A Call to Arms for Renewable Fuels

Jim's Corner

BIO President & CEO Jim Greenwood delivered remarks on the Renewable Fuel Standard and participated in a panel session on the Legacy of Bipartisan Support for Renewable Energy at ACORE’s National Renewable Energy Policy Forum, held on Capitol Hill:

Good afternoon.

It is good to be with ACORE again and to be part of your 10th annual policy forum. I had the pleasure of speaking at the RETECH 2012 conference in October. I said then it was time for a call to arms for renewable energy. It is still time to raise that cry. In fact, the need is more urgent today.

When we come to Capitol Hill to discuss biofuels and what our industry can contribute to the nation’s energy needs we always find strong bipartisan support for renewable fuels. I believe that is because every Member of Congress recognizes that we need reliable sources of energy, and lots of it, to power our economy.

There may be disagreements about the right mix of energy sources, but members of both parties know energy security is necessary to grow our economy, to create jobs, and to maintain our national security.

We’ve been able to make a good case that renewable biofuels are among the keys to ensuring abundant, reliable energy for America. Congress has responded by enacting policies designed to encourage a homegrown biofuels industry.

BIO fought hard for the Renewable Fuel Standard. We spent countless hours on the Hill, meeting with members from both parties to get it passed. It was signed into law by President Bush. It is supported by the Obama administration.

While many of you are intimately familiar with it, I should probably explain for some of you what the RFS is all about and, as I promised, why the fight to maintain it continues.

Less than a decade ago, our nation’s energy experts projected that imports of oil would continue to grow throughout the first third of the century. Both Congress and the president recognized that this was a threat to our economic competitiveness and growth. So the United States made a commitment to developing new forms of biofuels, particularly cellulosics, to reduce our reliance on foreign oil.

In 2006, President George W. Bush established the National Energy Initiative. It outlined an ambitious public-private partnership to drive research and development of cellulosic biofuels and make them practical and cost-competitive by 2012. To reach this goal Congress adopted the Renewable Fuel Standard, the 2008 Farm Bill energy title, multiple research and development programs, and a number of targeted tax credits.

Well, it is February 2013. 2012 is behind us now. How did this ambitious plan work out? It has worked out pretty well so far.

The RFS sets annual requirements for production and use of both conventional and advanced renewable fuels, with conventional biofuels on target to reach 15 billion gallons by 2015 and advanced biofuels to reach 21 billion gallons by 2022. There will be a combined 36 billion gallons of renewable fuel in 2022.

Each year the EPA sets an overall target for renewable fuel use based on several factors, including anticipated gasoline consumption and renewable fuel production capacity. Within the overall target, EPA sets specific targets for advanced and cellulosic biofuel derived from renewable feedstocks.

By adopting the RFS, Congress wanted to encourage development of renewable fuels technology by ensuring there would be a market open to renewables. The RFS is working. Renewable fuels currently provide 10 percent of our nation’s on-road transportation fuel needs.

Private companies have invested billions of dollars in advanced biofuel research and development. Today two companies have begun commissioning large-scale biorefineries for commercial production of cellulosic ethanol and diesel. They are already producing and selling a small number of gallons of fuel – and many others have begun construction of additional facilities in every region of the United States.

Five years ago, annual biofuel production stood at about 3.9 billion gallons of ethanol and 112 million gallons of biodiesel. Today annual ethanol production is more than 13 billion gallons and biodiesel is more than one billion gallons.

Five years ago, there were five cellulosic biofuel pilot plants and about 20 other demonstration and commercial projects on the drawing board. Today, there are more than three dozen pilot and demonstration biorefineries in operation, each testing a different technological approach. The first commercial biorefineries are opening too, bringing years of research and development to fruition. Algae biofuel, renewable chemical and other biorefineries are expected to come online this year.

Companies across the United States have made substantial long-term investments to bring advanced biofuel research and development to the point where it is making real contributions to U.S. energy security. They made these investments because the RFS requirements gave them confidence that if they could develop the technology, build the plant, and produce the fuel – there will be a ready market for it. The RFS has attracted $5 billion of investment in advanced and conventional renewable fuel technology so far – and that investment is beginning to pay off.

It is paying off not only by expanding our fuel supply, but by expanding job opportunities and economic development in rural communities. The RFS supports more than 400,000 jobs nationwide— jobs in direct biofuel production and distribution, but also jobs for farmers, rural co-ops, chemical engineers, and construction workers.

Renewable fuels have been a lifeline for rural communities, driving a $500 billion increase in America’s farm assets since 2007. There are now renewable fuel facilities in 37 states, and more on the way. By 2022, the advanced biofuel sector could add 800,000 new jobs.

The RFS has been a success story. It has accomplished what Congress intended – reduced the need for foreign oil, spurred investment, increased production and created jobs.

But to reach our national goals, to produce 36 billion gallons of renewable fuel in 2022 – and 21 billion gallons of that as advanced biofuels – we need to attract more investment to the sector today. That has been difficult with the recent economic downturn. But it is important that we stay the course.

Building advanced commercial-scale biorefineries isn’t cheap. It could cost as much as $168 billion to build the biorefineries we will need to produce 21 billion gallons of advanced biofuels in 2022.

We can do the science – we know how to scale up production to commercial levels. We have enough biomass feedstocks to reach our production targets. In fact, according to the Departments of Energy and Agriculture, we have enough biomass in america to replace nearly one-third of our gasoline consumption with renewable fuel by 2030.

What might prevent us from doing that isn’t the science or the available feedstocks – it’s the available investment to continue improving the technology and to build out our production capacity.

And that depends on maintaining a stable, predictable policy. It depends on maintaining the Renewable Fuel Standard.

This is pretty simple.

Maintain the RFS and we continue to attract billions of dollars to invest in more plants so we can look to a future of greater energy security, more jobs and cleaner fuels… Or kill the RFS and go backwards.

The private companies that have made substantial investments and rapid progress in developing advanced biofuels need a stable policy in order to raise additional investment to complete the job. We must have federal leadership and policy stability to assure investors that if they make those investments, they can rely on an open market for advanced biofuels.

Energy experts are projecting an American energy renaissance. We could soon achieve energy self-reliance – which has been a U.S. goal since the energy crisis of the 1970s. The International Energy Agency’s latest World Energy Outlook predicts that the United States will become a net energy exporter within the next few decades. The U.S. Energy Information Administration recently released an early draft of its Annual Energy Outlook that shows the same potential.

Certainly the advances in technology that have greatly expanded our reserves of natural gas will play a role in reaching energy independence. But these reports also demonstrate that renewable fuels will make a substantial contribution to this energy renaissance — if there is long-term, stable policy in place.

There is no doubt that our present standard of living is largely built on fossil fuels. It is obvious that we are going to burn coal, oil and natural gas for some time to come — until we are able to displace them with affordable renewables. Hopefully that day won’t come too late to leave our children a planet that still looks more like Earth than Mars.

So on top of achieving energy independence, creating good jobs and revitalizing rural economies, our children’s future rests upon our ability to shift as fast as possible to renewable energy sources.

Yet despite its success, the RFS has come under attack. I mentioned the waiver petition rejected by the EPA last fall. Opponents have also gone to court to challenge the EPA’s implementation of the RFS.

In January there was a court decision in one lawsuit brought by petroleum interests. The court rejected the oil industry’s long-standing objections to EPA’s implementation of the RFS. The court upheld EPA’s discretion to set annual required volumes for biofuel use. The court did give the oil industry plaintiffs relief on a very narrow issue regarding how the cellulosic biofuel volume is calculated. But overall, the court decision rejected the oil industry’s broad-brushed attempt to undermine the RFS.

I expect we’ll be fighting such fights again. And we’ll continue to need the help of not only the biofuels community, but the broad renewable energy movement that ACORE represents.

Those fights will also continue to take place here, in Congress. Some members of Congress have vowed to hold oversight hearings to try to find problems with the Renewable Fuel Standard. Congressional oversight is always appropriate – I say that as a former chairman of the Energy and Commerce Oversight Subcommittee.

So we welcome Congress taking a good look at the RFS, because what Members will find is that, despite criticisms, the RFS is working as it was intended. It has accelerated the development of domestic alternatives to foreign petroleum and boosted U.S. competitiveness and energy security. A strong bipartisan majority should have every reason to be pleased with the progress we’ve made with advanced biofuels and to continue to support a strong RFS and the other programs Congress has put in place to encourage advanced renewable fuels development.

This is not the time to kick the legs out from under renewable fuels. This is not the time to turn our backs on the 400,000 Americans whose jobs are supported by the biofuels industry.

The RFS is one of the most successful energy policies ever, because it does what it was intended to do. It has made the U.S. the world’s leader in renewable fuel innovation. Advanced biofuels are driving economic growth in communities that need it. We’re improving our nation’s energy security. The RFS is attracting millions in new technology dollars to invest in America’s future. And renewable biofuels are helping promote a cleaner environment, reduce greenhouse gases, and provide us with a sustainable future.

Let’s keep this progress moving forward – and keep America’s Renewable Fuel Standard in place. We owe our children no less. Thank you.

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