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2013 a Pivotal Year for the Renewable Fuel Standard

January 18, 2013
Less than a decade ago, the nation’s energy experts projected imports of oil to continue to grow throughout the first third of the century. Both Congress and the President recognized that this was a threat to our economic competitiveness and growth. So, the United States made a commitment to developing new forms of biofuels, particularly cellulosics, to reduce reliance on foreign oil.

Today, experts are projecting an American energy renaissance and achievement of energy self-reliance within that same time period. The International Energy Agency’s latest World Energy Outlook predicts that the United States will become a net energy exporter within the next few decades. And the U.S. Energy Information Administration’s recently released early draft of the Annual Energy Outlook shows the same potential. The reports also demonstrate that renewable fuels will make a substantial contribution to this energy renaissance if there is long-term, stable policy in place.

Back in 2006, President George W. Bush established the National Energy Initiative, outlining an ambitious public-private partnership to drive research and development of cellulosic biofuels, making them practical and cost-competitive by 2012. The Bush administration also developed the National Biofuels Action Plan to assess the challenges to the growth of advanced biofuels and develop solutions to overcome barriers. Acting to codify these plans, Congress adopted the Renewable Fuel Standard (RFS), the Farm Bill energy title, multiple research and development programs, and tax credits.

Today, we can see the first signs of this partnership coming to fruition. Private companies have invested billions of dollars in advanced biofuel research and development, accelerating the timeline for commercial development of new advanced biofuel facilities. Two companies have begun commissioning large-scale biorefineries for commercial production of cellulosic ethanol and diesel – producing and selling a small number of gallons of fuel – and many others have begun construction on additional facilities in every region of the United States. Algae biofuel, renewable chemical and other biorefineries are expected to come online this year as well, with the potential to further reduce U.S. reliance on foreign oil over time.

Still, some members of Congress have vowed to hold oversight hearings in the new Congress to try to find problems with the Renewable Fuel Standard. Despite criticisms, the RFS is working as it was intended.

Much of the confusion about the RFS revolves around the compliance mechanism – the Renewable Identification Numbers (RINs). This compliance mechanism was developed at the request of the major petroleum industry trade groups, and it contains all of the flexibility in meeting the RFS requirements that was originally requested. It acts as a safety valve to balance the compliance burden among regulated parties.

Despite claims by the petroleum trade groups that the industry paid millions of dollars in “fines” related to cellulosic RINs, in fact obligated parties exercised many different options for compliance with the RFS over the past few years. And in 2012, the first cellulosic biofuel RINs were generated and retired, per the rules.

The RFS as implemented by the U.S. Environmental Protection Agency has been much maligned and misunderstood. But it is working as Congress and the Bush administration outlined when it was adopted. It has accelerated the development of domestic alternatives to foreign petroleum and boosted U.S. competitiveness and energy security.

Recently, BIO and its member companies POET-DSM, Abengoa and DuPont – along with Fuels America – discussed their progress in meeting the nation’s goals for energy security through the development of domestic technology for cellulosic biofuels. Listen to excerpts from the call here, from (in order of speakers) Brent Erickson, executive vice president of BIO; Chris Standlee, Executive Vice President of Abengoa Bioenergy; Wade Robey, Board Member of POET-DSM Advanced Biofuels; and Jan Koninckx, Global Business Director for Biorefineries, DuPont Industrial Biosciences, and Board Member of Butamax Advanced Biofuels. 2013 Renewable Fuel Standard Projections