Governors' Biofuels Coalition

EPA’s top transportation official says the agency is planning a series of reforms to its criticized renewable fuel standard (RFS) using existing authority in order to quell some of the attacks on the program, such as clearing a backlog of applications for new fuel pathways that qualify for the rule and accelerating the annual RFS-setting process.

Chris Grundler, director of EPA’s Office of Transportation & Air Quality (OTAQ), told the ethanol industry’s National Ethanol Conference (NEC) held Feb. 17-19 in Orlando, FL, that the reforms will aim to improve several aspects of the maligned program, according to a recording of his remarks. EPA must “put the RFS on a . . . manageable trajectory, while continuing to support the growth of renewable fuels in our transportation supply,” he told NEC attendees Feb. 19.

Refiners have criticized the RFS for several reasons: lengthy delays in releasing the annual RFS fuel blending goals that fail to give the oil industry adequate time to make the plans for how to meet each year’s production targets, and claims that its renewable fuel production targets are impossible to meet and require industry to purchase expensive renewable identification number (RIN) credits as an alternative compliance mechanism.

EPA also plans to reduce the backlog of applications for new pathways that biofuel advocates say could — if approved — make the targets easier to meet, among other complaints. Refiners however oppose the new pathways as unworkable, saying it is hard to prove that the fuels deserve to qualify for the RFS.

Criticisms of the RFS have led some groups such as the American Petroleum Institute to call for the RFS’ outright repeal, which would require an act of Congress. But such action seems highly unlikely in the divided 113th Congress, and instead lawmakers are weighing options for potential legislation that could reform the program.

Grundler’s remarks indicate that the agency is aware of the growing criticism of the RFS and is looking for steps it can already take without additional legislative authority to try and improve the fuels program.

EPA has already taken initial steps to try and address industry claims over an impossibility in meeting the RFS’ conventional biofuel targets, largely met through the production of corn ethanol, due to what the sector says is the “blend wall” — the limit on the amount of ethanol that can be blended into the gasoline supply.

In the agency’s proposed 2014 RFS released in November, EPA floated a reduction in the blending targets for conventional biofuels by nearly a billion gallons compared to the 2013 targets. API and others said the move was a recognition by the agency of the blend wall, though ethanol groups attacked the proposal.

The criticisms have caused EPA to reiterate support for biofuels and the industry, even as its proposal makes deep cuts in the production targets not only for ethanol, but advanced biofuels and biomass-based diesel.

Grundler told NEC attendees that “much has been lost” in the reporting on the 2014 RFS, reiterating that the 2014 RFS “is a proposal” and has not yet been made final. He also said that “amid the shouts and murmurs” it has been said that EPA no longer supports biofuels. “I am here to tell you that . . . is absolutely wrong,” he said based on the audio recording of the event posted on DomesticFuels.com, an online trade publication.

Fuel Pathways

In addition to trying to address criticisms of the 2014 proposal, Grundler at the event announced specific actions he will take in an effort to administratively fix portions of the RFS program.

He said OTAQ will be clearing a “backlog” of over 30 “pathways” awaiting approval. Pathway approvals refer to the process by which EPA approves a feedstock for biofuel production that can be credited under the RFS, while also determining the lifecycle greenhouse gas (GHG) emissions of a particular feedstock.

Advanced biofuel advocates say the pathways provide valuable opportunities for producing biofuels to meet the various targets under the RFS, including the advanced biofuel standard requiring biofuels with 50 percent less lifecycle GHG emissions compared to gasoline, and the cellulosic biofuel standard requiring biofuels with 60 percent less GHG lifecycle emissions compared to gasoline.

With EPA requiring nearly half of the biofuel requirements to be achieved by cellulosic and advanced biofuels by 2022, the pathways are seen as critical to meeting that target.

“We will be finalizing another set of . . . new pathways . . . to final rule” in the coming months, Grundler said. In addition, EPA will also be “proposing another set of renewable fuel pathways known as ‘pathway three’ this year.”

He noted the pathway approval process takes too long and must be fixed to provide greater certainty to biofuel developers looking to use specific pathways for biofuel production to meet the RFS targets. “[W]e have to find ways to streamline this process . . . I am disappointed that we have this backlog, and we have to find a different way of doing this.” He said he is directing staff to develop ways of streamlining the process.

Grundler also said the agency is working on responding to refiners’ petitions asking the agency to reconsider the 2013 RFS, in addition to refiners’ lawsuits over the 2013 standard. The only certainty in regard to the petitions is that EPA will repropose the 2013 cellulosic standard. “We have petitions for reconsideration of the 2013 standard,” he said. “We will be reproposing the 2013 cellulosic standard for sure.”

2015 Rulemaking

In addition, Grundler said he wants “to put out a 2015 [notice of proposed rulemaking] before 2015. We have to get on some sense of normal scheduling on these rules, citing prior delays issuing annual RFS targets.

He said the agency is eager to address the 2015 standard “as we finalize 2014.” He also said they will issue a final rule on a quality assurance plan to prevent fraud in the biodiesel credit market.

Yet, despite his list of priorities, Grundler said his top concern will be finalizing the 2014 RFS. He explained that the 2014 standard is meant “to put the RFS on a . . . manageable trajectory, while continuing to support the growth of renewable fuels in our transportation supply.” This process will consider the tens of thousands of comments EPA received last month on the proposed rule, he noted. “I think we have to address some of the practical realities we see today in the marketplace, [and] . . . I can’t afford to get into an argument over . . . who is to blame.”

Grundler later acknowledged to reporters that the proposed rule was developed during the middle of last year, without the benefit of new data that could significantly impact the 2014 targets in the final version of the rule.

“And by the way when we wrote the 2014 proposal that was written in the middle of 2013, and things have changed,” he said. “Predictions have changed on gasoline demand and so on. So we will be using all the most recent data in making our final decision.”

Grundler also reiterated the role of biofuels in meeting the nation’s climate goals. “We know that if we are going to achieve what science is telling us we must achieve in terms of greenhouse gas reductions by the middle of this century. If we want to avoid the worst impacts of climate change, biofuels has got to be a part of that solution set,” he said.

He said vehicle efficiency standards only get the nation part of the way there with an 80 percent reduction in GHGs. “We have to make the transportation system as a whole more efficient,” and that requires reducing “the carbon intensity of our transportation fuels. There is no doubt . . . biofuels have got to be a part of that solution set. In my opinion it is way too early to declare failure here.” — John Siciliano (jsiciliano@iwpnews.com)