EPA decision to roll back renewable fuel targets under Senate spotlight

Source: Amanda Peterka, E&E reporter • Posted: Friday, December 13, 2013

The battle over the renewable fuel standard made its debut in the Senate Wednesday with a contentious hearing over U.S. EPA’s recent proposal to roll back the ethanol and advanced biofuel mandates for next year.

At the hearing of the Senate Environment and Public Works Committee, biofuels supporters and opponents alike took aim at the agency’s director of transportation and air quality for the proposal. Supporters said they worried that the agency was pulling the rug out from the advanced biofuels industry, while opponents charged that the agency wasn’t going far enough to address what they believe are fatal flaws with the nation’s ethanol mandate.

EPA’s Christopher Grundler, who at times looked fatigued by the questioning, attempted to ward off the criticism by repeating the agency’s reasoning in lowering the targets, namely that the nation has reached the feasible limit to the amount of ethanol that can be blended into transportation fuel.

But his defense appeared to fall largely on deaf ears in the Environment and Public Works Committee.

“I think you have made the strongest argument of why Congress has to act” to reform the standard, said Sen. Ben Cardin (D-Md.).

Under the proposal, EPA would require that refiners blend 15.21 billion gallons of renewable fuels into petroleum-based gasoline and diesel next year. Of that, 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.

As part of the advanced target, EPA has proposed that at least 1.28 billion gallons 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 (E&ENews PM, Nov. 15).

In contrast, the 2007 Energy Independence and Security Act, which created the most recent renewable fuel standard, calls for 18.15 billion gallons of renewable fuels to be blended into petroleum-based gasoline and diesel next year. Of that, 14.4 billion gallons was set to be conventional ethanol and 3.75 billion gallons advanced biofuels.

At the hearing yesterday, perennial critics of EPA and the renewable fuel standard said that the agency’s action showed the need to either reform or completely repeal the standard.

“The EPA has admitted that the mandate is completely broken,” Sen. Jim Inhofe (R-Okla.) said. “No one believes it’s running right. … It’s clear that the chorus of agreement is growing louder every day.”

Other members of the committee, such as Cardin, said they were concerned about how the standard’s impact on the price of corn has affected the livestock industry.

“We need to change the statute to protect food security in this country,” said Cardin, who added that he is working with Sen. David Vitter (R-La.), ranking member of the EPW Committee, on a reform bill.

Supporters of the renewable fuel standard, on the other hand, yesterday blasted the agency for lowering the targets for advanced fuels. A nascent advanced biofuels industry has grown based on the standard’s promise of a market, and EPA’s action has dampened the mood of investors toward future projects.

“Investors have based their investments on this,” Sen. Jeff Merkley (D-Ore.) said. “I want to make sure that we’re not aiming for a mark here that essentially leaves this whole effort stranded.”

In defense of the agency’s actions, Grundler said that EPA has explicit authority in the 2007 statute to use waivers to reduce the mandates for both conventional ethanol and advanced biofuels. The agency believes that the statute allows it to take distribution challenges collectively known as the blend wall into consideration when setting the yearly standards.

“We were recognizing that the blend wall has been breached,” said Grundler, who added that he expected the agency to use the same logic in following years to determine the targets for ethanol and advanced biofuel.

He acknowledged, though, that there would likely be lawsuits against the agency once the proposal is finalized.

Despite the criticism, Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) vowed that the standard would remain intact for as long as she has control of the committee gavel.

“I am not going to let us reverse course,” she said.

The hearing was the first foray into renewable fuels for the Environment and Public Works Committee since the debate over ethanol and the RFS grew heated during the summer of 2012 drought.

A few months ago, the House Energy and Commerce Committee’s Subcommittee on Energy and Power held a series of hearings on the standard and embarked on an effort to draft a comprehensive reform bill. But the government shutdown, EPA’s release of the 2014 targets and a lack of progress have put that effort on hold for now, the subcommittee’s chairman said in an interview this week.

“We didn’t have much success with that because we really could not get everyone at the table to try and reach some agreement,” Rep. Ed Whitfield (R-Ky.) said. “And when EPA came out with those lower numbers, of course the renewable fuels advocates were concerned about it, and I think we’re just going to wait a while to see if there’s a possibility if they may be willing to come back in and sit down with everybody else.”