Is The Advanced Biofuels Association On The Side Of The Biofuels Industry?

  • Friday, 13 March 2015 00:00

RFS reform is the sort of thing you expect to hear from Big Oil and its cohorts (EWG, Action Aid and other frivolous organizations) but not from a group that supposedly represents the advanced biofuels industry.

But that's exactly what happened on March 10 when the Advanced Biofuels Association's (ABFA) president, Michael McAdams, called for changes to be made to the RFS - the very law that ensures the existence of advanced biofuels. 

The ABFA's McAdams, who spent over 14 years at BP, says the RFS needs to be reformed because it isn't doing enough to spur investments in advanced biofuels and has only helped the corn ethanol industry.

It's true that investments in advanced biofuels haven't come as envisioned by the law. But that too has much to do with the EPA's ill-advised attempt to reduce the renewable volume obligations (the amount of biofuels that need to be blended with gasoline) for 2014.

As it stands, the 2014 and 2015 RVOs have not been announced and have left the industry in a limbo. Without proper clarity and direction from the EPA, the industry has been reluctant in investing in cellulosic biofuels.

That being said, we saw the launch of cellulosic ethanol production facilities last year from Poet-DSM, Quad County Corn Processors and Abengoa. This year, DuPont is set to launch a cellulosic ethanol plant in Nevada, Iowa. It's interesting to note that of the four, three are involved in corn ethanol production while Abengoa said during the launch of its Hugotan, Kansas plant that its plant would "have simple been impossible without the establishment of the Renewable Fuel Standard."

Checks shows that none of the abovementioned companies are members of ABFA so who exactly it represents is even more puzzling.

In fact, among the changes it is seeking in the RFS includes a minimum RIN value for cellulosic fuels "that will provide enough certainty and stability for our members to build facilities and commercialize their innovative products." In other words, ABFA wants the government to subsize the price of cellulosic ethanol RINs.

It's bad enough that the ethanol industry is constantly leveled with frivolous accusations of being subsidized (for the record, the industry does not receive any subsidies. Claiming the RFS is an indirect subsidy is akin to saying the law that requires motorists to have auto insurance is actually a subsidy for auto insurance providers).

If its subsidy idea is bad, it’s got one that's even worse. It wants the RFS to include a requirement for cellulosic RIN values to be indexed to the price of oil, providing more support when petroleum costs $50 per barrel and less at $100 per barrel. We may need some clarity on that but that sounds like price manipulation!

One can imagine how ABFA's proposal would be received by members of Congress.

As the RFA's Bob Dinneen said in this report by the Wall Street Journal, "We seriously question who [the Advanced Biofuels Association] is representing these days because all they are doing is throwing more uncertainty into the process by calling for legislative action when legislation isn’t needed."

In fact, as pointed by this report by FuelFix, some refiners have "quietly signaled they could back more modest reforms to the mandates that would preserve a path for cellulosic and other advanced biofuels, while scaling back or completely undoing the requirement for traditional renewable fuels that are typically made from corn."

But the mere talk of a subsidy or price manipulation in relation to the RFS would all but guarantee its death (you can already hear the oil industry cheering).

"I think if you open up the RFS, the whole thing is in jeopardy," said Growth Energy's Tom Bius in the same Wall Street Journal report.

In addition to subsidies, ABFA also advocated for a change in setting the annual RVO by basing it instead on the previous year's RIN generation numbers and not the numbers stipulated in the RFS. What this then means is that year-on-year ethanol consumption will most likely remain stagnant and the so-called "blend wall" will remain in place.

Even Novozymes, which has been involved in the second generation biofuel industry, distanced itself from ABFA stating the organization "does not represent even the majority of advanced biofuels producers."

Indeed. Who exactly is ABFA representing?