Bill Aims to Dismantle RFS, Limit Biofuel Blending

Agriculture (USDA)Environmental Protection Agency Federal Agency/Executive Branch Federal Legislation Feedstocks Field/Orchard/Plantation Crops/Residues Interior Department New Mexico Opinions Policy State Department Vermont

March 09, 2018

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by Erin Voegele (Ethanol Producer Magazine) On March 8, Rep. Peter Welch, D-Vt., and Sen. Tom Udall, D-N.M., introduced companion bills that aim to dismantle the Renewable Fuel Standard and sunset blending obligations for conventional, advanced, cellulosic, and biomass-based diesel fuels.

The acts, titled the “Growing Renewable Energy through Existing and New Environmentally Responsible Fuels Act,” or more simply, the “GREENER Fuels Act,” would phase out the corn ethanol mandate, cap ethanol blending at 9.7 percent, create a fee of 10 cents per renewable identification number (RIN) to support an environmental initiative, and alter the cellulosic mandate. The National Corn Growers Association and several other groups are speaking out against the bill, with the NCGA noting “this legislation seeks to kill our most successful American renewable energy program.”

Information released by Udall’s office explains that Section 3 the bill would prohibit any part of a corn kernel from qualifying as an advanced biofuel, including fuels made from corn oil, protein or fiber. A fact sheet states that “production of these fuels continues to drive more corn development” and Section 3 “is intended to limit corn production.”

Section 4 of the bill would prevent invasive species from qualifying as renewable biomass and require domestic biofuel producers to meet the stringent environmental reporting requirements currently required of foreign biofuel producers and domestic producers. The section would also require the U.S. EPA and USDA to issue an annual report on how much virgin land has been brought into agricultural production and how much corn and soy is being planted.

Under Section 5, the bill would end an exemption that allows ethanol plants to be grandfathered under the RFS with regard to greenhouse gas (GHG) reduction levels. Beginning in 2020, all ethanol plants would be required to meet a 20 percent GHG reduction when compared to baseline gasoline. The section would also eliminate the ability of the EPA to waive existing GHG reduction requirements for different types of biofuels.

Section 6 of the bill modifies applicable biofuel volumes and specifies timing for the sunset of the RFS’s four nested biofuel categories. Beginning in 2023, the conventional category, which includes corn ethanol, would be reduced from its current level of 15 billion gallons by 2 billion gallons per year, until it is fully eliminated in 2030. The requirement for cellulosic biofuels would be extended until 2 billion gallons of annual production is achieved, or calendar year 2037, whichever comes first. The cellulosic mandate would then sunset. The mandate for advanced biofuel would be capped at 2 billion gallons and sunset in 2030. Finally, the mandate for biomass-based diesel would be capped at 2 billion gallons and sunset in 2030. In addition, no more than 1 billion gallons of biomass-based diesel manufactured from pure vegetable oil could be used to meet the mandate each year.

Section 6 would also modify the development of the annual renewable volume obligations (RVOs) for biomass-based diesel, advanced and cellulosic biofuels. The annual RVO would be set on the previous year’s production volumes, with a mid-year adjustment to account for new production facilities and expansions. The date the RVOs are set by the EPA would move from Nov. 30 to March 1. The mid-year adjustment would take place Sept. 1.

Under the bill, Section 7 would cap ethanol at 9.7 percent of the fuel supply. The fact sheet explains this would ensure “we remain below the blend wall while preserving a small market for E0 gasoline.” The section would also require EPA to prioritize the use of cellulosic biofuel ahead of other biofuels when determining volumes below the blend wall.

Section 8 specifies that RINs may be carried forward to the following year and states that cellulosic volumes generated in excess of the mandate would still generate RINs.

Section 9 aims to alter the EPA’s existing waiver authority by eliminating waivers for cellulosic and biomass-based diesel. The section also eliminates the reset authority. According to the fact sheet, the section states “that if the U.S. is experiencing severe economic or environmental harm, and the implementation of the RFS is either the root cause of the harm or is significantly contributing to it, EPA should be required to grant a waiver petition—provided that waiving the RFS would appreciably alleviate the harm.”

Section 10 requires EPA to consider the impacts that a new biofuel pathway may have on land grabs. It would also require the USDA, EPA and USAID to issue a joint report examining the impacts of the RFS on farm-ownership collaboration and global land acquisition.

Under Section 11, the bill requires a study of the impacts ethanol blends greater than E10 could have on infrastructure, the environment, emissions, and other factors. He EPA would be prevented from issuing any new waivers allowing E15 until the study is completed.

Section 12 creates a new 10 cent per RIN fee that is to be assessed on obligated parties. The proceeds of the fee would go to the Department of the Interior to fund programs that help private landowners conserve land and habitat in areas most impacted by the conversion of habitat to corn and soy production.

Stakeholders in the biofuels industry are speaking out strongly against the bill and its provisions. “This legislation seeks to kill our most successful American renewable energy program,” said Kevin Skunes, president of the NCGA. “The bill ignores current science reflecting the significant environmental benefits of ethanol and would have catastrophic consequences for our nation’s economy, our energy security, and family farmers.”

“The sponsors of this legislation need to understand farmers’ productivity,” Skunes continued. “Ethanol production is not significantly impacting land use. In fact, planted corn acres were lower in 2017 than when the RFS was expanded in 2007, yet we produced significantly more biofuels. We produce more biofuels because average crop yields have increased by more than 25 bushels per acre, not because we are farming more land. The total agriculture footprint in the United States is shrinking.

“Corn production is also increasingly sustainable,” Skunes said. “Since 1980, corn farmers have doubled production while using half the nutrient inputs per bushel. Through our Soil Health Partnership, corn farmers are advancing production practices that result in greater productivity and more environmental benefits.”

The American Coalition for Ethanol also opposes the GREENER Fuels Act. “If this strange and unserious legislation ever became law it would have the opposite of its intended effect,” said Brian Jennings, CEO of ACE. “Dismantling the RFS in this way would increase pump prices and greenhouse gas emissions. It would also be the final nail in the coffin for some farmers and rural communities who are already struggling. Thankfully when Congress enacted the RFS several years ago it took a more forward-thinking approach that remains the law of the land today. We intend to keep it that way.”

The Biotechnology Innovation Organization said the bill would undermine investment in advanced biofuels. “Senator Udall’s and Representative Welch’s proposal creates new uncertainty for cellulosic and advanced biofuel producers, threatening to halt their recent progress,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “Cellulosic ethanol companies have made significant strides in recent years, overcoming years of instability in the RFS.”

“Rather than subvert a policy that has displaced nearly 2.5 billion barrels of imported oil and reduced greenhouse gas emissions by 780 million metric tons, Congress should work to ensure that U.S. consumers can choose the lowest carbon fuels at the pump,” Erickson continued. “And rather than roll back progress in cellulosic biofuel production, Congress should exercise its oversight authority to urge EPA to rapidly approve new biofuel technologies and provide new pathways to the transportation fuel marketplace.”

Copies of the Senate bill, House bill, and fact sheet can be downloaded from Udall’s website. READ MORE

RFS Reform Movement: Proposal Would End Corn Ethanol Mandate (DTN The Progressive Farmer)

Craddick: Ethanol mandates help Wall Street, and hurt Texas (Houston Chronicle)

Dem bill would overhaul ethanol mandate (The Hill)

Welch leads effort to reform corn-based ethanol incentives (VT Digger)

Reforming Ethanol Mandate Could be Win for Environment (Public News Service)

New Bill Takes Aim at Ethanol and Biodiesel (Energy.AgWired.com)

US: Democrat bill to limit first-gen biofuels, boost second-gen (Biofuels International)

New Biofuels Bill Aims to Protect Water, Wildlife and Climate (Public News Service)

New Bill Promotes Greener Biofuels (Public News Service)

Bill Seeks to Reform Biofuels Mandate (Public News Service)

US: Democrat bill to limit first-gen biofuels, boost second-gen (Biofuels International)

EESI Statement on the GREENER Fuels Act EESI (Environmental and Energy Study Institute) is reviewing the proposed changes to the Renewable Fuel Standard (RFS) Program in the bicameral Welch and Udall GREENER Fuels Act (H.R.5212 and S.2519) introduced yesterday, March 8. We expect to release a full analysis of the proposal next week. However, at first pass, the measures proposed in this bill would harm, not help, the development of lower carbon cellulosic biofuels. The biofuels industry, along with both federal and independent research, has proven that biofuels already do make a meaningful contribution to lowering the carbon intensity of the transportation sector. There is always room for improvement of the environmental impact of any sector, and biofuels are no exception. Unfortunately, it appears this bill would likely hinder the development of even lower carbon cellulosic fuel feedstocks and pathways that may also provide additional environmental benefits. READ MORE

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Advanced biofuels Agricultural Policy biodiesel cellulosic biofuel corn/maize corn fiber corn kernel corn oil corn oil/distillers corn oil (DCO) Department of Agriculture (USDA) Department of the Interior E15 environmental policy EPA (Environmental Protection Agency) ethanol/bioethanol GHG (Greenhouse Gas Emissions) invasive species land ownership land use change Legislation-Federal New Mexico Renewable Diesel/Green Diesel/HVO/Paraffinic Diesel Renewable Fuel Standard (RFS and RFS2) Renewable Fuel Standard (RFS2) revisions/repeal renewable volume obligation (RVO) RFS "reset" RINs (Renewable Identification Numbers) RINs price Transportation Fuels Policy US Agency for International Development (USAID) vegetable oils Vermont waiver

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