WASHINGTON — The Environmental Protection Agency on Nov. 30 announced its final rule for biofuel volume requirements under the Renewable Fuel Standard (R.F.S.). for 2014, 2015 and 2016 as well as final volume requirements for biomass-based biodiesel alone for 2017. The volume requirements mandate how much biofuel refiners must blend into the nation’s motor vehicle gasoline and diesel fuel supply. The E.P.A.’s final rule included volume requirements for advanced biofuel, which includes cellulosic biofuel and biomass-based diesel, as well as for total renewable fuel.
Predictably, corn-based ethanol manufacturers and corn growers were sharply critical of the final volume requirements, asserting they were too low and fell short of statutory mandates, especially for corn-based ethanol, while the petroleum industry asserted they were too high. The soybean industry, the major player in the biodiesel sector, was generally supportive. Views in Congress ran the gamut with some members saying the E.P.A. should have mandated more robust volume requirements and others arguing the R.F.S. was a failed policy and its reform or even outright repeal was necessary.
The E.P.A. noted it finalized 2014 and 2015 standards at levels that reflected the actual amount of biofuel used domestically in those years. The agency failed to establish standards for those years in advance. The agency said the standards for 2016 (and 2017 for biodiesel) represented significant growth over historical levels.
The E.P.A. noted the final 2016 standard for cellulosic biofuel — the fuel with the lowest carbon emissions — at 230 million gallons was about 200 million gallons, or seven times, more than the market produced in 2014. The agency pointed to the biodiesel standard, which increases each year to 1.9 billion gallons in 2016 and to 2 billion gallons by 2017. The final 2016 standard for advanced biofuel, at 3.61 billion gallons, was nearly 1 billion gallons, or 35%, higher than the actual 2014 volumes.
The E.P.A. said the total renewable fuel standard for 2016 at 18.11 billion gallons would be 1.83 billion gallons, or 11%, more than was manufactured in 2014.
The chief complaint of corn growers and ethanol manufacturers was that with the 2016 renewable fuel standard at 18.11 billion gallons and with 3.61 billion gallons of that total mandated for advanced biofuels, the resulting mandate for mostly corn-based ethanol was 14.5 billion gallons, which fell short of the 15 billion gallons targeted by Congress in the Energy Independence and Security Act of 2007 (EISA).
The E.P.A. asserted congressional intent was for the R.F.S. to help drive steady growth in the biofuel sector. While Congress established volume requirements under EISA, it also provided in the law a means by which the agency may waive the mandated volume increases should that be determined to be necessary.
“Despite significant increases in renewable fuel use in the United States, real-world constraints, such as the slower-than-expected development of the cellulosic biofuel industry and constraints in the marketplace needed to supply certain biofuels to consumers, have made the timeline laid out by Congress impossible to achieve,” the E.P.A. said.
One of the constraints referred to was the E10 blend wall. Ethanol-gasoline blends mostly are 10% ethanol to 90% gasoline. It has proved problematic to increase the blend to 15% ethanol for various reasons. The E.P.A. viewed this circumstance as posing a limit on how much renewable fuel may be blended into the nation’s gasoline and diesel supply, especially with overall fuel consumption falling short of expectations that prevailed when EISA was enacted. Under the final rule, renewable fuel in 2016 would comprise 10.1% of the nation’s forecast motor vehicle fuel supply.
Bob Dinneen, president and chief executive officer, Renewable Fuels Association, lambasted the E.P.A. announcement, saying, “This final rule directly contravenes the statute and places the potential growth for biofuels like ethanol in the hands of the oil companies. It will have the unfortunate consequence of increasing Big Oil’s ability to thwart consumer choice at the pump without even a scintilla of fear that E.P.A. will enforce the statute. With no consequences for Big Oil’s bad behavior, consumers will be denied greater access to the lowest cost liquid transportation fuel and No. 1 source of octane on the planet.”
Meanwhile, Jack Gerard, president and c.e.o., American Petroleum Institute, said, “E.P.A. has taken a significant step in the right direction by using its waiver authority to lower ethanol mandates, acknowledging the market limitations of the ethanol blend wall. However, the agency must do more to protect American consumers. E.P.A.’s final rule relies on unrealistic increases in sales of higher ethanol blends despite the fact that most cars cannot use them. Motorists have largely rejected these fuels.”
Mr. Gerard said the A.P.I. sought a final ethanol mandate of no more than 9.7% of gasoline demand as opposed to the 10.1% in the final rule.
“Today’s announcement makes clear that, in order to protect consumers, Congress must step in to repeal or significantly reform the R.F.S.,” Mr. Gerard said.
The American Soybean Association said while the volumes in the final rule do not fully capitalize on the capacity and growth potential of U.S. biodiesel, it does provide a step in the right direction. Soybean oil accounts for about half the feedstock used in the manufacture of biodiesel.
Wade Cowan, president of the A.S.A., said, “We are glad to see the volumes for biomass-based diesel increased above the proposed rule and previous proposals. Biodiesel provides significant economic and environmental benefits, and we have the capacity to do more. The administration wants to address climate change and reduce greenhouse gas emissions, and biodiesel can contribute more to that effort.”
On Capitol Hill, Representative Collin Peterson of Minnesota, ranking member on the House Committee on Agriculture, said, “A strong biofuels industry is an essential component of the rural economy and necessary to achieving our full potential of producing the next generation of domestic biofuels. Today’s announcement isn’t everything we wanted, but is an improvement on the disastrous proposed rule (the E.P.A.’s proposed rule issued in May had lower volume requirements than those contained in the final rule). The administration deserves credit for listening to our concerns and now needs to immediately start work on the numbers and get the program back on track.”
Congressional critics of the R.F.S. issued a strong rebuke to the E.P.A. In a joint statement, Representative Bob Goodlatte of Virginia, a former chairman of the agriculture committee, and Representatives Peter Welch of Vermont, Steve Womack of Arkansas and Jim Costa of California, said, “The E.P.A.’s decision to funnel more ethanol into the fuel supply is terribly disappointing. The R.F.S. requirements announced today will push ethanol volumes beyond the blend wall in 2016, leaving American consumers and our economy to feel the negative effects.”
The representatives are sponsors of the R.F.S. Reform Act, which would eliminate corn-based ethanol requirements, cap the amount of ethanol that may be blended into conventional gasoline at 10%, and require the E.P.A. to set cellulosic biofuels levels at production levels.
