EPA proposes rollback of 2011 cellulosic target in win for oil companies

Source: Amanda Peterka, E&E reporter • Posted: Tuesday, November 19, 2013

U.S. EPA has proposed taking back its 2011 cellulosic biofuel target and refunding oil companies nearly $5 million for their costs in trying to meet it.

The proposal — which was buried in Friday’s 204-page proposed rule setting next year’s renewable fuel targets — hands another win to oil companies, which are currently challenging the 2011 target in court.

EPA says it used the same process to develop the 2011 target of 6.6 million gallons as it did the standard for last year, which a federal court overturned in January after finding EPA was too optimistic in its predictions of how much fuel would be produced.

“Since we used essentially the same methodology to develop the 2011 cellulosic biofuel standard as we did to develop the 2012 standard,” EPA said in the proposed rule, “we believe it would be appropriate to rescind the 2011 cellulosic biofuel standard as well.”

Through the 2007 renewable fuel standard, EPA each year sets a production target for cellulosic biofuel, or fuel made from plant-based materials like agriculture residue, perennial grasses and municipal solid waste. The agency has consistently proposed a target that’s significantly less than the levels anticipated by law because of a slower-than-expected increase of cellulosic technologies partly caused by the recession.

The 2007 Energy Independence and Security Act, for example, called for 250 million gallons of cellulosic biofuel production in 2011.

Cellulosic biofuel producers generated zero gallons of commercial-scale production in 2011, according to EPA’s electronic tracking system. By law, the agency is still requiring refiners to purchase waiver credits to make up for the gallons that were not produced. That year, refiners purchased more than 4.2 million cellulosic waiver credits worth $1.13 apiece for gallons of fuel not produced, according to EPA.

The oil industry has been critical of the agency’s actions, arguing that the agency has required refiners to pay millions of dollars throughout the years for gallons of a fuel that do not yet exist. They sued the agency over both the 2012 and 2011 cellulosic biofuel requirements.

In April, EPA told the U.S. Court of Appeals for the District of Columbia Circuit that it was rethinking the 2011 target and asked that the court stay the lawsuits from the American Petroleum Institute, American Fuel & Petrochemical Manufacturers and the Western States Petroleum Association while it reconsiders. It’s likely that EPA would move to dismiss the lawsuit if Friday’s rule proposal is finalized.