Last year saw a major push towards the bioenergy movement across the globe. In Paris, climate negotiations centered around phasing out fossil fuels while the European Commission worked to prepare initiatives requiring member-states to present energy plans early this year. Meanwhile, the U.S. EPA was able to finalize the Clean Power Plan in the updated version of its Renewable Fuel Standards (RFS). With so much interest in the use of bioenergy sources, it's important to know what the prospects actually are for 2016. The purpose of this two-part series is to highlight the bioenergy sources with the brightest outlook for 2016 and beyond.
The biogas sector is ready to take things to the next level, fully prepared to deliver more and increase RFS volumes. Currently, RFS requires 230 million gallons of advanced cellulosic fuel (biogas falls under this fuel category). This is a major increase from the 2014 requirement of just 33 million gallons and last year's demand of 123 million gallons. Biogas experts like Patrick Serfass (Executive Director of the American Biogas Council) believe they can do even better, though, more than doubling the required volume in 2016, provided that the EPA do two things:
1. Approve projects that combine biogas and electric vehicles. For example, biogas would be used to generate the electricity used for EV charging stations.
2. Establish and recognize a higher "equivalence value" for biogas. This energy factor compares other sources against ethanol, and RFS credits are based upon the value. Biogas enables vehicles to travel 4.3 miles farther than the same amount of ethanol allows.
Another initiative that could impact biogas in 2016 is the generation of Renewable Identification Numbers (RINs). These would document and track fuel production, thus determining the commercial value for bioenergy projects. Fuel companies would be required to utilize the RIN system as a means of confirming their purchases of the mandated volumes of biofuel. This would ensure that companies in need of alternative fuels are drawn into the game.
Finally, we need to keep an eye on recycling mandates. Although biogas has great potential for growth in 2016, these types of projects could come to a screeching halt if recycling programs are abandoned, leaving the industry with an unpredictable supply of material sources.
Traditionally, the biodiesel sector has struggled in the US. Although biodiesel was consumed at record volumes in 2015, the industry suffered terrible margins. Why? First, Ultra Low Sulfur Diesel prices were extremely low. Next, producers were negatively impacted by the long delay in the updates made to RFS. Finally, tax policies worked against this sector.
Things could be looking up in 2016, though. Because the RFS has increased the required biomass-based diesel volumes to 1.9 billion gallons this year (with the requirement of 2 billion galls in 2017), we could see a boom in the production and use of cleaner-burning, renewable fuels. The success here will also depend on updated tax policies.
Have we managed to spark your interest in potential for bioenergy sources in 2016? Be sure to check back for part two of this discussion, which will highlight other top prospects, or talk to an expert at NuEnergen right now.