Senate Republicans’ ‘phantom fuels’ bill takes aim at cellulosic targets

Source: Amanda Peterka, E&E reporter • Posted: Friday, February 8, 2013

A trio of Republican senators introduced legislation that would force U.S. EPA to base its annual targets for cellulosic biofuel on the previous year’s production.

The legislation addresses what the oil industry considers a major flaw with the renewable fuel standard. EPA’s aggressive targets, the industry says, force refiners to pay penalties for “phantom fuels,” or cellulosic fuels that are not yet widely available in the market.

Sens. David Vitter (R-La.), Jeff Flake (R-Ariz.) and Mike Crapo (R-Idaho) introduced S. 251, the “Phantom Fuel Reform Act.” Reps. Gregg Harper (R-Miss.) and Jim Matheson (D-Utah) yesterday introduced an identical House measure (E&ENews PM, Feb. 7).

“Mandating the production of cellulosic biofuel has netted millions for the federal government for a product that barely exists, but it has placed a heavy financial burden on energy producers who simply pass along that cost to consumers,” said Flake, who first introduced the legislation last year when he was a House member. “This regulation must be reformed to reflect reality.”

The introduction of the legislation coincided with an ethanol industry meeting in Las Vegas, where companies working to develop cellulosic biofuels — those made from plant-based materials like switchgrass, agricultural waste and garbage — touted their progress toward reaching commercial production. Last year, INEOS Bio and KiOR Inc. became the first two companies to start production at commercial-scale plants.

“The myth … that there’s this ‘phantom fuel’ is really false,” said Dan Cummings, vice president at INEOS, which opened a municipal solid-waste-to-fuel plant in Vero Beach, Fla., last year.

Until now, cellulosic companies have logged just slightly more than 20,000 gallons of cellulosic fuels, well short of EPA’s requirement last year of 8.65 million gallons, according to the agency.

Earlier this year, a federal court vacated that requirement, finding it not accurate enough. The agency has proposed aggressive targets again this year: 11 million gallons, a figure equivalent to 14 million gallons of ethanol (E&ENews PM, Jan. 31).

The oil industry has been pushing for full repeal of the renewable fuel standard, which was first added to the Clean Air Act in 2005 and revised in 2007. In a statement, American Fuel & Petrochemical Manufacturers said it welcomed the legislation.

“EPA’s actions make clear that only legislative remedies will constrain the agency’s haphazard and irresponsible implementation of this unworkable mandate,” said Charles Drevna, president of AFPM. “This bill highlights and would solve just one of the many inherent problems with the RFS, and magnifies the need for Congress to repeal an unnecessary and costly law.”

In an interview today in Las Vegas, Advanced Ethanol Council Executive Director Brooke Coleman said the bills introduced today and yesterday did not come as a surprise, and he predicted more to come.

“We knew that in 2013 the oil industry would try to overturn the most progressive piece of fuel energy legislation ever passed,” Coleman said. “We’re not just going to see one bill in the House, one bill in the Senate. We’re going to see a lot of bills and a lot of hearings, but we’re fairly confident that their attempt to open up the Clean Air Act — and it will not stop at the RFS — will ultimately fail.”