Where Are We and Whats Next with the RFS? A VIEW FROM A FORMER - - PowerPoint PPT Presentation
Where Are We and Whats Next with the RFS? A VIEW FROM A FORMER REGULATOR PAUL ARGYROPOULOS PRESIDENT POLICY NEXUS ADVISORS POLICY NEXUS ADVISORS 2 Background A Little Program Question History Presentation Overview Conclusions 2018
A VIEW FROM A FORMER REGULATOR PAUL ARGYROPOULOS PRESIDENT POLICY NEXUS ADVISORS POLICY NEXUS ADVISORS
Background A Little Program History 2018 in Review Current Situation What’s Next? Conclusions Question
Retired in March after 35 years in Transportation and Fuel Policy and Regulatory World
25 in Government 10 in Private Sector
In May of this year, I Started Policy Nexus Advisors (PNA)
General Focus: Provide strategic advice on federal fuel and transportation program policies and the interface between the environmental, energy and agricultural related sector business interests.
Working with Several Great Companies, Associations and Consultants
Consulting with Several Individual Clients in the
Renewable Fuel Space
Working with the Advance Biofuels Association Partnering with Business Government Solutions on Several
Fronts with Several Clients
No one, and I mean no one knows this program better than the staff in EPA’s Office of Transportation and Air Quality.
This Program has been, without question, the most challenging program to be a regulator of in my experience.
It’s not just about setting standards, it’s about every other issue surrounding what’s in the law, what the divergence of interests are and the constantly evolving changes necessary to support implementation.
I know what I know. I’ll tell you what I can. I won’t tell you what I can’t.
What’s presented is my perspective, based on my experiences.
Everything is Subject to Interpretation and Change!
This Photo by Unknown Author is licensed under CC BY-SA-NC
How Hard Can It Be?????? Multiple Inputs -- Parties -- Perspectives -- Varying Interests
Sustainable Feedstocks Infrastructure Vehicles/Engines Fuel Types and Usage Scenarios Economics Environmental Protection: Multi-Media Issues Energy Security, Diversity and Sustainability Fleet Efficiency Metrics: Lifecycle, Energy, Hybrid Federal / State Incentives Fuel Blends / Market Absorption
Global Influences
Public Policy
RFS 1 – Complex – Only at that time.
RFS 2 – Let the Fun Begin
National Standard -- 4 categories
Significantly increased volumes
Extended Timeline – No Sunset
Expanded coverage -- gasoline and diesel, on/non-road
Explicit definitions for qualification
Land Types of Feedstocks Lifecycle – GHGs
Grandfathering
Waivers and Exemptions!
Other specific qualification requirements
Reset AND MORE!!!!!
Total Renewable Fuel – 36 Billion Gallons
Includes
Biofuels By 2022
by 2015
Total Advanced Renewable Fuels – 21 Billion Gallons
Includes
Minimum Biomass Based Diesel by 2012
Biofuels by 2022
Non Cellulosic Advanced by 2022
Cellulosic - 16 Billion Gallons Other Advanced - 4 Billion Gallons
Biomass Based Diesel - Minimum
RFS PROGRAM
Propose and Finalize RFS RVOs Point of Obligation Ongoing Compliance RIN Market Fuel Pathway Evaluations REGS Rule
Related Congressional Activity
Small Refiner Exemptions FOIA’s Inspector General Audits REFORM or REPEAL GAO Audits Ongoing and New Litigation
CELLULOSIC FUNDING, DEPLOYMENT, ECONMICS
MID-LEVEL BLENDS MARKET ISSUES E15 / E85 /E0 Renewable Biomass Determinations EXPORT RINS D8 RESET AND SET RULES
MANY OTHER ISSUES LIFECYCLE GHG E15 RVP FFVS NEW CERT FUELS DEFINITIONAL ANTII BACKSLIDING
Lots of Controversy with Former Administrator Pruitt
Pruitt out – Acting Administrator Andy Wheeler In
What might change?
Tone – Yes Approach to decisions – maybe Direction of decisions – not so much
Impact Decisions of 2018
Small Refiner Exemptions - What is the true impact? Volume Standard Increases
What are the Key influencing factors?
Nearly all gasoline today in the U.S. contains 10% ethanol (“E10”)
Some E15, Some E85, Some E0
100% utilization of E10 in gasoline = “blendwall”
To blend additional volumes of ethanol will require manufacture
and sale of higher ethanol blends
Currently there are some limitations for E15 and E85 related to both market and regulatory factors that affect distribution and consumption
HOWEVER, THINGS COULD AND CAN CHANGE
Reinstate FFV Incentives, transition to E15 overtime, E85 Market
Increases, Possible Octane / Mid-Level Blends in the Future
Importance of Biodiesel
Meeting / Exceeding Biodiesel Standards Market Restrictions Still Exist but they are
changing
More supply, distribution, feedstock flexibility,
etc.
Growing opportunities for non ethanol fuels:
biobutanol, renewable gasoline, biodiesel, renewable diesel, cellulosic diesel, jet and heating fuels
Production - 163 million gallons in July 2018.
7 million gallons higher than production in June 2018 .
Biodiesel production from the Midwest) accounted for 66 percent of the United States total.
Production came from 92 biodiesel plants with capacity of 2.4 billion gallons per year.
Sales - Producer sales of biodiesel during July 2018 included 71 million gallons sold as B100
96 million gallons of B100 sold in biodiesel blends with diesel fuel derived from petroleum. Feedstocks - There were a total of 1,260 million pounds of feedstocks used to produce biodiesel in July 2018.
Soybean oil remained the largest biodiesel feedstock during July 2018 with 671 million pounds consumed.
Currently there are some limitations related to
market absorption of ethanol – some regulatory, others as well
How might this influence the overall
renewable fuel market?
In the future, there may be growing
biobutanol, renewable gasoline, diesel and
jet, heating fuels
Legislative and regulatory actions may be
necessary to support growth of biofuels
Billions of Gallons
2014 2015 2016 2017 2018
2019
Proposed
Cellulosic biofuel (million gallons) 33 123 230 311 288 381 Biomass-based diesel (bgs) 1.63 1.73 1.9 2.0 2.1* 2.1 Total Advanced biofuel (bgs) 2.67 2.88 3.61 4.28 4.21 4.88 Total Renewable fuel (bgs) Conventional Fuels =15BGS 16.28 16.93 18.11 19.28 19.29 19.88
2020 +
BBD Standard for 2020 is set at 2.43 bg
EPA Sets EISA Standards Every Year Formula used per regulations - 4 obligations The Biomass Based Diesel Standard is Different
Minimum of 1 billion gallons Multiple Criteria to Evaluate Complicated by Nested Nature of the
Program
Set 14 Months in Advance
Rolling the dice but the dice are somewhat
loaded and it’s a little like playing Craps
Final Standards --- November 30th by Law
Current RFS Standards and Likely Global Draws
Current Fleet of Vehicles and Equipment
Sales Projections
Type Fuel / Energy Type
Petroleum Projections by Type
Production, consumption, cost
Feedstocks / Availability
Some Future dependent on qualifications Pathways Matter
Renewable Fuels
Types, Production Capacity Approved Fuels
Near and Likely Mid-Term Market Conditions
Volume standards – The Key
Action Starts with RESET
New Feedstock Qualifications
Under EPA Pathway Evaluations
Policy Determinations Qualifications /
Determinations Under Existing Authorities and Current Regulations
New Regulatory Actions are
Unlikely – At least for now
Global Actions For: Climate Sustainability Other
What is Reset What is Set Criteria Why Timing Implications
evaluation of ~20 factors
Economic impacts
Food prices
Cost to consumers of transportation fuel
Cost to transport goods
Job creation
Rural economic development
Price of agricultural commodities
Environmental impacts
Air quality Water quality Climate change Conversion of wetlands Ecosystems Wildlife habitat
Who Wants it? Why? Would it even be helpful? What are the Risks?
Paul Argyropoulos Policy Nexus Advisors PolicyNexusAdvisors@gmail.com