Biodiesel

Larry Schafer Senior Advisor

National Biodiesel Board

Nationwide Production

226 EPA-Registered plants nationwide with over 2.9 Billion GPY Capacity

Biodiesel Users

OEMs Supporting B20+

OEMs Supporting B20+

• New OEM B20 Support Statements in 2012:

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Bioheat – The Evolution of Oilheat

www.bioheatonline.comBioheat® is a renewable, clean-burning

heating oil. Usually blended with standard petroleum heating oil, Bioheat

significantly reduces emissions and keeps heating systems running longer

than standard heating oil alone. In-home and laboratory testing has shown

that the use of Bioheat in a standard home oil burner resulted in a substantial

reduction in unburned hydrocarbons, carbon monoxide, and particulate

matter compared to emissions from distillate fuels.

Production by Calendar Year

1 2 3 4 5 6 70

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

2005 2006 2007 2008 2009 2010 2011

Volume in Gallons

112 Million

224 Million

500 Million

691 Million

545 Million

315 Million

1.1 Billion

Economic DownturnRFS2 Uncertainty

Lapse of Biodiesel Tax Credit

RFS-2 ImplementedBiodiesel Tax Credit Extended

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(Millions of Gallons) EPA EMTS Data Month DOE EIA Survey (RINS Generated)

555 Through June 523 658 Through July 610757 Through August ?

(DOE through July up 33.26% compared to production over the first seven months of 2011).

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2012 Production

• The EPA’s Renewable Fuel Standard (RFS)

• The Biodiesel Tax Credit

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Federal Policy

The RFS2 program, implemented in 2010, requires a minimum amount of Biomass-based Diesel (which includes

biodiesel, BioHeat, bio-jet and renewable diesel) to be blended with petroleum diesel or aviation fuel:

2009 = 500 million gallons2010 = 650 million gallons 2011 = 800 million gallons2012 = 1 billion gallons2013 = 1.28 billion gallons 2014 = ???

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Renewable Fuel Standard

The $1 per gallon biodiesel tax incentive helps reduce costs for consumers and makes biodiesel more cost-

competitive with petroleum diesel.

The incentive, which was first implemented in 2005, has a proven impact on jobs.

It expired on Dec. 31, 2011 and Congress has yet to pass an extension.

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Biodiesel Tax Credit

Tax Incentive

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Aug. 2, 2012 - Senate Finance Committee, with 19-5 vote, passed tax extenders package including the biodiesel tax incentive.

Senate Finance package will serve as baseline for future negotiations and keeps us in good position if Congress can come together around a compromise.

Most likely scenario is for lame-duck legislation.

RFS Waiver Requests

Formal waiver petitions to EPA from:

Arkansas Gov. Mike Beebe (D)North Carolina Gov. Beverly Perdue (D) New Mexico Gov. Susana Martinez (R)Georgia Gov. Nathan Deal (R)Texas Gov. Rick Perry (R)Virginia Gov. Bob McDonnell (R)

(Informal Waiver Requests were from Delaware Gov. Jack Markell (D) and Maryland Gov. Martin O’Malley (D), in additional to several Members of Congress and industry groups who sent letters expressing support for waivers)

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RFS Waiver Requests

Section 211(o)(7)(A) of the Clean Air Act allows the EPA to waive volume requirements of the RFS in whole or in part if they would severely harm the economy or environment of a state, region or the United States, or if the EPA determines there is inadequate domestic supply of renewable fuel.

Waiver discussion and requests mostly focused on corn ethanol but with implications for biodiesel and other Advanced Biofuel sections of the program.

EPA has opened 45-day comment period for waiver petitions. Deadline for comments is October 11th.

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RIN Integrity Issues

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Congressional Hearing: On Wednesday, July 11, the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations held a hearing titled, "RIN Fraud: EPA's Efforts to Ensure Market Integrity in the Renewable Fuels Program."

The hearing featured a lengthy discussion of potential solutions for addressing fraud, including private-sector solutions and the ongoing discussions to restore confidence in RIN markets between the National Biodiesel Board, the petroleum sector and EPA.

RIN Integrity Issues

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Meetings with EPA, API and AFPM:

The NBB has been in discussions with EPA, API, AFPM, RFA, GE and others since mid-June on discussing a regulatory update to the rule.

NBB’s RIN Integrity Task Force meets every week to discuss latest developments and to promote a steadfast biodiesel position.

Continued discussions with EPA – EPA is considering a number of options, with the goal of having a regulatory proposal on which to comment by the end of the year.

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Legal Issues: Cellulosic Biofuel and Advanced Biofuel Volumes

• D.C. Circuit Litigation – 2012 RFS– API v. EPA, No. 12-1139

• On March 9, 2012, API filed a petition for review of the 2012 RFS• API’s brief was filed on June 21, 2012, challenging both the

cellulosic biofuel volume and EPA’s decision to retain the 2.0 billion gallon advanced biofuel volume requirement in light of the reduced cellulosic biofuel volume

• EPA’s brief was filed on August 20, 2012• NBB intervened in support of EPA on the advanced biofuel issue

and, with various other biofuel groups, filed a joint intervenor brief on September 4, 2012

– Intervenors sought to have case dismissed on jurisdictional grounds and defended EPA on the merits of its decision

• Briefing is set to be completed by October 9, 2012 • Oral argument is scheduled for December 10, 2012

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Legal Issues: Cellulosic Biofuel and Advanced Biofuel Volumes

• D.C. Circuit Litigation – 2011 RFS– June 11, 2012: AFPM and WSPA filled a petition for review of EPA’s denial of

Petition for Reconsideration and waiver request with respect to the 2011 RFS (Case No. 12-1249)

• July 11, 2012: NBB filed motion to intervene in support of EPA• July 23, 2012: EPA moved to hold case in abeyance pending court’s decision in

API v. EPA, No. 12-1139, on the 2012 RFS

– July 24, 2012: API filed a petition for review of 2011 RFS and EPA’s denial of Petition for Reconsideration and waiver request with respect to the 2011 RFS (Case No. 12-1330)

• August 23, 2012: NBB filed motion to intervene in support of EPA• August 24, 2012: API submits statement of issues, which, while non-binding,

appears limited to challenging the cellulosic biofuel volume• August 24, 2012: EPA filed a motion to consolidate the AFPM/WSPA and API

cases on the 2011 RFS• September 7, 2012: EPA filed a motion to dismiss API’s petition to the extent it

seeks to challenge the 2011 RFS rule issued in December of 2010 as untimely

– Case has been consolidated with the 2012 RFS Litigation

Thank You

Larry Schafer Lschafer@biodiesel.org

202-737-8801

National Biodiesel Boardwww.biodiesel.org