The final standards for cellulosic biofuel were developed in a manner consistent with the approach (thorough assessment of markets and industry engagement) outlined in the ruling. Due to the late announcement, the EPA extended the time frame for companies to comply with the new volume requirements from February 28 to June 30, 2014.
In the final rule, the EPA reduced the cellulosic biofuel standard from 14 million to 6 million gallons. The standards for biodiesel, advanced biofuel and renewable fuel were finalized as proposed.
Renewable identification number (RIN) generation data for June (the most recent data available), indicated 48,846 gallons of cellulosic biofuel and 19,251 gallons of cellulosic diesel were produced during the month. Biodiesel has been the most commercially-viable fuel to date. In 2012, approximately 1.1 billion gallons of biodiesel, accounting for 87 percent of the total advanced requirement, were produced.
Commercial-Scale Production Underway at Two Facilities
The two companies the EPA anticipated would produce cellulosic fuels this year have done so. KiOR shipped its first supply of cellulosic gasoline on June 28; the company previously shipped its first supply of biodiesel in March. In total, KiOR has shipped more than 75,000 gallons of cellulosic fuel from its Columbus, Mississippi facility.
The next question is when the plant will run at full capacity. Analysts have surmised that efforts to conserve cash, lower than anticipated yields (72 gallons per ton) and/or intermediate fuels that were not upgraded could have kept KiOR from realizing its previously announced target of 300,000-500,000 gallons. Now that the company has achieved continuous operation, its third quarter output will be watched closely to see where the numbers fall.
In other related news, KiOR reportedly plans to build a second intermediate facility at the Columbus site as an effort to more-quickly bring the company to cash-positive. The facility would have the capacity to process 500 dry tons/day to more than double total production from 11 to 24 million gallons. KiOR is also planning a 40 million gallon plant in Natchez.
On July 31, INEOS Bio announced its Indian River BioEnergy Center in Vero Beach, Florida began commercial-scale production of ethanol from cellulosic feedstock. The company uses wood biomass as well as other vegetative and municipal waste to produce fuel as well as power. The plant has the capacity to produce eight million gallons of ethanol as well as six megawatts of power.
Company leaders did not share how much fuel the center had produced to date; shipments are set to begin this month. The facility is expected to achieve full fuel production capacity by year end. It began generating power in November 2011 and currently operates at 90 percent. The Biorefinery Assistance Program in the 2008 Farm Bill guaranteed $75 million in loans for the $130 million project.
Despite the good news that both KiOR and INEOS Bio are now producing at a commercial scale, the EPA expects to lower its overall volume standards for 2014 due to the looming blend wall (the amount of ethanol that can be reasonably blended into the fuel supply). A vocal opponent to the RFS, the American Petroleum Institute has petitioned the agency to waive the 2014 blending requirements altogether. Nevertheless, if KiOR can near its production goals in the last half of the year, 2013 could very well be the turning point for wood-produced cellulosic biofuels.