Answers to Your Questions about the Renewable Fuel Standard: Your Guide to the Comments Received by EPA

February 05, 2014

Print This Article Share it With Friends

by Jim Lane (Biofuels Digest) ... More than 15,000 comments were received by EPA. What is the problem that led to a waiver petition? Why does EPA propose to act and how, and when, and in what way? Today, in the Digest, we look in detail at the comments submitted by players across the spectrum to get you the answers.
...
As RFA sums it up: “EPA proposes to reduce the volume of total renewable fuel under the 2014 RVO from the statutory level of 18.15 billion gallons to 15.21 billion gallons. The proposed reductions include cuts to the statutory requirements for cellulosic biofuel and advanced biofuel, as well as a decrease to the requirement for unspecified renewable fuel (i.e., the portion of the RVO for which corn starch ethanol may qualify) from 14.4 billion gallons to 13.01 billion gallons. In attempting to justify the proposed volume reductions, EPA describes what it views as “two important realities.”
“1 First, the Agency cites perceived “[l]imitations in the volume of ethanol that can be consumed in gasoline…, a set of factors commonly referred to as the ‘blendwall.’”
“2 Second, EPA points to “[l]imitations in the ability of the industry to produce sufficient volumes of qualifying renewable fuel.” But, even assuming that consumption is the relevant standard in granting a waiver (it is not), these two “realities” are pure fiction.”
...
As ACORE notes in its comments: “1) USEPA is invoking the “blend wall” contrary to statute to determine there is insufficient supply of domestic renewable fuels; (2) the “blend wall” is the result of the USEPA’s reliance on assumptive equations based on false variables due to outdated research; (3) USEPA has sustained this “blend wall” by failing in its legal mandate to enforce existing statutes 202(I) and 211(c) of the CAA, as well as the regulatory regime established under 211(f)(1)(A); (4) USEPA can and should take concrete steps to fulfill its statutory mandates under the CAA, which will eliminate the “blend wall;” and (5) USEPA should revise its 2014 RVO to the statutory mandate of 18.15 billion gallons of total renewable fuel as directed in the Energy Security and Independence Act (EISA) of 2007.
BIO adds: “In finalizing the 2013 RFS20, EPA determined that biofuel producers were capable of supplying 16.55 billion gallons of renewable fuel to the nation’s fuel supply. Despite continued rapid deployment of conventional and advanced biofuels since issuance of the 2013 final rule, the Agency’s 2014 proposal reduces the total renewable fuel requirement down to 15.21 billion gallons. Instead of encouraging the obligated parties – who have control of fuel distribution – to invest in the infrastructure to offer more options to consumers to use biofuels, this proposed rule validates the mythical “blend wall.”
...
ACORE says: “The origin of this artificial “blend wall” is USEPA’s reliance on a study completed in 1992—15 years before the RFS was created and now over 20 years old, which falsely concluded that ethanol increases the emissions of pollutants in vehicles. More recent studies conducted by other entities have reached the opposite conclusion: blending renewable fuel into gasoline reduces the emissions of harmful pollutants below that of other fuel additives. Yet, under CAA Section 211(c)(1)(A), USEPA is not permitted to use studies that have not been funded, overseen or conducted by USEPA in their governing processes. It is time for USEPA to conduct an updated study on the role ethanol can play in reducing harmful emissions from vehicles.”
...
ACORE says: “USEPA’s proposed reductions in biofuel targets are motivated by a view that the “blend wall” and increased Renewable Identification Number (RIN) prices drive-up consumer gasoline prices, but this is not the case. There are good options for moving beyond E10, such as E85 and drop-in biofuels. RINs are the essential mechanism to enable these fuels to grow in the market. It has always been known and expected that RINS prices would rise. Contrary from being a negative, rising RIN prices are a positive sign of growing market demand and is an essential market signal for investment. Absent rising RIN prices, there will be no market growth. In other words, rising RIN prices are evidence the RFS is working as it should to incentivize the development of a mature and diverse biofuel industry. The proposed 2014 RVO levels corresponding to E10 will actually cause RIN prices to collapse and would remove the enabling mechanism for E85 and drop-in biofuels growth.
...
BIO adds: ...“Following its own guidance, EPA should determine that “inadequate domestic supply” refers to the adequacy of the supply of neat renewable fuel to obligated parties, not “ultimate consumers.”
...
ABFA writes: “By the EPA’s own admission, there are 33 outstanding pending pathways for advanced and cellulosic technologies and feedstocks that further thwart and underestimate the industry’s actual ability to produce gallons in 2014.5 The proposed reduction in the advanced pool to 2.21 billion gallons from 2013′s target of 2.75 billion is a volume which was exceeded almost entirely by the biomass-based diesel pool alone according to EPA’s EMTS system as of Jan. 28th, 2014. These issues point strongly towards a massive underestimation of volumes for 2014, resulting in negative impacts to the advanced sector. ..."
...
RFA adds: “In the end, the RFS program was designed to force the oil industry to change the status quo—not to perpetuate it. The entire purpose of this program would be subverted if the oil industry is rewarded for its failure to take the steps necessary to ensure that it was capable of distributing, blending, and dispensing the renewable fuel volumes required under the statute.”
Growth Energy states: “Under Petitioners’ view, the RFS program serves no purpose at all. If the petroleum industry declines to meet the goals that Congress set, under Petitioners’ view, EPA must simply lower those goals. But that is not what the law provides or what Congress intended. Rather, the program is intended to create incentives for industry to market additional quantities of renewable fuels. Granting Petitioners’ waiver request would simply remove those incentives.”
...
NBB says: “EPA reported a record monthly production of biomass‐based diesel of over 210 million gallons (over 321 million RINs) in December of 2013.2 Even at 210 million gallons per month, which equates to more than 2.5 billion gallons of biomass‐based diesel annualized, the industry is not running at capacity. EPA has registered more than 3.1 billion gallons of domestic biodiesel and renewable diesel production capacity. Clearly, the biomass‐based diesel industry has demonstrated that it is ready to meet both current and future requirements. The biomass based diesel requirements also have allowed the advanced biofuel statutory volume to be met, representing over 80% of the advanced biofuel program each year since 2010 and almost 99% of the 2.75 billion gallons required for 2013.3…NBB believes EPA has authority to set a volume of at least 1.7 billion gallons of biomass‐based diesel for 2014 and at least 2.1 billion gallons for 2015.
...
ABFA contends: “This most likely will wind up in federal court further leaving the country and the advanced and cellulosic industry in suspended animation concerning the overall direction of the RFS. This lack of clarity and uncertainty will stifle the ability of many smaller companies from being able to acquire financing to build out the advanced biofuel sector envisioned in the 2007 law.” READ MORE and MORE (Advanced Biofuels USA comments) and MORE (Iowa Farmer Today) and MORE (KCUR) and MORE (Lansing State Journal)

Excerpt from Iowa Farmer Today: (Bob) Dinneen, president and CEO of the Renewable Fuels Association, says he believes EPA rule-makers actually understand ethanol is a good thing and that they shouldn’t change the RFS. But, he says those EPA officials were overruled by White House staff.
“Our fight is not with EPA. Our fight is with the White House,” he says. But, he adds President Obama still supports the idea of renewable fuels and the idea of reducing the amount of carbon that humans pump into the atmosphere.
“I believe that the administration still supports its climate agenda,” he says, adding ethanol supporters need to ask him the question: “If you still want to reduce carbon, why are you reducing the RFS?” READ MORE