Ag senators sympathetic to industry concerns about EPA proposal

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, April 9, 2014

Biofuels industry representatives opposed to U.S. EPA’s recent proposal to lower the renewable fuel standard found sympathetic ears yesterday among agriculture senators.

At a hearing of the Senate Agriculture, Nutrition and Forestry Committee, senators said they shared the concerns of the advanced biofuels industry that the proposal has stymied investment and lent credence to oil industry critics.

“We’re going to send all the testimony over to EPA,” Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) said at the end of the hearing.

EPA in November proposed the first-ever rollback of the renewable fuel standard, a 16 percent reduction in total biofuels compared with the levels set out in the 2007 Energy Independence and Security Act. The agency cited limits to the amount of ethanol that can be used in gasoline and a slower-than-anticipated ramp-up of advanced biofuels (E&ENews PM, Nov. 15, 2013).

EPA says it is trying to put the renewable fuel mandate on a “manageable trajectory,” but industry representatives said the proposal makes it more difficult to find funding for next-generation fuel projects or those that aren’t corn ethanol.

“This really would put biofuels in a downward movement, and this really would slow down or stop the positive impact that it has had on agriculture and the energy crisis,” testified DuPont Global Business Director for Biorefineries Jan Koninckx, whose company is building a next-generation ethanol plant in Iowa.

They also told senators not to buy into oil industry concerns that there is a “blend wall,” or a technical limit to the amount of ethanol that can be used in gasoline.

Oil industry trade groups say the blend wall drove up prices last year for the ethanol credits that are used to show compliance with the renewable fuel standard. In its proposal, EPA also said there was a blend wall hampering greater use of biofuels in the market.

“The program was working as designed last year, and if EPA sees that and reacts to it and decides that it’s going to make changes … investors are going to see that, and they’re going to run away from the industry,” said Brooke Coleman, executive director. “And that’s really the situation we face.”

Industry representatives urged their Senate supporters to use their oversight authority to encourage EPA to maintain a robust RFS, as well as reject any legislative changes to the policy.

Agriculture senators, many of whom are from ethanol states and have met personally with EPA Administrator Gina McCarthy to complain about the RFS proposal, seemed eager to get past the roadblocks.

“Ethanol, biodiesel and other advanced biofuels offer the United States great opportunity,” Sen. Chuck Grassley (R-Iowa) said in a statement after the hearing. “Homegrown biofuels have been a catalyst for economic development in rural America. That’s why it’s so frustrating that the EPA is taking actions that are scaring off future investments in this promising industry.”

But Sen. Heidi Heitkamp (D-N.D.), who hosted McCarthy in her state recently to boost both the coal and renewable fuels industries, said she worries that the industry is facing serious infrastructure challenges getting product to the market.

She sought to find the “next generation” not only of fuels but of policy strategies to get more biofuels into gasoline and diesel.

“As we move forward, I think the real challenge is not only a regulatory challenge but it’s also a public policy challenge. I don’t know what would happen if you put renewable fuel standards to a vote today in the United States House,” Heitkamp said. “We’d like to think we’d maintain it and be able to present those arguments, but it may not be factual. I think it’s really important to start talking about what’s the next generation of incentives.”

A large coalition of members of Congress from oil and livestock states has called for reform or repeal of the standard.

EPA is expected to come out with its final proposal for 2014 in June. The Obama administration has hinted that the numbers may be different because of recent increased estimates of gasoline demand.