Wednesday, September 22, 2021


“The Nexus of Energy and Environmental Policy”


Oil & Energy speaks with Advanced Biofuels Association President Michael McAdams

Earlier this year, NEFI announced a new partnership with the Advanced Biofuels Association. Under this arrangement, the organizations will together promote government policies and industry initiatives designed to support the use of environmentally sound advanced biofuels in the home energy market. The agreement effectively partners America’s Main Street liquid heating fuel retailers with the country’s leading advanced biofuel producers to achieve net-zero emissions economy-wide by 2050.

On August 17, Oil & Energy spoke with Advanced Biofuels Association President Michael McAdams about his organization, their partnership with NEFI, and their vision for the liquid fuels of the future. Our conversation appears below with minor edits for length and clarity. Readers who would like to find out more about any of the topics discussed here are encouraged to attend the 2021 HEAT Show Industry Summit & Luncheon on Wednesday, September 15 at 12 p.m. Tickets are available now at heatshow.com/attend.

O&E: Can you tell us a little bit about the mission and membership of the Advanced Biofuels Association (ABFA)?

MM: The Advanced Biofuels Association’s mission is to enhance the low-carbon energy market by providing the liquid fuels of the future.

ABFA is comprised of 45 member companies, including major fuel refiners, distributors, biofuel producers, and compliance market traders. Our association is vertically integrated throughout the clean-fuel supply chain, with the exception of feedstock providers. For example, our members include refiners BP, Shell, Marathon, Phillips 66, Exxon, and Total; distributors Pilot Flying J, Love’s, Sprague Resources, and Victory Renewables; and producers Diamond Green, Neste, Renewable Energy Group, and World Energy to name a few. In total, our members produce 5 billion gallons of advanced biofuels annually (none of that being corn ethanol).

Our members also bring new and innovative technologies online that expand feedstock availability and enable us to produce, refine, and distribute significant volumes of fuels that provide greater than 50 percent carbon reductions. These are drop-in, plug-and-play fuels that don’t require changes to infrastructure or new equipment, so there’s no need to build charging stations or install heat pumps.

ABFA is principally a federally focused advocacy group that I created in 2007 and formally branded in 2009. As a longtime registered lobbyist, I work closely with the law firm of Holland & Knight and its 70 lobbyists, as well as separate teams that deal specifically in communications, regulation, and taxation. I find this to be a really effective model as it allows me to punch above my weight class.

In short, our members deliver real-world carbon-reduction solutions, and I work in Washington to help remove the regulatory barriers and build the incentives needed to bring these solutions to market at scale.

You mentioned expanding feedstock availability. Can you give us some examples?

Sure, ABFA members include folks like Gevo, Fulcrum, and Red Rock, who offer real second- and third-generation feedstock technologies. Some are thermochemical, and some are synthetic biology. For example, Gevo is able to make renewable fuel out of corn. Their genetically modified “bugs” turn starch to renewable gasoline or sustainable aviation fuel that, when speciated right, is chemically identical to the gasoline or jet fuel currently available. To reach the volumes of low-carbon fuels required in our future, we must look at a much broader range of options, such as carbon capture, air capture, energy crops, more municipal solid waste components, and wood residues.

How did ABFA and NEFI’s relationship begin, and how have the associations worked together since?

Our relationship dates back to previous negotiations over the Biodiesel Tax Credit renewal, in which I found NEFI to be a valuable ally.

Quite candidly, though, I have great respect and gratitude for the folks that provide heat, light, and mobility to America’s cities, suburbs, and rural communities, primarily in the Northeast. The number of gallons that get used up there on the heating oil side is very significant. ABFA members produce a number of different renewable liquid fuels that can be used in home heating to deliver net-carbon reductions above 50 percent, thus eliminating the need for costly electric heat pumps.

So, our organizations have a similar vision for our customers’ future. We’re more on the production side, and NEFI is more on the distribution side, but what better way to communicate to fuels’ end users than through the people who deliver these fuels to homes. We have a great partnership, which fits nicely with ABFA’s vertical integration and allows for a great deal of political coordination.

The future of the Renewable Fuel Standard and the Biodiesel Tax Credit both seem somewhat up in the air right now. How would you like to see these federal programs evolve in the future?

The EPA takes over the Renewable Fuel Standard’s volume mandates in 2023, so it’s essential for the Biden administration to show us the “beef” — i.e., what they intend to do on the policy side to support liquid fuels in the future — have open conversations, and work transparently moving forward. We’re now in August and still haven’t seen any number on the Renewable Volume Obligations (RVO) for the first time since 2015.

I have heard from within the administration that they are holding off on revealing the numbers out of fear they will lose votes on infrastructure. At some point, they’ll get through that bill, and then I’m sure we’ll see the number. At this point, I am giving them the benefit of the doubt, but soon we need to see some specific numbers and policy direction ideas. They are either going to do the right thing, or I’m going to call them on it. They only have so many options.

The price of gasoline is high right now, as are RIN prices. In my conversations with EPA, I’ve heard that they are very sensitive about the cost of fuel to the American consumer. When they put the RVO together, I expect they will weigh that consideration heavily. At this point, the renewable diesel industry is scheduled to bring around 5 billion new gallons to the renewable fuels market by the end of 2024. The sooner we see the direction by the administration the more support it will give these companies making these large investments. Certainty is key.

I’m expecting that we will see some tax components in the infrastructure bill, which may include a sustainable aviation fuel credit. Because the Biodiesel Tax Credit doesn’t expire until next year, I’m assuming its extension bill will be punted, and conversations about the length of that extension will be tied to discussions about how long it takes to reach net-zero. The better story we can tell the more support we’ll get for things like the BTC. Communications and policy are intertwined. Unless the administration can get its policy sequence on the right timeline, it will be hard for them to reach the carbon reduction targets they’re putting out.

Are there any specific changes you’d like to see to the RFS?

One thing that we need to get done is fixing the restriction that prevents biointermediaries from generating RIN credits. Producers can use multiple feedstocks to create pyrolysis oil, which then goes to a refiner and, through a hydroprocessing facility, gets upgraded to produce a replacement fuel. The Department of Energy’s recent study says up to 740 million tons of feedstock could be upgraded this way. By their own assessment, this could replace 30 percent of the liquid transportation fuels used in 2005. That’s huge! How, when you’re trying to reach net-zero, do you overlook that? So, the restriction around co-location needs to be removed.

Additionally, I’d like to see greater flexibility around the approved end uses of fuels under the RFS. The wood industry has been around a long time, and everything it does is aggregated, but under the RFS, each use must be segregated. So, many wood-derived biofuels don’t qualify, because you can’t tell where they came from. This is like telling a heating oil company they can’t use a smaller truck to deliver fuel. At some point, there needs to be rationality behind the regulation.  

NEFI is an associate member of the National Biodiesel Board as well as ABFA. In your eyes, what are some things that set ABFA and NBB apart?

Firstly, I work hand-in-hand with NBB on issues that impact our shared members, of which we have a number, like REG, World Energy, Diamond Green, and others. We will work hand-in-hand like we always have on the BTC, RFS, and more.

That being said, a large part of their association is still directly connected to soybeans. Our association was specifically set up without an attachment to any particular feedstock because we do not believe the renewable fuels industry should be beholden to farm subsidies. We’re about creating the fuels of the future, not awarding people who grow corn or soybeans. I have nothing to do with that. I respect corn growers’ associations, they do a great job, and they’ve been around a lot longer than me, but my core skill set going back to my days at BP has always been at the nexus of energy and environmental policy. So, I have a lineup that’s far friendlier with the environmental groups than the NBB, and it’s more aligned with this administration.

What do you see as the next steps, politically and logistically, for advanced biofuels in the heating fuel sector?

I think NEFI and ABFA need to go arm-in-arm to make sure we have volumes that NEFI and customers will demand in the future to deliver higher and higher carbon reductions over time. That’s where the future of the industry is going, and we ought to all go there together so we understand the timing and the needs of the industry and can fulfill the desires of our customers as expeditiously as possible.

Specifically, that means help me pressure EPA to remove the biointermediary block and help me get some of these changes adopted by this administration, because my members will help deliver greater carbon reductions. Let’s put the beef between the buns!

Right now, much of the administration’s communications on biofuels seem to deal with sustainable aviation fuel and marine biofuel. Will biofuels be able to support these markets as well as home heating and on-road transportation? And how do you communicate that message to the policymakers who most need to hear it?

Yes, they’ll absolutely support all of these markets, and frankly, a lot of my members are focused on SAF and marine biofuels. But did you know that when you use U.S. biofuel on an offshore boat you don’t get a RIN? That’s another thing this administration needs to look at, but unfortunately it takes a statutory change that I don’t have much hope for.

Let’s look specifically at the size of the U.S. jet fuel pool. Pre-COVID, it was around 17 billion gallons. We can deliver 10 percent of that in the blink of an eye with second-generation feedstocks. So, we’ll be working closely with the administration to try and give them a picture of the regulatory barriers that need to be removed, how to balance that with support for a 10-year tax credit, and how to accomplish these goals in parity so they’re not stealing feedstocks from other product markets.

Obviously, when communicating with policymakers, you start with leadership of the committees that have jurisdiction in both houses. We will be looking at additional outreach opportunities when the COVID-19 crisis is deemed over. The pandemic is hurting everyone trying to talk about these issues at higher levels, because it has made it easier for legislators to hide.

We need a concerted effort across all of the liquid fuel industry to improve our message. It has to be messaging that people can understand, and these are complicated issues, so we need to thread that needle. To that end, we will be conducting a focus group during the first week of September. I will also be speaking at an OPIS event in September and at the 2021 HEAT Show. Additionally, ABFA will be putting up a new website that will include a set of our association’s core principles related to achieving a 50 to 60 percent carbon reduction in each of our fuels. We call this a “layered blending approach.”

Look, my mom and dad both worked for senators. My grandmother worked in the Senate cafeteria. I’ve been around Washington a long time. This is not Neverland, and I’m not handing out hearts and diplomas. This is real stuff that can be done if we’re willing to take on the responsibility of vetting the substance to get there. Let’s roll up our sleeves and do the right thing. That’s all I’m asking. We are going to need to reduce carbon in our fuels, so let’s get about the task of doing it.

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