Biofuel producers to Obama: Don’t put oil industry in driver’s seat.

Biofuel producers to Obama: Don’t put oil industry in driver’s seat. HT: FuelFix.

WASHINGTON — Biofuel producers on Tuesday implored the Obama administration not to give in to oil industry demands to lower renewable fuel quotas.

In a letter to President Barack Obama, leaders of two advanced biofuels groups said the Environmental Protection Agency will effectively put the oil industry in the driver’s seat if it lowers the 2014 targets to reflect current biofuel production instead of next year’s output forecast.

Current production data does not capture new and forthcoming advanced biofuel production, so using those stats would artificially limit the market for those products, wrote Brooke Coleman, executive director of the Advanced Ethanol Council, and Jim Greenwood, president of the Biotechnology Industry Organization.

“The best outcome for the renewable fuel standard is to base the annual (quotas) on immediate-term forecasts of actual expected output in the coming year,” Coleman and Greenwood said. “Allowing the renewable fuel standard to reflect — rather than drive — the marketplace is a problem because the oil industry controls off-take of our fuel, which in turn gives them unreasonable leverage to determine themselves how quickly our industry grows.”

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To work the way it was designed and foster demand for new second-generation ethanols and advanced biofuels, the eight-year-old renewable fuel standard “must maintain pressure on the marketplace,” Coleman and Greenwood insisted.

“The controversy over the renewable fuel standard boils down to a market-share battle between a growing biofuels industry and the incumbent oil industry,” the pair added. “The oil industry wants (regulators) to make administrative adjustments to the renewable fuel standard that will greatly reduce or eliminate the drivers that facilitate more biofuel blending over time, which will ultimately lead to price competition between the two industries at the fuel pump.”

Oil industry associations have asked the EPA to cap traditional renewable fuel requirements at 12.9 billion gallons — about 9.7 percent of of the nation’s projected gasoline demand — while slashing the requirements for cellulosic and advanced biofuels.

The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers are battling the 2013 quotas in court. The API has also warned the EPA it will sue if the agency doesn’t finalize 2014 numbers by a late November deadline.

Refiners say they have hit a blend wall, a point where they can no longer mix in enough ethanol to meet the mandate’s volumetric targets for renewable fuels without exceeding a 10 percent threshold acceptable for use in all cars and trucks. A 15 percent blend is approved only for vehicles made since 2001, and there is a relatively small market for an 85 percent ethanol-based fuel used in specialized vehicles.

So far, there’s evidence that the EPA is sympathetic. A widely circulated draft of the proposal would require 13 billion gallons of corn-based ethanol, while lowering quotas for advanced biofuels and other categories. But the EPA has distanced itself from the draft proposal, which surfaced earlier this month, insisting that the agency has made no final decision on its proposed quotas for 2014.

“No decisions will be made on the final standards without a full opportunity for all stakeholders to comment on the EPA’s proposed 2014 renewable fuel standards and be heard on how to best foster a growing biofuels industry that takes into account infrastructure- and market-related factors,” the agency said in a statement.

“The Obama administration remains firmly committed to furthering the development of all biofuels — including corn-based ethanol, cellulosic biofuel, and advanced biofuel,” the EPA added. “Biofuels are a critical part of the president’s all-of-the-above energy strategy that is reducing America’s dependence on oil and creating jobs across the country.”

BIO AEC Letter to WH.pdf