British author AA Milne is in the news this week with the impending release of “Goodbye Christopher Robin,” which brings to mind “Winnie the Pooh and the Blustery Day”. It’s been bluster and bother and in the bioeconomy this week, all right, and significant players are feeling downright Eeyoreish and we’ll get to that. But some sectors have had a week steeped in pots of Hunny.
As Pooh himself might have observed, “When it feels like you can’t make any progress in the wind, just turn and look the other way, you’ll be blown along very quickly indeed.”
US road transport biofuels producers are up in arms this week. There are reports of oil industry led-efforts within the EPA to create an export-subsidy RIN, cut biofuel targets with new “data,” and bypass EPA staff recommendations for higher cellulosic targets.
Tut-tut, it looks like rain.
Now, the industry has written a sharp letter to President Trump over news from EPA of proposed “drastic, unprecedented changes” designed to benefit a few petroleum refiners.that the EPA is considering a major rollback in 2018 biomass-based diesel, advanced biofuel, and total renewable fuel volumes, and/or the 2019 biomass-based diesel volume under the Renewable Fuel Standard (RFS) program.
What’s at stake. The EPA is seeking to test how much it can use the general waiver provision of EISA to roll back renewable fuel standards if they “make the price of biomass-based diesel fuel increase significantly.” The question becomes, what is significant, and how is policy stability to be achieved if there is political disagreement about what is a tolerable price impact?
POET chairman and CEO Jeff Broin observed:
“The oil industry is concocting new ways to cut biofuel volumes and aggressively pushing the EPA to roll back the growth of homegrown renewable fuels. Approving any of these proposed measures would be a severe blow to our nation’s public health, air quality and national security. These actions would put millions of dollars into the hands of a few oil companies at the expense of American consumers, family farmers and biofuel producers. President Trump has repeatedly committed to protecting the RFS, and we remain hopeful that he will hold his administration accountable and keep the EPA from following the dangerous path laid out by the oil industry.”
Fuels America letter to President Trump
October 3, 2017
President Donald J. Trump
The White House
1600 Pennsylvania Ave, NW
Dear President Trump,
We commend your commitment to reinvigorate economic growth in America’s heartland. The biofuels industry is poised to lead the next manufacturing wave across America. However, we are concerned about the Environmental Protection Agency’s (EPA’s) consideration of drastic, unprecedented changes to the Renewable Fuel Standard (RFS) that would undercut investments in the production of American-made biofuels such as ethanol and biodiesel. The proposed changes are inconsistent with the law and threaten the growth and prosperity of the U.S. biofuels industry.
EPA’s changes are also inconsistent with Administrator Pruitt’s assurances to uphold the law and your long-standing support of ethanol and the RFS. If the proposed changes are finalized, EPA’s actions would cause severe harm to our industry, undermining your efforts to drive economic growth and secure America’s status as the global leader in biofuel production. We urge you to act quickly to continue to grow the RFS, and we would look forward to working with you and your staff to do so.
Under the Agency’s most recent RFS proposal, and the follow-up Notice of Data Availability (NODA) released on September 26, EPA is proposing to implement a series of changes to the regulation that would discourage U.S. investment in new production capacity and biofuel blending infrastructure, undermine the energy and economic security goals of the RFS, and disadvantage America in the global race to develop new technologies and commercialize next-generation biofuels.
To that end, we would like to clarify where our industry stands on several key RFS issues. We are requesting that you act quickly to prevent actions that will freeze innovation, hurt numerous rural manufacturing sectors, and slow economic growth in America’s heartland.
The final 2018 RFS Renewable Volume Obligation (RVO) must require 15 billion gallons of conventional biofuels, as proposed. While EPA did not propose to invoke its general waiver authority to reduce the conventional biofuel requirement, it left the door open on the matter for the final rule. We oppose any weakening of the conventional biofuel standard.
The proposed rule rolls back the advanced biofuel requirement for the first time by flat-lining the 2019 biomass-based diesel standard and cutting the cellulosic biofuel standard by roughly 25 percent from 2017 levels. The volumetric cuts are unwarranted, and we have serious procedural concerns about how EPA reached its conclusions. According to the public record, EPA sent a stronger, pro-growth proposal to the White House Office of Management and Budget (OMB), but EPA leadership intervened to make drastic changes to the proposal after OMB review. EPA leadership inserted a modified methodology that discounts projected advanced biofuel volumes based on “actual production” from 2016. This new approach would signify a major policy shift long sought by the oil industry. The original version of the proposed 2018 rule approved by OMB in early June warns against the exact path ultimately proposed, noting that “doing so could result in inappropriately low production projections for a commercially successful technology.” The new methodology should be dropped. The final proposal must be forward-looking and continue to grow advanced biofuel volumes. Already-finalized volumes for biomass-based diesel in 2018 must not be reduced.
On September 26, EPA published a Notice of Data Availability (NODA) exploring options for further reducing RFS advanced and total renewable fuel volumes. EPA is considering making biofuel imports ineligible for the RFS, while also reportedly exploring the prospect of making biofuel exports eligible for RFS compliance. These proposals originate from the same small group of petroleum refiners seeking to avoid the law by moving the RFS point of obligation, and would serve no purpose other than to paralyze growth in U.S biofuel markets, slow investment in blending infrastructure, strand investment in advanced biofuels, and export innovation overseas. Creating an “Export Subsidy RIN” may violate the statute and will almost certainly provoke a trade backlash – including potentially damaging tariffs on U.S. agriculture – via the World Trade Organization, which agreed in 2015 to abolish export subsidies. The current treatment of imports/exports under the RFS strikes the right balance and should be maintained.
For the first time, EPA is proposing to exclude new cellulosic biofuel gallons from facilities unable to secure registration from EPA the year before the actual compliance year. While we would not expect EPA to allow non-registered fuels to be eligible for compliance credits, there is no harm in receiving registration early in the compliance year and selling fuel thereafter. There is no better example of over-regulation than this one. If finalized, the new approach would slow down, rather than accelerate, the commercialization of cellulosic fuels.
Mr. President, thank you for your strong support of the RFS. We look forward to working with you to ensure that EPA and your Administration remains firm in that commitment.
The Advanced Biofuels Business Council (ABBC), The American Biogas Council (ABC), The American Coalition for Ethanol (AEM), The Association of Equipment Manufacturers (AEM), The Biotechnology Innovation Organization’s (BIO), Growth Energy, The Iowa Renewable Fuels Association (IRFA), The National Biodiesel Board (NBB), The National Corn Growers Association (NCGA), The Renewable Fuels Association (RFA)
It’s not all been bad for the bioeconomy this week. On the whole, it’s been good.
In Queensland, the state premier Annastacia Palaszczuk and Minister for State Development Dr Anthony Lynham unveiled a government-supported two-year agreement where Gevo will suppply aviation biofuels to Virgin Australia to support Virgin commercial flights and establish Brisbane as a biojet refueling hub.
“The biorefinery projects currently under development across Queensland have the potential to create 1100 jobs when they are operational,” the Premier said. “To get up and running, industrial-scale biorefinieries need a critical mass of customers to supply. That’s why it’s vital to get big industries like aviation and defence on board as potential customers.”
State Development Minister Dr Anthony Lynham said biojet can be produced from a range of organic materials, including sugarcane bagasse, molasses, wood waste and agave. “Some of the existing refinery projects being developed in Queensland will have the capability to produce biofuel for commercial aviation,” Dr Lynham said. “Queensland has a vision for a $1 billion biofutures sector by 2026,” Dr Lynham said. “Queensland’s bio-industrial revolution is here, and the dividends it’s going to pay our state in jobs and economic growth will mean a greener and more prosperous future for all Queenslanders.”
Across the broad advanced bioeconomy, even more reason for cheer.
In London, Unilever has signed an agreement to acquire Brazilian natural and organic food business Mãe Terra, which operates in several categories with a portfolio that includes organic cereals, cookies, snacks and culinary products. The main Mãe Terra categories represent a Brazilian market worth more than €8 billion (Euromonitor). Growing at over 30% per year, Mãe Terra has a strong brand equity and a clear purpose of making nutritious food accessible to all. This fits clearly with Unilever’s own sustainable nutrition strategy and its commitment to sustainable growth.
In France, microbiome start-up Eligo Bioscience has secured a $20 million Series A round led by Khosla Ventures and Seventure Partners, including a $2 million award from the Worldwide Innovation Challenge. This comes just months after Eligo was selected as one of the 30 Most Innovative Companies in 2017 by the World Economic Forum. This funding will enable Eligo to strengthen its biotherapeutic platform, begin clinical trials for its lead indication and extensively grow its international team of scientists, engineers, and executives.
Perhapss most significantly if subtly of all, Calyxt’s first alfalfa product candidate has been designated as a non-regulated article under “Am I Regulated?” Process by Biotechnology Regulatory Services of the Animal and Plant Health Inspection Service (APHIS), an agency of the USDA. Significant, because it is a gene-edited varietal, and the first ever alfalfa product to receive the non-regulated distinction from the USDA. The collaboration between Calyxt and S&W Seed Company is focused on providing enhanced traits in alfalfa seed varieties that can drive improved productivity, while decreasing input costs to meet the growing global demand for higher quality alfalfa products.
The Bottom Line
In nutrition markets, we’re seeing the US government getting out of the way, and in fuel markets the EPA is taking a far more activist role in seeking to reduce the US biofuels market established by mandate under the RFS. Yet, we continue to see action in aviation circles to bring forward liquid fuels — which are right now being produced in small volumes and available at higher costs to consumers.
Cost — what will consumers pay more for? Same-old performmance with green, scoietal benefits? That’s proving to be a challenge. Significant benefits attract consumers — as we reported only yesterday, the real undeniable benefit driving adoption of electric cars in states like California is “access to high-occupancy vehicle lanes” for faster communting times.
So, faster is good, cheaper is good. Better for employment, energy security and emissions? The old triad that has long supported renewable fuels and the advanced bioeconomy is looking tired in some of it’s key constituencies.