The 8th Advanced Bioeconomy Leadership Conference is ready to open in Washington, DC just as a major split looms in the ethanol sector, which we report on here. And as the Fuels America coalition dumps RFA, as we report here. Rumors continue to fly that the Trump Administration will issue and executive order changing the RFS point of obligation away from oil refiners, as soon as Wednesday.
The ABLC Domestic Policy Forum will take place on Thursday, March 2nd at 815am and will be streamed live around the globe, here.
Here are 10 Trends which the ABLC speakers and delegates will be discussing and debating over the next three days.
The Shift to the States
We’ll see it right away on stage. In years past, the major opening morning figures on stage have been federal-level officials and members of the Cabinet. This year at ABLC, we’ll be featuring governors on stage — as momentum shifts from DC to the states. This year, the California Low Carbon Fuel Standard os hot, and Oregon and British Columbia have adopted one and Massachusetts may be following. Meanwhile, Iowa and Minnesota have enacted renewable chemicals production incentives. There’s debate in DC over the Point of Obligation, but there’s no debate about the Point of Innovation — that’s shifting down to the state level.
An RFS vs The RFS
There are so many proposals floating around to reform the Renewable Fuel Standard. that we’ve lost count, There’s a major brouhaha over the RFS’ Point of Obligation — should that be oil refiners or fuel retailers and transporters, which is the subject of our Top Story yesterday, here.
And, there’s the annual debate over renewable fuel volumes, and the ongoing complaints over RIN price volatility and RIN fraud.
In some ways, the debate has shifted somewhat from a “RFS vs No RFS” debate over repeal, to a “The RFS vs An RFS” debate over reform. Some contend that a continually-shifting RFS douses investor confidence in developing new fuels, and pushes people to embrace existing fuels like ethanol and biodiesel that can be scaled up with less technology risk. Others say that without meaningful RFS reform, it will fail to achieve its volumetric targets (and the impact it was intended to have on energy supply) — regardless of what technologies might or might not be available.
Intermediates and their role
But there’s also a debate over what constitutes an allowable intermediate — do all intermediates have to be produced inside the one refinery, or can they be produced anywhere and shipped to multiple refineries for secondary processing?
That’s a feasibility and a policy question. From a technology point of view — there are the technologies like Renmatix, Sweetwater, Comet and Leaf Resources that can make renewable sugars, which in turn can be used to make fuels, chemicals or biobased materials — is this a good model? From a policy point of view, who gets to issue RINs – only the makers of a fuel made completely at one facility, or one made using inputs from other manufacturing plants and processes?
Ethanol blends vs drop-ins and heavy-duty
One thing is for sure, this week there’s increasing focus on ethanol blend levels. Is the right strategy for E10 saturation to move to E15, to E85, or to work with manufacturers to develop E30 engines that have high levels of fuel efficiency. Or, a combination of all, or some. Or, a move towards drop-in fuels that can be co-processed at a refinery?
Then, there’s the larger question of how much growth will come on the gasoline replacement side (e.g. ethanol, butanol) and how much will come on the diesel side (for example, renewable diesel or biodiesel) with heavy-duty trucks and the like. Or, on the jet side with ATJ or HEFA fuels.
California vs the Airlines Dilemma
When it comes to jet, there’s the California problem. The LCFS supports road transport, not air transport – and credits stack up, so there’s more money to be made making diesel for the California market than aviation fuels — and that’s what we’ve been seeing. Yet, the airlines are crying for fuels — who will supply them?
Driven by markets or technologies?
A related debate is about the underlying technology itself. In most cases, companies in this sector were formed because of a market opportunity for renewable fuels that it was hoped that disruptive technology could be developed to fill. Though fuels were policy-driven, they were driven by policy impact on markets.
That’s different to, say, the approach taking by DOE in fostering fracking technology. There, the focus was disruption of markets by technology, rather than policy.
Meanwhile, many technologies have pivoted away from fuels — heading for renewable chemicals, nutraceuticals, advanced foods and biomaterials. In most cases, they are chasing higher-value markets as well as concern from strategic investors over sustainability, and commodity price volatility. In some cases, technologies have uncovered novel applications with performance benefits. But the question remains, can technologies develop fast enough if driven by markets to get to market before the commodity price window closes? If driven by technology, can they attract enough early-stage investment support to get through the Valley of Death?
EVs and the Image Problem
One thing spooking markets is the expectation in the media that electrics will be huge, and shortly — driving out a source of demand for renewables but also undercutting the need to incentivize renewables as an alternative to petroleum. How fast will the EV market grow, and why do EVs have such a strong positive image as Zero Emission Vehicles when many vehicles driven on renewable fuels have far lower emissions.
Fostering investor confidence, and the financing problem
In many cases, financing is the challenge — the financial benefit conferred through the RFS is not enough the galvanize investors. Loan guarantees, credits, and incentives are used to fill the gap, but they come with their own challenges. Often, pivots to smaller markets are the result of small financings. The Financing & Investment Workshop at ABLC generally conveys “what’s working” for commercial-scale as well as early-stage finance.
Oil prices, renewable chemicals and sustainable brands
When the pivot is to chemicals, the low oil price environment hasn’t helped, in a market with a Renewable Fuel Standard but no Renewable Chemical Standard. Opportunities on the chemical side have tended to focus on performance benefits from novel chemicals, and organic acids that contain oxygen (found in biomass, but not petroleum).
The Sustainable Agriculture Imperative
And in the end, it all comes down to the raw materials. Nothing is made from nothing. Whether it is waste material piling up in a landfill, new energy crops or existing crops that can be used to make fuels as a secondary application — it’s all about producing sustainable, affordable, reliable available feedstock. That’s why we’re beginning ABLC this year actually in the building at USDA, focusing on the building of supply chains for the biobased revolution. We’re starting where the supply chain starts — with the farmer and the lab.
Not only looking at making more biomass, but making it more sustainably through yield intensification, reduced inputs, smart fields and farmers with all the decision-support data they could possibly need, right at their fingertips.