POET'S POLICY VOICE
POET's involvement in federal and state policy issues.
EPA: Destabilizing Cellulosic InnovationCellulosic Biofuels and the Renewable Fuel Standard (RFS)
Under the Renewable Fuel Standard, as expanded by Congress in 2007, the United States set an ambitious goal of increasing the production of cellulosic biofuels to 16 billion gallons each year.
Cellulosic biofuels are made from inedible plant material such as agricultural residues, perennial grasses, and wood chips.
By law, all cellulosic biofuels must reduce emissions by at least 60 percent, while some varieties reduce greenhouse gas emissions by 100 percent or even sequester carbon over time.
Unfortunately, years of policy instability, rulemaking delays, and discouraging market signals from the Environmental Protection Agency (EPA) have chilled investment and stymied growth.
Under the most recent EPA proposal for 2020, cellulosic targets would be held to a mere 540 million gallons, compared to the 10.5 billion gallon target set by Congress.
According to the Biotechnology Innovation Organization, regulatory uncertainty has frozen investments in advanced biofuels totaling an estimated $22.4 billion.
Similar instability has impacted cellulosic biofuels via the tax code, under which a $1.01 per gallon of Second Generation Biofuel Producer Tax Credit expired in December 2016, was later extended retroactively to December 2017, then allowed once again to expire, despite ongoing efforts by biofuel champions in Congress.
The RFS creates a market-based incentive to utilize homegrown biofuels, which is reflected in the value of Renewable Identification Numbers (RINs). RINs are created when biofuels are blended into the fuel supply. Each kind of biofuel generates a different class of RIN.
For example, blending a gallon of conventional ethanol – made from corn – into the fuel supply generates one D6 RIN. Cellulosic ethanol generates D3 RINs, and cellulosic biodiesel generates D7 RINs.
Refiners who have not blended enough biofuel to meet their targets can simply purchase surplus RINs from retailers, refiners, and other fuel blenders. The higher the value of a RIN, the greater the incentive to blend – and invest in – that class of biofuel.
When the EPA undermines the RFS, the value of RINs can plummet. And when the value of D3 RINs drops, the most advanced biofuels may no longer be economically viable, forcing producers to halt production or cut investments in growth.
POET Good Stewards: The Handsaker Family
WHITE HOUSE BIOFUELS PLAN WILL BLOCK CORRUPT OIL TACTICS
On October 4, the White House announced a comprehensive plan that sets us on a path to restore integrity to the Renewable Fuel Standard. This plan comes after years of Big Oil corruption hurting farmers and biofuels workers across the Midwest. Biofuels Champions like President Trump, Senators Ernst, Grassley, Thune, and Rounds, and Governors Reynolds and Noem worked tirelessly to put farm families first.
We’re grateful for the dedication and unwavering support of the elected officials who have stood up for what’s right and restored integrity to the RFS.
The biofuels plan:
EPA Threatening RFS Goals, Creating Harm across Rural America
For the past few years, the EPA has been using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process. Throughout 2019, farmers saw farm debt increase and corn grind drop across the country. Biorefineries announced scaled back production, further impacting domestic markets for corn. In August, POET announced it would be forced to idle production at its Cloverdale biorefinery due to EPA mismanagement of the RFS, dropping over 30 million bushels of corn processing annually in Indiana. Like many other ethanol producers, POET reduced corn processing at half of its biorefineries, dropping processing of an additional 100 million bushels of corn across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri. This action resulted in hundreds of direct and indirect jobs lost and hundreds of millions of economic activity wiped away, amplifying the economic downturn being seen across the Midwest.
The U.S. Environmental Protection Agency (EPA) on Friday, May 31, issued a final rule to allow consumers uninterrupted access to E15, a fuel blend with 15 percent ethanol. The announcement comes following a public comment period on a proposed rule and in time for this summer’s driving season.
The EPA’s rule changes the nearly decade-old limitations on year-round E15, allowing consumers to have year-round access to the clean, lower-cost option at the pump. Previously, E15 sales were restricted in most markets from June 1 to Sept 15.
Resetting Renewable Fuel Standard Targets
The Clean Air Act grants the U.S. Environmental Protection Agency (EPA) authority to adjust volumetric targets for renewable fuels established by Congress under certain circumstances. The EPA is expected to use this authority to reset annual volumetric targets for 2020-2022.
As the recognized global leader in both starch-based and cellulosic biofuel production, POET remains committed to ensuring that any new volumetric targets proposed by the EPA serve to strengthen the Renewable Fuel Standard and continue to encourage future growth and investment in homegrown biofuels.
Expanding State Low Carbon Fuel Standards
In an effort to reduce lifecycle greenhouse gas emissions and improve air quality, a number of policymakers are working at the state level to enact or strengthen Low Carbon Fuel Standard (LCFS) programs. These programs are designed to encourage the use of cleaner fuels with lower carbon intensity.
At POET, our environmental mission is central to who we are and what we do. Cleaner-burning renewable biofuels, including mid-level blends like E15 and E30, are the best way for states to achieve their carbon reduction goals. POET continues to partner with policymakers across the U.S. to ensure that the many environmental benefits of biofuels are appropriately recognized and accurately measured in each state’s LCFS program.
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