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FocusUS EPA enters next phase in key biofuels mandate

25 September 2009 15:01  [Source: ICIS news]

Biodiesel mandate loomsBy Ben Lefebvre

HOUSTON (ICIS news)--The US Environmental Protection Agency (EPA) on Friday stopped accepting public comments on its proposed renewable fuel standards, leaving biodiesel producers anxiously waiting to hear whether their fuel will end up in the nation’s gas tank.

The EPA said it will now analyse the thousands of comments it received during the past four months on the draft rules. RFS 2, as the proposal is known, would mandate that 1bn gal/year of biodiesel be blended into the US fuel supply by 2012.

If the EPA implements the rules as the biodiesel industry hopes it will, RFS II would be a game-changer for a market beset with pitiful sales, sources said.

"We absolutely have to have it,” said Imperium Renewables chief executive John Plaza, whose 100m gal/year biodiesel refinery closed earlier this year on lack of sales. “RFS 2 implementation ... is absolutely key to the entire renewable fuel industry.”

US biodiesel production is down more than a third from the same time last year. Refiners lost their biggest market after the EU slapped tariffs on US biodiesel imports in March and extended them for five years in June.

The US produced 178m gal of biodiesel in the first five months of 2009, down 38% from the same period the year before, according to the latest data from the US Energy Information Agency (EIA). About two-thirds of the nearly 180 producers in the US have idled their plants during the past year, the National Biodiesel Board (NBB) has said.

Jeff Stroburg, CEO and chairman of Renewable Energy Group (REG), the largest biodiesel supplier in the country, said the fragile state of the renewable fuels industry can now be traced directly to the EPA’s delay in implementing the new standards.

“It’s extremely important for the industry. Not having the rules out creates uncertainty, and markets don’t work well in uncertainty,” Stroburg said.

What worries soy-based biodiesel refiners is whether the agency will keep provisions that would measure how much greenhouse gas (GHG) biodiesel refiners emit during the fuel’s entire lifecycle, from producing the feedstock grain to burning the fuel in an automobile engine.

That would likely cause biodiesel GHG emissions to jump past the EPA’s pollution bar, leaving the fuel ineligible for blending.

EPA administrator Lisa Jackson signaled on Thursday that her agency, after reviewing the thousands of comments it received, would revisit its stance on how to measure GHG in biodiesel.

“It is ... clear that there are significant uncertainties associated with ... the estimate of indirect land use change,” Jackson wrote in a letter to Sen. Tom Harkin (Democrat - Iowa), chairman of the Senate agriculture committee. “We will present these estimates in the final rule, and I plan to incorporate those estimates of uncertainty in my regulatory decisions.”

If the agency’s draft mandate becomes law, it would not be just the producers but also the government who would feel the hurt, said Ron Marr, who runs the 30m gal/year Minnesota Soybean Processors biodiesel plant in Brewster.

“If the rules go through as EPA drafted, there is absolutely no way for the US biodiesel industry to be able to meet the volume requirements. There simply isn't enough waste oils and fats oils feedstocks available to make 1bn gallons,” Marr said.

For more information on biodiesel, visit ICIS chemical intelligence
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By: Ben Lefebvre
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