Advanced BioFuels USA

by Erin Voegele (Biomass Magazine)  On Dec. 1, the Senate Subcommittee on Regulatory Affairs and Federal Management held a hearing to discuss the U.S. EPA’s management of the renewable fuel standard (RFS) and two Government Accountability Office reports released on Nov. 28. During the hearing, participants discussed several issues associated with the RFS, including recently finalized renewable volume requirements (RVOs) for 2017, the agency’s response to petitions seeking to move the point of obligation, the impact of regulatory uncertainty, future administration of the program, renewable identification number (RIN) prices, and greenhouse gas (GHG) reduction levels.

Chairman James Lankford, R-Okla., opened the hearing with a statement largely criticizing the RFS, calling it a “deeply flawed program,” and calling for the next administration and the American public to “do away with the RFS.”

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In her opening statement, Ranking Member Heidi Heitkamp, D-N.D., stressed her support of the RFS program and applauded the EPA for getting the RFS back on track with the recently finalized rule to set 2017 RVOs.

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One report states that low expected production volumes make it unlikely that advanced biofuels can meet increasing targets. The other report states that the RFS program is unlikely to meet its targets for reducing GHG emissions.

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Heitkamp asked several questions regarding potential triggering of the “reset provision” included in the regulation establishing the current RFS program. She noted that that provision states that in years after 2016, the EPA is allowed to adjust statutory RFS mandates if the volume totals contained in the RVO tables fall below those set in law by 20 percent in two consecutive years or by 50 percent in one year.

Responding to her question, McCabe indicated those levels have been triggered for the cellulosic and advanced fuel pools, but stressed the EPA has not embarked upon a reset rule at this time.

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Even for those that meet the 20 percent reduction threshold under the RFS, Rusco (Frank Rusco, director of natural resources and environment at the GAO) said there is still some debate because some people think EPA’s model has not effectively taken into account indirect land use change and the resulting effect on GHG emission. That issue aside, he said the RFS program has resulted in a modest reduction in GHG emissions. He also stressed that the GHG benefits of the program would significantly with greater deployment of advanced and cellulosic fuels.

In response to Rusco’s statements on indirect land use change, McCabe stressed that the EPA looks into the issue each year when it completes the annual RFS rulemaking and to date has found no evidence that the RFS program has caused additional land to enter feedstock production.

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Responding to the GAO reports, the Biotechnology Innovation Organization said it believes the EPA’s actions over the past few years have delayed the success of the RFS and shaped the outcomes included in the GAO report.

“BIO has noted that EPA’s delays and methodology for setting the annual RFS chilled investment in advanced biofuels,” said Brent Erickson, executive vice president of BIO. “Based on BIO’s findings, investment patterns clearly demonstrate that EPA is sending a sustained market signal that disincentivizes advanced biofuels, causing a $22.4 billion shortfall in necessary investment.”

“Further, EPA continues to be too slow in making decisions on RFS pathway review and approval process,” Erickson continued. “Petition review and approvals for advanced biofuel companies have averaged more than three years. These lengthy waits for approval of new pathways discourage investment in commercial production of advanced and cellulosic biofuels. Under these conditions, companies have found it difficult to attract the necessary investment to initiate, continue, and complete the construction and startup of new facilities; a number have delayed or abandoned their commercialization plans.”

“The GAO report also notes that the program is unlikely to meet its targets for reducing greenhouse gas emissions,” Erickson said. “BIO has repeatedly pointed out that EPA’s delays and reductions in the annual volumes have caused increases in transportation-related greenhouse gas emissions. BIO estimates that emissions increased by 72 million metric tons in 2014 and again by 22.9 million metric tons in 2015 because of EPA reducing biofuel volumes and delays in getting the rule out. However, the report fails to note that over its first 10-years the RFS reduced U.S. transportation-related carbon emissions by 589.33 million metric tons. The total reduction is equivalent to removing more than 124 million cars from the road over the decade. Further the GAO report fails to point out if EPA had maintained the successful approach to the RFS that it used in 2013, EPA could have considerably limited greenhouse gas emissions from the increase in transportation fuel use.”

“While the findings in this report grab headlines, they should not be surprising,” Erickson continued. “Unfortunately, political uncertainty and the actions taken by the EPA have undermined the goals of the RFS statute. With EPA now abandoning its legally flawed reliance on general waiver authority as a basis for departing from statutory biofuels volumes requirements in its final rule for the 2017 RFS, the agency has sent a strong signal that it will support the biofuels industry and grow advanced and cellulosic biofuel production. This will allow the RFS to be successful in driving development of cleaner transportation fuels that measurably reduce carbon emissions.”

The Renewable Fuels Association said the hearing missed the point. “The RFS has been a resounding success by any measure,” said Bob Dinneen, president and CEO of the RFA. “It has created high-paying jobs across America, reduced oil imports from OPEC, lowered consumer fuel prices, slashed emissions from the transportation sector, and driven substantial investment into advanced and cellulosic biofuel technologies.

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A video recording of the full hearing can be found on the Senate Committee on Homeland Security & Government Affairs website.  READ MORE