Key representatives from the US biofuel industry have warned that the national government’s focus on electrification is leaving little to no room for renewable fuels, illustrated by lower-than-expected renewable volume obligations (RVOs) for the next three years.
Speaking during a panel session at the Fastmarkets Biofuels and Feedstocks Americas conference on Tuesday May 16, Clean Fuels Alliance America (CFAA) public affairs and federal communications director Paul Winters told delegates that priorities for the US administration “are about electrifying this or that,” while there is “no consideration for the role that renewable fuels can play.”
Last year, proposals to include biogas for renewable electricity supplied to electric vehicles in the US Renewable Fuel Standard (RFS) received opposition from refiners, who would be obliged to buy compliance credits from carmakers that will ultimately earn the credits.
“There is a lot of lip service to our industry, however, with Administrator Regan reiterating in Congress that our industry should have a seat at the table,” Winters said, adding that, despite Regan noting he had met with industry groups over the RFS rule, CFAA “is still waiting for that meeting two years later.”
RFS woes
In December 2022, the US Environmental Protection Agency (EPA) proposed to increase biofuel blending volume requirements for the next three years under the RFS, as well as proposing changes, including making refiners buy newly classified “e-RINs” from makers of electric cars — vehicles that are viewed by the oil industry as an existential threat.
The agency called for an overall blending mandate of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, and is expected to publish its final rule for 2023 RVOs by June 14, although conference delegates told Fastmarkets Agriculture that delays “wouldn’t be surprising.”
“I wish they would raise the top number,” Michael McAdams, from the Advanced Biofuels Association, told the audience in Chicago.
“But I am less than 50% [sure] they will go there,” he added.
Renewable diesel capacity
Fastmarkets Agriculture sees renewable diesel (RD) capacity at approximately 2.4 billion gallons at the end of 2022, surpassing the biodiesel industry for the first time.
Not only has RD just moved beyond biodiesel in terms of market size, but it is also expected to more than double by the end of 2024.
The doubling of RD capacity is going to increase feedstock demand proportionately. Vegetable oils, including distillers’ corn oil (DCO), will continue to face strong demand.
Still, there are potential headwinds for several new RD projects due to current economic factors, with Canadian-based Parkland Corp in March canceling plans to build an RD plant at its Burnaby refinery in British Columbia due to rising feedstock costs and uncertainty surrounding renewable fuel tax credits in the US for non-domestic producers.
“You are seeing a rationalization now to Parkland,” Trent Weatherly, from Montana Renewables, said during the conference. Montana Renewables recently began producing RD in Great Falls, Montana.
“Refinery margins [which have improved] since the second quarter of last year are also going to influence this,” Ash Creek Renewables president John Cusick said, regarding whether companies will proceed with plans to build RD plants.
Feedstock supply
Panelists had mixed views on feedstock supply for the biofuel industry, with some remaining confident that supply issues in the US were subsiding, while others warned this could be only temporary.
“The market is awash with feedstock in a way, but we also see big projects coming online — some are a bit delayed or not being commissioned as quickly as envisioned, so there’s definitely some false sense of security in the market,” Cusick said.
However, Winters pointed to growing domestic soybean crushing capacity in echoing sentiments expressed earlier in the day by the American Soybean Association, adding that the US plans to stop exporting so much of its soybean crop.
“There are also other crops being discussed, like canola, for winter rotations in southern states,” Winters said, referencing a new joint project between Chevron, Bunge and Coretva that was announced on May 16.
State-led low-carbon efforts
Meanwhile, panelists told the conference that a handful of states could potentially follow the lead of California by implementing low-carbon emissions programs in the coming years.
According to Cusick, New York, or any other state in the northeastern US, could be the next to move in a low-carbon direction.
Cheryl Laskowski, from the California Air Resources Board, earlier pointed to New Mexico as a possibility as the next state in the western US to implement such a program.
Earlier this year, Washington state said it would reduce the carbon intensity of its transportation fuels to 20% below 2017 levels by 2038, and quite possibly by 2034.
