As congressional support for overhauling the renewable fuel standard grows, what impact would a revision have on long-term technology investments? During today's OnPoint, Jan Koninckx, global business director of biofuels at DuPont, explains why he believes reforming the RFS would be on par with repealing the law. He also discusses the imminent commercial viability of cellulosic ethanol.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Jan Koninckx, global business director of biofuels at DuPont. Jan, thanks for coming on the show.
Jan Koninckx: Sure.
Monica Trauzzi: We've had several discussions on the show in recent weeks about the future of renewable fuels policy here in the United States. There are some serious concerns that the ethanol industry can't really meet the requirements that are laid out in the renewable fuel standard. DuPont is engaged on the ground. From your standpoint, have we reached a juncture in the conversation where we really do need to talk about scaling back the targets of the RFS?
Jan Koninckx: Monica, the renewal fuel standard works really well and has been extremely effective since its inception in 2007. It's been very successful, and it has met or exceeded all its objectives. Cellulosic ethanol is coming to reality a little later than the original vision of the renewable fuel standard, but this was foreseen. This was foreseen in the law as a possibility, so there's a good regulatory framework around it with which the EPA can administer this issue. So there is no need for any change. The RFS is successful. In fact, if every law that came out of the stand worked as well as the RFS, the stand would be very productive.
Monica Trauzzi: So EPA just in short term targets is enough for you rather than Congress having to address it on the whole?
Jan Koninckx: Yes, and actually it's much more constructive. EPA has a number of tools available with which they can adjust the implementation of the standard.
Monica Trauzzi: Are they using those tools?
Jan Koninckx: They are. They regulation is fairly new. The law comes from 2007 to us. The regulation was put in place in 2010. The EPA is working through, that is fairly new, and they've been dealing with a number of difficult issues in I think a very professional and fact-based way.
Monica Trauzzi: Congressman Olsen and Costa have just introduced legislation, it's called the Domestic Alternative Fuels Act, and it would allow ethanol production by natural gas to compete directly with corn ethanol for meeting the RFS requirements. Is that a potential long-term solution that could solve some of the critical issues that we're seeing?
Jan Koninckx: I think that all of the proposals that are made to alter the RFS essentially have the same objective as eliminating it or repealing it. The objective here is to sort of change it, make it unclear, start a debate, and to take the eye off the ball, while we've steadily progressed through commercialization and to success. So I think the objective here is to divert.
Monica Trauzzi: A lot of these pieces of legislation, because there are several, have bipartisan support. So would you say that politics of fuel are no longer partisan, and how does the industry sort of need to change its pace now that things are changing a bit in Washington?
Jan Koninckx: There's some constructive parts that really do have bipartisan support for good reasons, and of course the RFS itself was put in place by the previous administration and with wide bipartisan support at the time. A good example of bipartisan support and one that we support is the Master Limited Partnership bill proposal that was made by, among others, Senator Coons, which puts the renewable fuel industry and the renewable energy industry broadly sort of from a governance and finance perspective on equal footing with fossil fuel industry. So, yes, I think there are some elements there with good bipartisan support because they're quite constructive.
Monica Trauzzi: So Congress should be looking at this issue right now. House Energy and Commerce is doing a lot of work. They're releasing five white papers on the issue, three of the five have been released up until this point - do you think that's an appropriate level of engagement?
Jan Koninckx: We're participating in that process. What we're concerned about is that there is an undertone to try to repeal the RFS or to obfuscate its progress. This law is very successful, we're implementing this. As DuPont we've invested large amounts of money and our best resources and so have other companies like Powitt and DSM, a Dutch company that's investing over $100 million in manufacturing in the US. So has Avante Garde, a Spanish company. So the RFS has been very successful bringing the US to the global leadership in renewable fuels and in biotechnology, and has brought a lot of investment to the US.
Monica Trauzzi: So as you said, EPA could take some steps - how would you describe the relationship between the White House and industry when it comes to communicating how well you could meet the targets of the RFS?
Jan Koninckx: Well, the agency and the administration is interested in information and is asking about that, just like Congress does with the white paper process. So we participate in that. I think that could be a very constructive discussion. The RFS brings tremendous benefits to the country in its implementation, and I think everybody can see that and support.
Monica Trauzzi: As the days pass, though, a reform of the RFS is looking more and more likely. How would the industry adjust to a revised RFS?
Jan Koninckx: I think any kind of opening of the RFS has as intent to get it repealed. I think the opponents of the RFS are really just proposing these steps as steps to repeal. And they do this, I think, because it is so successful and it actually works so well. The opponents of the RFS were there when it was created, and they were very quiet about it. The first few years it must have been working very well for them. Now that they see that the advanced portion, the cellulosic ethanol portion, is coming to reality with a significant number of projects and construction are in start up, now we hear from them.
Monica Trauzzi: All right, let's talk about cellulosic, because it's been criticized, especially here in Washington. We've been hearing for years on this show that commercial viability is imminent, and we just haven't seen it. So what's gone wrong with cellulosic, and when is it actually going to be commercially viable?
Jan Koninckx: Nothing has gone wrong. In fact, this has gone tremendously quick. I have responsibility for the cellulosic ethanol development and commercialization at DuPont, and I have now for more than five years. And we started at that time in the laboratory, and we have developed very quickly a sustainable supply chain. We're partnering with the USDA and the National Resource Conservation Service, a collaboration with very many farmers. I'm in contact with farmers personally very frequently about this, they're very excited about this opportunity. We've put together the supply chain, we've put together a new process, we've engineered biotech, this is going very quickly and very well. As a 210-year-old science and innovation company, we've taken these difficult technologies to market numerous times and we'll do it here as well.
Monica Trauzzi: All right, we're going to end it right there on that note. Thank you for coming on the show.
Jan Koninckx: It's a pleasure.
Monica Trauzzi: And thanks for watching, we'll see you back here tomorrow.
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