Monica Trauzzi: Hello, and welcome to OnPoint. I’m Monica Trauzzi. With me today is Hugh Welsh, president of DSM North America. Hugh, thank you so much for coming back on the show.
Hugh Welsh: Thanks for having me again.
Monica Trauzzi: So Hugh, this week the Senate revisited issues stemming from the RFS and EPA’s implementation of the rule during an oversight hearing. What is your current level of confidence in EPA and its ability to effectively set RFS targets?
Hugh Welsh: We’re very happy with the way EPA’s done it thus far. We’d like to have them look at the mechanics of how they do the calculations again to move away from this ill-conceived concept of a blend wall. We don’t think that there’s a blend wall in the RFS legislation. So we’d like to see increasing blend levels, which would require EPA to do their calculations differently. I heard a little bit about Senator Inhofe’s committee hearing today. Still a lot of arguments against the RFS. Trying to repeal the RFS, but we’re also confident that the RFS is going to remain through 2022.
Monica Trauzzi: What’s the level of responsiveness from EPA in changing the way that they do their calculations?
Hugh Welsh: Not so much today, but I think the EPA is waiting to see how the plethora of lawsuits resolve themselves over the course of time.
Monica Trauzzi: Earlier this month, Senator Bill Cassidy proposed an amendment to the big energy package that would have repealed the RFS. Do you expect that efforts like that one will continue with any success?
Hugh Welsh: I expect that efforts will continue. Groups like API and some of the other big oil lobbying firms will continue to push their elected officials to have the RFS repealed, but I don’t think they’ll be successful at all.
Monica Trauzzi: Republican presidential candidate Ted Cruz still managed to win Iowa earlier this month despite being in favor of repealing the RFS. Has the industry seen any specific impacts from this really heated debate over the RFS that we’ve seen in the presidential campaign?
Hugh Welsh: Senator Cruz did win in Iowa, but 83 percent of the voters voted for pro-RFS candidates, which was even a higher level than in 2012. So the result in Iowa was actually, from our perspective, very pro-RFS. We, again, remain confident that the RFS will remain in place. It’s good for the country, good for the environment, good for jobs.
Monica Trauzzi: So we’re hearing from many U.S. biofuels companies that China is increasingly looking like a compelling market. What signals are you seeing from the Chinese market that there is demand for U.S. advanced biofuels?
Hugh Welsh: There’s a lot of capital flight at the moment from China. You see it in the news every day on MSNBC and some other stations, but one area where the Chinese government, both the public and private sector, are looking at is ways to bring in cellulosic ethanol specifically. So they would love to bring in cellulosic ethanol technology to produce ethanol within China. The reason is the Chinese government has put a moratorium on building new grain ethanol plants ’cause they don’t want ethanol in China to compete with food or feed. DSM, with our partner POET, has built a large-scale demonstration plant here in the United States called Project Liberty. So we have a lot of interest from different Chinese organizations to license our technology, to bring it to China to help alleviate some of the environmental concerns that they have.
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