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RFS proposal offers long awaited good news for biodiesel

Corn and soybean growers waited, and waited, and waited for the Environmental Protection Agency to release Renewable Fuel Standard (RFS) rules that determine the volume of Ohio biofuels blended into the nation’s fuel supply. By law, EPA is supposed to finalize biomass-based diesel volumes 14 months in advance of the applicable year, making the agency significantly overdue in setting the volumes for 2014, 2015 and 2016 with the release of the proposal in May.

After the long wait ethanol supporters were not pleased with the RFS numbers, but for biodiesel backers it was a different story, which will likely be reflected in the 60-day public comment period that ends on July 27.

“This is an RFS that is not perfect, but it is an RFS that works well for biodiesel,” said Adam Ward with the Ohio Soybean Association. “The demand will not only come from the biodiesel category, but also the advanced biofuel category — biodiesel is the only domestic fuel that qualifies as an advanced biofuel. The OSA is working with American Soybean Association (ASA) and the National Biodiesel Board to craft comments on the RFS during the comment period.”

Ward said that biodiesel production broadly benefits agriculture by supporting the soybean oil market.

“It is important for Ohio soybean growers to understand that in the past the oil market has been driving the meal market. With the demand for soybean oil increasing with the RFS that is now back in place, we should see lowering soybean meal costs because of oil demand being up,” Ward said. “That benefits everyone. Animal agriculture should see some reduced feed costs with the new RFS in place and more demand for soybean oil.”

EPA proposes setting the biomass-based diesel and the total Advanced Biofuels volumes at the following levels:

  • 2014 — 1.63 billion gallons of biomass-based diesel, 2.68 billion gallons of advanced biofuels
  • 2015 — 1.7 billion gallons of biomass-based diesel, 2.9 billion gallons of advanced biofuels
  • 2016 — 1.8 billion gallons of biomass-based diesel, 3.4 billion gallons of Advanced biofuels
  • 2017 — 1.9 billion gallons of biomass-based diesel

“The proposal is a step in the right direction, and we appreciate the administration’s efforts to strengthen and grow the RFS,” said Anne Steckel, vice president of government affairs for the National Biodiesel Board. “However, there is plenty of room for improvement before it is finalized in November. We intend to make sure policy makers in Washington understand biodiesel’s full potential to help grow the economy and strengthen our energy security while sharply reducing pollution.”

The volumes proposed by EPA are an increase over the previous proposal, which would have set the biomass-based diesel requirements at 1.28 billion gallons for 2014 and 2015. The increases proposed by EPA will provide some benefit and certainty to the domestic biodiesel industry. However, ASA believes the EPA and the Obama Administration could do more to capitalize on additional benefits that could be achieved with more robust biomass-based diesel volumes.

EPA intends to finalize the rule by Nov. 30, 2015.

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