Jim Lane
In Washington, the U.S. Environmental Protection
Agency announced final volume requirements under the Renewable
Fuel Standard program today for the years 2014, 2015 and 2016, and
final volume requirements for biomass-based diesel for 2014 to
2017. This rule finalizes higher volumes of renewable fuel than
the levels EPA proposed in June, boosting renewable production and
providing support for robust, achievable growth of the biofuels
industry.
“The biofuel industry is an incredible American success story,
and the RFS program has been an important driver of that
success—cutting carbon pollution, reducing our dependence on
foreign oil, and sparking rural economic development,” said Janet
McCabe, the acting assistant administrator for EPA’s Office of Air
and Radiation. “With today’s final rule, and as Congress intended,
EPA is establishing volumes that go beyond historic levels and
grow the amount of biofuel in the market over time. Our standards
provide for ambitious, achievable growth.”
The final 2016 standard for cellulosic biofuel — the fuel with
the lowest carbon emissions — is nearly 200 million gallons, or 7
times more, than the market produced in 2014. The final 2016
standard for advanced biofuel is nearly 1 billion gallons, or 35
percent, higher than the actual 2014 volumes; the total renewable
standard requires growth from 2014 to 2016 of more than 1.8
billion gallons of biofuel, which is 11 percent higher than 2014
actual volumes. Biodiesel standards grow steadily over the next
several years, increasing every year to reach 2 billion gallons by
2017.
The RFS, established by Congress, requires EPA to set annual
volume requirements for four categories of biofuels. The final
rule considered more than 670,000 public comments, and relied on
the latest, most accurate data available. EPA finalized 2014 and
2015 standards at levels that reflect the actual amount of
domestic biofuel used in those years, and standards for 2016 (and
2017 for biodiesel) that represent significant growth over
historical levels.
Whew!
Well, you might think to yourself, why is the EPA finalizing a
mandate for 2014 and 2015 n November 2015. Well, they were two
years late on the 2014 mandate and a year late for 2015. But they
are on time for 2016. Let’s celebrate.
What’s next?
Likely, someone is going to sue the EPA. Possibly a coalition of
biofuels trade groups, who will focus on getting court rulling
that the EPA does not have the authority to create a distribution
waiver by redefining a waiver authority basded on shortfalls in
the “supply of renewable fuels” to mean “supply of renewable fuels
OR gas pumps to deliver fuels to consumers.”
What the numbers mean
First of all, the EPA increased the volumes from the spring 2015
proposal, after receivging 670,000 comments. However, much of that
stems from correcting an accounting error in the original
proposal, and because rising gasoline consumptino increases the
available pool for E10 ethanol blends.
Bottom line, the EPA has embraced an implied “distribiution
waiver”, something that was proposed in the House version of the
original EISA Act, not included by the Senate, and eliminated in
the final bill. Congress feared at the time that the oil & gas
industry would use its effective monopoly of infrastructure to
strangle growth of biofuels past an E10 saturation point, which
essentially happened. Critics say the EPA and Obama Administration
have caved in to Big Oil on this one.
Reaction from Stakeholders
Chip Bowling, president, National Corn Growers Association
“America’s corn farmers are proud to grow a cleaner burning,
renewable fuel source for America and the world. In July, we asked
the Environmental Protection Agency to restore the 2014-16 corn
ethanol renewable volume obligation to comply with the Renewable
Fuel Standard as passed by Congress and signed into law.
“While we are pleased to see the EPA take a step forward and
revise its original proposal, the fact remains that any reduction
in the statutory amount will have a negative impact on our
economy, our energy security, and the environment. It is
unfortunate that Big Oil’s campaign of misinformation continues to
carry weight in the court of public opinion, and in this decision.
The Renewable Fuel Standard has been one of America’s most
successful energy policies ever. Because of it, our economy is
stronger, we are more energy independent, and our air is cleaner.
We should be strengthening our commitment to renewable fuels, not
backing down. “In light of the EPA’s decision, we are evaluating our options.
We will fight to protect the rights of farmers and consumers and
hold the EPA accountable.”
Joe Jobe, CEO, National Biodiesel Board
“This decision means we will displace billions of gallons of
petroleum diesel in the coming years with clean-burning biodiesel.
That means less pollution, more American jobs, and more
competition that is sorely lacking in the fuels market,” said NBB
CEO Joe Jobe. “It is a good rule. It may not be all we had hoped
for but it will go a long way toward getting the U.S. biodiesel
industry growing again and reducing our dangerous dependence on
fossil fuels.”
“I want to thank President Obama, Administrator McCarthy and
Secretary Vilsack for supporting growth in the program and for
their commitment to biodiesel,” Jobe added. “We have seen three
years of damaging delays, but the Administration took a strong
step forward today that should put biodiesel and the RFS on a more
stable course in the years to come.”
“We will continue working with the Administration toward stronger
standards moving forward that drive innovation and productivity.
We certainly think the biodiesel and overall Advanced Biofuel
standards could and should have been higher. The production
capacity is there, and we have surplus fats and oils that can be
put to good use.”
Brent Erickson, Executive Vice President of BIO’s Industrial
& Environmental Section
“Today’s rule is a severe blow to American consumers and the
biofuels industry. To date, BIO member companies have invested
billions of dollars to develop first-of-a-kind advanced and
cellulosic biofuel production facilities. EPA’s two-year delay in
finalizing the rule created untenable uncertainty and shook
investor confidence in the RFS program. BIO estimates that
investment in the advanced biofuel sector has experienced a $13.7
billion shortfall due to EPA’s delays and proposed changes.
Unfortunately, this final rule exacerbates the problem.
“As EPA has acknowledged, its delay allowed obligated parties to
act as though the law did not exist. The delay increased U.S.
carbon emissions by millions of tons over the past two years,
compared to what could have been achieved with required use of
biofuels. As the United States enters negotiations with the rest
of the world to limit greenhouse gas emissions, EPA is putting in
place an RFS rule that will sacrifice achievable reductions of
emissions in the transportation sector.
“Moreover, EPA has violated the law. As BIO explained in its
formal comments on the proposed rule, EPA has misconstrued
Congressional intent, and its attempt to change the plain meaning
of the RFS law regarding waivers is a needless and impermissible
departure from EPA’s successful implementation of the RFS program
through 2013. EPA’s action will undoubtedly trigger Court
challenges that prolong and aggravate uncertainty about this
program. BIO, its members and allied groups are now considering
their available legal options to remedy EPA’s violation of the
Clean Air Act.
“EPA’s decision increases carbon emissions from the
transportation sector above achievable levels. This backsliding on
transportation emissions – which account for 30 percent of all
U.S. carbon emissions – unnecessarily and regrettably undermines
America’s credibility at the Paris Climate Change Conference,
which starts next week.”
Tom Buis, chairman, Growth Energy
“Growth Energy and its members are pleased to see that the
President and the Environmental Protection Agency have recognized
the need to move the renewable fuel industry past the so-called
blend wall for the sake of America’s climate, energy security and
rural economy. While this rule still relies on a flawed
methodology that sets renewable fuel volumes below the statutory
levels enacted by Congress, it is an important improvement from
the proposed rule, and moves us closer to getting America’s most
effective climate policy back on track and providing certainty for
biofuels in the marketplace.
“Specifically, we are pleased that the RVOs have been finalized
after such a long delay and that the levels have increased from
the original proposal. This final rule makes it possible to drive
the growth of higher ethanol blends through the so-called blend
wall, giving consumers choices at the pump, such as low-cost E15.
Additionally, the numbers for 2016 represent a final rule closer
to the statutory levels established by Congress, avoid the “reset”
and indicate a more certain future for renewable fuels.
“However, we remain concerned that the final rule continues to
rely on the “distribution waiver” that redefines supply as demand
and was rejected by Congress when the RFS was enacted into law. Of
particular concern is that by using such a waiver, the oil
industry is being rewarded for its unwillingness to follow the law
and invest in infrastructure to move toward cleaner, renewable
fuel, which sets a dangerous precedent for the future of the
program. The uncertainty this waiver will create risks sending
investment in the next generation of renewable fuel overseas just
as this new, homegrown industry is taking off.
“We appreciate Administrator McCarthy’s stated commitment to
return to statutory levels, and our industry is committed to
working with her to ensure the final rule announced today is the
first step toward fulfilling that commitment.”
RFA President and CEO Bob Dinneen
“EPA’s decision today turns our nation’s most successful energy
policy on its head. When EPA released its proposed RFS rule in
May, the agency claimed it was attempting to get the program back
on track. Today’s decision, however, fails to do that. It will
deepen uncertainty in the marketplace and thus chill investment in
second-generation biofuels. Unlike Big Oil, the ethanol industry
does not receive billions in tax subsidies and the RFS is our only
means of accessing a marketplace that is overwhelmingly and
unfairly dominated by the petroleum industry. Today’s decision
will severely cripple the program’s ability to incentivize
infrastructure investments that are crucial to break through the
so-called blend wall and create a larger market for all biofuels.
“There is simply no reason for EPA to adopt API’s blend wall
narrative. Data shows that EPA, in its initial RFS proposal,
understated the likely market for E85 and non-ethanol conventional
biofuels in 2016 by at least 440 million gallons. The data
suggests there will be at least 14.7 billion gallons of
undifferentiated renewable fuel blended next year. With
approximately 2 billion surplus RIN credits already available for
refiners to use for compliance in 2016, and with another 900
million RINs potentially becoming available from 2015
over-compliance, the EPA’s decision to lower the 2016 RVO below
the statutorily imposed level of 15 billion gallons is simply
unnecessary.
“What makes today’s decision even more perplexing is that it
continues to reflect the administration’s conflicting views
regarding ethanol. The Department of Agriculture continues to
fight for ethanol, working hard to secure necessary
infrastructure, promoting exports, correcting food versus fuel
myths, investing in new technologies and new feedstocks and
advocating for ethanol’s positive climate change benefits. The
Department of Energy, too, works hard to complete biofuel research
on higher ethanol blends and infrastructure that is moving this
industry forward. Why is EPA so out of step?
“Today’s decision by EPA furthers that conflict and, sadly,
significantly undercuts President Obama’s credibility as he
prepares to take the world stage to address climate change at the
COP21 talks in Paris. RFA recently commissioned a study
which concluded that biofuels consumed under the RFS have reduced
U.S. greenhouse gas (GHG) emissions by 354 million metric tons of
carbon dioxide-equivalent since 2008. For context, that is the
equivalent of avoiding carbon dioxide emissions from 74 million
passenger cars. How can the president speak credibly about the
need to address climate change on a global stage when his EPA is
failing to fully implement the most potent and proven weapon to
combat climate change in his own backyard?”
“This final rule directly contravenes the statute and places the
potential growth for biofuels like ethanol in the hands of the oil
companies. It will have the unfortunate consequence of increasing
Big Oil’s ability to thwart consumer choice at the pump without
even a scintilla of fear that EPA will enforce the statute. With
no consequences for Big Oil’s bad behavior, consumers will be
denied greater access to the lowest cost liquid transportation
fuel and number one source of octane on the planet.”
POET CEO Jeff Broin
“The EPA volumes announced today are a move in the right
direction, and they correctly call the oil industry’s bluff about
our ability to surpass 10 percent ethanol use in the U.S.
“However, these numbers fall well short of our capability to
provide clean, domestic ethanol to America’s drivers.
Additionally, the EPA’s method for arriving at these numbers is
contrary to the intent of the Renewable Fuel Standard.
“I look forward to breaking the so-called ‘blend wall’ next year
and proving this country’s ability to replace more imported oil
with biofuels produced within our borders. In the future, we need
to see a stronger and more consistent commitment to renewable fuel
from Washington if we are ever going to realize the true potential
of renewable fuels, including the development of cellulosic
ethanol.”
Brooke Coleman, Executive Director, Advanced Biofuels Business
Council
“What we’re seeing in the RFS final rule, volumetrically at
least, is continued growth in renewable fuel blending. That counts
for something, predominantly in markets already inclined to offer
consumers more renewable fuels. But it is frustrating that the
Administration missed this opportunity to fix two waiver issues
that are undercutting U.S. investment in low carbon, advanced
biofuels. Waivers are absolutely critical to U.S. investment,
because they define for investors when the field of play can be
altered. It is confounding that the Obama Administration would
side with the oil industry against Democratic members of Congress
and the advanced biofuels industry in reinterpreting its waiver
authority to allow for “distribution waivers,” which would permit
EPA to waive the RFS if the oil industry refuses to make
arrangements to distribute renewable fuel and comply with the law.
“The entire purpose of the RFS is to prohibit oil companies from
using their market power to block the distribution of renewable
fuels. We do not expect this reinterpretation to stand up in
court; but regardless, it is the exact type of policy bait and
switch that chills investor confidence in the United States. And
while initial discussions with EPA have been productive, we must
also move quickly to address waiver issues in the cellulosic pool,
which currently allow the oil industry to buy year-end waivers to
avoid buying cellulosic gallons. The Obama Administration has
supported advanced biofuel development, and certainly the programs
administered by the U.S. Department of Agriculture are an
important part of that picture, but letting the oil industry off
the hook with industry-friendly waivers is not consistent with the
Administration’s position on innovation, clean energy development
and climate change – especially against the backdrop of the
President’s message in Paris. What’s at stake when it comes to the
RFS is not whether the advanced and cellulosic biofuels industry
will succeed commercially; but rather, whether it happens here in
the United States. The Council will continue to work with the
Administration and stakeholders to get the RFS back on track. We
are not there yet with this rule, but we are confident that we can
continue to improve the program in 2016.”
Mike McAdams, President, Advanced Biofuels Associstion
“The Advanced Biofuels Association applauds EPA’s support of
next-generation biofuels. Today’s final rule is a step in the
right direction that recognizes the importance of growing supplies
of advanced and cellulosic biofuels to help provide more
sustainable fuels for our future to combat climate issues. Only
advanced biofuels reduce greenhouse gas emissions by more than 50%
compared to today’s gasolines and diesels.
While we appreciate EPA’s efforts, we continue to believe that
legislative reform is required to address ongoing hurdles facing
next-generation biofuels. Congress needs to strengthen the RFS to
help focus and expedite the production of advanced biofuels.
Outdated definitions, cellulosic waivers, as well as overall
program uncertainty have created significant barriers to entry for
the advanced and cellulosic industry. That’s why ABFA will
continue to work with Congress and the Administration to reform
and strengthen the RFS so it can deliver on the promise of
next-generation renewable fuels.”
Brian Jennings, Executive Vice President of the American
Coalition for Ethanol
“When Congress enacted the Renewable Fuel Standard it voted to
side with those of us who said ‘yes we can’ reduce greenhouse gas
emissions from motor fuel, ‘yes we can’ allow consumer access to
E15 and flex fuels, and ‘yes we can’ spark innovative ways to
produce cleaner fuels,” said Jennings. “While we appreciate that
the Administration made incremental improvements compared to the
proposed RFS rule, unfortunately, today they are choosing to side
with those who say ‘no, we can’t’. Regrettably, EPA’s final RFS
rule protects the old way of doing business by obstructing
consumer access to cleaner fuels, stifling competition in the
marketplace, and undermining innovation. Given all the President
hopes to accomplish at the international climate talks which begin
in Paris today, it is inconsistent for the Administration to
unravel the most effective policy at their disposal to support low
carbon fuels.”
Despite the fact that the Clean Air Act calls for ethanol use to
exceed ten percent of gasoline consumption, EPA’s final rule sets
blending targets for 2015 and 2016 which fall short of statutory
requirements and instead draw on the legally questionable E10
“blend wall” methodology put forward by oil companies who don’t
want ethanol to comprise more than ten percent of fuel use in the
U.S. Congress did not authorize EPA to adjust volumes based on the
E10 blend wall.
“Thanks to the RFS, ACE members have made significant biofuel
production advancements and we know that further innovation is
just around the corner. ACE is strongly committed to ensuring
consumers have access to higher blends of ethanol and we will
explore all options at our disposal to achieve that goal with this
Administration and the next.”
American Energy Alliance President Thomas Pyle
“EPA bureaucrats continue to prove they are incapable of managing
the RFS. The agency consistently misses deadlines and sets
unrealistic levels for cellulosic ethanol, which is expensive and
not commercially viable. This gross mismanagement is just one more
reason to scrap the entire mandate, and why anything short of full
repeal would just make the RFS worse.
“The RFS was ill-conceived from the get-go. The mandate distorts
markets, raises gasoline prices, and benefits a limited few at the
expense of all Americans. Partial repeal would only make the
mandate worse by moving it closer to a California-style Low Carbon
Fuel Standard, causing Americans to pay more at the pump. Full
repeal is the only option for those concerned about the interests
of all Americans, and not just the self-interests of the biofuel
industry and its lobbyists.”
The Urban Air Initiative President Dave VanderGriend
“EPA has made it clear it has no intention of opening the market
for ethanol and other biofuels. We have been challenging EPA for
years to take actions that would protect public health, lessen our
dependence on petroleum, and reduce CO2 and other harmful
emissions. The EPA has rejected us at every turn.”
“This is simply one program. We can move well beyond that and we
will not let EPA and its faulty, inaccurate models define our
value and limit our growth. EPAs action should be a message to the
ethanol industry that it needs to secure its own future and
recognize that ethanol’s highest value is as a clean fuel that can
provide high octane to reduce the toxic compounds in gasoline
while reducing a range of harmful emissions. UAI has identified a number of steps to provide access to the
market, all of which will improve fuel quality and protect public
health. Specifically, UAI has called for EPA to:
- Lift the Vapor Pressure Restriction on Higher Blends since RVP actually goes down as ethanol volumes go up above E10;
- Enforce Section 202 (l) of the Clean Air Act to limit aromatics and open the market for ethanol as a source of clean octane;
- Reinstate fuel economy credits (CAFE) and prorate them for mid-level blends;
- Make 87 AKI gasoline the minimum octane for all states;
- Revise modeling for both the life cycle analysis of biofuels and the emissions profile, notably the MOVES Model.
“The RFS has done its job up to this point in building a bridge
but from here on we need to seize our future and look forward, not
backward.”
Brazilian Sugarcane Growers Association
“UNICA is heartened by EPA’s recognition the RFS requirements for
advanced biofuel can and should increase. Today’s decision appears
to leave the door open for continued American access to sugarcane
ethanol from Brazil, one of the cleanest and most commercially
ready advanced biofuels available today.”
“EPA has taken another step toward a cleaner, healthier
environment, and Brazilian sugarcane producers stand ready to make
even higher volumes of advanced biofuel available to America.
According to the latest estimates, Brazil is on track to produce
nearly six percent more sugarcane ethanol this year compared to
2014 – an additional 450,000 gallons. Under the right market
conditions, Brazil has the capacity to produce up to two billion
additional gallons of this advanced biofuel for export according
to installed capacity figures.”
“America and Brazil have built a thriving global biofuels market,
creating economic growth and environmental benefits, through good
policy implementation. UNICA applauds today’s decision by EPA to
maintain that growth by encouraging production of clean,
low-carbon fuels.”
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