Does U.S. EPA's deadline extension for compliance with the 2013 renewable fuel standard further make the case against the industry and its ability to meet the targets? Was the agency's decision a political one? During today's OnPoint, Joe Jobe, CEO of the National Biodiesel Board, discusses the latest delay and its impact on the timeline for the release of final 2014 targets.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Joe Jobe, CEO at the National Biodiesel Board. Joe, thanks for coming on the show.
Joe Jobe: Thanks for having me back, Monica.
Monica Trauzzi: Joe, recent news coming out of EPA that it's extended the deadline for compliance with the 2013 renewable fuel standard, another wrinkle in this RFS storyline. What's your take on the latest move by the agency, and was it a political decision?
Joe Jobe: Well, I don't know that it was a political decision. I think it was maybe an accommodation to try to be more flexible. I'm not sure how much it will have an impact on the overall program. I think it's probably a reasonable one.
Monica Trauzzi: Do they need to be more flexible? I mean, how flexible could the agency possibly have to be with one standard?
Joe Jobe: Well, it seems like they are providing a lot of flexibility to the obligated parties, and that, in itself, is not a bad thing, but some of the flexibility that they're extending to them, particularly as it relates to the 2014 RVO, is very significant.
Monica Trauzzi: Is it further proof, though, that the targets set out in the RFS were just simply too difficult to meet?
Joe Jobe: No. They're not too difficult to meet. They're being met, and in fact, biodiesel is the only domestic, fully commercialized advanced biofuel, and the fact that cellulosic ethanol has not been -- that promise has not been fully realized yet sort of loses the fact that because of biodiesel, the advanced biofuel targets have met their goals every single year of the program. Of course, the conventional biofuel targets have met their goals every single year of the program, and it has been successful.
Monica Trauzzi: And are you expecting that, as a result of that 2013 extension, the final 2014 targets might be delayed?
Joe Jobe: We hope not. We don't necessarily think so. The EPA has been consistent in saying that they want to have the rule finalized by early summer. I don't think that if it slips, it's because they're trying to play politics. I think it has just been a very hard slog with a lot of opposition from the obligated parties, a lot of political pressure by the obligated parties, and it's a hard, complicated rule. We continue to urge them to get this rule finalized as quickly as possible. The right thing to do is very clear and very obvious, and they just need to do that and finalize this rule.
Monica Trauzzi: So if this isn't finalized until the fall, you don't think that has anything to do with politics and helping some members who need a boost in ethanol states?
Joe Jobe: I would hope that would not be the case, and I would hope that it would not be the case that it's not finalized until fall. We want to continue to urge them to get this rule finalized absolutely as soon as possible, because the longer this rule is not finalized, the longer our members and our markets continue to languish.
The proposed rule was very detrimental to our members, our markets and to advanced biofuels. They stated in their proposed rule that the reason for these across-the-board cutbacks was to address the E10 blend wall. Biodiesel is the only fuel that helps alleviate the E10 blend wall, and the net effect of this proposed rule would virtually cut biodiesel in half from our 2013 run rates to what they would propose in this rule.
Monica Trauzzi: So you're anticipating or hoping for a big change in that final rule?
Joe Jobe: They still have time to change it. We continue to urge that they modestly increase the biomass-based diesel category, which will help bring more of the renewable component into the diesel fuel pool.
There's no blend wall for biodiesel in the diesel fuel pool. One of the primary, fundamental changes of the RFS2 over the RFS1 was to add a renewable component in the diesel fuel pool, and the other thing that RFS2 did that changed from RFS1 was to put an emphasis on advanced biofuels. And biodiesel is the only thing that addresses both of those issues, and it's been very ironic and discouraging that their proposed rule would harm biodiesel more than any other fuel, including when they state that they're trying to address the ethanol blend wall. The proposal would harm the one fuel that helps alleviate the ethanol blend wall.
Monica Trauzzi: How are you navigating the competitive and very aggressive lobbying that's happening on both sides on this RFS?
Joe Jobe: Well, the primary thing that we have going for us is that biodiesel -- we have the facts on our side. We have the truth on our side. Biodiesel is a demonstrated success story. We went from about 1 billion gallons in 2012 to almost 2 billion gallons in 2013, and in fact, the last half of 2013, we exceeded an annualized production rate of 2 billion gallons. That's 5 percent of the diesel fuel pool, so it's a demonstrated success story; we have the facts on our side; we are reducing greenhouse gases by the EPA's own numbers by as much as 56 to 86 percent. It is one of the best greenhouse gas reduction technologies available for transportation fuel. So we just keep telling our story, and we have the benefit of being able to tell the truth and the facts.
Monica Trauzzi: So part of the 2014 standard will be a program that ensures the quality of credits, of renewable fuel credits, and that's specifically aimed at the fraud issues that we saw in your industry. How far do you anticipate the agency will go, and are you comfortable with a program like that?
Joe Jobe: You know, RIN fraud was something that happened back in 2011 when the program was starting up. Fraud is something that I have a particular interest in, because in my previous job, I was a fraud investigator for the attorney general's office. We took a very aggressive stance when the enforcement actions took place. We launched a private-sector solution. That private-sector solution -- working with the EPA, working with EPA enforcement, working with the petroleum industry -- has pretty much dealt with the issue, and we're the -- any kind of RIN fraud activity that's being reported on now has pretty much happened pre-2012.
Monica Trauzzi: So do you think this is an overreach?
Joe Jobe: No, but we're not waiting for this QEP rule to be finalized. The markets are not waiting. The RIN issues have been addressed. We've worked with the EPA to help make this rule effective with the industry and with the markets. We're just not waiting for that to address RIN integrity.
Monica Trauzzi: All right. We'll end it there. Thank you for coming on the show.
Joe Jobe: Thank you, Monica.
Monica Trauzzi: Nice to see you. And thanks for watching. We'll see you back here tomorrow.
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