EPA proposes rollback of renewable fuel targets

Source: Amanda Peterka, E&E reporter • Posted: Saturday, November 16, 2013

U.S. EPA today proposed scaling back renewable fuel targets for the first time since Congress passed a national biofuel mandate in 2007.

The agency proposal 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 corn starch as an input.

As part of the advanced target, EPA is proposing 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.

EPA is also seeking comment on ranges of targets. For overall renewable fuels, the agency has proposed a range from 15 billion to 15.52 billion gallons. For advanced biofuels, the range stretches between 2 billion and 2.51 billion gallons, and cellulosic biofuel is between 8 million and 30 million gallons.

“This proposal seeks to put the [renewable fuel standard] program on a steady path forward — ensuring continued growth of renewable fuels while recognizing the practical limits on ethanol blending,” EPA said.

In comparison, the 2007 Energy Independence and Security Act, which created the RFS, 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 to be conventional ethanol and 3.75 billion gallons was to be advanced biofuels.

This year’s targets are 13.8 billion gallons for corn ethanol and 2.75 billion gallons for advanced biofuels, for an overall renewable fuels target of 16.55 billion gallons.

With the proposal, EPA officially acknowledged the existence of the “blend wall” — the point where petroleum manufacturers say they’re required to blend more ethanol into fuel than is feasible.

The targets proposed today are similar to those EPA included in an initial draft proposal that was circulated last month among stakeholders and was first reported by Greenwire (Greenwire, Oct. 9).

Biofuels producers and trade organizations launched a lobbying blitz in response to the draft, warning that the rollback would stymie investment in next-generation fuels and could lead to the shuttering of dozens of conventional ethanol plants. According to official meeting records, biofuel and ethanol producers met with EPA and the Office of Management and Budget eight times since the draft was leaked; oil industry groups and companies met with the agencies only three times.

Biofuel producers are reacting harshly to the official proposed rule.

“The proposed rule released today turns the logic of the RFS on its head and could significantly chill investments in advanced biofuels projects,” said Brent Erickson, executive vice president of the Biotechnology Industry Organization’s industrial and environmental section.

The oil industry, meanwhile, complained that the proposal doesn’t go far enough toward addressing its concerns. It’s pushing the agency to lower the ethanol portion to no more than 9.7 percent of the nation’s petroleum-based fuel supply, or 12.9 billion gallons.

“For the first time, EPA has acknowledged that the blend wall is a dangerous reality and must be addressed to avoid serious impact on America’s fuel supply and harm to American consumers,” said Jack Gerard, CEO of the American Petroleum Institute. “While the agency took a step in the right direction, more must be done.

API and the American Fuel & Petrochemical Manufacturers have already threatened to sue EPA if it does not finalize the rule by the statutory deadline of Nov. 30.