EPA says it will get back on schedule in issuing rules for biofuels

Source: By Chris Mooney, Washington Post • Posted: Monday, April 13, 2015

At issue is the 2005 Renewable Fuel Standard, a law requiring energy companies to blend an increasing amount of renewable fuel, such as corn-based and cellulosic-based ethanol, into the nation’s motor fuel supply. The law directs that fuel refiners blend in 36 billion gallons of renewable fuel by 2022; by that year, EPA has estimated, this would displace about 7 percent of gasoline and diesel fuel use.

But the law — and EPA, which implements it — has now run into serious problems. People are using less gas, mainly because cars have become more fuel-efficient. And fuel refiners are protesting the requirement, saying they cannot meet targets without breaching a “blend wall” beyond which so much renewable fuel is introduced into motor fuels that it puts vehicles at risk. (Some experts, however, contest that is a real risk.)

The EPA, which is required to set blend requirements yearly, has a missed a number of deadlines and in November of last year punted on issuing any rules for 2014. The agency is in effect stuck in the middle between petroleum and gasoline interests, who want to see the RFS repealed, and the ethanol industry — which strongly supports it.

The lag in rulemaking has spurred two powerful industry groups, the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, to sue the agency  to get it to take action.

The suit last month has now prompted the EPA to agree in a consent decree to a schedule for finally producing the required regulations. It says it will issue proposed rules for 2015 blend requirements by June 1, and final rules for both 2014 and 2015 by Nov. 30. In addition, EPA says it will also produce 2016 standards by those same 2015 dates.

“We will be back on the statutory timeline,” Christopher Grundler, director of EPA’s Office of Transportation and Air Quality, said during a press call Friday. “Our goal is to provide the market with the certainty it needs to continue to grow renewable fuel volumes.”

But the new agreement does not in any way resolve the difficult issue of how EPA will set volume requirements that balance the competing demands of the petroleum and renewable fuel industries. Furthermore, the 2005 renewable fuels legislation calls for vastly increasing the use of ethanol made from cellulosic materials, which would only make it more difficult for EPA to resolve the “blend wall” problem.

From the industry perspective, EPA’s failings expose a flawed program that is difficult to implement.

“While we are pleased that we were able to negotiate a deadline that requires EPA to issue the overdue [blend] rules, we remain concerned with the government’s implementation of this broken program,” said Rich Moskowitz, general counsel of the American Fuel and Petrochemical Manufacturers, in a statement. “EPA’s failure to comply with the statutory deadlines injures refiners and exacerbates the problems associated with this unreasonable government mandate.”

Ethanol interests praised the development. In a statement, Brooke Coleman, head of the Advanced Ethanol Council, said that the agreement “lays out a time frame and a reasonable market expectation for resolving the regulatory uncertainty.”

The overall situation “reflects the challenges that exist in determining how to implement the requirements of the [Renewable Fuel Standard] in the face of the…blend wall and weakening U.S. gasoline demand,” said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy, by email.

But EPA says it’s turning things around. “We are definitely getting unstuck,” said the EPA’s Grundler on a press call. But he declined to comment on whether Congress should in any way change the law behind this situation.