Obama’s EPA Ups Renewable Fuel Requirements for 2017

The day before Thanksgiving, the Obama Administration released its final biofuel requirements for 2017, raising the required biofuel levels from those proposed earlier this year. The new levels are above the blend wall, i.e. where the level of biofuels required exceeds 10 percent of motor fuel demand. Exceeding the blend wall matters because many automobile manufacturers will not warranty vehicles using gasoline with ethanol volumes greater than 10 percent. Besides increasing the blend wall, refiners must purchase renewable identification numbers when they do not meet the biofuel levels stipulated by the Environmental Protection Agency (EPA). Those renewable identification numbers have been increasing in value and the costs are passed onto the consumer, which results in higher gasoline prices for Americans.

The New Requirements for 2017

Refiners will be forced to blend 19.28 billion gallons of ethanol, biomass-based diesel and other biofuels into the gasoline and diesel supply in 2017. This is a record amount. The corn-based ethanol requirement increases to 15 billion gallons, which is the level required by the Energy Independence and Security Act of 2007 that created the Renewable Fuel Standard (RFS).  The RFS rule for 2017 is 1.2 billion gallons higher than the amount of renewable fuels that EPA required to be blended into the fuel supply for 2016–a 6 percent increase.[i]

To summarize, the new RFS rule requires that:

  • Conventional renewable fuel increases to 15 billion-gallons, which was the congressional target in the 2007 legislation.
  • Biomass-based biodiesel increases by 100 million gallons–the required volume for 2017 is twice that of the minimum congressional target.
  • Cellulosic biofuel increases by 35 percent over the 2016 standard.
  • Advanced biofuels, comprised of biomass-based diesel, cellulosic biofuel, and other biofuel increases by 19 percent over the 2016 standard.

The EPA required renewable fuel volumes for 2014 to 2018 are listed below. The only requirement that is provided for 2018 is the volume for biomass-based diesel.[ii]

Renewable Fuel Volume Requirements for 2014-2018

  2014 2015 2016 2017 2018
Cellulosic biofuel (million gallons) 33 123 230 311 n/a
Biomass-based diesel (billion gallons) 1.63 1.73 1.9 2.0 2.1
Advanced biofuel (billion gallons) 2.67 2.88 3.61 4.28 n/a
Renewable fuel (billion gallons) 16.28 16.93 18.11 19.28 n/a


Source:
http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

Final Levels Are Higher Than EPA Proposed Levels

Earlier this year, EPA proposed its 2017 biofuel requirements and provided them for comment. The proposed volumes were as follows: 14.8 billion gallons for conventional or corn-based biofuel and 4.0 billion gallons for advanced biofuels for a total of 18.8 billion gallons. The final levels released on November 23, 2016, are 2.6 percent higher than those proposed earlier this year.[iii]

According to the Energy Information Administration, ethanol’s share of the U.S. gasoline market has already exceeded 10 percent a couple of times this fall.[iv] EPA’s proposed levels for 2017 were expected to exceed the blend wall with an expected share of 10.44 percent.[v] With the final required amounts for 2017 even higher at 19.28 billion gallons, those requirements will surely exceed the blend wall by an even higher percentage.

As mentioned earlier, many automobile manufacturers will not warranty vehicles that use greater than 10 percent ethanol. Further, any amount of ethanol in motor fuel can damage small engines such as lawn mowers, snow blowers, and boats. And, because corn is used in ethanol production which competes with food uses, the National Council of Chain Restaurants claims that ethanol drives up the cost of food and causes market volatility that impacts both industry and consumers.[vi]

Costs Increase When Required Biofuel Levels Are Not Met

Refiners that are not able to meet the renewable fuel requirement must purchase Renewable Identification Numbers (RINs)–credits that allow them to make up the difference between what is mandated and what is actually used. While RINs had originally cost a few cents when biofuel requirements were low, RINs have now escalated in cost. RINs tracking ethanol use have doubled to 91 cents in a year, and RINs tracking biodiesel have increased 59 percent to 95.5 cents during the same period. Due to the large increase in the cost of RINs, refiners are incurring huge costs: Valero Energy Corp. expects its cost for RINs to total $850 million this year; CVR Refining expects the cost to total $250 million; PBF Energy expects an increased cost burden of 15 percent.[vii]

RINs will either bankrupt our small, merchant refiners and/or be passed onto gasoline and diesel prices which will hurt American consumers. Either way, RIN costs of this magnitude are not good for the American economy. While ethanol has benefits to refiners as an octane booster and oxygenate, mandated levels that exceed the blend wall just drive up prices for everyone. There is bipartisan legislation (H.R. 5180) in the House to limit EPA ethanol requirements in total transportation fuel at 9.7 percent, which could help to reduce the market volatility that RINs produce.[viii]

Conclusion

The Obama Administration seems to strive to set rules that intentionally drive up the cost of energy and hurt our economy without achieving any major benefit. This is the case for the Clean Power Plan and it is the case for biofuel requirements. Exceeding the blend wall, which is the case for the 2017 biofuel requirements mandated by EPA, causes harm to vehicles, small engines, merchant refiners, and American consumers.


[i] The Hill, Feds Boost Biofuel Mandate for 2017, November 23, 2016, http://thehill.com/policy/energy-environment/307348-feds-boost-biofuels-mandate-for-2017

[ii] National Law Review, EPA Finalizes Increase in Renewable Fuel Volumes, November 26, 2016, http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

[iii] National Law Review, EPA Delivers Proposed Renewable Fuel Standard Requirements to OMB, November 4, 2016, http://www.natlawreview.com/article/epa-delivers-proposed-renewable-fuel-standard-requirements-to-omb

[iv] Des Moines Register, Ethanol advocates, opponents brace for ruling, November 2, 2016, http://www.desmoinesregister.com/story/money/2016/11/02/ethanol-advocates-opponents-brace-ruling/93170002/

[v] Washington Times, EPA’s move to raise ethanol mix in gasoline fuels alarm over engine damage, May 20, 2016, http://www.washingtontimes.com/news/2016/may/20/epas-move-raise-ethanol-mix-gasoline-fuels-alarm-o/

[vi] Farm and Diary, EPA issues final renewable fuel Standard volumes for ethanol, November 26, 2016, http://www.farmanddairy.com/news/epa-issues-final-renewable-fuel-standard-volumes-for-ethanol/384221.html

[vii] Oil Price, Trump’s Election Is Great News For Independent Refiners, November 18, 2016, http://oilprice.com/Energy/Energy-General/Trumps-Election-Is-Great-News-For-Independent-Refiners.html

[viii] BNA, Biofuel Mandate Opponents Build Overhaul Momentum, November 17, 2016, http://www.bna.com/biofuel-mandate-opponents-n57982082935/

The post Obama’s EPA Ups Renewable Fuel Requirements for 2017 appeared first on IER.

from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2016/11/obamas-epa-ups-renewable-fuel.html
via http://raymondcastleberry.blogspot.com

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Obama’s EPA Ups Renewable Fuel Requirements for 2017

The day before Thanksgiving, the Obama Administration released its final biofuel requirements for 2017, raising the required biofuel levels from those proposed earlier this year. The new levels are above the blend wall, i.e. where the level of biofuels required exceeds 10 percent of motor fuel demand. Exceeding the blend wall matters because many automobile manufacturers will not warranty vehicles using gasoline with ethanol volumes greater than 10 percent. Besides increasing the blend wall, refiners must purchase renewable identification numbers when they do not meet the biofuel levels stipulated by the Environmental Protection Agency (EPA). Those renewable identification numbers have been increasing in value and the costs are passed onto the consumer, which results in higher gasoline prices for Americans.

The New Requirements for 2017

Refiners will be forced to blend 19.28 billion gallons of ethanol, biomass-based diesel and other biofuels into the gasoline and diesel supply in 2017. This is a record amount. The corn-based ethanol requirement increases to 15 billion gallons, which is the level required by the Energy Independence and Security Act of 2007 that created the Renewable Fuel Standard (RFS).  The RFS rule for 2017 is 1.2 billion gallons higher than the amount of renewable fuels that EPA required to be blended into the fuel supply for 2016–a 6 percent increase.[i]

To summarize, the new RFS rule requires that:

  • Conventional renewable fuel increases to 15 billion-gallons, which was the congressional target in the 2007 legislation.
  • Biomass-based biodiesel increases by 100 million gallons–the required volume for 2017 is twice that of the minimum congressional target.
  • Cellulosic biofuel increases by 35 percent over the 2016 standard.
  • Advanced biofuels, comprised of biomass-based diesel, cellulosic biofuel, and other biofuel increases by 19 percent over the 2016 standard.

The EPA required renewable fuel volumes for 2014 to 2018 are listed below. The only requirement that is provided for 2018 is the volume for biomass-based diesel.[ii]

Renewable Fuel Volume Requirements for 2014-2018

  2014 2015 2016 2017 2018
Cellulosic biofuel (million gallons) 33 123 230 311 n/a
Biomass-based diesel (billion gallons) 1.63 1.73 1.9 2.0 2.1
Advanced biofuel (billion gallons) 2.67 2.88 3.61 4.28 n/a
Renewable fuel (billion gallons) 16.28 16.93 18.11 19.28 n/a


Source:
http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

Final Levels Are Higher Than EPA Proposed Levels

Earlier this year, EPA proposed its 2017 biofuel requirements and provided them for comment. The proposed volumes were as follows: 14.8 billion gallons for conventional or corn-based biofuel and 4.0 billion gallons for advanced biofuels for a total of 18.8 billion gallons. The final levels released on November 23, 2016, are 2.6 percent higher than those proposed earlier this year.[iii]

According to the Energy Information Administration, ethanol’s share of the U.S. gasoline market has already exceeded 10 percent a couple of times this fall.[iv] EPA’s proposed levels for 2017 were expected to exceed the blend wall with an expected share of 10.44 percent.[v] With the final required amounts for 2017 even higher at 19.28 billion gallons, those requirements will surely exceed the blend wall by an even higher percentage.

As mentioned earlier, many automobile manufacturers will not warranty vehicles that use greater than 10 percent ethanol. Further, any amount of ethanol in motor fuel can damage small engines such as lawn mowers, snow blowers, and boats. And, because corn is used in ethanol production which competes with food uses, the National Council of Chain Restaurants claims that ethanol drives up the cost of food and causes market volatility that impacts both industry and consumers.[vi]

Costs Increase When Required Biofuel Levels Are Not Met

Refiners that are not able to meet the renewable fuel requirement must purchase Renewable Identification Numbers (RINs)–credits that allow them to make up the difference between what is mandated and what is actually used. While RINs had originally cost a few cents when biofuel requirements were low, RINs have now escalated in cost. RINs tracking ethanol use have doubled to 91 cents in a year, and RINs tracking biodiesel have increased 59 percent to 95.5 cents during the same period. Due to the large increase in the cost of RINs, refiners are incurring huge costs: Valero Energy Corp. expects its cost for RINs to total $850 million this year; CVR Refining expects the cost to total $250 million; PBF Energy expects an increased cost burden of 15 percent.[vii]

RINs will either bankrupt our small, merchant refiners and/or be passed onto gasoline and diesel prices which will hurt American consumers. Either way, RIN costs of this magnitude are not good for the American economy. While ethanol has benefits to refiners as an octane booster and oxygenate, mandated levels that exceed the blend wall just drive up prices for everyone. There is bipartisan legislation (H.R. 5180) in the House to limit EPA ethanol requirements in total transportation fuel at 9.7 percent, which could help to reduce the market volatility that RINs produce.[viii]

Conclusion

The Obama Administration seems to strive to set rules that intentionally drive up the cost of energy and hurt our economy without achieving any major benefit. This is the case for the Clean Power Plan and it is the case for biofuel requirements. Exceeding the blend wall, which is the case for the 2017 biofuel requirements mandated by EPA, causes harm to vehicles, small engines, merchant refiners, and American consumers.


[i] The Hill, Feds Boost Biofuel Mandate for 2017, November 23, 2016, http://thehill.com/policy/energy-environment/307348-feds-boost-biofuels-mandate-for-2017

[ii] National Law Review, EPA Finalizes Increase in Renewable Fuel Volumes, November 26, 2016, http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

[iii] National Law Review, EPA Delivers Proposed Renewable Fuel Standard Requirements to OMB, November 4, 2016, http://www.natlawreview.com/article/epa-delivers-proposed-renewable-fuel-standard-requirements-to-omb

[iv] Des Moines Register, Ethanol advocates, opponents brace for ruling, November 2, 2016, http://www.desmoinesregister.com/story/money/2016/11/02/ethanol-advocates-opponents-brace-ruling/93170002/

[v] Washington Times, EPA’s move to raise ethanol mix in gasoline fuels alarm over engine damage, May 20, 2016, http://www.washingtontimes.com/news/2016/may/20/epas-move-raise-ethanol-mix-gasoline-fuels-alarm-o/

[vi] Farm and Diary, EPA issues final renewable fuel Standard volumes for ethanol, November 26, 2016, http://www.farmanddairy.com/news/epa-issues-final-renewable-fuel-standard-volumes-for-ethanol/384221.html

[vii] Oil Price, Trump’s Election Is Great News For Independent Refiners, November 18, 2016, http://oilprice.com/Energy/Energy-General/Trumps-Election-Is-Great-News-For-Independent-Refiners.html

[viii] BNA, Biofuel Mandate Opponents Build Overhaul Momentum, November 17, 2016, http://www.bna.com/biofuel-mandate-opponents-n57982082935/

The post Obama’s EPA Ups Renewable Fuel Requirements for 2017 appeared first on IER.

GAO Report Reveals the Failures of the Renewable Fuel Standard

Besides issues with the blend wall and with renewable identification numbers that we have discussed in the past, the General Accountability Office (GAO) has identified other issues with the Renewable Fuel Standard (RFS) in recent reports. Namely, that the RFS is not meeting expected greenhouse gas reductions because advanced biofuels are not being produced to the levels specified in the Energy Independence and Security Act of 2007. Nor will they meet these production levels in the near future because they are too expensive to produce. For example, in 2017, 24 billion gallons of biofuels were to be produced according to the legislation that created the RFS, but only 19.28 billion gallons are being required by the Environmental Protection Agency (EPA) because the cost of producing advanced biofuels, particularly cellulosic ethanol, is prohibitive. Also hampering production is the boom in domestic oil and gas production that has made fossil fuels far more inexpensive in the marketplace.

Thus, the congressionally mandated levels for biofuels are irrelevant. These levels are specified through 2022. After that date, EPA is to set the levels. Despite EPA lowering the congressionally mandated levels in recent years, it is still setting ethanol and other biofuels blending requirements that are unrealistic and potentially harmful to engines, resulting in increased costs to consumers. According to a study by the Manhattan Institute, biofuel subsidies and mandates cost U.S. motorists $10 billion annually in additional fuel costs.[i]

The GAO Reports

The RFS was created in 2005 and amended by Congress in 2007, where the stated goals of the program were to reduce oil imports and greenhouse gas emissions. According to the GAO, the RFS has fallen short on both these goals. Since the RFS was established, U.S. oil imports have decreased, and while the RFS did contribute to the decrease, other factors contributed more significantly. These include the increase in domestic oil production due to the advent of hydraulic fracturing and the decrease in the consumption of gasoline.[ii]

The reduction in greenhouse gas emissions were expected to come from the advanced biofuel requirements of the RFS. However, because of their shortfall in production, most of the biofuels blended under the RFS are from conventional corn ethanol, which contributes less to greenhouse gas reductions than advanced biofuels. For example, the cellulosic biofuel blended into the transportation fuel supply in 2015 was less than 5 percent of the statutory target of 3 billion gallons. As a result, EPA has reduced the RFS targets for advanced biofuels in each of the last 4 years. According to GAO, the shortfall of advanced biofuels is the result of high production costs. Further, GAO notes that the current investment climate in research and development required to make these fuels more cost-competitive with petroleum-based fuels is unlikely, even in the longer term.

The graph below shows the congressionally mandated levels of advanced biofuels versus the levels that EPA has set from 2010 to 2017. Note that the levels that GAO used in its report for 2017 were the levels proposed by EPA and not the final levels that were recently released. The final advanced biofuel levels were 0.28 billion gallons higher than the proposed levels.

screen-shot-2016-11-30-at-11-03-55-am

Source: GAO, http://www.gao.gov/assets/690/681252.pdf

According to the GAO, the federal government supported research and development related to advanced biofuels through direct research or grants. In fiscal years 2013 through 2015, the federal government obligated over $1.1 billion for advanced biofuels research and development. Of that amount, the Department of Agriculture obligated over $168 million that developed a process to increase production of butanol, a drop-in fuel that lowered production costs by over 20 percent. According to the GAO, the federal agencies are shifting their focus to drop-in fuels in part because they are compatible with existing infrastructure, which makes them more desirable than cellulosic ethanol.[iii]

Despite spending on research and development by the federal government, there are several factors that make significant increases to advanced biofuel production challenging. According to GAO, biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and certain drop-in fuels. While biodiesel and renewable diesel are being produced in significant volumes, it is unlikely that their production can expand much in the next few years because of feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and there is limited potential for expanded production because production costs are currently too high. While drop-in fuels are technologically well understood, they are not being produced because their production costs are also too high.

Further development in advanced biofuels is expected to be stunted because of the low price of fossil fuels relative to advanced biofuels, which is a disincentive for consumers to adopt greater use of biofuels and a deterrent for private investors to enter the advanced biofuels market. Other uncertainties include government policy, including whether the RFS and federal incentives that support advanced biofuels will remain in effect.

Conclusion

According to the GAO, the two major goals of the legislation that created the RFS was to reduce oil imports and greenhouse gas emissions. While both of these have been reduced, the RFS had less to contribute than other factors. The reduction in oil imports occurred mainly due to greater domestic production of oil and lower consumption of gasoline. The RFS contributed less to greenhouse gas reductions than expected because advanced biofuels production is far below their congressionally mandated levels due to lack of feedstocks and high costs of production. Further, there are serious challenges to increased production of advanced biofuel technologies in the future because of their high costs, the relatively low price of fossil fuels, and uncertainty in the regulatory environment.


[i] Manhattan Institute, The Corn Hidden Ethanol Tax, March 2015, http://www.manhattan-institute.org/pdf/ib_32.pdf

[ii] Government Accountability Office, RENEWABLE FUEL STANDARD Program Unlikely to Meet Its Targets for Reducing Greenhouse Gas Emissions, November 2016, http://www.gao.gov/assets/690/681252.pdf

[iii] Government Accountability Office, RENEWABLE FUEL STANDARD Low Expected Production Volumes Make It Unlikely That Advanced Biofuels Can Meet Increasing Targets, November 2016, http://www.gao.gov/assets/690/681256.pdf

The post GAO Report Reveals the Failures of the Renewable Fuel Standard appeared first on IER.

Obama’s EPA Ups Renewable Fuel Requirements for 2017

The day before Thanksgiving, the Obama Administration released its final biofuel requirements for 2017, raising the required biofuel levels from those proposed earlier this year. The new levels are above the blend wall, i.e. where the level of biofuels required exceeds 10 percent of motor fuel demand. Exceeding the blend wall matters because many automobile manufacturers will not warranty vehicles using gasoline with ethanol volumes greater than 10 percent. Besides increasing the blend wall, refiners must purchase renewable identification numbers when they do not meet the biofuel levels stipulated by the Environmental Protection Agency (EPA). Those renewable identification numbers have been increasing in value and the costs are passed onto the consumer, which results in higher gasoline prices for Americans.

The New Requirements for 2017

Refiners will be forced to blend 19.28 billion gallons of ethanol, biomass-based diesel and other biofuels into the gasoline and diesel supply in 2017. This is a record amount. The corn-based ethanol requirement increases to 15 billion gallons, which is the level required by the Energy Independence and Security Act of 2007 that created the Renewable Fuel Standard (RFS).  The RFS rule for 2017 is 1.2 billion gallons higher than the amount of renewable fuels that EPA required to be blended into the fuel supply for 2016–a 6 percent increase.[i]

To summarize, the new RFS rule requires that:

  • Conventional renewable fuel increases to 15 billion-gallons, which was the congressional target in the 2007 legislation.
  • Biomass-based biodiesel increases by 100 million gallons–the required volume for 2017 is twice that of the minimum congressional target.
  • Cellulosic biofuel increases by 35 percent over the 2016 standard.
  • Advanced biofuels, comprised of biomass-based diesel, cellulosic biofuel, and other biofuel increases by 19 percent over the 2016 standard.

The EPA required renewable fuel volumes for 2014 to 2018 are listed below. The only requirement that is provided for 2018 is the volume for biomass-based diesel.[ii]

Renewable Fuel Volume Requirements for 2014-2018

  2014 2015 2016 2017 2018
Cellulosic biofuel (million gallons) 33 123 230 311 n/a
Biomass-based diesel (billion gallons) 1.63 1.73 1.9 2.0 2.1
Advanced biofuel (billion gallons) 2.67 2.88 3.61 4.28 n/a
Renewable fuel (billion gallons) 16.28 16.93 18.11 19.28 n/a


Source:
http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

Final Levels Are Higher Than EPA Proposed Levels

Earlier this year, EPA proposed its 2017 biofuel requirements and provided them for comment. The proposed volumes were as follows: 14.8 billion gallons for conventional or corn-based biofuel and 4.0 billion gallons for advanced biofuels for a total of 18.8 billion gallons. The final levels released on November 23, 2016, are 2.6 percent higher than those proposed earlier this year.[iii]

According to the Energy Information Administration, ethanol’s share of the U.S. gasoline market has already exceeded 10 percent a couple of times this fall.[iv] EPA’s proposed levels for 2017 were expected to exceed the blend wall with an expected share of 10.44 percent.[v] With the final required amounts for 2017 even higher at 19.28 billion gallons, those requirements will surely exceed the blend wall by an even higher percentage.

As mentioned earlier, many automobile manufacturers will not warranty vehicles that use greater than 10 percent ethanol. Further, any amount of ethanol in motor fuel can damage small engines such as lawn mowers, snow blowers, and boats. And, because corn is used in ethanol production which competes with food uses, the National Council of Chain Restaurants claims that ethanol drives up the cost of food and causes market volatility that impacts both industry and consumers.[vi]

Costs Increase When Required Biofuel Levels Are Not Met

Refiners that are not able to meet the renewable fuel requirement must purchase Renewable Identification Numbers (RINs)–credits that allow them to make up the difference between what is mandated and what is actually used. While RINs had originally cost a few cents when biofuel requirements were low, RINs have now escalated in cost. RINs tracking ethanol use have doubled to 91 cents in a year, and RINs tracking biodiesel have increased 59 percent to 95.5 cents during the same period. Due to the large increase in the cost of RINs, refiners are incurring huge costs: Valero Energy Corp. expects its cost for RINs to total $850 million this year; CVR Refining expects the cost to total $250 million; PBF Energy expects an increased cost burden of 15 percent.[vii]

RINs will either bankrupt our small, merchant refiners and/or be passed onto gasoline and diesel prices which will hurt American consumers. Either way, RIN costs of this magnitude are not good for the American economy. While ethanol has benefits to refiners as an octane booster and oxygenate, mandated levels that exceed the blend wall just drive up prices for everyone. There is bipartisan legislation (H.R. 5180) in the House to limit EPA ethanol requirements in total transportation fuel at 9.7 percent, which could help to reduce the market volatility that RINs produce.[viii]

Conclusion

The Obama Administration seems to strive to set rules that intentionally drive up the cost of energy and hurt our economy without achieving any major benefit. This is the case for the Clean Power Plan and it is the case for biofuel requirements. Exceeding the blend wall, which is the case for the 2017 biofuel requirements mandated by EPA, causes harm to vehicles, small engines, merchant refiners, and American consumers.


[i] The Hill, Feds Boost Biofuel Mandate for 2017, November 23, 2016, http://thehill.com/policy/energy-environment/307348-feds-boost-biofuels-mandate-for-2017

[ii] National Law Review, EPA Finalizes Increase in Renewable Fuel Volumes, November 26, 2016, http://www.natlawreview.com/article/epa-finalizes-increase-renewable-fuel-volumes

[iii] National Law Review, EPA Delivers Proposed Renewable Fuel Standard Requirements to OMB, November 4, 2016, http://www.natlawreview.com/article/epa-delivers-proposed-renewable-fuel-standard-requirements-to-omb

[iv] Des Moines Register, Ethanol advocates, opponents brace for ruling, November 2, 2016, http://www.desmoinesregister.com/story/money/2016/11/02/ethanol-advocates-opponents-brace-ruling/93170002/

[v] Washington Times, EPA’s move to raise ethanol mix in gasoline fuels alarm over engine damage, May 20, 2016, http://www.washingtontimes.com/news/2016/may/20/epas-move-raise-ethanol-mix-gasoline-fuels-alarm-o/

[vi] Farm and Diary, EPA issues final renewable fuel Standard volumes for ethanol, November 26, 2016, http://www.farmanddairy.com/news/epa-issues-final-renewable-fuel-standard-volumes-for-ethanol/384221.html

[vii] Oil Price, Trump’s Election Is Great News For Independent Refiners, November 18, 2016, http://oilprice.com/Energy/Energy-General/Trumps-Election-Is-Great-News-For-Independent-Refiners.html

[viii] BNA, Biofuel Mandate Opponents Build Overhaul Momentum, November 17, 2016, http://www.bna.com/biofuel-mandate-opponents-n57982082935/

The post Obama’s EPA Ups Renewable Fuel Requirements for 2017 appeared first on IER.

GAO Report Reveals the Failures of the Renewable Fuel Standard

Besides issues with the blend wall and with renewable identification numbers that we have discussed in the past, the General Accountability Office (GAO) has identified other issues with the Renewable Fuel Standard (RFS) in recent reports. Namely, that the RFS is not meeting expected greenhouse gas reductions because advanced biofuels are not being produced to the levels specified in the Energy Independence and Security Act of 2007. Nor will they meet these production levels in the near future because they are too expensive to produce. For example, in 2017, 24 billion gallons of biofuels were to be produced according to the legislation that created the RFS, but only 19.28 billion gallons are being required by the Environmental Protection Agency (EPA) because the cost of producing advanced biofuels, particularly cellulosic ethanol, is prohibitive. Also hampering production is the boom in domestic oil and gas production that has made fossil fuels far more inexpensive in the marketplace.

Thus, the congressionally mandated levels for biofuels are irrelevant. These levels are specified through 2022. After that date, EPA is to set the levels. Despite EPA lowering the congressionally mandated levels in recent years, it is still setting ethanol and other biofuels blending requirements that are unrealistic and potentially harmful to engines, resulting in increased costs to consumers. According to a study by the Manhattan Institute, biofuel subsidies and mandates cost U.S. motorists $10 billion annually in additional fuel costs.[i]

The GAO Reports

The RFS was created in 2005 and amended by Congress in 2007, where the stated goals of the program were to reduce oil imports and greenhouse gas emissions. According to the GAO, the RFS has fallen short on both these goals. Since the RFS was established, U.S. oil imports have decreased, and while the RFS did contribute to the decrease, other factors contributed more significantly. These include the increase in domestic oil production due to the advent of hydraulic fracturing and the decrease in the consumption of gasoline.[ii]

The reduction in greenhouse gas emissions were expected to come from the advanced biofuel requirements of the RFS. However, because of their shortfall in production, most of the biofuels blended under the RFS are from conventional corn ethanol, which contributes less to greenhouse gas reductions than advanced biofuels. For example, the cellulosic biofuel blended into the transportation fuel supply in 2015 was less than 5 percent of the statutory target of 3 billion gallons. As a result, EPA has reduced the RFS targets for advanced biofuels in each of the last 4 years. According to GAO, the shortfall of advanced biofuels is the result of high production costs. Further, GAO notes that the current investment climate in research and development required to make these fuels more cost-competitive with petroleum-based fuels is unlikely, even in the longer term.

The graph below shows the congressionally mandated levels of advanced biofuels versus the levels that EPA has set from 2010 to 2017. Note that the levels that GAO used in its report for 2017 were the levels proposed by EPA and not the final levels that were recently released. The final advanced biofuel levels were 0.28 billion gallons higher than the proposed levels.

screen-shot-2016-11-30-at-11-03-55-am

Source: GAO, http://www.gao.gov/assets/690/681252.pdf

According to the GAO, the federal government supported research and development related to advanced biofuels through direct research or grants. In fiscal years 2013 through 2015, the federal government obligated over $1.1 billion for advanced biofuels research and development. Of that amount, the Department of Agriculture obligated over $168 million that developed a process to increase production of butanol, a drop-in fuel that lowered production costs by over 20 percent. According to the GAO, the federal agencies are shifting their focus to drop-in fuels in part because they are compatible with existing infrastructure, which makes them more desirable than cellulosic ethanol.[iii]

Despite spending on research and development by the federal government, there are several factors that make significant increases to advanced biofuel production challenging. According to GAO, biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and certain drop-in fuels. While biodiesel and renewable diesel are being produced in significant volumes, it is unlikely that their production can expand much in the next few years because of feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and there is limited potential for expanded production because production costs are currently too high. While drop-in fuels are technologically well understood, they are not being produced because their production costs are also too high.

Further development in advanced biofuels is expected to be stunted because of the low price of fossil fuels relative to advanced biofuels, which is a disincentive for consumers to adopt greater use of biofuels and a deterrent for private investors to enter the advanced biofuels market. Other uncertainties include government policy, including whether the RFS and federal incentives that support advanced biofuels will remain in effect.

Conclusion

According to the GAO, the two major goals of the legislation that created the RFS was to reduce oil imports and greenhouse gas emissions. While both of these have been reduced, the RFS had less to contribute than other factors. The reduction in oil imports occurred mainly due to greater domestic production of oil and lower consumption of gasoline. The RFS contributed less to greenhouse gas reductions than expected because advanced biofuels production is far below their congressionally mandated levels due to lack of feedstocks and high costs of production. Further, there are serious challenges to increased production of advanced biofuel technologies in the future because of their high costs, the relatively low price of fossil fuels, and uncertainty in the regulatory environment.


[i] Manhattan Institute, The Corn Hidden Ethanol Tax, March 2015, http://www.manhattan-institute.org/pdf/ib_32.pdf

[ii] Government Accountability Office, RENEWABLE FUEL STANDARD Program Unlikely to Meet Its Targets for Reducing Greenhouse Gas Emissions, November 2016, http://www.gao.gov/assets/690/681252.pdf

[iii] Government Accountability Office, RENEWABLE FUEL STANDARD Low Expected Production Volumes Make It Unlikely That Advanced Biofuels Can Meet Increasing Targets, November 2016, http://www.gao.gov/assets/690/681256.pdf

The post GAO Report Reveals the Failures of the Renewable Fuel Standard appeared first on IER.

GAO Report Reveals the Failures of the Renewable Fuel Standard

Besides issues with the blend wall and with renewable identification numbers that we have discussed in the past, the General Accountability Office (GAO) has identified other issues with the Renewable Fuel Standard (RFS) in recent reports. Namely, that the RFS is not meeting expected greenhouse gas reductions because advanced biofuels are not being produced to the levels specified in the Energy Independence and Security Act of 2007. Nor will they meet these production levels in the near future because they are too expensive to produce. For example, in 2017, 24 billion gallons of biofuels were to be produced according to the legislation that created the RFS, but only 19.28 billion gallons are being required by the Environmental Protection Agency (EPA) because the cost of producing advanced biofuels, particularly cellulosic ethanol, is prohibitive. Also hampering production is the boom in domestic oil and gas production that has made fossil fuels far more inexpensive in the marketplace.

Thus, the congressionally mandated levels for biofuels are irrelevant. These levels are specified through 2022. After that date, EPA is to set the levels. Despite EPA lowering the congressionally mandated levels in recent years, it is still setting ethanol and other biofuels blending requirements that are unrealistic and potentially harmful to engines, resulting in increased costs to consumers. According to a study by the Manhattan Institute, biofuel subsidies and mandates cost U.S. motorists $10 billion annually in additional fuel costs.[i]

The GAO Reports

The RFS was created in 2005 and amended by Congress in 2007, where the stated goals of the program were to reduce oil imports and greenhouse gas emissions. According to the GAO, the RFS has fallen short on both these goals. Since the RFS was established, U.S. oil imports have decreased, and while the RFS did contribute to the decrease, other factors contributed more significantly. These include the increase in domestic oil production due to the advent of hydraulic fracturing and the decrease in the consumption of gasoline.[ii]

The reduction in greenhouse gas emissions were expected to come from the advanced biofuel requirements of the RFS. However, because of their shortfall in production, most of the biofuels blended under the RFS are from conventional corn ethanol, which contributes less to greenhouse gas reductions than advanced biofuels. For example, the cellulosic biofuel blended into the transportation fuel supply in 2015 was less than 5 percent of the statutory target of 3 billion gallons. As a result, EPA has reduced the RFS targets for advanced biofuels in each of the last 4 years. According to GAO, the shortfall of advanced biofuels is the result of high production costs. Further, GAO notes that the current investment climate in research and development required to make these fuels more cost-competitive with petroleum-based fuels is unlikely, even in the longer term.

The graph below shows the congressionally mandated levels of advanced biofuels versus the levels that EPA has set from 2010 to 2017. Note that the levels that GAO used in its report for 2017 were the levels proposed by EPA and not the final levels that were recently released. The final advanced biofuel levels were 0.28 billion gallons higher than the proposed levels.

screen-shot-2016-11-30-at-11-03-55-am

Source: GAO, http://www.gao.gov/assets/690/681252.pdf

According to the GAO, the federal government supported research and development related to advanced biofuels through direct research or grants. In fiscal years 2013 through 2015, the federal government obligated over $1.1 billion for advanced biofuels research and development. Of that amount, the Department of Agriculture obligated over $168 million that developed a process to increase production of butanol, a drop-in fuel that lowered production costs by over 20 percent. According to the GAO, the federal agencies are shifting their focus to drop-in fuels in part because they are compatible with existing infrastructure, which makes them more desirable than cellulosic ethanol.[iii]

Despite spending on research and development by the federal government, there are several factors that make significant increases to advanced biofuel production challenging. According to GAO, biofuels that are technologically well understood include biodiesel, renewable diesel, renewable natural gas, cellulosic ethanol, and certain drop-in fuels. While biodiesel and renewable diesel are being produced in significant volumes, it is unlikely that their production can expand much in the next few years because of feedstock limitations. Current production of cellulosic biofuels is far below the statutory volumes and there is limited potential for expanded production because production costs are currently too high. While drop-in fuels are technologically well understood, they are not being produced because their production costs are also too high.

Further development in advanced biofuels is expected to be stunted because of the low price of fossil fuels relative to advanced biofuels, which is a disincentive for consumers to adopt greater use of biofuels and a deterrent for private investors to enter the advanced biofuels market. Other uncertainties include government policy, including whether the RFS and federal incentives that support advanced biofuels will remain in effect.

Conclusion

According to the GAO, the two major goals of the legislation that created the RFS was to reduce oil imports and greenhouse gas emissions. While both of these have been reduced, the RFS had less to contribute than other factors. The reduction in oil imports occurred mainly due to greater domestic production of oil and lower consumption of gasoline. The RFS contributed less to greenhouse gas reductions than expected because advanced biofuels production is far below their congressionally mandated levels due to lack of feedstocks and high costs of production. Further, there are serious challenges to increased production of advanced biofuel technologies in the future because of their high costs, the relatively low price of fossil fuels, and uncertainty in the regulatory environment.


[i] Manhattan Institute, The Corn Hidden Ethanol Tax, March 2015, http://www.manhattan-institute.org/pdf/ib_32.pdf

[ii] Government Accountability Office, RENEWABLE FUEL STANDARD Program Unlikely to Meet Its Targets for Reducing Greenhouse Gas Emissions, November 2016, http://www.gao.gov/assets/690/681252.pdf

[iii] Government Accountability Office, RENEWABLE FUEL STANDARD Low Expected Production Volumes Make It Unlikely That Advanced Biofuels Can Meet Increasing Targets, November 2016, http://www.gao.gov/assets/690/681256.pdf

The post GAO Report Reveals the Failures of the Renewable Fuel Standard appeared first on IER.

from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2016/11/gao-report-reveals-failures-of.html
via http://raymondcastleberry.blogspot.com

5 Takeaways from Earning Links in 130 Countries

Posted by kerryjones

I was in Peru earlier this year for a digital marketing conference, and I overwhelmingly heard the same frustration: “It’s really hard to use outreach to earn links or PR coverage in our country.”

This wasn’t for lack of trying. As I continued to hear this sentiment during my visit, I learned there simply weren’t a lot of opportunities. For one thing, in Peru, there aren’t nearly as many publishers as in more populous countries. Most publishers expected payment for mentioning a brand. Furthermore, journalists did a lot of job-hopping, so maintaining relationships was difficult.

This is a conundrum not limited to Peru. I know many people outside of the US can relate. When you see the Fractl team and others sharing stories about how we earn hundreds of links for a single content piece, you might think it must be nice to do outreach somewhere like the US where online publishers are plentiful and they’ll feature great content with no strings attached. While the work my team does isn’t easy by any means, I do recognize that there are ample opportunities for earning links and press coverage from American publishers.

What can you do if opportunities are scarce in your country?

One solution is focusing your outreach efforts on publishers in neighboring countries or countries with the same language and a similar culture. During conversations with the Attachmedia team (the company hosting the conference I was at), I learned they had much greater success earning media stories and building links outside of Peru because publishers in surrounding South American countries were more receptive to their email pitches and publishing third-party content.

But you may not need to do any international outreach if you know how to create the type of content that will organically attract attention beyond your borders.

At Fractl, many of our top-performing client campaigns have secured a lot of international links even without us doing much, or any, international outreach. To dig deeper, we recently conducted an analysis of 290 top-performing client content campaigns to determine which content naturally attracted coverage from international publishers (and thus, international links). Altogether, these campaigns were featured by publishers in 130 countries, earning more than 4,000 international media stories.

In this post, I’ll share what we found about what causes content to spread around the world.

1. Domestic success was a key factor in driving international placements for Fractl’s campaigns.

For years, we’ve noticed that if content gets enough attention in the US, it will organically begin to receive international press and links. Watch how this happens in the GIF below, which visualizes how one of our campaigns spread globally after reaching critical mass in the US:

Mapping-Viral-Content.gif

Our study confirmed that there’s a correlation between earning a high number of links domestically and earning international links.

When we looked at our 50 most successful client campaigns that have earned the highest number of media stories, we discovered that these campaigns also received the most international coverage. Out of the 4,000 international placements we analyzed, 70 percent of them came from these 50 top-performing campaigns.

We also found that content which earned at least 25 international media pickups also earned at least 25 domestic pickups, so there’s a minimum one-to-one ratio of international to domestic pickups.

2. Overcome language barriers with visual formats that don’t rely on text.

Maps showing a contrast between countries were the visualizations of choice for international publishers.

top-50-by-format.jpg

World maps can be easily understood by global audiences, and make it easy for publishers to find an angle to cover. A client campaign, which looked at how much people eat and drink around the world, included maps highlighting differences between the countries. This was our fourth-highest-performing campaign in terms of international coverage.

calories-map.png It’s easy for a writer whose primary language isn’t English to look at a shaded map like the one above and pick out the story about his or her country. For example, a Belgian publisher who covered the consumption campaign used a headline that roughly translated to “Belgians eat more calories than Americans”:

belgian-publisher.png

Images were the second most popular visual format, which tells us that a picture may be worth a thousand words in any language. One great example of this is our “Evolution of Miss Universe” campaign, where we created a series of animated and interactive visualizations using photos of Miss Universe winners since 1952:

https://onlinedoctor.superdrug.com/services/widgets/evolution-miss-universe/miss-universe-timeline/

The simplicity of the visuals made this content accessible to all viewers regardless of the language they spoke. Paired with the international angle, this helped the campaign gain more than 40 pickups from global sites.

As we move down the rankings, formats that relied on more text, such as infographics, were less popular internationally. No doubt this is because international audiences can’t connect with content they can’t understand.

When creating text-heavy visualizations, consider if someone who speaks a different language can understand it — would it still make sense if you removed all the text?

Pro tip: If your outreach strategy is targeting multiple countries or a country where more than one language is widely spoken, it may be worth the effort to produce text-heavy visuals in multiple languages.

3. Topics that speak to universal human interests performed best internationally.

Our top-performing international campaigns show a clear preference for topics that resonate globally. The six topics that performed best internationally were:

  1. Drugs and alcohol
  2. Health and fitness
  3. Entertainment
  4. Sex and relationships
  5. Travel
  6. Technology

Bear in the mind that these topics are reflective of our client campaigns, so every topic imaginable was not included in this study.

We drilled this down a little more and looked at the specific topics covered in our top 50 campaigns. You’ll notice many of the most popular topics would make your grandma blush.

international-data-by-topic.jpg

We know that controversial topics are highly effective in grabbing attention, and the list above confirms that pushing boundaries works on a global scale. (We weren’t exactly surprised that a campaign called “Does Size Matter?” resonated internationally.)

But don’t look at the chart above and assume that you need to make your content about sex, drugs, and rock and roll if you want to gain international attention. As you can see, even pedestrian fare performed well globally. Consider how you can create content that speaks to basic human interests, like technology, food, and … Instagram.

4. A global angle isn’t necessary.

While our top five international campaigns did have a global focus, more than half of our 50 top-performing international campaigns did not have a global angle. This tells us that a geographic angle doesn’t determine international success.

Some examples of non-geographic ideas that performed well are:

  • A tool that calculates indirect sexual exposure based on how many partners you’ve had
  • The types of white lies people commonly tell and hear
  • A face-off between Siri, Cortana, and Google Now performance
  • A sampling of how many bacteria and germs are found in hotel rooms

We also found that US-centric campaigns were, unsurprisingly, less likely to succeed. Only three of our campaigns with America-focused titles received more than 25 international placements. If your content topic does have a geographic angle, make sure to broaden it to have a multi-national or worldwide focus.

Pro tip: Consider how you can add an international twist to content ideas that already performed well domestically. The Miss Universe campaign example I shared above? That came to fruition after we successfully did a similar campaign about Miss America. Similarly, we could likely reboot our “Tolerance in America” campaign to look at racism around the world and expect it to be successful, as this topic already proved popular at home and is certainly relevant worldwide.

5. The elements of share-worthy content hold true internationally.

Over the years, we’ve seen time and time again that including certain elements in content greatly increases the chance of success. All of our content that achieved international success included some combination of the following:

  • Surprising information
  • An emotionally resonant topic
  • A universally appealing topic
  • Comparison or ranking of multiple places, things, or ideas
  • A geographic angle
  • A pop culture angle

Look back at the content examples I shared in this post, and make note of how many of the characteristics above are present in each one. To increase the likelihood that your content appeals to global audiences, be sure to read this post about the vital role these elements play in creating content that earns a lot of links and social shares.

What has your experience been like using content to attract international press and links? I’d love to hear what’s worked for you — leave a comment below!

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from Raymond Castleberry Blog http://raymondcastleberry.blogspot.com/2016/11/5-takeaways-from-earning-links-in-130.html
via http://raymondcastleberry.blogspot.com