EPA’s proposed standards renew battle over renewable fuels
January 31, 2013 | 08:03 PM
Ignoring a recent court ruling that it had overestimated possible cellulosic ethanol production in 2012 in setting its targets for the use of renewable fuels, the Environmental Protection Agency today announced it is proposing 2013 renewable fuel standards that include another increase for cellulosic ethanol.
The volume targets, for four fuel categories which steadily increase to an overall level of 36 billion gallons in 2022, are part of the agency’s Renewable Fuel Standard program that was established under the Energy Independence and Security Act (EISA) of 2007.
In a decision earlier this month, the U.S. Court of Appeals for the District of Columbia said that EPA is not allowed “to let its aspirations for a self-fulfilling prophecy divert it from a neutral methodology,” and that the agency should set more reasonable standards.
But with its announcement today, EPA has increased its target for cellulosic ethanol from 8.7 million gallons in 2012 to 14 million gallons in 2013. The industry produced only about 20,000 gallons in 2012, USA Today reported.
Bob Greco
The announcement set off another round in the battle between the American Petroleum Institute, which filed the suit, and renewable fuels groups.
“The court recognized the absurdity of fining companies for failing to use a nonexistent biofuel,” said Bob Greco, director of API’s Downstream Group.
“But EPA wants to nearly double the mandate for the fuel in 2013. This stealth tax on gasoline might be the most egregious example of bad public policy, and consumers could be left to pay the price,” Greco said. “EPA needs a serious reality check.”
The proposal announced today will be open for a 45-day public comment period, and EPA will consider feedback from a range of stakeholders before the proposal is finalized, the agency said.
To achieve the volumes established by EISA, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.
The proposed 2013 overall volumes and standards are:
Overall, EPA’s RFS2 program encourages greater use of renewable fuels, including advanced biofuels, the agency said.
For 2013, the program is proposing to implement EISA’s requirement to blend more than 1.35 billion gallons of renewable fuels over the amount mandated for 2012, the agency added.
Bob Dinneen
The Renewable Fuels Association noted that the proposal waives the cellulosic biofuel requirement from 1 billion gallons to 14 million gallons, but retains overall advanced biofuel and renewable fuel requirements.
“The 2013 RFS requirements will be the catalyst that finally compels oil companies to get serious about breaching the so-called blend wall,” RFA CEO Bob Dinneen said in a news release.
“This year’s RFS requirements will necessitate the use of more E15, E85 and other higher-level blends,” he said. “Injecting larger volumes of biofuels into the U.S. fuel supply and spurring a more rapid transition to domestically produced renewables is exactly what the RFS was intended to do. The program is working as envisioned by Congress.”
Although the petroleum industry and other critics have questioned whether EPA uses accurate information in setting the standard, Dinneen said, “The proposed standard in no way exaggerates the volumes that will be available in 2013 based on current information, and may ultimately prove to be conservative. Cellulosic ethanol is being produced today at commercial scale in Florida, and with construction nearing completion at several other commercial sites, we fully expect 2013 to be the breakthrough year for cellulosic ethanol. At the same time, the fact that EPA waived 98.6 percent of the statutory cellulosic biofuel standard demonstrates the extraordinary flexibility and adaptability of the RFS program.”
RFA is concerned that the proposed 2013 advanced biofuel standard will open the door even wider to imports of more expensive Brazilian sugarcane ethanol, Dinneen said. “We hope the requirement can be met with domestic advanced biofuels, like waste-derived ethanol and biodiesel.”
News reports have said that the renewable fuels industry is trying to block the Brazilian imports.
“We must be mindful that imports accounted for 92 percent of the 2012 advanced biofuel standard,” Dinneen said.
“In an unconstrained fuel market where E15 and other mid-level blends were broadly available, imports would not be a major concern,” he said.
“However, in today’s constrained market, where oil companies continue to throw up roadblocks to E15 and other mid-level blends, every gallon of imported ethanol is one less gallon of domestically-produced ethanol that will be used,” Dinneen said.
“This occurs only because EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel RIN [renewable identification number] that is currently trading at $0.48. High-priced sugar ethanol imports began to cannibalize the U.S. market in 2012, and today’s decision potentially adds fuel to the fire,” he said.
“RFA will continue to encourage EPA to revisit its lifecycle analysis, which graciously assigns advanced biofuel status to sugarcane ethanol.”
“EPA’s outdated analysis suggests sugarcane ethanol reduces greenhouse gas emissions by 52 to 71 percent relative to gasoline. However, the most recent peer-reviewed, published estimate found the range of sugarcane GHG reductions to be 40 to 62 percent, meaning nearly half of current sugarcane imports likely do not meet the 50 percent GHG reduction requirement.”
With regard to EPA’s proposal to address biodiesel RIN fraud, Dinneen added, “We're encouraged that EPA has proposed a voluntary mechanism for obligated parties to assure the RINs they are using for compliance actually reflect a gallon produced.”
“It addresses a major concern oil companies have raised regarding biodiesel RINs and assures the overall integrity of the RFS program,” he said. “It is important to note that there have been no incidents of RIN fraud with ethanol gallons produced for the RFS in large part because ethanol producers generally do not separate the RINs from the gallons they produced, as is the case with other biofuels.”
Tom Buis
Growth Energy CEO Tom Buis said his group is still studying the proposal.
“We are currently reviewing the announcement it its entirety and will submit formal comments on the proposed biofuel volumes,” Buis said.
“We are pleased to see that EPA is moving forward with a voluntary program to address the concerns raised about the integrity of RINS in the RFS program,” he said.
Brooke Coleman
The Advanced Ethanol Council called the EPA targets for cellulosic biofuels “on target.”
“EPA worked hard to ensure that the cellulosic biofuels volume standard for 2013 would be tied directly to the commercial production of cellulosic biofuels expected to come online this year,” said Brooke Coleman, AEC executive director. “EPA’s acknowledgement of the Brazil situation underscores the need to knock down the ethanol blend wall quickly, so that we are not protecting 90 percent of the market exclusively for fossil fuels.”
Anne Steckel
The National Biodiesel Board said the industry “is poised and ready to help meet these requirements, and that will mean reduced greenhouse gas emissions, a better economy and more domestic fuel choices for consumers.”
“With plants across the country and more than a billion gallons of production last year, the U.S. biodiesel industry is already the leading producer of advanced biofuels in the country, accounting for more than 80 percent of required production to date,” said Anne Steckel, NBB's vice president of federal affairs.
“The industry is adding new feedstocks and building capacity every year, and this policy will only help us continue that growth.”
Steckel also noted that the industry has exceeded the RFS production requirements for two consecutive years, and in 2012 it produced nearly 1.1 billion gallons of fuel, with plants in nearly every state in the country supporting more than 64,000 jobs.
Under the RFS, the biomass-based diesel requirement is a subset of the overall advanced biofuel requirement, the group noted.
For 2013, the EPA’s proposal calls for an overall advanced biofuel requirement of 2.75 billion gallons and within that total, the biomass-based diesel requirement — which has already been finalized and was not a part of today's announcement — is 1.28 billion gallons, the group said.
Biodiesel is made from a diverse mix of feedstocks including recycled cooking oil, soybean oil and animal fats at more than 200 EPA-registered production plants nationwide.
The volume targets, for four fuel categories which steadily increase to an overall level of 36 billion gallons in 2022, are part of the agency’s Renewable Fuel Standard program that was established under the Energy Independence and Security Act (EISA) of 2007.
In a decision earlier this month, the U.S. Court of Appeals for the District of Columbia said that EPA is not allowed “to let its aspirations for a self-fulfilling prophecy divert it from a neutral methodology,” and that the agency should set more reasonable standards.
But with its announcement today, EPA has increased its target for cellulosic ethanol from 8.7 million gallons in 2012 to 14 million gallons in 2013. The industry produced only about 20,000 gallons in 2012, USA Today reported.
The announcement set off another round in the battle between the American Petroleum Institute, which filed the suit, and renewable fuels groups.
“The court recognized the absurdity of fining companies for failing to use a nonexistent biofuel,” said Bob Greco, director of API’s Downstream Group.
“But EPA wants to nearly double the mandate for the fuel in 2013. This stealth tax on gasoline might be the most egregious example of bad public policy, and consumers could be left to pay the price,” Greco said. “EPA needs a serious reality check.”
The proposal announced today will be open for a 45-day public comment period, and EPA will consider feedback from a range of stakeholders before the proposal is finalized, the agency said.
To achieve the volumes established by EISA, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.
The proposed 2013 overall volumes and standards are:
- Biomass-based diesel (1.28 billion gallons; 1.12 percent)
- Advanced biofuels (2.75 billion gallons; 1.60 percent)
- Cellulosic biofuels (14 million gallons; 0.008 percent)
- Total renewable fuels (16.55 billion gallons; 9.63 percent)
Overall, EPA’s RFS2 program encourages greater use of renewable fuels, including advanced biofuels, the agency said.
For 2013, the program is proposing to implement EISA’s requirement to blend more than 1.35 billion gallons of renewable fuels over the amount mandated for 2012, the agency added.
The Renewable Fuels Association noted that the proposal waives the cellulosic biofuel requirement from 1 billion gallons to 14 million gallons, but retains overall advanced biofuel and renewable fuel requirements.
“The 2013 RFS requirements will be the catalyst that finally compels oil companies to get serious about breaching the so-called blend wall,” RFA CEO Bob Dinneen said in a news release.
“This year’s RFS requirements will necessitate the use of more E15, E85 and other higher-level blends,” he said. “Injecting larger volumes of biofuels into the U.S. fuel supply and spurring a more rapid transition to domestically produced renewables is exactly what the RFS was intended to do. The program is working as envisioned by Congress.”
Although the petroleum industry and other critics have questioned whether EPA uses accurate information in setting the standard, Dinneen said, “The proposed standard in no way exaggerates the volumes that will be available in 2013 based on current information, and may ultimately prove to be conservative. Cellulosic ethanol is being produced today at commercial scale in Florida, and with construction nearing completion at several other commercial sites, we fully expect 2013 to be the breakthrough year for cellulosic ethanol. At the same time, the fact that EPA waived 98.6 percent of the statutory cellulosic biofuel standard demonstrates the extraordinary flexibility and adaptability of the RFS program.”
RFA is concerned that the proposed 2013 advanced biofuel standard will open the door even wider to imports of more expensive Brazilian sugarcane ethanol, Dinneen said. “We hope the requirement can be met with domestic advanced biofuels, like waste-derived ethanol and biodiesel.”
News reports have said that the renewable fuels industry is trying to block the Brazilian imports.
“We must be mindful that imports accounted for 92 percent of the 2012 advanced biofuel standard,” Dinneen said.
“In an unconstrained fuel market where E15 and other mid-level blends were broadly available, imports would not be a major concern,” he said.
“However, in today’s constrained market, where oil companies continue to throw up roadblocks to E15 and other mid-level blends, every gallon of imported ethanol is one less gallon of domestically-produced ethanol that will be used,” Dinneen said.
“This occurs only because EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel RIN [renewable identification number] that is currently trading at $0.48. High-priced sugar ethanol imports began to cannibalize the U.S. market in 2012, and today’s decision potentially adds fuel to the fire,” he said.
“RFA will continue to encourage EPA to revisit its lifecycle analysis, which graciously assigns advanced biofuel status to sugarcane ethanol.”
“EPA’s outdated analysis suggests sugarcane ethanol reduces greenhouse gas emissions by 52 to 71 percent relative to gasoline. However, the most recent peer-reviewed, published estimate found the range of sugarcane GHG reductions to be 40 to 62 percent, meaning nearly half of current sugarcane imports likely do not meet the 50 percent GHG reduction requirement.”
With regard to EPA’s proposal to address biodiesel RIN fraud, Dinneen added, “We're encouraged that EPA has proposed a voluntary mechanism for obligated parties to assure the RINs they are using for compliance actually reflect a gallon produced.”
“It addresses a major concern oil companies have raised regarding biodiesel RINs and assures the overall integrity of the RFS program,” he said. “It is important to note that there have been no incidents of RIN fraud with ethanol gallons produced for the RFS in large part because ethanol producers generally do not separate the RINs from the gallons they produced, as is the case with other biofuels.”
Growth Energy CEO Tom Buis said his group is still studying the proposal.
“We are currently reviewing the announcement it its entirety and will submit formal comments on the proposed biofuel volumes,” Buis said.
“We are pleased to see that EPA is moving forward with a voluntary program to address the concerns raised about the integrity of RINS in the RFS program,” he said.
The Advanced Ethanol Council called the EPA targets for cellulosic biofuels “on target.”
“EPA worked hard to ensure that the cellulosic biofuels volume standard for 2013 would be tied directly to the commercial production of cellulosic biofuels expected to come online this year,” said Brooke Coleman, AEC executive director. “EPA’s acknowledgement of the Brazil situation underscores the need to knock down the ethanol blend wall quickly, so that we are not protecting 90 percent of the market exclusively for fossil fuels.”
The National Biodiesel Board said the industry “is poised and ready to help meet these requirements, and that will mean reduced greenhouse gas emissions, a better economy and more domestic fuel choices for consumers.”
“With plants across the country and more than a billion gallons of production last year, the U.S. biodiesel industry is already the leading producer of advanced biofuels in the country, accounting for more than 80 percent of required production to date,” said Anne Steckel, NBB's vice president of federal affairs.
“The industry is adding new feedstocks and building capacity every year, and this policy will only help us continue that growth.”
Steckel also noted that the industry has exceeded the RFS production requirements for two consecutive years, and in 2012 it produced nearly 1.1 billion gallons of fuel, with plants in nearly every state in the country supporting more than 64,000 jobs.
Under the RFS, the biomass-based diesel requirement is a subset of the overall advanced biofuel requirement, the group noted.
For 2013, the EPA’s proposal calls for an overall advanced biofuel requirement of 2.75 billion gallons and within that total, the biomass-based diesel requirement — which has already been finalized and was not a part of today's announcement — is 1.28 billion gallons, the group said.
Biodiesel is made from a diverse mix of feedstocks including recycled cooking oil, soybean oil and animal fats at more than 200 EPA-registered production plants nationwide.
