EPA holds steady on biofuel volumes for 2018

Source: Marc Heller, E&E News reporter • Posted: Friday, December 1, 2017

U.S. EPA will keep required renewable fuel volumes about even in the next year, the agency said today. Biofuel groups cheered the decision, while gas and oil interests are disappointed because they are opposed to the mandates.

“Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the Agency by upholding the rule of law,” EPA Administrator Scott Pruitt said in a news release.

The agency set total renewable fuel levels at 19.29 billion gallons, including 15 billion gallons for conventional ethanol, which meets the congressional requirement in the renewable fuel standard.

Levels for other fuels included 4.29 billion gallons for advanced biofuel, 2.1 billion gallons for biomass-based diesel in both 2018 and 2019, and 288 million gallons for cellulosic biofuel. Biodiesel levels are set a year ahead of other renewables.

EPA largely stuck to volumes it had proposed earlier this year, backing away from indications in September that it might scale back some of the numbers in a final rule (E&E News PM, Sept. 27).

Advocates for advanced biofuels and cellulosic ethanol said they were disappointed that EPA didn’t recommend bigger volumes. Although the agency has said it questions whether the industry can provide increased volumes, industry groups and their supporters say the administration is selling biofuel producers short.

“Congress intended for the RFS to drive growth in biofuels across all categories,” said Sen. Chuck Grassley (R-Iowa) in a statement. “Contrary to that goal, this final rule does little to encourage investment and growth in advanced biofuels.”

The Biotechnology Innovation Organization, which advocates for second-generation biofuel in addition to corn, said EPA’s decision “fails to recognize the enormous opportunity before us to harness our nation’s vast cellulosic resources for higher performing and lower cost fuels.”

Oil and gas companies, which have been lobbying for lower mandates, said EPA had been forced to implement a “broken” renewable fuel mandate that was originally intended to reduce the nation’s reliance on imported fuel — even as the United States has become less reliant on imports in recent years. High-ethanol fuels also aren’t safe for many older engines, the American Petroleum Institute said.

“So this program is trying to solve a problem that no longer exists while creating real problems for consumers,” said Frank Macchiarola, downstream director for the API.

EPA’s announcement leaves the landscape largely unchanged as dueling sides in the renewable fuels debate fight over the mandate’s future. The arguments have especially high stakes for backers of cellulosic biofuel and similar renewables that have played a secondary role to corn.

Advanced biofuel companies have been held back by EPA’s go-slow approach, as well as by economic factors such as sharply lower oil prices in recent years, said Michael McAdams, president of the Advanced Biofuels Association. In addition to setting target volumes too low, he said, the agency’s failure during the Obama administration to make on-time renewable fuel volume announcements for three years discouraged potential investors.

“It’s fair to say that EPA has at best been disappointing,” McAdams said before the agency’s announcement. “I’ve seen numerous companies just throw up their hands and walk away.”

Although industry groups on both sides of the RFS debate said EPA’s announcement came in as expected, the Iowa Renewable Fuels Association said it was surprised by one aspect of the decision — the unchanged biodiesel number from 2018 to 2019 — because EPA had signaled last year that volumes should be increased in the near future.

Biodiesel producers had reason to expect an increase of 100 million gallons in 2019, based on EPA’s reasoning from a year ago, said Monte Shaw, executive director of the Iowa Renewable Fuels Association. Biodiesel levels tend to go along with advanced biofuel, and holding back advanced biofuel levels left biodiesel short of expectations, he said.

In Iowa, ethanol plants produce distillers’ corn oil that is used for biodiesel, Shaw said.

“Ethanol plants had every right to expect a growing market for biodiesel, but today’s rule cuts the expectation for 2018 and signals no growth for 2019,” Shaw said.

Other groups are pushing the administration and Congress to steer the renewable fuel program toward cellulosic biofuel and away from corn, which they say should be used for food, not fuel. One such group, Waxman Strategies — a public relations agency led by former Rep. Henry Waxman (D-Calif.) — charged the agency with shying away from its proposal in October to potentially move in that direction.

“The EPA proposed in October to reduce consumption of polluting, food-based biofuels. But the volume rule issued today tethers us to corn ethanol and soy biodiesel while leaving cellulosic fuels to languish below last year’s levels,” said Rose Garr, Waxman Strategies’ campaign director. “This approach is totally backward.”