Senate bill targets RFS incentives for Brazilian ethanol

Source: Amanda Peterka, E&E reporter • Posted: Monday, May 20, 2013

A bipartisan pair of senators introduced legislation that would effectively bar Brazilian sugar cane ethanol from counting for credit under domestic biofuel targets.

The bill sponsored by Sen. Bob Corker (R-Tenn.) and co-sponsored by Sen. Joe Manchin (D-W.Va.) would compel U.S. EPA to lower its overall targets for advanced biofuels whenever it lowers its targets for cellulosic biofuels. Doing so would remove the gap in advanced biofuels that has up to now been filled mostly by sugar cane ethanol imports.

“Because its mandated biofuels volumes are too high, the RFS is also unintentionally incentivizing ethanol imports,” Corker said in a statement. “Our bill helps to correct that problem by more properly aligning mandated levels with what we produce domestically.”

The “Foreign Fuels Reduction Act,” S. 977, has support from the oil industry, which has called this year for the complete repeal of the federal biofuel policy. Biofuel groups, on the other hand, stood by EPA’s authority to set the targets and denounced the bill as another attack on the renewable fuel standard.

Under the renewable fuel standard, EPA each year sets a target for conventional ethanol and advanced biofuel. A subset of the advanced category is cellulosic biofuels, or those made from plant-based materials like agricultural residues, perennial grasses and municipal solid waste.

The agency over the last several years has lowered the cellulosic target by at least 93 percent compared to the levels that were written into the RFS in 2007 to reflect a slower-than-expected take-off in cellulosic technologies. EPA has not, however, lowered the overall advanced target, leaving a shortfall that it says can be filled by either domestic biodiesel or sugar cane ethanol imports from Brazil.

This year, EPA estimates that 666 million gallons of its proposed 2.75 billion-gallon advanced biofuel level will need to come from Brazilian sugar cane ethanol.

By requiring a reduction in advanced biofuels that corresponds with the reduction in cellulosic fuels, Corker and Manchin said that their bill would remove the incentive that draws increasing imports from Brazil. They said that by lowering the standard’s overall mandate, the bill would also “soften the harmful effects of the RFS” on land use and commodity prices.

American Fuel & Petrochemical Manufacturers, which has called for the repeal of the standard this year, today applauded the legislation.

“This legislation highlights one of the many problems with the policy,” AFPM President Charles Drevna said. “When the RFS was enacted in 2007, Congress never envisioned that cellulosic biofuels would not exist and that more than 90 percent, as much as 75 billion gallons, of the advanced biofuels quota would have to be fulfilled by imports and biodiesel.”

While ethanol trade groups Renewable Fuels Association and Growth Energy have also called on EPA to lower its advanced standard (Greenwire, April 9), they today rejected any legislation that fixes the standard. EPA, they said, already has the authority to make the change.

“RFS has been a proven success, and we believe no legislative changes are necessary,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “Flexibility is a fundamental component of the renewable fuel standard. The provision offered today would begin to take away the EPA’s ability to be flexible and make changes as issues arise.”

Advanced biofuel producers also panned the proposed law.

“This legislation is totally duplicative, confusing and unnecessary,” said Michael McAdams, president of the Advanced Biofuels Association. “This is simply another effort to try and discredit the RFS generally.”