By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- Conventional biofuels such as corn ethanol would receive a boost if proposed Renewable Fuel Standard volumes released Wednesday for 2017 hold up.
Still, at least one major ethanol industry group said the proposal released by the U.S. Environmental Protection Agency still is not following the law. Representatives for both the biodiesel and cellulosic ethanol industry expressed disappointment at the proposal, as well.
EPA is calling for total renewable fuel volume of 18.8 billion gallons that would include:
- 4 billion gallons for advanced biofuel,
- 312 million gallons for cellulosic biofuel,
- 2 billion gallons for biomass-based biodiesel in 2017 and 2.1 billion gallons in 2018.
That leaves corn ethanol with a 14.8-billion-gallon RFS requirement. That would increase the mandated blend volume for corn ethanol by 530 million gallons compared to 2016 volume requirements.
DTN Market Analyst Todd Hultman said 14.8 billion gallons for corn ethanol comes out to 5.29 billion bushels of corn for the mandate. Adding another 300 million bushels of corn in the form of ethanol exports would equal about 5.6 billion bushels of corn used. USDA estimates 5.25 billion bushels of corn for ethanol in 2015-2016 and 5.3 billion bushels in 2016-2017.
The 14.8 billion gallons, he said, would be higher than USDA's May 29 estimate of 14 billion gallons and is "slightly bullish" for corn prices.
"The big threat this year is the size of the next U.S. corn crop which USDA estimated at 14.4 billion bushels," Hultman said. "This would at least help to move some of that corn, if weather gives us another good harvest."
The Renewable Fuels Association said in a statement Wednesday it continues to be disappointed with EPA's approach implementing its authority to waive volume levels under the 2007 law. RFA is among a handful of industry groups suing the agency for its implementation of the Renewable Fuels Standard.
"For months, EPA has been saying it plans to put the program 'back on track,'" said Bob Dinneen, president and chief executive officer of the RFA. "Today's proposal fails to do that. The agency continues to cater to the oil industry by relying upon an illegal interpretation of its waiver authority and concern over a blend wall that the oil industry itself is creating."
The result, Dinneen said is that consumers are left with less availability of "higher octane, lower cost renewable fuels." Also, EPA's cap on ethanol usage is stagnating technology in advanced biofuels and causing greenhouse gas emissions from automobiles to be higher.
"The real frustration is that EPA seems to be artificially constraining this market," Dinneen said.
Dinneen still gave EPA "credit" for getting its 2017 proposal out in a timely manner and bringing volume requirements for corn ethanol within 200 million gallons of its statutory level.
EPA touted its work on biofuels. Janet McCabe, acting assistant administrator for EPA's Office of Air and Radiation, said in a news release Wednesday the 2017 volumes keep the biofuels industry on track to record "achievable" growth.
"The Renewable Fuel Standards program is a success story that has driven biofuel production and use in the U.S. to levels higher than any other nation," McCabe said. "This administration is committed to keeping the RFS program on track, spurring continued growth in biofuel production and use, and achieving the climate and energy independence benefits that Congress envisioned from this program."
CELLULOSIC ETHANOL, BIODIESEL
The 312 million gallons for cellulosic ethanol would translate into a boost of 82 million gallons from 2016. This is the case although production has stopped at Abengoa's cellulosic ethanol plant in Kansas as the company works its way through bankruptcy.
The proposed 4 billion gallons for advanced biofuels in the 2017 proposal would represent an increase of about 390 million gallons.
The 2017 proposal would give biodiesel a slight bump in the RFS from 1.9 billion gallons in 2016 to 2 billion gallons in 2017.
The National Biodiesel Board expressed disappointment the EPA gave biodiesel only a slight bump from 1.9 billion gallons in 2016 to 2 billion in 2017 and 2.1 billion in 2018.
NBB Vice President of Federal Affairs Anne Steckel said without stronger growth in the final rule the Obama administration would be missing an opportunity to reduce carbon emissions while helping to reshape America's transportation sector.
"We appreciate the EPA's timeliness in releasing these volumes and its support for growing biodiesel use under the RFS, but this proposal significantly understates the amount of biodiesel this industry can sustainably deliver to the market," Steckel said in a news release statement.
"We have plenty of feedstock and production capacity to exceed 2.5 billion gallons today and can certainly do so in 2018."
The Biotechnology Innovation Organization, or BIO, said in a news release the proposal "fails to put the program fully back on track."
Advanced Biofuels Business Council Executive Director Brooke Coleman said the Obama administration isn't doing enough to further the development of advanced biofuels.
"The administration has pledged to do everything in its power to drive the commercialization and use of advanced, low-carbon biofuels," he said. "The 2017 proposal does not do that. We cannot let the oil industry slow the implementation of this program. It's that simple."
Last year EPA announced a three-year program for 2014, 2015 and 2016 that includes biofuel volumes below those set in the original 2007 law.
EPA used a waiver rule to change the blend volumes required by petroleum marketers. Biofuel volumes are set in the final rule at 18.11 billion gallons for 2016, which is 18.6% below blending volumes set in the 2007 law.
Read EPA's proposal here, http://1.usa.gov/…
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @toddneeleyDTN
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