The Obama administration last week issued its long overdue biofuel standards, setting the volumes for renewable fuels at levels that fall short of the levels set out under the law.
EPA says in its proposal that “real-world limitations” have prevented the U.S. from reaching its biofuel goals for 2014, 2015 and 2016 and that it would seek to use the waivers allowed by Congress to cut the mandate, while still seeing to increase overall supplies of the renewable fuels.
On May 29, the U.S. EPA released a proposed rule containing 2014, 2015 and 2016 renewable volume requirements (RVOs) under the renewable fuel standard (RFS), along with a proposed 2017 RVO for biomass-based diesel ahead of its June 1 judicial deadline. While the proposed RVOs do increase over time, they fall short of statutory requirements.
According to the EPA, the proposed 2014 RVOs reflects the actual amount of domestic biofuel used last year. The cellulosic requirement is set at 33 million gallons, with the biomass-based diesel requirement set at 1.63 billion gallons, the advanced biofuel requirement set at 2.68 billion gallons, and the requirement for total renewable fuel set at 15.93 billion gallons. Statutory requirements for 2014 called for 18.15 billion gallons of renewable fuel, including 1.75 billion gallons of cellulosic biofuels, and 3.37 billion gallons of total advanced biofuels.
The proposed rule calls for the 2015 RVOs to include a cellulosic requirement of 106 million gallons, a biomass-based diesel requirement of 1.7 billion gallons, an advanced biofuel requirement of 2.9 billion gallons and a requirement for total renewable fuel of 16.3 billion gallons. This is far below the statutory requirement of 20.5 billion gallons of total renewable fuel, including 3 billion gallons of cellulosic biofuels and 5.5 billion gallons of total advanced biofuels.
The EPA’s proposal calls for the 2016 RVOs to include 206 million gallons of cellulosic biofuels, along with 1.8 billion gallons of biomass-based diesel, 3.4 billion gallons of advanced biofuel, and 17.40 billion gallons of total renewable fuel. This is also far below the statutory requirement of 22.25 billion gallons of total renewable fuel, including 4.25 billion gallons of cellulosic biofuel and 7.25 billion gallons of total advanced biofuel.
In addition, the proposed rule aims to set the 2017 RVO for biomass-based diesel at 1.9 billion gallons.
Janet McCabe, the acting assistant administrator for EPA’s Office of Air, said in a statement, “We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels.”
According to the EPA, the proposed 2016 RVO for cellulosic biofuel is six times higher than actual 2014 volumes, while the 2016 RVO for total renewable fuel is approximately nine percent higher than actual 2014 volumes. The agency also pointed out the proposed 2016 RVO for advanced biofuel is about 27 percent higher than actual 2014 volumes, with the 2017 biomass-based diesel RVO 17 percent higher than 2014 volumes.
In a fact sheet, EPA said it recognizes that the statutory volume targets were intended to be ambitious; Congress set targets that envisioned growth at a pace that far exceeded historical growth rates. Congress clearly intended the RFS program to incentivize changes that would be unlikely to occur absent the RFS program. While EPA is proposing to use the tools provided by Congress to waive the annual volumes below the statutory levels, the agency believes the proposed standards are ambitious but within reach of a responsive marketplace.
According to the EPA, a hearing on the proposal will be held June 25 in Kansas City, Kansas. A public comment period will be open through July 27. The final rule is subject to a judicial deadline, and is expected to be released by Nov. 30.
25 x 25 called the announcement a major disappointment noting that if not revised, they could make the attainment of the President’s energy efficiency and climate goals much more difficult – if not impossible – to achieve.
“Reducing the congressionally established biofuel blending requirements, as called for in the proposals released today, would reverse course on the path the Obama administration has long taken in its promotion of cleaner forms of energy and its efforts to curb global climate change. The President can help cement his energy and climate legacy by ensuring that the RFS – as adopted by a wide, broadly bipartisan Congress in 2007 – is maintained and followed to the letter of the law,” the organization said in a statement.
Several biofuel trade organizations have weighed in on the proposed rule. The Renewable Fuels Association criticized the EPA for clinging to the “blend wall” methodology that falsely claims ethanol has reached its saturation point at a 10 percent ethanol blend, and that higher-level ethanol blends, such as E15 and E85, are not yet large enough to justify a higher RVO. “EPA has to be given some credit for attempting to get the RFS back on track by increasing the renewable volume obligations (RVOs) over time,” said Bob Dinneen, president and CEO of the RFA. “But the frustrating fact is the agency continues to misunderstand the clear intent of the statute—to drive innovation in both ethanol production and ethanol marketing. The agency has eviscerated the program’s ability to incentivize investments in infrastructure that would break through the blend wall and encourage the commercialization of new technologies.
“Today’s announcement represents a step backward for the RFS. EPA successfully enforced a 13.8 billion gallon RVO in 2013,” Dinneen said. “The industry produced 14.3 billion gallons of ethanol last year. There is no reason to promulgate an RVO rule that takes us backward. All it will do is result in an ever-increasing supply of renewable fuel credits (RINs) that will further discourage private sector investment in infrastructure and technology. This doesn’t make sense.”
RFA said that the EPA plan places the potential growth in renewable fuels in the hands of the oil companies—empowering the incumbent industry to continue to thwart consumer choice at the pump with no fear of consequence for their bad behavior.
Mike McAdams, president of the Advanced Biofuels Association, called the proposal a step in the right direction, saying it gives more growth potential to advanced and cellulosic biofuels relative to the original proposal.
Tom Buis, CEO of Growth Energy, called the proposals an improvement over EPA’s original 2014 RVO proposal, but noted they still need significant improvement. “We have sincere concerns that these proposed numbers are not moving forward to the degree that Congress had intended for the RFS. It is unfortunate that EPA chose to side with the obligated parties who have deliberately refused to live up to their obligation to provide consumers with a choice of fossil fuels or lower cost, higher performing, homegrown renewable energy at the pump. Now the obligated parties, controlled primarily by Big Oil, have refused to live up to their obligation and the initial read on EPA’s proposal is they have simply acquiesced to the demands of Big Oil.”
On behalf of biodiesel producers, Joe Jobe, CEO of the National Biodiesel Board, called the proposal a significant step in the right direction. “It is not perfect, but it will get the U.S. biodiesel industry growing again and put people back to work,” he said. “Biodiesel has proven that advanced biofuels can do just what we said they would, which is create jobs and strengthen our energy security while significantly cutting harmful pollution from petroleum,” Jobe said. “Biodiesel has displaced more than 8 billion gallons of petroleum diesel in the U.S. over the last decade. That is an incredible achievement, and we will build on that success under the proposal the EPA released today.”
“However, more can be done, and we particularly look forward to working with the administration on strengthening biodiesel volumes for 2016 and 2017 during the comment period in the coming weeks,” Jobe said.
“Biodiesel is one of the most practical, cost-effective means we have for cutting carbon emissions in the transportation sector, and there is no doubt that the industry can exceed the EPA’s proposed volumes in a sustainable way using domestic resources,” Jobe continued, noting that the EPA’s proposal for 2017 is only slightly higher than the actual biodiesel production of 1.8 billion gallons in over the last two years. “It is imperative that we get it right. This is a critical component of President Obama’s pledge to address climate change while also making sure America leads in the development of alternative fuels.”
Brent Erickson, executive vice president of the Biotechnology Industry Organization’s Industrial & Environmental Section, said the proposal will continue to chill investment for advanced biofuels. “EPA’s delays in the RFS rulemaking have already done significant damage to the advanced biofuel industry,” he said.
“Today’s overdue re-proposal doesn’t do enough to get the RFS program back on track,” Erickson continued. “The RFS was designed to provide a market floor for biofuels. Instead, EPA has once again proposed to help the oil industry build a regulatory wall to keep advanced biofuels out of the U.S. market.”