Recent reporting, including in the New York Times, accurately points out the current shortfall in cellulosic biofuel production relative to the targets established by the Renewable Fuel Standard (RFS). However, the New York Times is just the latest media outlet to miscast the reasons for delay and the state of the advanced ethanol industry.
“In a very difficult financial and policy environment, the first wave of commercial advanced ethanol production facilities are under construction in a number of states across the country,” said Advanced Ethanol Council Executive Director Brooke Coleman. “Diversifying America’s fuel supply with increasing amounts of clean, domestically produced renewable fuel requires us to keep our eyes on the prize and not be distracted by the noise and misdirection coming from naysayers protecting the status quo. “
Coleman continued, “It is important to remember why the RFS is needed. If the market operated based on free market principles, then we would not need blending requirements to force regulated parties to purchase renewable fuels. But instead, the market is controlled by one industry, and few players, who are increasingly reliant on OPEC to secure their product. In turn, we need forceful programs with the right incentives to introduce new fuels made by Americans. That’s what the RFS is, and it’s working.”
The U.S. Environmental Protection Agency (EPA) is required by Congress to adjust the RFS cellulosic biofuel blending volumes based on forecasted future available supplies. For both 2011 and 2012, EPA reduced those volumes by over 90 percent to provide relief for regulated parties and simultaneously implement the very type of credit system the oil industry requested to address the inherent market uncertainties of deploying new fuel technologies in the marketplace.
For perspective, the anticipated cost for 2011 waiver credits for obligated parties is $6.8 million. In 2010, the three largest publicly traded oil companies reported profits of $58.3 billion. These waiver credits represent approximately 1 percent of these profits and a pittance compared to the billions of dollars in taxpayer subsidies enjoyed by oil producers.Yet, this provision maintains at least a base level incentive in the marketplace for the oil companies to facilitate rather than obstruct the deployment of advanced ethanol.
“We must not let the crocodile tears of a few multi-national oil companies become a Trojan horse for second guessing ourselves on the RFS. The progress of cellulosic ethanol industry has been slower than anyone in the industry would like due to a number of factors outside of their control, but it is simply false to suggest that the technology is not working and the industry is not emerging.”
“Today, commercial scale facilities are being built and production is on the way to meet the adjusted requirement in 2012, and hopefully more aggressive requirements in the years to come,” Coleman added. “As crucial chokepoints of world oil supplies are being threatened, America cannot afford to back track on an RFS program that has already dramatically reduced foreign oil dependence and remains a linchpin for local bio-economies all over the country."