EPA rejects oil industry petition to waive 2011 cellulosic requirements

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, May 30, 2012

U.S. EPA rejected Friday an oil industry petition for waiving 2011 cellulosic biofuel requirements, which refiners say forces them to pay for nonexistent biofuel.

The joint petition from the American Petroleum Institute, National Petrochemical & Refiners Association and Western States Petroleum Association asked EPA to retroactively abandon its 2011 requirement that the country produce 6.6 million gallons of cellulosic biofuel.

EPA sets the biofuel-volume requirement under the renewable fuel standard.

Producers have yet to commercialize cellulosic biofuel and effectively generated none last year. Refiners say they are being forced to pay for the gallons and renewable fuel credits that do not exist.

“EPA’s mandate is out of touch with reality and forces refiners to pay a penalty for not using imaginary biofuels,” said Bob Greco, API’s director of downstream and industry operations. “EPA’s unrealistic mandate is effectively an added tax on making gasoline.”

Biofuel groups applauded EPA’s decision. They had urged the agency to stand firm on its requirements, saying such action would provide the regulatory certainty needed to bring cellulosic biofuel to the commercial market.

The groups argued there were numerous ways for refiners to comply with the requirements, including purchasing waiver credits, purchasing renewable identification codes from the original renewable fuel standard set in 2005 or deferring their obligation for a year.

“Some oil refining industry lobbyists continue to try to throw regulatory obstacles in the way of the advanced biofuel industry,” said Brent Erickson, executive vice president of the Biotechnology Industry Organization’s industrial and environmental section. “We applaud the EPA for standing firm against these efforts.”

In March, the American Petroleum Institute filed a separate challenge with the U.S. Court of Appeals for the District of Columbia Circuit opposing EPA’s 2012 requirements. This year, the agency is mandating that the country produce 8.65 million gallons of cellulosic biofuel.

The nation’s major ethanol trade groups are intervening in the case on behalf of EPA.

EPA has already drastically lowered the requirements compared to the levels Congress set out in the original 2007 law that created the current renewable fuel standard. The Energy Independence and Security Act set a goal of 250 million gallons last year and 500 million gallons this year.

The one bright spot in the advanced biofuels sector has been in biodiesel. EPA announced last week that the biodiesel industry produced 94.5 million gallons in April, bringing year-to-date production up to 331 million gallons.