2. Biodiesel roars back with mandate, tax credits, B20 OKs
Turns out that predictions of biodiesel’s demise were a tad premature. The fuel’s boosters are gathering this week at the National Biodiesel Conference & Expo, touting a stream of good news. Highlights:
“The EPA has said that they are going to enforce the 800 million gallon volume RFS2 requirement” said National Biodiesel Board CEO Joe Jobe to Biodiesel magazine, “and we will have the tax credit in place. Last year we had neither in place.” He described the combination as a “powerful policy framework” and predicted that 2011 would be the biggest year yet for US biodiesel sales.
At the same time, more good news on vehicle acceptance. Jobe is touting that “We’ve got all of the Big Three American automakers accepting B20 in their vehicles.”
At the same time, there are challenges on the feedstock front. Bottom line, jatropha, camelina and algae are still emerging feedstocks, soy and canola are pricey, waste oils & greases are tough to find at scale, and palm is politically radioactive.
More on this trend, here.
3. Ethanol’s back, too, sort of, or is it that drop-ins have waned?
Drop-in fuels all the rage? Not smart, says Coskata CSO Rathin Datta, ethanol is the champion for biomass-based fuels.
In Washington DC last July , at the DOE’s Biomass 2011 annual conclave, Rick Wilson, the CEO of Cobalt Technologies, and Wes Bolsen, CMO of Coskata, engaged in a formal debate over the motion: “Federal funding for biofuels should focus primarily on the development of infrastructure-compatible, hydrocarbon fuels.”
There has been quite a lot of press in recent years around the development of “drop-in fuels” – from articles like 2009′s “Drop In, Tune Out, Turn On” to the coverage of recent DOE funding of consortia like the NABC that are pursuing infrastructure-compatible fuels.
But Coskata has been on the warpath of late to remind the industry, and the broader stakeholders in a future beyond fossil fuels, about why ethanol fuels were developed in the first place, and why they should be considered a superior alternative to drop-in hydrocarbons, when refining fuels from biomass.
At the end of last summer, Coskata CSO Rathin Datta didn’t exactly descend into the lion’s den, when choosing to present this strongly positive view on ethanol at the Fuel Ethanol Workshop in Indianapolis. It’s sort of like praising Cal Ripken Jr. in the friendly confines of Camden Yards.
***Of the EPA, Platts wrote:
The US Environmental Protection Agency opted Tuesday [Dec. 27] to set a more ambitious goal for the production of cellulosic biofuels in 2012, saying the 31% boost from 2011 levels would drive growth in the fledgling industry. The EPA is requiring that 8.65 million gallons of cellulosic biofuels be used in 2012, up from the 6.6 million gallons it required in 2011. That number is still far below the 500 million gallons required by statute. But it is higher than the low end of the range it had originally proposed in June, when it said it was considering a volume of 3.45 million to 12.9 million gallons. The cellulosic requirements are part of the larger Renewable Fuel Standard targets for 2012. Refineries and other blenders will have to use the equivalent of 15.2 billion gallons of ethanol, cellulosic biofuels, biodiesel and similar renewable fuels next year -- the same amount as the EPA had initially proposed in June. That compares with 13.95 billion gallons the EPA required in 2011. The volumes, part of the so-called RFS2, represent 9.2% of the nation's transportation fuel supply in 2012. The EPA set a requirement of 1 billion gallons for biomass-based diesel in 2012. But it punted a decision on 2013 volumes for biomass-based diesel fuel until next year, saying more analysis was needed. In setting the higher goal for cellulosic fuels, the EPA said that meeting the statutory goals of predictability and reducing uncertainty "does not require the EPA to specify an applicable volume for cellulosic biofuel that is as low as possible or based only on demonstrated (as opposed to reasonably anticipated) production," the final rule states. The EPA acknowledged its higher targets could create uncertainty.
"Once again, refiners are being ordered to use a substance that is not being produced in commercial quantities -- cellulosic ethanol -- and are being required to pay millions of dollars for failing to use this non-existent substance," NPRA President Charles Drevna said in a statement. "This makes no sense." The EPA said it was persuaded by public comments, such as those filed by the Renewable Fuels Association, urging higher cellulosic targets. In comments filed to the June proposed rule, the RFA had said that lowering the cellulosic targets "because of past production problems discourages development of cellulosic sources." It rejected comments, such as those filed by Chevron, suggesting that the 2012 target be set closer to the low end of the proposed range. "EPA believes the industry is capable of exceeding the lower end of the range of projected volume from our proposed rule," the EPA said on Tuesday.
***Of the ethanol tax break, westernfarmpress notes:
For the first time in more than three decades of generous U.S. government subsidies for the domestic ethanol industry, coupled with a steep tariff on imports, the United States market will be open to imported ethanol as of Jan. 1, 2012, without protectionist measures.
The adjournment of the 112th Congress means both the US $0.54 per gallon tax on imported ethanol and a corresponding tax credit of US $0.45 per gallon for blenders, the VEETC (Volumetric Ethanol Excise Tax Credit), will expire as expected on Dec. 31.
"With Congress in recess, there are no opportunities for further attempts to prolong the tax credit or the tariff, so we can confidently say these support mechanisms will be gone at the end of 2011," said the Washington Representative for the Brazilian Sugarcane Industry Association (UNICA), Leticia Phillips.
The New Year will come without an ethanol tax break, which has many people wondering if we'll see an impact at the pump.
The long-running tax credit went to refiners who mixed ethanol with gas. That tax break is expiring. Tom Kloza, from the Oil Price Information Service, says the end of the tax credit means the cost for wholesalers and retailers will rise by four and a half cents a gallon on January first.