After RFS release, both sides of the debate double down

Source: Amanda Peterka, E&E reporter • Posted: Monday, November 18, 2013

Backers and opponents of the renewable fuel standard only vowed to fight harder after U.S. EPA on Friday proposed to lower the federal targets for both corn-based ethanol and advanced biofuels next year for the first time since the standard was put into place.

Biofuels supporters viewed the action as a historic retreat from clean energy goals by the Obama administration and an official recognition of what they view as a manufactured “blend wall,” or the point where petroleum refiners say they’re required to blend more ethanol into fuel than is feasible.

But the action by EPA did little to quell opponents’ thirst for full congressional repeal of the standard.

“While the EPA’s slight reduction of the RFS for 2014 acknowledges that the mandate is unworkable, it is not enough to provide the much-needed relief businesses, farmers and consumers need,” Rep. Bob Goodlatte (R-Va.), who has introduced legislation this year to both reform and repeal the standard, said Friday. “Today’s announcement makes it even clearer that it will now be up to Congress to fix this broken mandate.”

Opponents ranging from oil to livestock to small-engine groups on Friday also doubled down on their criticism of the standard, all with a similar message: EPA’s proposed rule was only a bandage on a wound too deep to fix.

“We agree that this is a short-term breather and that a permanent solution is still needed from Congress,” said Joel Brandenberger, president of the National Turkey Federation, which has fought the RFS for years on Capitol Hill.

But at least one biofuels group said it may seek help from Congress in response to the low targets from EPA.

“Our top priority will remain ensuring the future viability of the advanced biofuels industry, so it can help America transition to a low-carbon economy with enhanced energy security by building better fuels,” said Michael McAdams, president of the Advanced Biofuels Association. “Now more than ever, all our options remain open — including in the courts and on Capitol Hill — as we pursue that goal.”

McAdams, who on late Friday afternoon described himself as “in shock,” said the group would first push its supporters on the Hill to weigh in with EPA. He warned that the targets would have an effect not only on future investment in advanced biofuels but on projects that are already on the ground.

“We’re going to have to work hard and have to fight to try and keep the gallons we already made,” McAdams said.

The renewable fuel standard created by the 2007 Energy Independence and Security Act requires EPA to set yearly targets for both conventional biofuels and advanced biofuels. Refiners are required to blend those fuels into petroleum-based gasoline and diesel.

The target, originally created to reduce foreign oil imports and greenhouse gas emissions, has taken heat for more than a year now on Capitol Hill because of its alleged link to high food prices and refiner costs. But supporters of the standard have consistently urged Congress to leave the standard alone and let EPA use its flexibility to address any issues

The agency’s response is a proposal that would require refiners to blend 15.21 billion gallons of renewable fuels into petroleum-based gasoline and diesel next year, a reduction of 2.94 billion gallons from the level set in the 2007 Energy Independence and Security Act. Of the target this year, 13.01 billion gallons is to come from conventional ethanol and 2.2 billion gallons from advanced biofuels that do not use cornstarch as an input.

EPA is proposing that at least 1.28 billion gallons of the advanced target be biodiesel — made from soybean oil, animal fats and used cooking grease. Seventeen million gallons must be cellulosic biofuel made from other plant-based materials such as crop residue and municipal solid waste.

This year’s targets are 13.8 billion gallons for corn ethanol and 2.75 billion gallons for advanced biofuels, for an overall renewable fuels target of 16.55 billion gallons.

In a 60-day public comment period, EPA is also seeking input on ranges surrounding the targets. The agency stressed that the proposal, which was leaked in a draft form last month, was not final

“We’re focused on listening to all stakeholders, because we understand the importance of a diverse energy supply that includes fuel produced from renewable sources,” Janet McCabe, acting assistant administrator of the agency’s Office of Air and Radiation, wrote in a blog post Friday afternoon. “Consumers, farmers and ranchers, and businesses across the nation have a stake in the availability of renewable energy — and we want to hear from everyone.”

The biofuels industry’s champions in Congress immediately rallied after the announcement Friday

“It is clear that this administration has done a complete 180 on their support for biofuels,” said Democratic Rep. Dave Loebsack of Iowa, the nation’s No. 1 ethanol-producing state. “Today’s announcement is a devastating decision for Iowa’s farmers, rural communities and the economy.”

In a flurry of statements Friday afternoon, biofuels producers also reiterated their support for the renewable fuel standard. The corn ethanol industry warned of shuttered plants, while advanced biofuels warned that the proposal would hamper the next wave of investment in their industry.

To biofuels supporters, the announcement from EPA is bewildering and makes no sense politically.

“I think what the administration thinks they’re doing, what they thought they were doing when they drafted this, is we’re going to depressurize the program a little bit, reduce the political drama around the program,” Brooke Coleman, executive director of the Advanced Ethanol Coalition, said in an interview before the proposal’s official release. “They probably rationalized this by saying it’s going to help on Capitol Hill.”

Coleman added, “If this is what your friends do, who needs enemies?”

The administration sought to calm worries that it had abandoned support of the industry.

“The Obama administration remains committed to the production of clean, renewable energy from homegrown sources, and to the businesses that are hard at work to create the next generation of biofuels,” Agriculture Secretary Tom Vilsack said in a statement.

But Rep. Steve King (R-Iowa), a strong congressional supporter of ethanol, said Thursday that he believed the administration was sending a mixed message by claiming support for the industry on the one hand and seeking reductions in the targets on the other.

He warned that the ethanol industry could face the same freeze in development that happened when Congress decided to lower the industry’s now-expired tax credit 6 cents through the 2008 farm bill.

“If the EPA should ratchet down the RFS, if that happens, that sends a message to the industry, and it makes the petroleum industry more aggressive,” King said.

House Energy and Commerce Chairman Fred Upton (R-Mich.) and ranking member Henry Waxman (D-Calif.), who launched a bipartisan effort to review the renewable fuel standard earlier this year, praised EPA in a rare joint statement but said they still would continue to work together on a potential reform effort.

“Many of the issues raised by EPA, stakeholders and consumer advocates are now reflected in the agency’s proposed rule,” Upton said. “While the proposal is not a perfect solution, these targets would alleviate the immediate pressure of a looming blend wall. Yet uncertainty remains for the future.”