t the California Advanced Biofuels Conference held late February in Sacramento, California, this author, as vice chair of the California Advanced Biofuels Alliance (CABA), gave the annual state of the alliance address to a packed house of the industry’s major players. Past chairs Jennifer Case, New Leaf Biofuels, and Curtis Wright, Imperial Western Products, were awarded the alliance’s Climate Leader Award for their dedication to the industry.
Floyd Vergara, California Air Resources Board (CARB), gave an update on the state’s Low Carbon Fuel Standard, assuring attendees that California recognizes the need for biofuels. He touched on a number of different upcoming CARB projects, including a workshop to discuss the alternative diesel fuel regulation, a targeted white paper to be released in the first half of the year for the low-emission diesel regulation, and the upcoming new technology diesel engine testing at the University of California, Riverside.
National Biodiesel Board (NBB) Chief Executive Officer Donnell Rehagen was optimistic in his presentation, stating that he believes the expired biodiesel tax credit will be reinstated and extended. He is also hopeful that the United States (US) House leadership will take the signal from the US Senate in getting tax legislation passed soon, and stressed the importance of efforts from the industry to educate Congress members and assist NBB in its lobbying efforts.
CABA lobbyist Louie Brown of Partner, Kahn, Soares, and Conway LLP, moderated a roundtable legislative panel with various staffers from California’s capitol: Derek Chernow, California State Legislature chief of staff; Senator Bob Wieckowski; Katie Valenzuela, capitol director for Assembly member Eduardo Garcia; and Katerina Robinson, legislative director for Senator Nancy Skinner. This panel is a new addition to the conference and provided insight into California politics. The panelists described their offices’ bills supporting biofuels and emphasized the importance of educating staffers on the issues the biofuels industry faces.
Eric Bowen, Renewable Energy Group, moderated a panel focusing on displacing the state’s petroleum diesel pool. One month prior to the conference, CABA released a report mapping out the alliance’s plan to eliminate petroleum diesel in California by 2030 that aligns with Governor Gavin Newsom’s goals (see Newsline on page 8). The panel included representatives from alternative fuel producers who demonstrated the ability to accomplish this objective. The conference wrapped up with a look into the future on innovative original equipment manufacturer technologies and feedstock supply.
Biofuel Production Ramping Up Despite Lack of Federal Tax Credit
In late February, US Senators Chuck Grassley (D-IA) and Ron Wyden (D-OR) introduced the Tax Extender and Disaster Relief Act of 2019, which included a retroactive reinstatement of the $1 per gallon biodiesel and renewable diesel tax credit from January 1, 2018, through December 31, 2019. One week later, CABA sent House Speaker Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA) a letter urging the US House of Representatives to renew the biodiesel tax credit as soon as possible. This has been the longest period of policy uncertainty since the tax incentive was first established nearly 15 years ago. The lack of a tax credit has created a slowing of both investments in new plants and in raising funds to maintain, improve, or expand existing plants, according to CABA.
Despite this, Shell Trading (US) Company has agreed to purchase renewable diesel from Next Renewable Fuels’ proposed 600-million-gallon-per-year project in Port Westward on the Columbia River in northern Oregon. Representing an investment of more than $1 billion, Next Renewable Fuels is scheduled to open its facility in 2021 and plans to supply Shell and other partners with its alternative liquid fuels to help meet customer demand while complying with federal and state carbon regulations and fuel security requirements.
Meanwhile, Phillips 66 announced it would partner with Renewable Energy Group (REG) to build a large-scale renewable diesel plant next to its existing oil refinery in Ferndale, Washington. Phillips also recently revealed it would partner with California-based Ryze Renewables to build two renewable diesel plants in Nevada.
The Iowa Economic Development Authority (IEDA) Board awarded tax benefits to ReadiFuels-Iowa, a newly created entity started by Applied Research Associates Inc. (ARA) and C&N Biofuels LLC. The company will utilize a variety of feedstocks to produce approximately 34 million gallons of renewable diesel and renewable naphtha annually, the nation’s first commercial facility to use a biofuels process developed by ARA and Chevron Lummus Global. ReadiFuels-Iowa plans to build a new production facility utilizing existing infrastructure at a partially abandoned 77-acre property near Hull in rural Sioux County, Iowa. Construction is expected to begin in the fourth quarter of this year and will be finished in November 2020. IEDA awarded tax benefits from the High Quality Jobs program for the $58.7 million capital investment. The project is expected to create 31 jobs. Other funding sources include a $45.1 million guaranteed loan from the US Department of Agriculture, according to state documents.
In Washington State, the House passed a Clean Fuels Standard (H.B. 1110) that would institute a low carbon fuel program by 2020. The program is designed to reduce greenhouse gas emissions from transportation fuels 10 percent below 2017 levels by 2028 and 20 percent below those same levels by 2035. Supporters share that the program will play a significant role in meeting the state’s overall greenhouse gas emissions reduction goals and help support fledgling biofuel producers in the state.
In Washington, DC, Bloomberg reports that a Securities Exchange Commission filing by CVR Energy shows the company saved $189 million in renewable identification number (RIN) compliance costs in 2018 following extensive lobbying to get the Renewable Fuels Standard changed to reduce RIN costs for small refiners. RIN prices have tumbled in the aftermath of lower RIN demand as smaller refiners received waivers from the Environmental Protection Agency (EPA).
New EPA Chief Gets Mixed Reviews
In late February, the US Senate confirmed EPA Acting Administrator Andrew Wheeler, a former coal lobbyist, to lead the nation’s top environmental regulator. A Washington insider with years of experience working as a congressional staffer, Wheeler was nominated by President Donald Trump in January to replace Scott Pruitt, who resigned in July 2018 amid widespread criticism for alleged ethical missteps. Only one Republican in the Republican-controlled Senate opposed Wheeler, Maine’s Susan Collins, who argued his efforts to roll back standards on emissions blamed for climate change takes the country in the wrong direction. Business interests like oil and coal, eager to see reduced regulation, were quick to hail Wheeler’s confirmation, while Democrats and conservation groups are worried that environmental rollbacks under the Trump administration are going too far.
While running the EPA on an interim basis, Wheeler oversaw the weakening of President Barack Obama-era rules limiting carbon and mercury emissions from power plants and standards on carbon dioxide emissions from cars and trucks. He has also advanced an initiative to lift a summertime ban on higher ethanol blends of gasoline that was enacted to curb smog. During his confirmation hearing in January, Wheeler said he did not believe climate change was a major crisis, a stance that resonates with Trump’s skepticism but which clashes with the scientific consensus that global warming will have devastating consequences if not addressed urgently.
Like Pruitt, Wheeler held nearly 20 times more meetings with industry representatives than with conservationists during his first two months on the job, according to a copy of his schedule reviewed by Reuters. Prior to the vote, Wheeler had also faced a brief pushback from five Republican senators from oil states, including Ted Cruz of Texas, over what was perceived as his support of policies favorable to the ethanol industry. The corn and oil industries have conflicting interests when it comes to biofuels like ethanol, which compete with petroleum for market share. All five senators had met with Wheeler in February over the issue and voted to approve him. Michelle Bloodworth, president of the American Coalition for Clean Coal Electricity, a coal industry lobbying group, said Wheeler was a “thoughtful leader who understands the need for sensible environmental policies.”