Among the most promising new developments has been progress in using not just the starchy parts of plants like the kernels of corn, but also the tougher material called cellulose that is found in stalks, leaves, corn cobs, switch grass and wood chips – and doing so at a competitive cost. When Congress established the cellulosic biofuel portion of the RFS, it understood that American consumers would reject advanced biofuels if they were more expensive than the fuels they were replacing. Congress directed the EPA to evaluate annually the industry’s projections and intentions to produce cellulosic biofuels, adjust the standard accordingly and provide blenders and refiners a waiver credit as an alternative way to comply with the law.
The Cellulosic Waiver Credit is set at the difference between $3.00 and the average wholesale gas price for the preceding year. The credit guarantees that cellulosic biofuels have to be cost competitive at that price. The cost of the waiver credit is set through a transparent calculation, so that everyone knows the price cellulosic biofuels must reach to be competitive. And while to date cellulosic biofuels have not reached the price set by law, despite producers’ plans and stated intentions, the credit remains an option that protects obligated parties and consumers from paying too high a price for the new technology.
Now certain special interest groups are threatening this progress and creating additional uncertainty by calling for an end to the RFS. One industry group that helped to devise the waiver credit mechanism program now claims that refiners and blenders are being penalized by having to abide by the regulations.
Pioneering advanced biofuels producers and biotechnology companies have made significant capital investments, even during the recession, to build pilot facilities and ready the technology for commercialization. These companies have already produced jobs in research and engineering. Not all will be successful in scaling up to commercial production. But we should draw the appropriate lessons from these efforts and remain focused on the ultimate goals of increasing energy security, reducing air emissions, and maintaining U.S. leadership in deploying advanced technologies that will ensure future economic growth.
The RFS is a critically important tool for ensuring that fuel markets will be open to new advanced technology as it becomes commercially available and cost competitive. Any drastic legislative changes to the RFS, followed by additional years of new rulemaking, can only create fresh challenges for these companies and serve to hinder development of the technology.
Jim Greenwood is president and CEO of the Biotechnology Industry Organization (BIO).