Thoughts from the Frontlines of the Low Carbon Fuel Revolution

Thoughts from the Frontlines of the Low Carbon Fuel Revolution

The following is a preview of the content from our MI: Liquid Biomass Feedstocks Report known as Cusick’s Corner.

As the biofuel industry continues to wait for the fulfillment of promises from President Trump to increase biofuel consumption and from Members of Congress to reinstate the Biodiesel Blenders’ Tax Credit (BTC), Corn Belt state legislators are mulling proposals to implement state-level renewable fuel programs modeled on the Low Carbon Fuel Standard (LCFS) in California. The one significant change in Corn-Belt plans is likely to be a preference for traditional biofuel feedstocks like corn and soybean oil, but the success of the LCFS program in supporting and growing the supply of alternative fuels in California has not gone unnoticed.

The uncertainty and delayed promises of the federal program have driven states to take action to support key constituencies, and anecdotal reports indicate that planning is more advanced in Midwestern and Northeastern states than previously realized. In addition to the failure of the federal Renewable Fuel Standard (RFS) to support continued growth in domestic biofuel consumption, state legislators are taking note of the fact that refiners are increasingly implementing and changing business models to serve markets that generate valuable credits. It is unclear that the new projects would receive support from both the federal and state programs, but what is not ambiguous is that the state-level programs on the West Coast are driving growth in biofuel production.

Lobbyists from agricultural trade associations are welcoming the architects of the state-level programs on the West Coast and consultants to try to craft plans that would provide support for farmers. While progress ideas about renewable fuels are not commonly associated with the Midwest, the development of state-level programs that favor traditional feedstocks makes perfect sense. In the same way that the progressive ideals of many residents of West Coast states have driven programs that support low carbon intensity (CI) feedstock fuels in support of environmental objectives and the residents of Texas support fossil fuels, state legislators and lobbyists are betting that residents of the Corn Belt will support a program that encourages fuel production from corn and soybean oil.

In the end, it seems likely that while a significant portion of the biofuel industry is undoubtedly suffering through some of the darkest days in recent years, the future looks bright. International energy companies are shifting from the costs and risks associated with operating traditional refineries toward revenue-generating renewable fuel processing, and state-level programs could accelerate that trend. Also, President Trump needs to hold the Midwestern states to have any hope of a second term, which means that there is likely to be a significant effort to boost biofuel use at the federal level. If Congress restores the BTC either later this year or early next year, the industry may be in much better shape by this time next year.

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