McCarthy Defends EPA Commitment To RFS As Low-Carbon Fuel Strategy

Source: By Doug Obey, Inside EPA • Posted: Monday, July 20, 2015

EPA Administrator Gina McCarthy is defending the agency’s proposed multi-year renewable fuel standards (RFS) regulation as consistent with the administration’s efforts to curb carbon emissions, rejecting criticism that the proposed biofuel volumes fall short of Congressional requirements by noting that they exceed current market performance.

“We are committed to this industry, this industry that helps cut carbon pollution, grow jobs in rural America and reduce our dependence on foreign oil,” McCarthy told a National Corn Growers Association conference July 16 in Washington, D.C.

“At the same time, we cannot be in the business of setting unattainable standards,” McCarthy said, defending the agency’s effort in its recent proposed rule setting RFS targets for 2014 through 2016 strike a balance between the statute’s mandates to grow the biofuels sector and changes in fuels markets that most observers say have made the law’s original targets impractical.

In particular, McCarthy touted the proposed 2016 volume standard for cellulosic ethanol is “six times higher” than what the market produced in 2014. “So EPA isn’t just promoting growth, we are trying hard to push the envelope,” McCarthy said.

Despite McCarthy’s defense of the cellulosic targets current proposal, acting EPA air chief Janet McCabe recently said fuel blending targets for cellulosic ethanol will be revised substantially downward from 2017 onward under a “reset” provision in the program.

The reset provision requires EPA to reduce volumes otherwise mandated by statute where prior years’ supply has fallen far short of expectations, such as the cellulosic goals.

“I would agree” that cellulosic fuel mandates will have to be reset downward from their statutory levels, McCabe testified at a June 18 House hearing on the RFS. “And we may pull the trigger” to reduce RFS-mandated volumes of other categories of biofuel, such as the advanced biofuel category, as well, McCabe said.

The administrator’s latest remarks come during an open comment period on EPA’s proposed RFS rule that codifies required biofuel volumes in transportation fuel for 2014, 2015 and 2016, as well as a specific biofuels target for 2017.

The RFS, established in its current form under the Energy Independence and Security Act (EISA) in 2007, requires fuel suppliers to blend progressively higher levels of renewable fuels into the fuel supply each year until 2022 to encourage fuels that emit lower overall greenhouse gases (GHGs) than conventional gasoline.

The law sets separate mandates for volumes of cellulosic and advanced biofuels, defined by their lifecycle GHGs, and for biomass-based diesel. To qualify for credits under the program, cellulosic fuels must have a 60 percent smaller carbon footprint than gasoline, while advanced biofuels may have a 50 percent smaller footprint.

But because most of the total renewable fuels mandate lies outside the cellulosic, advanced and biodiesel quotas, it is satisfied in practice by corn-based ethanol, which some critics say has a large carbon footprint.

Industry Criticism

Many biofuel industry advocates have strongly criticized EPA’s proposal, saying the agency has not proposed stringent enough levels to encourage domestic development of the fuels.

But McCarthy urged critics of the regulation to file comments by the July 27 comment deadline, and acknowledged criticism from many biofuels advocates that the levels in EPA’s proposal fall short of numeric targets specified in the RFS law, which was enacted in 2005 and expanded in 2007.

McCarthy also strongly pushed back against the notion that the proposal reflects an abandonment of renewable fuels by the Obama administration.

“You might have heard we are trying to shrink or kill this program,” McCarthy said. “Despite some overheated criticism, EPA is deeply committed to the RFS,” she added, noting her own deep involvement in RFS rules when she served as EPA air chief prior to being elevated to the agency’s top post.

McCarthy argued that the blending targets in the proposal would still drive the biofuel market beyond current production levels even though the targets fall short of the levels in the RFS law.

“The volumes we have proposed in 2015 and 2016 are designed to bust through any blend wall, even if you don’t believe it exists,” McCarthy said, referencing the controversy over whether exceeding 10 percent concentrations of ethanol and other biofuels in the fuel supply is a true barrier to biofuel deployment.

The oil industry argues that there is such a barrier, in part due to incompatibility of older vehicles with ethanol concentrations above 10 percent, but RFS supporters say the industry is exaggerating the issue and is simply reluctant to invest in biofuels infrastructure.

“Our proposed 2016 standard for total renewable fuels is 1.5 billion gallons more, that is almost 10 percent higher, than the actual 2014 volumes,” McCarthy said.