Prospects for Biofuels Use by Other Transportation Modes

sexta-feira, setembro 27, 2019

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This week, much of official Washington, DC--or at least the folks who care about agricultural and energy policy--is waiting to see what changes to U.S. biofuels policy will finally emerge from the White House. The Trump administration is scrambling to assuage Midwest farmers’ frustration and anger about the decision to issue Small Refiner Exemptions (SRE’s), which relieves facilities from compliance with the Renewable Fuel Standards (RFS), to another 31 U.S. refining operations for 2018.

The farmers’ frustration stems primarily from two aspects of that August 2019 announcement--1) the EPA gave waivers to small refining facilities owned by large multinational energy companies, such as Exxon-Mobil and Chevron, an action which they believe is inconsistent with the spirit of the law, and 2) thus far, the EPA has refused to re-allocate the required biofuels volume to other refiners, effectively watering down the impact of the RFS in boosting annual demand for both ethanol and biodiesel. A Reuters report on September 25th which indicated that EPA had chosen to disregard the recommendations of the Department of Energy to issue only partial waivers to some companies for 2018 is likely to roil matters further.

While supporters of the U.S. biofuel industry will no doubt continue to advocate for some remedial action by the administration on the SRE/RFS issues, they should not overlook the fact that the U.S. market for fuel for surface vehicles, like cars, light trucks, and commercial trucks, are not the only game in town. Other potential outlets include use in aviation fuel (both military and civilian) and use in marine vessels, both commercial and military fleets.

The U.S. Department of Defense has long been interested in developing alternative fuels to power its planes, tanks, ships, and other vehicles. In February 2016, I wrote a blog on this topic (https://www.agweb.com/blog/straight-from-dc-agricultural-perspectives/that-other-renewable-fuels-market). Since then, legislative supporters of renewable fuels were able to beat back an effort to bar USDA from purchasing renewable fuels on behalf of the Department of Defense. Such a provision had been inserted in the FY18 omnibus appropriations bill by the opponents of renewable fuels, but was removed as a result of a floor amendment offered by then-Representative David Young (R, IA) in September 2017. Despite the Trump administration’s reversal of many federal policies seeking to reduce emissions of greenhouse gases or mitigate the impacts of climate change, the Department of Defense continues to view climate change as an inevitable set of events that will have adverse effects on U.S. national security unless addressed.

Globally, the commercial aviation industry is projected to use about 97 billion gallons of jet fuel in 2019 to transport both passengers and goods around the world. That use accounts for about 12 percent of global fuel use for transportation purposes, according to data collected by the U.S. Energy Information Agency (EIA). Over the last few years, several major airlines have taken significant steps to introduce more renewable fuels into that fuel supply, in an effort to reach a set of goals set by the International Air Transport Association (IATA). These included attaining carbon-neutral growth by 2020 and reduce CO2 emissions by 50 percent by the year 2050, as compared to 2005 levels. Air Canada and United Airlines have conducted demonstration flights using biofuels in their fuel mixtures and committed to incorporating biofuels on a regular basis, although such efforts still only represent a small fraction of the companies’ total fuel use. United just completed a deal to buy 10 million gallons of biofuels over the next two years, while their annual fuel consumption is about four billion gallons. Earlier, this month, Delta Airlines invested $2 million in a study of the feasibility of producing biofuels from forest waste in the northwest United States.

Last month, I wrote a blog about the looming deadline for the world’s commercial maritime fleet to reduce the sulfur content of the fuel they utilize, which takes effect on January 1, 2020 (https://www.agweb.com/blog/changes-coming-high-seas-how-will-they-affect-us-agriculture). Some market participants have looked at the feasibility of incorporating biodiesel into marine fuels to achieve the mandated sulfur reduction, but it is not clear that there will be any such blending capability at refineries producing such fuel in the United States once the January 1 deadline arrives.

The groups that are currently pushing the Trump administration to provide more room for increasing biofuels consumption under the RFS for the next few years should consider also pushing the administration to help them gain more significant footholds in these other markets for transportation fuel.

Page: Agweb

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