EPA Holds Firm on 2014 Biodiesel Mandate

By Tina Caparella

In mid-November, the United States (US) Environmental Protection Agency (EPA) released for public comment its proposed 2014 Renewable Fuel Standard (RFS) mandates. The numbers reflect the first-ever reduction in the “renewable volume obligation” for biofuels blended with gasoline and diesel as required by Congress under the Energy Independence and Security Act of 2007. Specifically, the biomass-based diesel volume, which is biodiesel and renewable diesel, is proposed to remain at the 2013 requirement of 1.28 billion gallons. As of September 30, 2013, EPA reported 1.1 billion gallons of biodiesel had been produced. The biodiesel industry predicts it is on pace to produce a record 1.7 billion gallons this year.

The agency said it took the unprecedented action of reducing the volume because of the “E10 blend wall,” the point when the petroleum industry, facing reduced gasoline demand, must blend biofuels with gasoline at higher percentages than the current 10 percent rate in order to meet its RFS obligation.

“If gasoline demand continues to decline, as currently forecast, continuing growth of ethanol will require greater use of higher ethanol blends such as E15 and E85,” EPA stated in a news release.

The National Biodiesel Board (NBB) immediately voiced its disappointment.

“The growth in domestic biodiesel production dovetails exactly with President Obama’s statement in July of this year that ‘biofuels are already reducing our dependence on oil, cutting pollution, and creating jobs around the country,’” said Anne Steckel, NBB’s vice president of federal affairs. “This is why EPA’s action today is so surprising and disappointing.”

According to NBB, the proposed volume is particularly challenging because excess biodiesel production in 2013 can be carried over for compliance into 2014. As a result, the 1.28 billion gallon proposal could mean an effective market closer to one billion gallons – a dramatic reduction from current production.

“Our industry has been running recently at 170 million gallons per month – an annualized rate of two billion gallons,” Steckel said. “This proposal could nearly cut that in half. We will continue urging the administration to improve this rule before it becomes final.”

The 2014 RFS proposal for all renewable fuels is 15.21 billion gallons, based on a range of options from 15 to 15.52 billion gallons. This compares with the statutory requirement of 18.15 billion gallons. A breakdown of the fuel numbers reveals the conventional biofuel volumetric mandate – the category that includes corn ethanol – is proposed at 13 billion gallons, down from the statutory level of 14.4 billion gallons.

The total for cellulosic ethanol is proposed at 17 million gallons based on a range of seven to 30 million gallons. The renewable volume obligation for advanced biofuels is proposed at 2.2 billion gallons, based on a studied range of 2.0 to 2.51 billion; for biomass-based diesel (biodiesel/renewable diesel), the total proposed is 1.28 billion gallons. NBB has pushed the administration to set the biomass-based diesel at 1.7 billion gallons, roughly 2013 production. Public comments on the proposed rule will be due 60 days after it is published in the Federal Register, which was expected in late November.

Just prior to EPA’s announcement, NBB released a study that shows the biodiesel industry supported more than 62,000 jobs and $2.6 billion in wages in 2013. The study found if EPA were to limit 2014 RFS requirements to 1.28 billion gallons, the number of supported jobs would drop to 54,500, with supported wages falling below $2.3 billion and total economic impact reduced to $12.2 billion. The study was commissioned by NBB and conducted by LMC International, a global economic research firm.

A bipartisan group of US Senators joined NBB’s plea by sending a letter to the Obama administration supporting reasonable growth in the biodiesel industry next year under the RFS. The 32 senators, representing biodiesel production plants from Washington to Minnesota to Maine, specifically called on the administration to establish a volume requirement of at least 1.7 billion gallons, consistent with this year’s projected production. The letter was led by Senators Patty Murray (D-WA), Al Franken (D-MN), Roy Blunt (R-MO), and Chuck Grassley (R-IA) and warned that a weakened RFS could lead to plant closures and thousands of lost jobs while threatening future investment.

“Biodiesel has exceeded RFS targets in each year and is clearly poised to do so again in 2013,” the senators wrote. “Biodiesel is improving our energy security by reducing our dependence on imported petroleum diesel, diversifying fuel supplies, and creating competition in the fuels market. Setting the 2014 biodiesel volume requirement at reduced levels could have severe impacts on the domestic biodiesel industry.”

Biodiesel is the first and only commercial-scale fuel produced across the United States to meet EPA’s definition of an advanced biofuel, meaning the fuel reduces greenhouse gas emissions by more than 50 percent when compared with petroleum diesel. Produced in nearly every state in the country, the industry has exceeded RFS requirements every year of the program, producing more than one billion gallons annually since 2011.

Croatia to Get First Biodiesel Plant

BDI – BioEnergy International AG, based in Austria, has entered into a contract with Biom D.O.O. to construct the first multi-feedstock biodiesel plant in Croatia at a cost of more than 20 million euros ($27 million USD). Total capacity of the plant will be about 100,000 metric tons per year (30 million gallons) with start-up anticipated by the end of 2014. Vesna Trnokop-Tanta, a representative of the Croatian Chamber of Commerce, has pledged full support for the project and underlined that this is an important step for Croatia in meeting the European Union’s demands regarding the renewable energy directive in the fuel sector.

BDI has also been commissioned to perform two retrofit applications at existing biodiesel plants, one in Atlanta, GA, in the United States and the other in the United Kingdom. While BDI would not confirm the name of the plant in Atlanta, the company did state it was the “biggest biodiesel producer in the US,” which led Biodiesel Magazine to presume the plant to be owned by Renewable Energy Group acquired from Bulldog Biodiesel in 2012. Renewable Energy Group had no comment.

BDI will carry out basic engineering assignments at the Atlanta plant, a prerequisite for successful implementation of its retrofit program at the site. The aim is to modernize the plant, which is out of operation at the moment, in such a way that a profitable restart of production can be guaranteed.

At the same time, BDI will implement a biodiesel purification unit for a British biodiesel manufacturer. With the help of this optimization unit, the contaminant content of the biodiesel (particularly the residual monoglyceride content) will be reduced to a level that is far lower than the relevant limits specified by the strict European biodiesel quality standard. This project will guarantee not only a considerable improvement in quality but also an increase in the output of the biodiesel plant.

The value of the two commissions is about 400,000 euros ($541,000 USD).

Funding Available to Develop Advanced Biofuels Projects

The United States Department of Agriculture (USDA) is making $181 million available to develop commercial-scale biorefineries or retrofit existing facilities with appropriate technology to develop advanced biofuels from non-food sources. The funding is being made under USDA’s Biorefinery Assistance Program created through the 2008 farm bill and administered by USDA Rural Development. It provides loan guarantees to viable commercial-scale facilities to develop new and emerging technologies for advanced biofuels. Eligible entities include Indian tribes, state or local governments, corporations, farmer co-ops, agricultural producer associations, higher education institutions, rural electric co-ops, public power entities, or consortiums of any of the above.

Examples of previously funded advanced biofuels projects include Sapphire Energy’s “Green Crude Farm” in Columbus, NM. In 2011, USDA provided Sapphire Energy a $54.5 million loan guarantee to build a refined algae oil commercial facility. In continuous operation since May 2012, the plant is producing renewable algae oil that can be further refined to replace petroleum-derived diesel and jet fuel. According to the company, more than 600 jobs were created throughout the first phase of construction at the facility, and 30 full-time employees currently operate the plant. The company expects to produce 100 barrels of refined algae oil per day by 2015, and be at commercial-scale production by 2018. After receiving additional equity from private investors, Sapphire was able to repay the remaining balance on its USDA-backed loan earlier this year.

In 2011, USDA issued a $12.8 million loan guarantee to Fremont Community Digester for construction of an anaerobic digester in Fremont, MI. The digester, which began commercial operations late last year, is the largest commercial-scale anaerobic digester in the United States. It has the capacity to process more than 100,000 tons of food waste annually to produce biogas and electricity. Biogas from the digester runs generators that total 2.85 megawatts in capacity. The electricity produced is sold to a local utility company to provide power for about 1,500 local homes.

Applications for assistance are due by January 30, 2014. More information is available in the October 2, 2013, Federal Register or from the USDA Rural Development office.

Hong Kong Commerce Secretary Tours New Biodiesel Plant

Gregory So, Hong Kong’s secretary for Commerce and Economic Development, visited the new 100,000 metric ton per year (30 million gallons) biodiesel plant of ASB Biodiesel (Hong Kong) Ltd. in Tseung Kwan O Industrial Estate in October.

The ASB Biodiesel plant is not only the largest biodiesel plant in Hong Kong, but also the first in Asia to make use of advanced multi-feedstock technology to transform waste cooking oil into biodiesel. The company collects cooking oil and as much as 550 tons of waste grease from about 4,000 local restaurants as a feedstock for its plant. Initially, 20 percent of the plant’s feedstock will come from Hong Kong, eventually increasing to around 45 percent, with waste oil also imported from countries such as Singapore and Malaysia.

Minnesota Raises Biodiesel Mandate to 10 Percent

Starting next July, Minnesota will become the first state in the country to require that most diesel fuel sold in the warm-weather months contain 10 percent biodiesel (B10). Currently, Minnesota, like other states, requires a year-round five percent blend (B5) for most diesel sales. The B10 mandate will begin July 1, 2014, and run through October 31, 2014. Beginning in 2015, B10 will be required from May 1 through October 31.

Minnesota became the first state to require the use of biodiesel in 2005. The 10 percent mandate was scheduled to take effect in 2012 under a 2007 law, but it took longer than expected to ensure adequate supplies statewide and set up regulatory protocols for tracking its use. The state agriculture, commerce, and pollution control commissioners certified in a letter published in the Minnesota State Register on October 1, 2013, that all the legal criteria are now met and the B10 mandate can now take effect.

REG Opens Iowa Biodiesel Plant and Begins Upgrade

Renewable Energy Group (REG) formally opened its recently acquired biodiesel refinery in Mason City, IA, and announced it has begun a $20 million project to upgrade the plant to a multi-feedstock facility. REG completed the acquisition of the former Soy Energy, LLC refinery on July 31, 2013, and immediately began efforts to repair and restart the plant, which began producing biodiesel on October 1.

“With these upgrades, we will be able to utilize lower cost raw materials like inedible corn oil from ethanol production, used cooking oil, and animal fats, with the majority coming from close proximity to Mason City,” said Brad Albin, REG vice president of manufacturing.

December 2013 RENDER | back