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Estimating Chilled Investment for Advanced Biofuels Due to RFS Uncertainty

$13.7 Billion Shortfall in Investment During Delays in Rulemaking

The advanced biofuel industry has invested billions of dollars since 2009 to build first-of-a-kind demonstration and commercial-scale biorefineries around the world, even during a global economic recession. Cellulosic biofuels have reached commercial status, though not at the volumes envisioned in the Renewable Fuel Standard (RFS); at the same time, overall advanced biofuels have met the RFS goals every year (2010 through 2013) that annual volume obligations have been established, primarily through existing capacity for proven biofuel technologies. Instability in the administration of the RFS has hampered investment in new advanced biofuel technology and new feedstocks within the United States. Separating the investment impact of policy instability from the general economic recession and challenges of scaling up new technologies is the goal of this white paper.

To reach the 2015 RFS goal of producing 5.5 billion gallons of advanced biofuels (including 3 billion gallons of cellulosic and 2.5 billion gallons of advanced biofuel or biodiesel), bio-era estimated the need for 110 operating plants requiring $20.34 billion dollars in cumulative investment. As of April 2015, there are five commercial cellulosic biorefineries with a combined capacity of more than 50 million gallons within the United States and registered to meet the goals of the RFS, along with several pilot and demonstration plants. Additionally, there are 28 biorefineries generating cellulosic biogas with a combined annual capacity of approximately 80 million gallons.

The Environmental Protection Agency (EPA) was nine months late issuing the 2013 RVOs and is more than 17 months late in issuing the 2014 rule. Further, the agency has made cellulosic biofuel producers wait an average of 29 months (more than two years) for approval of production pathways. Currently, 29 companies have unresolved petitions filed with EPA and they have been waiting on average more than 32 months for resolution. A majority of an estimated $13.7 billion shortfall in investment for cellulosic and new advanced technologies should therefore be attributed to EPA’s delays in issuing timely rules.

Estimating Chilled Investment for Advanced Biofuels Due to RFS Uncertainty

- Cellulosic and advanced biofuel biorefineries have now reached commercial status and additional ones can be built at lower capital costs.

- Policy instability and delays in EPA rulemakings are responsible for the majority of an estimated $13.7 billion shortfall in necessary investments for capacity to meet the RFS goals.

- EPA’s delays in rulemaking have undercut the industry’s ability to create new employment opportunities by more than 80,000 direct jobs.

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