By David Ripplinger
Bioproducts and Bioenergy Economist & Assistant Professor
North Dakota State Univ.
Dept. of Agribusiness and Applied Economics
I'm trying to wrap my head around the Environmental Protection Agency's (EPA) announced delay of final 2014 biofuel mandates.
Here's a little background for those who don't follow federal biofuels policy closely.
We have a federal law, the Renewable Fuel Standard (RFS), which mandates minimum biofuel use by type and year through 2022. By November, the EPA is required to finalize mandates for the upcoming year. That includes lowering the mandates in the event of expected economic harm or inadequate supply.
Last November, the EPA proposed slashing mandated volumes with the reasoning that the nation does not have the infrastructure or fleet to use such large amounts of ethanol. Note that the EPA was already late because the final rule was supposed to be out by that time, not just the proposed rule.
The proposal was applauded by the oil and gas industry, which hasn't been a big fan of the RFS, and criticized by the renewable fuels industry. The latter didn't like the reduction in volume but especially was confused by the reasoning.
Now, a year later, the EPA has announced that it will finalize the 2014 volumes in February.
This past year, I've used the analogy of a game where players don't know how the score is kept. I started using the analogy in May when the game "was almost at halftime." Last month, it was updated to when the game "was almost over." Now it looks like the players may get a text within a couple of hours of the game's conclusion.
I shouldn't make light of the situation because fuel is serious business. However, this situation is frustrating, if not absurd, so a little levity may be in order.
So what does this mean? I'm not sure. There are experts who claim they do, and nearly every industry group is claiming victory, which I find surprising because no one knows the rules or the score.
I'm confident that this is bad news for advanced biofuels. These are the prospects hoping to play in the future but don't know if they should be hitting the weights, doing cone drills or polishing their resume for a future outside of sports, hopefully as a K Street lobbyist.