RFS 3.0? Biofuel law experts pitch reform plan

Source: Amanda Peterka, E&E reporter • Posted: Thursday, October 17, 2013

The time may be ripe for a “renewable fuel standard 3.0,” a pair of biofuel law experts say in a new analysis funded by a BP PLC-backed bioenergy research institute.

In a paper that will soon be published in the New York University Environmental Law Journal, the experts pitch a revamped RFS that would give U.S. EPA the power to make permanent changes to annual renewable fuel targets and modify the annual target for ethanol based on corn supplies, eliminate a specific category for cellulosic biofuels, and allow national forestland-derived wood to count for credit

“The RFS is the most groundbreaking and proactive renewable energy policy currently in place in the U.S.,” wrote Timothy Slating and Jay Kesan, researchers at the University of Illinois, Urbana-Champaign, who are affiliated with the Energy Biosciences Institute. But, they say, “there are beneficial changes to its statutory and regulatory structure that could be made.”

The 2007 renewable fuel standard mandates that 36 billion gallons of biofuels be blended into petroleum-based fuel a year by 2022. Through the standard, EPA sets yearly targets for both conventional ethanol and advanced biofuels, which refiners can meet by blending biofuels or by purchasing credits.

The current standard is itself a revision that called for significantly more renewable fuels than the original 2005 RFS.

Since last year’s drought in corn country, the standard has taken heat from a strange-bedfellow coalition of groups including those representing oil, food, auto, free-market and environmental interests. Several bills have been introduced to either repeal or reform the standard in the House and Senate, while members of a special House Energy and Commerce Committee task force are crafting a reform measure of their own.

The 100-page analysis by Slating and Kesan weighs the relative political strength and positions of all the various groups involved in the Capitol Hill debate over the standard. It concludes that EPA has the authority to make changes that would satisfy many of the groups’ complaints but that the agency could benefit from gaining more control through congressional action.

“While we firmly believe, and our political economy analysis suggests, that any legislative attempts to alter the RFS would result in negative changes … we do recognize that the RFS’s current statutory and regulatory framework includes imperfections that only Congress can rectify,” the paper says. “As such, we must put forth some practical recommendations for how to positively alter the RFS in the likely event that it becomes open to the legislative process.”

The renewable fuel standard’s annual levels, which were written into the 2007 Energy Independence and Security Act, should be permanently modified to reflect current market conditions and expected commercial production of cellulosic biofuels, the Illinois researchers say.

But rather than determine the levels on its own, Congress should give that authority to EPA, which is “best-positioned” to choose realistic levels, according to the paper. Under current law, the agency has the authority to permanently modify only the cellulosic biofuel category of the standard after 2016.

“Over the past years, the EPA has not only demonstrated its ability to competently coordinate the RFS’s implementation with stakeholders, but it has also gained a great deal of experience and knowledge concerning the biofuels industry,” the authors say.

The researchers also recommend that the RFS should be modified to require EPA to initiate a rulemaking every year corn supplies fall below a certain level to determine whether the standard should be reduced. Such a mechanism would account for droughts like the one that crippled the Corn Belt last summer.

The RFS should also no longer single out cellulosic biofuels, or those made from plant-based materials like agricultural residue and perennial grass, in their own category, according to the proposal. The annual setting of a cellulosic biofuel target has become a divisive subject because commercial production of the fuel has ramped up more slowly than was originally envisioned in the 2007 RFS.

Instead of a cellulosic category, the RFS should require a certain level of “second-generation biofuel,” a broader category that would include any biofuel — including algae-derived fuel — that meets a 60 percent greenhouse gas reduction compared to petroleum fuel, the researchers say.

They are also calling on Congress to allow wood gathered from national forestland in the name of pest control and disease prevention to be used to make fuel that counts for credit under the standard. Under the proposal, EPA would also be required to commission a study from the National Academy of Sciences on whether producing biofuel results in indirect land-use change emissions.

The researchers say legislative action, though, should be a last resort because opening up the standard would allow powerful oil and food interests to propose changes that do more to dismantle than reform it.

“In light of the relatively high political bargaining power of those who oppose the RFS,” they say, “we nonetheless recognize the efficacy of, to the extent possible, dealing with the current issues associated with RFS’s implementation via the flexibilities built into the existing regulatory regime.”