Tag Archives: Environmental Protection Agency

Producers must re-register plants under RFS2

Buried in the middle of the RFS 2 regulations published in February by the EPA are the new requirements for producer program registration. The rules as posted are only the proposed modification to 40 CFR 80, pending publication of the final regulations in the Federal Register, a legal requirement for final adoption.

If you are not already aware, even if your facility was registered under the first version of RFS, it must re-register prior to July 1, 2010 to participate under the auspices of the new program.

The new producer registration requirements are detailed in a densely packed section of the 120 page document.

Occupying roughly four (4) pages, the requirements include a description of the type of fuels produced at the facility (or possibly produced with little modification to the production process),  feedstock used in the production process, the co-products produced with each fuel type,  and the submission by a state licensed, third party, chemical engineer the results of a careful review of your facility process and capacity expectation.

These requirements come at a time when producers are particularly sensitive to issues surrounding cash flow and operating costs, and expenses like a third-party engineering review may seem ill-timed.

RFS 2 participation is important to us here at Promethean. It is a personal initiative for me and I am focused on preparing us to meet the July start date.

There still exists a subset of mysteries whose answers are yet to be revealed by the EPA regarding what the EPA will specifically require as an ultimate demonstration of conformance.

I hope clarity is imminent.

Make it a better place,

Todd

RFS 2 Rumour Mill

The EPA is getting closer to final decision making related to the new set of rules slated for implementation in RFS 2 (renewable Fuel Standard v2).

Rumors abound, but I do have some interesting tidbits related to some of the biodiesel producer requirements that seem sure to become fact.

The first is that biodiesel producers everywhere will be required to re-register their facilities.  This re-registration may require a plant engineering review, ostensibly to ascertain the ability of a plant to actually produce ASTM quality fuel. This requirement may also be an attempt for the EPA to regain a certain amount of credibility as well as limit the currently overwhelming number of new producer registrations.

Another item that seems to be the next sure thing is that the future EPA hosted RIN tracking system will be added as a module to the current Central Data Exchange (CDX) registry system. I would suggest that any producers out there may want to check the accuracy of their CDX records sooner rather than later.

Make it a better place.

Todd

Biodiesel….Great as a fuel! Better as a fuel additive?

Over the last few months I have spoken to a variety of stakeholders in the biodiesel community about the realities that inhibit the adoption of biodiesel as a neat, standalone, fuel in favor of its use as a fuel additive.

I started these conversations after I arrived at the conclusion that, in the near term, biodiesel’s current position in the marketplace as a fuel additive will most likely be its longer term position in the markets until we see the arrival of new feedstock technologies and a change in the legislative and regulatory climate.

My conversations have included the folks that write policy at the EPA, a bevy of representatives of the California Air Resources Board and the South Coast Air Quality Management District (SCAQMD) other producers like Brandt Clupper from EcoLife;  Leif and Matt Rudolf from Piedmont; and marketers like Jason Burroughs of DieselGreen, and one or two NBB committee members.

It is something that I will be talking about to the NBB leadership as well.

Twelve years ago when the soy farmers and NBB began lobbying for the mandated use of agribiodiesel, the focus was on obtaining as large a piece of the diesel fuel market as possible. At that time there had not been a large amount of salient research related to land use, oil yield per acre, or feedstock availability to indicate what the actual supply capability targets should be. And so, one might say blind to the potentially negative consequences, NBB and the other agents of change that wanted to see biodiesel as a viable alternative fuel in the marketplace were ultimately successful in carving out a niche for the creation of the biodiesel industry.

The core problem is that with American diesel utilization averaging more than 65 billion gallons a year, the biodiesel industry does not have the feedstock supply or infrastructure necessary to replace the use of petroleum diesel.  In addition, because the lobbying efforts were for biodiesel as a replacement diesel fuel, the industry has been forced to suffer through a period of price competition related to the price of conventional diesel, a product which is supported by an infrastructure that is nearly a century old and has benefited greatly from a variety of subsidies and taxpayer supported initiatives.

In addition, biodiesel has had to suffer various attacks from the petroleum industry and car manufacturers related to topics ranging from appropriateness for underground storage, pipeline access, and its emissions profile. It continues to suffer these attacks even though it is now widely accepted that ASTM 6751 compliant biodiesel has a smaller COx and particulate matter profile than its petroleum counterpart, and well-cleaned without additives is less toxic than table salt. One might also note that historically the fuel manufacturers rarely bear the brunt of emissions standards issues; the car manufacturers do.

Several states have adopted biodiesel as a fuel additive, in percentages ranging from 2 – 20%.  Auto manufacturers for the most part have agreed to support some level of biodiesel mixed in with petroleum as long as the petroleum diesel meets the ASTM D975 specification and the biodiesel meets the ASTM D6751 specification.

And although it is quite possible to run 100% biodiesel (B100) in a vehicle with great results, the current technology selections of the automotive industry make it difficult for a consumer or fleet manager to find newer vehicles.

In summary: Supply limits adoption. Legislative mandates promote the use of biodiesel, but in many ways inhibit its use as a standalone fuel. The majority of producers have idled their plants because they cannot cost effectively produce sufficient product when it is tied to the price of petroleum diesel.

Fuel additives generally sell for more than the fuel they are added to; our system seems designed in such a way as to consign biodiesel to a fuel additive category without wanting to increase what the consumer needs to pay.

Biodiesel may be great as a fuel. It may be better as a fuel additive. It may need to cost more no matter what.

Make it a better place.

Todd

The new Renewable Fuel Standard

The Environmental Protection Agency (EPA) is proposing revisions to the National Renewable Fuel Standard program (more commonly known as RFS).  The proposed rule is intended to address changes mandated by the Energy Independence and Security Act of 2007 (EISA).

The recently legislated requirements establish, and in some cases adjust, specific volume standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must be used as, or in, transportation fuel each year.

The requirements include new definitions and criteria for renewable fuels and the feedstocks used to produce them. The EPA has also proposed new greenhouse gas emission (GHG) thresholds for renewable fuels.

Importantly, these new RFS requirements will apply to producers and importers of renewable fuel that are both foreign and domestic.

The passage of EISA expanded the coverage of the RFS program beyond gasoline to broadly cover all transportation fuels, including diesel fuel used in highway vehicles and engines as well as offroad, marine and locomotive engines.

Mirroring the same approach adopted to implement RFS 1, the EPA believes these provisions should be applied to refiners, blenders, and importers of transportation fuel with the designated percentage standards applicable to the total amount of gasoline and diesel produced.  Some special caveats exist for small refiners which are intended to decrease the administrative burden these rules create.

Ultimately RFS under the new act is expected to reduce American reliance on foreign oil sources, increase the domestic production of energy, foment the reduction of greenhouse gas emissions (GHG) , and diversify the American renewable energy portfolio.

The increased use of renewable fuels like biodiesel may also expand the market for agricultural products used in fuel production and accelerate the growth of new markets focused on the development of cellulosic feedstocks and production technologies.

The volumes of renewable fuel are specified by statute and will ultimately affect the price of fuel paid by the consumer.

In my next few posts I will discuss various aspects of RFS2 as the EPA approaches its final decisions on implementation. The discussion will include the topic of Renewable Identification Numbers (RINS), fuel quantity targets, and compliance issues that directly affect small producers like Promethean.

Make it a better place.

Todd

Biodiesel complexities: Two sources of botheration.

I’ve started the new year reflecting on two complications impacting the production and distribution of biodiesel; feedstock sourcing and accessibility to health effects data. These issues might not be issues that solely plague the emergent biodiesel industry. The biofuels industry is immature, and currently does not benefit from a well-established infrastructure of diverse players occupying a well-stratified marketplace. Consequently, the sources of annoyance for me in the biodiesel industry probably have equivalents in the ethanol industry as well. I believe it is important to address these issues now or risk that they will go on to effect the production and consumer value proposition of second generation biofuels if solutions are not arrived at soon that can be successfully modeled.

The feedstock situation is a constantly evolving muddle. A few companies with big names like ADM and Cargill control the majority of the domestic virgin oil used by the largest biodiesel (and ethanol) producers. It is important to understand that these entities not only “control” the cost and destination of finished, harvested, product but the intellectual property related to the genetically modified seedstock used for planting.  Although most in the industry currently acknowledge that biomass is the future of widespread biofuels production, it will still be the case that the companies that develop the technologies used to convert waste products to fuels, whether those technologies are genetically modified algae or enzymes or future tech, will likely control the licensing or monopolization of the technologies they have developed.

In a similar sense access to health effects data is an issue of growing concern to the biodiesel industry. Currently there is one organization that has successfully submitted the health effects data required by the EPA to produce B100 (or pure biodiesel). That organization is the National Biodiesel Board or the NBB. That’s not to say that other health effects data isn’t out there for biodiesel. At least one other organization has submitted health effects data for B20 (or 20% biodiesel mixed with 80% petroleum diesel), but if you want to commercially produce the pure stuff, you must currently have demonstrated to the EPA that the NBB has given you permission to rely on the set of data they have submitted. The catch is that the NBB requires any would-be producer to join, and although the EPA will stop requiring producers to submit either health effects data or proof of access in 2015, current NBB membership policies require producers to pay a per gallon “tithe” when they reach certain production levels. The commitment to pay this fee currently extends beyond 2015 for members.

The NBB does also offer access to the data to non-members for a $25,000 fee. This is obviously no small sum to would-be small producers.

Further complicating the health effects data issue is the EPA’s policy related to the Tiers of data required. Basically, the EPA can require that organizations provide up to 3 tiers of data, with each tier requiring further study and more investment.  For biodiesel only two tiers were required for initial submission. 

In reality, small producers only need access to Tier 1 (the first tier) of data. Only large producers require proof of access to both Tier 1 and Tier 2 data. NBB does not explicitly make this distinction in its membership requirements but does offer a reduced cost non-voting membership ostensibly for small producers.

I personally believe an argument can be made that their is sufficient health effects data in the public domain to satisfy EPA’s Tier 1 requirements. (I will have more to say on this topic in future posts.) At any rate, I do believe that any combustible energy source needs to be thoroughly tested to protect the public health.

Health effects data is required for any fuel, whether it is toxic or non-toxic, to determine the effects on the general public after exposure. The data compiled includes animal testing and emissions data.

The data gathering and packaging into an EPA compliant format is expensive. And this is where this issue effects the biofuels industry in general. Historically the EPA has adopted a strategy to protect the technology licensor, allowing those responsible for the research and development of a fuel product to recoup the cost of research as well as profit from their endeavors.

But this may be a case where government policy has not kept pace with a changing marketplace and research environment. Oftentimes much of the new research is subsidized with government grants, also known as taxpayer dollars, and preserving a system where an organization can receive public monies to do research and then profit from the research is difficult to balance.

Energy independence is a rising American priority of tremendous importance. It is critical that the mechanisms that allow for widespread production and distribution are constantly examined to evaluate potential inefficiencies and inequities.

I also believe that the need is so great, and the consequences for failure are so dire, that we need to support as citizens a revised approach to allowing small biofuels producers to thrive.

Make it a better place,

Todd

 

 

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