RFS
Crystal Ball
It is risky to attempt to predict the EPA’s actions, but if history tells us anything, one can assume that the agency will land some-
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Of greater interest to many grain-based ethanol producers is the advanced biofuels portion of the RFS. The EPA proposed to maintain the initial 2 billion gallon requirement for next year’s advanced biofuels category, a significant increase over the 2011 requirement of 1.35 billion gallons. In order to qualify as an advanced biofuel, the fuel must reduce greenhouse gas emissions by at least 50 percent and, to the dismay of corn ethanol producers, cannot be produced from corn. This could create an interesting scenario in 2012, says Clayton McMartin, president of the Clean Fuels Clearinghouse, which owns and operates the Rinstar Renewable Fuels Registry. “There’s going to be more and more
where in the middle of the RFS debate. The petroleum industry has been requesting the elimination of cellulosic biofuels mandates since 2009, and the EPA has yet to agree with it. In issuing Producers its final volume requireExpected to ments for 2011, the agency produce cellulosic noted that it must remain ethanol in 2012 optimistic when establishing cellulosic biofuel mandates because if actual production exceeds the mandate the industry will be at risk for weak product and RIN demand. The agency has also never agreed that corn ethanol should be allowed to make up for shortcomings in other categories. For the past two years, the EPA has settled on a cellulosic biofuels mandate of approximately 6 million gallons, and with little change in the industry it is likely to do the same this year. Cellulosic producers agree it will be necessary to reduce next year’s mandate. Of the six ethanol producers expected to produce next
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Advanced at a Premium
demand for advanced biofuels, and sugarcane ethanol is pretty much the only option,� he says. This situation could drive up the prices for advanced biofuels RINs as obligated parties fight to comply with the RFS, he says. In his remarks at the EPA hearing, Growth Energy President Jim Nussle asked EPA officials to reconsider the corn discrimination clause in the advanced biofuels category. “We believe that excluding corn ethanol risks many unintended consequences, such as increased costs, reduced supply pressures and market uncertainty, which would harm investment,� he said. Other ethanol producers have requested that the EPA reduce the advanced biofuels category but leave the overall 2012 mandate of 15.2 billion gallons untouched so that corn ethanol could be used to make up the difference.
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RFS, which was to encourage the expansion of renewable fuels. “Basing annual cellulosic biofuel requirements on past production levels does absolutely nothing to encourage the construction of new cellulosic biofuel and discourages innovation,� the RFA stated.
november 2011 | Ethanol Producer Magazine | 59