As the Office of Management and Budget reviews U.S. EPA's draft proposal on 2014 renewable fuel volumetric limits, will the agency meet its statutory deadline of Nov. 30 for a final rule? During today's OnPoint, former Rep. James Greenwood, CEO of BIO, discusses his recent meeting with EPA Administrator Gina McCarthy on the future of the renewable fuel standard and talks about the impact a change in volume targets will have on the biofuels industry.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is former Congressman Jim Greenwood, CEO of BIO. Jim, nice to have you here.
Jim Greenwood: Thanks for having me.
Monica Trauzzi: Jim, as Congress reconvenes this week there are so many questions in play over the future of the RFS, both long and short term. Let's focus on the 2014 volumes. EPA is tasked with proposing and setting those targets and there's a November 30th statutory deadline. The agency has flexibility written within the RFS to change those volume targets. First off, are you expecting the agency to meet the November 30th deadline?
Jim Greenwood: Yes. In fact, I just met yesterday with the administrator of the EPA. It's clear that the EPA has completed its work. It sent the information over to the Office of Management and Budget. It's always hard to get any agency of federal government moving, but I think based on the fact that EPA has concluded its work hopefully we'll meet that deadline.
Monica Trauzzi: So based on that conversation, what did you hear? Did you hear anything about what's in that draft?
Jim Greenwood: No, of course not. She was not going to speculate. But what I would hope is that she bases her number, as the EPA has consistently, on what is a realistic and science-based and data-based set of principles, and one that continues to incentivize investment in advanced biofuels.
Monica Trauzzi: The industry has in many ways already acknowledged that it's having difficulty moving forward with meeting those volume targets. So what is the key argument you'd make when it comes to what that 2014 proposal should look like?
Jim Greenwood: I would note that, yes, we had hoped to be a little farther along by now than we are, but we are far along now. And what I mean by that is if you look at the fact that we've incentivized something like $6 billion in investment, so steel in the ground. And one of the things that I do when I go to the hill to talk to my former colleagues there is I take a brochure that shows all of these plants that are either completed and now just recently operational, and all of the ones that are under construction. There's one in Kansas right now where there are a thousand people on the ground working to build this plant. We've arrived, and we're going to continue to bring these plants on line.
Monica Trauzzi: So talk a bit about what's happening on the Hill and what the tone is towards renewal fuels and the RFS. We heard over the summer that Senate EPW would be moving forward this fall focusing in on the debate over the RFS. Chairwoman Boxer has essentially stayed out of the debate for quite some time now, and Energy and Natural Resources has been the committee that's been looking at it. How important and pivotal is that, that she is now taking that up in her committee?
Jim Greenwood: I think the Senator is a big supporter of the Renewable Fuel Standard, so I'm guessing, I haven't spoken with her, but I'm guessing that she's trying to create somewhat of a counter-balance to some of the other activities that are pretty much driven by the large petroleum companies. And let's go back to basic principles. Congress created the Renewable Fuel Standard because there was and continues to be in the America public a broad consensus that we need alternative fuels that are better for the environment, that produce more jobs in the U.S., and that make us less reliant on bringing fuels over from volatile countries, and everyone still believes that. And that's the purpose of the RFS, and it has been working. And the reality is that because it is now successful, because these plants are coming on line, frankly the big oil companies, not all of them but some of them, I would say the less forward thinking of them, see that there's actually going to be real competition for fuels. And rather than trying to figure out how to get into the future they're trying to push us back into the past.
Monica Trauzzi: We have the Advance Biofuels Association's Joe Velasco on the show recently and he said that EPA shouldn't just move to propose the 2014 rule quickly but they should also quickly follow up with the 2015 numbers. So at this point, is the industry really just looking for certainty?
Jim Greenwood: The industry is looking for certainty, investors are looking for certainty, and of course we rely upon our investors. Investors have been, the $6 billion didn't come out of thin air, it came from investors, and as long as investors see that these plants are coming on line, that they're able to sell their products on the market, they'll continue to invest, because they see this as the future. Frankly, if the Congress were to certainly repeal the law, that would be tragic, and this program would come to a halt. But even tampering with it legislatively we think has the potential to spook investors and really bog this program down, which is important to the future of our children.
Monica Trauzzi: But how much trust can we put into an industry that has made promises, many, many promises, and has been unable to parse out on those promises?
Jim Greenwood: I wouldn't say that we've been unable, the industry's been unable to meet the promises. I would say we have been disappointed at our ability to meet the timetable that we expected. Part of that was the recession. You can probably look at just about any industry in the country and look at their projections of where they would be that were made in 2006 and 2007 and find that in 2013 maybe they're not quite there. But we all suffered from the same economic downturn. The science has progressed, we've demonstrated the ability to do this, there's no question about our capacity to make these fuels and to make them at an affordable and attractive price, and the only thing that could stop us now is Congress undoing the commitment that it made in 2007.
Monica Trauzzi: So earlier this summer INIOS announced the first commercial quantity of cellulosic ethanol to be produced in the America. Industry is touting this as a game-changer, but how does this actually influence the discussion over the RFS?
Jim Greenwood: I think, kind of as I was just alluding to, this is no longer theoretical. It's not a pilot plant. This is a full-scale plant that's been able to take, in this case, a yard waste, and waste from an old orange grove, and take that cellulosic woody material and turn it into a fuel that you can put into your vehicles. So there's no theory left, it's proven, it's affordable, and it's going to continue. As long as there's no backtracking on the part of Congress we're going to continue to see these plants come on line month after month, year after year, around the country, and finally deliver this promise of lower greenhouse gas, more domestic jobs, and less reliance.
Monica Trauzzi: But realistically, when does news like this actually begin to have a material impact on the industry's ability to meet the RFS volume targets? I mean, it's not immediate.
Jim Greenwood: It's not immediate but it's certainly having its impact. And in fact, I think what we're seeing here is that the oil industry has seen that we can succeed in making these products and that we can do it in a competitive way, and that's why they're putting up the ferocious fight that they are in the halls of Congress.
Monica Trauzzi: All right, we're going to end it right there. Thank you for coming on the show.
Jim Greenwood: OK, thank you for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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