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BIO: RFS policy instability has chilled advanced and cellulosic biofuel investments; $13.7B shortfall

EPA’s delays in rulemaking for the Renewable Fuel Standard (RFS) over the past two years have chilled necessary investment in advanced and cellulosic biofuels just as they reached commercial deployment. The industry has experienced an estimated $13.7-billion shortfall in investment as a result, according to a new analysis released by the Biotechnology Industry Organization (BIO).

To reach the 2015 RFS goal of producing 5.5 billion gallons of advanced biofuels (including 3 billion gallons of cellulosic and 2.5 billion gallons of advanced biofuel or biodiesel), Bio Economic Research Associates (bio-era) estimated the need for 110 operating plants requiring $20.34 billion dollars in cumulative investment. The research and advisory firm also estimated that more than $95 billion in cumulative capital investments would be needed by 2022 for construction of nearly 400 advanced biofuel biorefineries with the capacity to produce 23 billion gallons of advanced biofuel.

As of April 2015, there are five commercial cellulosic biorefineries with a combined capacity of more than 50 million gallons within the United States and registered to meet the goals of the RFS, along with several pilot and demonstration plants.

Additionally, there are 28 biorefineries generating cellulosic biogas with a combined annual capacity of approximately 80 million gallons.

Taking into account additional renewable diesel producers deploying novel technologies, such as Altair, REG, and Diamond Green, the industry has reached the level of investment (roughly $3 billion) and production capacity (600 million gallons per year) that bio-era originally projected for 2011. We therefore estimate that the industry has a cumulative delay of four years, corresponding to a shortfall in investment of more than $20.6 billion, which can be attributed to policy instability, the general economic recession and the challenges of scaling up new technologies.

The Environmental Protection Agency (EPA) issued rules on time in both 2011 and 2012. Therefore, the shortfall in cumulative investment for 2011 and 2012 of $6.9 billion should be attributed solely to the recession and to challenges in commercializing new technology. Nevertheless, the agency was nine months late issuing the 2013 RVOs and is more than 17 months late in issuing the 2014 rule. Further, the agency has made cellulosic biofuel producers wait an average of 29 months (more than two years) for approval of production pathways. … At least two companies abandoned plans for cellulosic biorefineries while waiting for EPA approval of pathways. A majority of the remaining $13.7 billion shortfall in investment for cellulosic and new advanced technologies should therefore be attributed to EPA’s delays in issuing timely rules.

—“Estimating Chilled Investment for Advanced Biofuels Due to RFS Uncertainty”

bio-era also notes that more than $600 million dollars has been invested overseas in biorefineries that commercialized new technologies researched and developed in the United States, and suggests that with policy instability in the United States, advanced biofuel companies are likely to continue deployment in other countries.

BIO has tracked the development and construction of advanced biofuel and renewable chemical facilities within the United States since 2008. Currently, biorefineries employ 5,125 scientists, engineers and operations personnel. Construction of these facilities has created an additional 8,600 fulltime positions over the past five years. BIO estimates that EPA’s delays in rulemaking have undercut the industry’s ability to create jobs by more than 80,000 direct jobs in operations and construction, and an additional 228,000 indirect jobs within the rural economy.

Cellulosic and advanced biofuel producers have now reached commercial status, enabling them to build additional biorefineries based on proven technology with lower risk and reduced costs. But just as the industry reached this stage of commercialization, EPA rulemaking delays generated instability in the RFS program and intolerable investment uncertainty. The policy instability is responsible for chilling as much as $13.7 billion in investments that the advanced biofuel industry needed to build capacity to meet the RFS goals. The chill in investment has had the heaviest impact on cellulosic biofuel developers. The delays in rulemaking have also undercut the industry’s ability to create new employment opportunities, resulting in the loss of more than 80,000 direct jobs.

—Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section



Wouldn't the same $21B be better invested into H2 stations equipped with clean H2 converters.

Those 10,000 to 20,000 H2 stations could become the first generation H2 national network.

Of course, quick charge EV stations could co-exist with H2 stations.


Cellulose fuels can be used in existing vehicles, a proven market. Capital likes lower risk.


"A combined capacity of more than 50 million gallons” – let’s see...

All total there were 286,237 gallons of Cellulosic ethanol booked in the first quarter in the EPA's EMTS system. This is about 2% of the stated capacity. Yet it is the slow EPA causing the lack of investor confidence? I really don’t think the main problem here is the relate to the EPA or the RFS, could be contributing, but if the processes actually worked there might be more investment confidence forthcoming…
and then there is the matter of the economics of these processes...

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