EPA bets on two cellulosic makers for ambitious US blending mandate

US companies hoping to make the world’s first commercial-scale gasoline and diesel refined from plant waste have much to prove in 2013, after suffering another year of start-up delays, growing attacks by the oil industry and an unfavorable court ruling.

The second-generation biofuels industry’s best defense against those attacks will be to do what the Environmental Protection Agency thinks it can: make 11 million gallons of cellulosic fuel for refiners to blend under the Renewable Fuel Standard.

EPA set the ambitious target last week. It amounts to the equivalent of 14 million gallons of ethanol, up 34% from the 10.45 ethanol-equivalent gallons the agency required refiners to blend in the 2012 mandate.

Last year, biofuels makers got nowhere close to meeting EPA’s goal.

One company made 20,000 gallons of cellulosic ethanol and another made 1,000 gallons of cellulosic diesel, according to EPA data. All of the cellulosic ethanol reported got exported to Brazil to be used as a demonstration during the RIO+20 United Nations sustainability conference.

In 2013, EPA is relying on two companies to make the fuel refiners will need to comply with the cellulosic mandate.

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The agency expects Kior to make 8 million ethanol-equivalent gallons of gasoline and diesel from wood waste at its Columbus, Mississippi, plant beginning in the first quarter. The company made the 1,000 gallons of cellulosic diesel reported last year at a demonstration plant near Houston.

EPA is counting on Ineos Bio to make another 6 million gallons of cellulosic ethanol from vegetative waste at its Vero Beach, Florida, plant, also starting in the first quarter.

The agency thinks two other plants under construction will make their first gallons of cellulosic fuel in the fourth quarter, but not enough to contribute to the 2013 blending requirement. Those include Abengoa’s corn stover ethanol plant in Hugoton, Kansas, and Fiberight’s municipal solid waste ethanol plant in Blairstown, Iowa.

The Energy Information Administration used slightly different methodology to project 2013 cellulosic output of 9.6 million gallons, or the equivalent of 13.1 million gallons of ethanol. It thinks Kior will make 9 million ethanol-equivalent gallons, Ineos will make 4 millions gallons, and various pilot plants will make 100,000 gallons.

The American Petroleum Institute pointed to that disparity in previous cellulosic mandates as a reason the US Court of Appeals for the District of Columbia Circuit should shoot down the rule. The court did not have a problem with EIA and EPA coming up with different projections, but it did take issue with EPA’s broader approach.

The DC Circuit said EPA acted more like a biofuels booster than an unbiased regulator, that it set targets with more concern for promoting the industry than for creating an accurate estimate of future production.

“While the program as a whole is plainly intended to promote that technology, we are not convinced that Congress meant for EPA to let that intent color its work as a predictor, to let the wish be father of the thought,” the court said.

EPA said it took that ruling to heart before proposing volumes for 2013.

“This projection reflects EPA’s current estimate of what will actually happen in 2013, and we will consider public comments before setting the final cellulosic standard,” the agency said.

The public has 45 days to comment on the 2013 mandate, and the biofuels industry has just under 11 months to make that fuel.

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