Midwest Democrats Urge Leaders To Boost Biofuels In Reconciliation Bill

Source: By Stuart Parker, Inside EPA • Posted: Tuesday, September 7, 2021

Midwestern Democrats in the House and Senate are calling on their party leaders to include a series of measures to boost the biofuels sector in their forthcoming multi trillion-dollar legislative package being crafted under streamlined budget reconciliation procedures, with some of the measures aiming to overcome recent EPA court losses.

In a Sept. 2 letter, the lawmakers urge Senate Majority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) “to make sure that the upcoming budget legislation currently being drafted includes support for homegrown renewable fuels. Providing additional market access for higher blends of low carbon fuels in the budget reconciliation process will create jobs in rural communities, lower the price of fuel for consumers at the pump, reduce our dependence on fossil fuels, and, most importantly, decrease carbon emissions.”

Signatories to the letter are Sens. Amy Klobuchar (D-MN), Tammy Duckworth (D-IL), Tammy Baldwin (D-WI), Tina Smith (D-MN) and Dick Durbin (D-IL) and Reps. Cindy Axne (D-IA), Angie Craig (D-MN), Cheri Bustos (D-IL) and Mark Pocan (D-WI).

Their letter comes at a critical time as authorizing committees in the House and Senate are beginning to mark up their portions of the reconciliation legislation and submit it to the respective chambers’ budget committees ahead of a Sept. 15 deadline.

The Budget Committee would then compile the bills into a broader package for a floor vote — potentially later this month — with House and Senate Democrats aiming to coordinate their efforts. Democrats are using reconciliation procedures to push through their sweeping climate and domestic policy priorities in order to allow Senate Democrats to circumvent a potential GOP filibuster.

A $1 trillion bipartisan infrastructure package, including some climate and clean-energy provisions and approved by the Senate last month, is expected to come up for a House vote by Sept. 27.

Democrats will require near unanimity to enact the package, particularly in the 50-50 Senate

But underscoring their fraught path on the bill, Senate energy committee Chairman Joe Manchin (D-WV) published a Sept. 2 op-ed in the Wall Street Journal calling for a “strategic pause” on the reconciliation package and pressing to slim down the emerging bill’s overall spending level.

However, the lawmakers’ calls to include robust biofuel incentives in the reconciliation package could aid the industry after a series of court losses, as well as various policy decisions, that the industry says have undercut demand for the fuel.

For example, the U.S. Court of Appeals for the District of Columbia Circuit earlier this year vacated a Trump-era rule that allowed summer-time sales of 15-percent ethanol fuel (E15).

According to the letter, one of the bills the lawmakers are seeking to include in any reconciliation package is S.2339/H.R.4410, which would enable retailers to sell E15 year-round, overriding the court’s ruling.

Regional Divisions

The lawmakers also seek to use the reconciliation bill as a vehicle to move several other bills already introduced. These include: S.2271/H.R.1542, which would provide for the installation of new fuel pump infrastructure to deliver ethanol blends greater than 10 percent and biodiesel blends greater than 20 percent; and S.2262/H.R.4254, which would establish a low carbon fuel tax credit to incentivize ethanol blends of 15 percent or greater.

Further, the lawmakers also seek the inclusion of S.2267, a Senate bill to incentivize automakers to manufacture flex-fuel vehicles (FFVs) capable of running on up to E85 by offering a $200 tax credit and restoring Corporate Average Fuel Economy (CAFE) credits for FFV production; and S.1806/H.R.3472, which would extend the current federal biodiesel tax credit through 2025.

The lawmakers add, “we also support enacting a long-term extension of the Second Generation Biofuel Producer Tax Credit . . . which expired in 2020. This $1.01 per gallon credit will help increase the production of advanced biofuels that cut carbon emissions between 70 and 126 percent.”

Given that biofuels divides both parties along regional, rather than partisan lines, prospects for inclusion of all these measures in the reconciliation bill seem unclear, as several Democrats are opponents of existing biofuels policies and skeptical of the climate and broader environmental benefits of conventional corn ethanol in particular.

Emily Skor, CEO of pro-ethanol group Growth Energy, applauded the letter. “We’re currently working with our U.S. Senate and House champions on a number of biofuels issues before Congress, including a legislative effort to allow retailers to sell E15 year-round,” said Skor. “Including these initiatives would return certainty to the biofuels market as we face continued regulatory uncertainty from the administration.”

Such uncertainty stems from the Biden EPA’s failure so far to issue overdue biofuels blending volumes for 2021 under the Renewable Fuel Standard (RFS) that requires refiners to blend increasing volumes of biofuel into the fuel supply each year. The agency further risks missing a Nov. 30 statutory deadline to finalize volumes — yet to be proposed — for 2022, and is rumored to be considering a retroactive cut to volumes for compliance year 2020.

A proposal for 2021 and 2022 volumes is now under White House Office of Management and Budget (OMB) prepublication review, and OMB is holding meetings with stakeholders into mid-September, suggesting a late September release date for the proposal.

Adding to the uncertainty is EPA’s failure to also approve or disapprove dozens of outstanding requests for RFS waivers by small refineries — exemptions which are fiercely opposed by the biofuels sector, and which EPA is thought by some observers to be reluctant to issue. — Stuart Parker (sparker@iwpnews.com)