Global Biofuels Blog

Our European Biofuels Director wonders about the the implementation of the RED in the EU Member States: 

It took 12 months for Member States to agree on all the details of the Renewable Energy Directive (RED), but it was approved last December to the relief of the EU biofuels industry. Five months have passed since the European Parliament’s approval, more than one month since the Council approved it and Member States have yet to give an indication that they are working on adopting the 10% biofuels mandate in 2020. Actually, the steps that have been taken since the December vote are quite interesting: The Netherlands reduced their biofuels mandate in January 2009, the U.K. reduced its biofuels mandate in April 2009 and Germany is in the process of reducing its biofuels mandate too!

Some positive signs for the industry have come from Spain and Portugal, the first introducing a mandate in January 2009 and the second introducing a biodiesel mandate in July 2009. But, no Member State has yet unveiled plans about implementing the 2020 target. The RED will be published in June 2009 according to the Commission and only then will Member States be bound to implement it. However, considering the range of options available to meet the 10% mandate, it is surprising how little debate is ongoing. Is the renewable energy in the EU a victim of the economic crisis? Are Member States finding out that greening their energy sources and transportation sector is too costly right now?

Well, the Spanish renewable energy association APPA has just had enough waiting it seems, because they have translated the RED for the benefit of their rule makers and have drafted a law allowing its implementation in Spain! Will Spain take the lead and be the first Member State to implement the RED?

Yesterday we were pleased to have U.S. EPA present the RFS2 program to our members and those of our sister service, the International Fuel Quality Center. A guest (not a GBC member) who took part in the Webinar sent the following feedback to me, “Overall, the webinar was a jumble of bureaucratic mumbo jumbo and ‘alphabet’ speak. It is amazing how answers to questions result in sentences that are composed of complex phrases that, combined, form no coherent thought.” I’m aware there’s a lot of folks out there who share the same sentiment, and there’s no doubt the RFS2 is a complex rulemaking.

But chew on this one for a sec: who really created the mumbo jumbo here? That’s right, the U.S. Congress. And as it pertains to energy policy in the U.S., and more specifically biofuels, there’s been a hell of a lot of sausage created by that esteemed body in the last few years (or really, 30+). You want some coherent thought? Don’t read the Energy Independence and Security Act (EISA) of 2007! Perplexed and looking to understand what Congress actually intended? Well, good luck finding some legislative history to light your dark path. (On the bright side, there are quite a few complex phrases in the legislation for the enthusiast). Further, and as I recall, EPA never exactly hastened down to Rayburn House Office Building asking for RFS2. Quite simply, the Agency is playing the hand it was dealt as it regards RFS2.

EPA doesn’t need me to defend them (they have a lot of lawyers for that). But let’s get real here. Maybe Congress needs to stop passing slap-dash, poorly drafted and thought-through omnibus legislation! I was absolutely appalled (yet strangely at the same time not surprised) when in a recent hearing the very same members who voted on EISA had no clue at all what they had voted on.  No one seemed to be aware of the provision that they approved that required EPA to consider indirect GHG emissions from land use. Am I appalled that they had no clue, or am I appalled that they would actually admit it? Get back to me on that one.

In introducing new legislation this week that would eliminate the indirect land use elements of the RFS2, Rep. Collin Peterson (D-Minnesota) stated (with just the right amount of indignation), “The unreasonable restrictions placed on the biofuels industry in the 2007 Energy Bill were never debated by Congress, and I’ve spent the past two years trying to undo the damage that we’re seeing now that EPA has published the proposed regulations that will make it impossible to meet the RFS.” Wouldn’t you know that Rep. Peterson not only voted for the bill but was also a co-sponsor?! Yes indeed!

Credibility on the matter lacking, he still has a point. Otto van Bismarck is famous for having said, “Laws are like sausages, it is better not to see them being made.” For the biofuels industry and its proponents in Congress, maybe this is a lesson to be careful what you wish for: maybe it’s time to let in a little sunshine in and let us all see how that sausage is getting made.

Livia Kosaka, our Latin America director, discusses her recent trip to Uruguay and observations about the dynamic biofuels arena in the region: Recently I attended the ARPEL Conference in Punta del Este, Uruguay. ARPEL currently has 26 members that are state and private oil companies with operations in Latin American & Caribbean, representing more than 90% of the region’s upstream and downstream operations.

I spoke in the “Biofuels in the Energy Sector” session along with representatives from the Brazilian Institute of Petroleum (IBP), the Inter-American Institute for Agriculture Cooperation (IICA),  REPSOL-YPF Argentina, ECOPETROL Colombia and PETROBRAS Brazil to discuss sustainability in biofuels production, issues related to  operations, logistics and environment, technological advances, and present status and trends on biofuels specifications. This session was held simultaneously with other three sessions, and I was impressed with the number of attendees that filled up the room and also the amount of questions and comments we had from participants, which reinforced the growing importance of this topic of discussion among energy players in the region.

As most oil companies in the region are partly of fully owned by the state, they are heavily involved on implementation of biofuels programs. During the session, REPSOL-YPF, Petrobras and Ecopetrol all highlighted how they are involved with biofuels programs in their respective countries.

• In Argentina, REPSOL-YPF is preparing for implementation of 5% biofuels blends nationwide starting Jan. 1, 2010. A major concern is the current legislation in which biodiesel producers have to be certified to either produce it locally or export the fuel. At this time, there are only biodiesel producers certified to produce the fuel toward export markets (and they have been struggling to maintain production levels because of the closure of the “splash & dash” loophole in the U.S.). As a result, the government is considering revising its biodiesel legislation; otherwise, there may not be enough biodiesel production to supply local markets with B5 and biodiesel exporters will continue to struggle.
• In Brazil, Petrobras continues to invest in the region and recently announced plans to invest US$2.4 billion in production of ethanol and biodiesel during the 2009-2013 time frame through its subsidiary Petrobras Biofuels. In addition, the company is investing US$400 million in a dedicated ethanol pipeline, scheduled to start operations in the end of 2010. Petrobras continues to set the stage for a lot of other players in the region, which are following Petrobras’ steps to become “energy” rather than just “oil” companies.
• In Colombia, Ecopetrol is also investing in ethanol and biodiesel production and on R&D to overcome challenges on maintaining fuel quality standards for biodiesel produced from different feedstocks, a key concern within the biodiesel industry.

And the list goes on: ANCAP Uruguay is building biodiesel and ethanol plants in preparation to implement B2 by 2011 and E5 by 2014, Petroecuador is involved with E5 in Guayaquil, ENAP Chile is investing in R&D for second generation biofuels production, Petrojam is working on carrying out E10 in Jamaica, just to name a few. New players, such as STAATSOLIE, National Oil Company in Suriname, also attended the event, as the country plans to follow some of its neighboring countries on developing biofuels programs to supply local markets.

Latin America is a very dynamic region when it comes to biofuels and I have noted there are more countries on board with biofuels (with crisis or not), a trend that will continue in years to come.

GBC will continue to follow biofuels developments across this exciting region very closely and I will continue to contribute to the blog. Until then, hasta luego!

Today we were pleased to have Dr. Robert Howarth, the David R. Atkinson Professor of Ecology and Evolutionary Biology at Cornell University with us to present the Scientific Committee on Problems of the Environment (SCOPE) Biofuels Project during a webinar to the GBC membership.  The object of the project was to perform an objective, science-based assessment to provide a comprehensive, systematic and comparative analysis of the environmental benefits and costs of biofuel technologies.

Dr. Howarth, chair of the project, noted in the presentation to the GBC members that the environmental effects of biofuels can vary depending on issues such as feedstocks, biofuel type, where the feedstocks are grown and where fuels are produced, among other factors.  Nevertheless, negative impacts are seen on everything from greenhouse gas (GHG) emissions to air and water quality impacts to soil degradation.  One of the conclusions from the project is that current mandates and targets for liquid biofuels should be reconsidered in light of the potential adverse environmental consequences.

With respect to this conclusion, I asked Dr. Howarth, if you’re a policymaker, what do you do?  What do you do when biofuel producers, distributors, blenders and other stakeholders have spent billions to comply with the mandates you’ve already set for them?  What about the independent, state and multinational oil companies that are spending billions on R&D, infrastructure, supply contracts?  How do you go back and say, “Nevermind!”?  There were no good, practical answers to these questions.

This was ironic in light of what happened right after the close of the webinar and that is that U.S. EPA finally announced its long-awaited Renewable Fuels Standard 2 (RFS2) notice of proposed rulemaking. The centerpiece of the rule will focus on GHG emission reduction targets different biofuel categories will need to meet, and the initial lifecycle analyses, which include a component on indirect land use change, is not favorable at all for corn-based ethanol.  Again, what does a policymaker do when caught between an environmental sustainability agenda and a biofuel industry (created by policy) that is now teetering on the brink of economic failure?

For the Obama Administration, what you do is come out strongly in favor of a robust biofuels policy lead by three major cabinet members.  While not turning back from the indirect land use GHG issue, you promise to support the industry in other ways by refinancing existing ethanol and biodiesel factories whose owners are having trouble obtaining credit, guaranteeing loans for the construction of new biorefineries, and expediting funding for R&D (more than $700 million) for next generation biofuels.   You establish the Biofuels Interagency Working Group, which among other tasks, will look at policies that promote environmentally sustainable biofuels while growing the biofuels industry.  You walk the tightrope, but you move forward.