Industry: EPA is pulling the plug on new biofuels

The advanced biofuel lobby is raising concerns that the Environmental Protection Agency, the supposed defender of clean-burning fuels, could be setting up the industry for a devastating fall if new regulations are enacted.

The defenders of the second-generation fuels, derived from agriculture waste and other feedstock, say EPA’s recently proposed Renewable Fuel Standard only appears to boost demand for biofuels, while in reality it gives the agency the power to reduce production forever.

Brent Erickson, vice president of the Biotechnology Industry Organization, a prime defender of the emerging advanced biofuel industry, framed the new proposal as a “cynical” attempt to appease the refinery and oil industries. The proposed rules would trigger the EPA under the Clean Air Act to rewrite the standards at much lower levels beginning next year.

“EPA’s proposed rule cynically adjusts the regulatory system to benefit the industry it is intended to regulate and to throw up a roadblock (call it a blend wall if you like) for advanced biofuels,” Erickson wrote in a recent op-ed published in Biofuels Digest.

Paul Winters, a spokesman for the group, says the concern extends to several fuel requirements under the standard, including the cellulosic biofuel mandate in addition to the advanced fuels.

“One of our biggest concerns is that EPA appears to be very arbitrarily proposing advanced and overall volumes that will trigger the rewrite of not just the cellulosic but the advanced and overall volumes as well for 2017 and after,” Winters said in an email.

Ironically, advanced biofuels carry the most weight for combating climate change under the president’s global warming agenda. Advanced and cellulosic biofuels reduce the most carbon dioxide compared to petroleum fuels.

Many scientists say manmade global warming is a result of increased carbon dioxide from fossil fuels. Biofuels are meant to displace petroleum use to lower emissions and enhance energy security.

The Renewable Fuel Standard is issued annually by EPA, establishing mandatory requirements for the oil industry and refiners to blend corn-based ethanol and other, more advanced biofuels into the nation’s gasoline and diesel supplies.

The program has suffered from substantial delays in recent years, forcing the agency to issue three years’ worth of requirements in May, establishing rules for 2014, 2015 and 2016.

The unprecedented three-year proposal also sets the requirements for refiners to blend the lowest-emitting fuels under the program, designated as “advanced” and “cellulosic” biofuels.

But even though the industry’s production levels are historically high, they are still not as high Congress intended them to be. And therein lies the problem, according to Erickson and BIO.

If EPA sets the biofuel levels consecutively at much lower levels, which it has done in May’s proposed rule, it triggers a new authority under the Clean Air Act whereby it can rewrite the requirements at permanently lower levels.

“The agency disingenuously claims that its proposal is ‘forward-leaning’ and that the volumes are ‘higher than what the market would produce and use in the absence of such market-driving standards,'” Erickson said. “But the fact is, EPA proposed volumes for 2015 and 2016 that are transparently calculated to give the agency authority to rewrite the statutory volumes for the future.”

Erickson said all Renewable Fuel Standard stakeholders have been aware of EPA’s authority under the Clean Air Act “that allows EPA to rewrite the statutory volumes after 2016, if it is required to waive volumes by more than 20 percent in two consecutive prior years.”

“The overall volumes that EPA has proposed for 2015 and 2016 are slightly higher than that 20 percent waiver mark,” he said. That is no coincidence, as the oil industry has been encouraging the big waivers, he said.

At a June 25 public hearing on the proposal in Kansas City, oil industry officials urged the agency to “maintain those 20 percent cuts to the overall volumes and rewrite the statutory volumes for 2017 and beyond,” he said.

“While EPA’s current logic escapes me,” he said, “they still have time to correct the RFS” in the final rule. The comment period on the three-year proposal ends July 27.

The standard has been a thorn in the agency’s side for years, suffering from delays, lawsuits and angst from both the oil industry that it regulates and the renewable fuel producers and farmers it is supposed to support.

Both Republican and Democratic lawmakers have proposed legislation to repeal or reform the program, while many would like to see EPA resolve the program’s problems. Still, others note that the program is a prime example of a federal subsidy program gone awry, and that the market should decide which fuels become commercial.

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