Thursday, October 10, 2013 – Larry Schafer, National Biodiesel Board

Report
American Fats and Oils
Association
Oct. 10, 2013
Larry Schafer
Senior Advisor
National Biodiesel Board
1
Overview
 Government Shutdown.
 2013 Production Numbers
 2014 RFS Volumes
 RFS and Congress
 Tax Incentive Outlook
 Miscellaneous Issues
2
Government Shutdown
 Disrupting all government operations.
 Likely to delay rulemaking for 2014 RFS volumes and for Quality
Assurance Plans (QAP).
 Depending on how long it goes on, could significantly disrupt EPA
and RFS operations affecting biodiesel producers, including EMTS,
permitting, questions, etc.
3
Government Shutdown
Effects on EMTS and CDX
 The EMTS will continue to function and all regulated RFS2 entities are required
to continue to use it during the shutdown for RIN transactions.
 CDX support will not be available for problem resolution.
 All pending RFS2 registration approvals, proposed pathways and open tickets
will be on hold until the federal government reopens.
 According to its Oct. 1 contingency plan, of the 16,205 EPA employees, only
909 remain actively working.
4
2013 Production - Industry Growth
 On track for a record year and to exceed 1.28 BG RFS requirement
 Anticipating some 1.7 billion gallons
Jan.
Feb.
March
April
May
June
July
Aug.
Total YTD
Biodiesel
72
MG
77
MG
109 MG
110
MG
135
MG
133
MG
132
MG
148
MG
916
MG
Biodiesel &
Renewable
Diesel
80
MG
81
MG
129 MG
125
MG
140
MG
151
MG
166
MG
177
MG
1.05
BG
5
2014 RFS Volumes
 The EPA has made clear it is planning reductions for 2014:
“EPA anticipates that in the 2014 proposed rule, we will propose
adjustments to the 2014 volume requirements, including to both the
advanced biofuel and total renewable fuel categories.”
 EPA sent proposal to White House Office of Management and Budget
(OMB) on Aug. 30. Given the shutdown, we don’t know when the
proposal will be published in the Federal Register. Once published we
anticipate months of additional review before becoming final next year.
 Based on 2013 production projections and analysis by NBB RVO Working
Group, NBB is advocating a Biomass-based Diesel volume of at least 1.7
BG.
 However, any increase will be challenging given EPA’s announcement
that it is planning reductions, and we will need your help in grassroots
advocacy.
6
2014 RFS Volumes
 The EPA has made clear it is planning reductions for 2014:
“EPA anticipates that in the 2014 proposed rule, we will propose
adjustments to the 2014 volume requirements, including to both the
advanced biofuel and total renewable fuel categories.”
 EPA sent proposal to White House Office of Management and Budget
(OMB) on Aug. 30. Given the shutdown, we don’t know when the
proposal will be published in the Federal Register. Once published we
anticipate months of additional review before becoming final next year.
 Based on 2013 production projections and analysis by NBB RVO Working
Group, NBB is advocating a Biomass-based Diesel volume of at least 1.7
BG.
 However, any increase will be challenging given EPA’s announcement
that it is planning reductions, and we will need your help in grassroots
advocacy.
7
2014 RFS Volumes
 The EPA has made clear it is planning reductions for 2014:
“EPA anticipates that in the 2014 proposed rule, we will propose
adjustments to the 2014 volume requirements, including to both the
advanced biofuel and total renewable fuel categories.”
 EPA sent proposal to White House Office of Management and Budget
(OMB) on Aug. 30. Given the shutdown, we don’t know when the
proposal will be published in the Federal Register. Once published we
anticipate months of additional review before becoming final next year.
 Based on 2013 production projections and analysis by NBB RVO Working
Group, NBB is advocating a Biomass-based Diesel volume of at least 1.7
BG.
Data on 690 million gallons
 However, any increase will be challenging given EPA’s announcement
of biodiesel through July
that it is planning reductions, and we will need your help 2013
in grassroots
– renewable diesel
facilities
not included
advocacy.
8
2014 RFS Volumes
 The EPA has made clear it is planning reductions for 2014:
“EPA anticipates that in the 2014 proposed rule, we will propose
adjustments to the 2014 volume requirements, including to both the
advanced biofuel and total renewable fuel categories.”
 EPA sent proposal to White House Office of Management and Budget
(OMB) on Aug. 30. Given the shutdown, we don’t know when the
proposal will be published in the Federal Register. Once published we
anticipate months of additional review before becoming final next year.
 Based on 2013 production projections and analysis by NBB RVO Working
Group, NBB is advocating a Biomass-based Diesel volume of at least 1.7
BG.
 However, any increase will be challenging given EPA’s announcement
that it is planning reductions, and we will need your help in grassroots
advocacy.
9
Cellulosic (D3, D7)
Biodiesel (D4)
Advanced (D5)
Conventional (D6)
Total
2013 2013 Projected 2013 Projected
Volume Production RIN Equivalent
Requirement (gallons)
6 MG
1.28 BG
1.7 BG
*2.6 B
2.75 BG
13.8 BG
16.55 BG
Source: EPA.*One biodiesel gallon generates 1.5 RINs; so 1.7 billion gallons of biodiesel equals 2.55 billion RINs
10
2014 RFS Volumes
 The EPA has made clear it is planning reductions for 2014:
“EPA anticipates that in the 2014 proposed rule, we will propose
adjustments to the 2014 volume requirements, including to both
the advanced biofuel and total renewable fuel categories.”
 EPA sent proposal to White House Office of Management and
Budget (OMB) on Aug. 30. Given the shutdown, we don’t know
when the proposal will be published in the Federal Register. Once
published we anticipate months of additional review before
becoming final next year.
 Based on 2013 production projections and analysis by NBB RVO
Working Group, NBB is advocating a Biomass-based Diesel volume
of at least 1.7 BG.
11
RFS Waiver Requests
API and AFPM have filed a waiver petition with EPA to waive the 2014
and reduce the overall volume of the RFS by more than 3 billion
gallons.
EPA has the authority to invoke its own waiver – and EPA suggested
that the API\AFPM waiver was well crafted – at this time we don’t
know if EPA intends to invoke any waiver process, but it is possible
they could propose to waive some part of the program.
13
RFS and Congress
U.S. House
 Energy and Commerce Committee compiled “white papers” and held
hearings exploring RFS concerns. NBB CEO Joe Jobe testified July 23.
 Hearings and debate have mostly focused on ethanol.
 Task Force led by Rep. John Shimkus, R-Ill., is reviewing concerns and
looking at potential legislation.
 NBB has met with committee and offered our perspective.
 Too soon to predict if there will be new legislation.
U.S. Senate
 Environment & Public Works Committee planning hearing soon –
probably after the government shutdown.
 Last week, due to the government shutdown the Senate Agriculture
Committee cancelled a hearing related to the Energy Title of the Farm
bill.
14
Tax Incentive Outlook
 Discussions on comprehensive tax reform continue.
 Senate Finance and House Ways & Means Committees:
• “Blank slate” approach for a “Tax Reform” package
 Little movement currently
 NBB is advocating for a multi-year extension for biodiesel tax
incentive.
 Most likely scenario is another late-year push for tax extenders
15
RIN Integrity - QAP
 EPA continues to meet with stakeholders. Final rule on the proposed
QAP rule from April not expected until November/December
(depending on Gov’t Shutdown).
 Although we expect some changes, it is too early to determine what
changes EPA will make to the proposed rule.
Already, obligated parties, biofuel producers, QAP Auditors and others
have incorporated retrospective QAP's into their 2013 plans, and we
expect the same for 2014.
16
RIN Integrity - QAP
 NBB is pushing for independence in the QAP provider.
For Example:
• Is buying RINs in the marketplace and holding RINs a conflict of interest for a QAP
provider?
• Is it a conflict for an EMTS agent to generate and QAP the same RINs?
• The recent EPA Inspector General’s report on EPA RFS2 discussed independence of
QAP providers and Professional Engineers – we anticipate these issues will make it
into a final rule.
 Biofuel Imports and Exports:
• NBB has proposed tighter rules for producers and importers of biofuels and tighter
rules for exporters of biofuels.
17
Questions?
NBB Washington Office: 202-737-8801
[email protected]
18

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