Reactions to EPA dragging out biofuels decision until next year

Renewable Fuel StandardThe US Environmental Protection Agency decided to once again put off its decision on biofuel production and gasoline blending until next year – nearly one year after deciding to extend that decision on production volume. A deadline wasn’t given, but it’s probably not going to be announced anytime soon.

While government regulations aren’t the only market force determining what happens to a business sector, it appears that the EPA decision on production volume mandates will shape the future of biofuels. That industry, and oil producers and refiners, have placed a massive amount of energy and resources on influencing the federal agency. Reactions to the latest EPA decision have been mixed.

On Friday, the EPA released this statement: “Today EPA is announcing that it will not be finalizing 2014 applicable percentage standards under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the 2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015.”

The EPA’s announcement on Friday came after it was nearly a year late in issuing its 2014 requirements for the production and use of ethanol, biodiesel, and cellulosic fuels. Oil refiners and producers had been arguing and lobbying hard over how much renewable fuel could be blended into the gasoline supply; and they say that the Renewable Identification Numbers (RIN) credit market system is volatile and costing them way too much money. Automakers have been sending out warnings on the corrosive effect that E15 could bring to engines. Biofuel farmers and producers have been fighting for victory on RFS for increasing the gasoline blend to E-15 and for supporting advanced biofuels, particularly cellulosic ethanol and biodiesel. The EPA held public hearings around the country over the past year where thousands of people made their case for or against the RFS.

The EPA has sent out mixed messages. EPA Administrator Gina McCarthy may agree with automotive engineers sending out warnings that too much ethanol in gasoline will damage vehicle engines. McCarthy has also suggested that the EPA is leaning toward increasing biofuel production in the 2014 rules and beyond. That could be a reference to backing off corn ethanol (such as leaving it at E10) and increasing volumes of advanced biofuels such as biodiesel, cellulosic ethanol, and other fuels coming from algae and biomass.

So, how did industry groups perceive the EPA decision? It’s been a mixed bag, according to Biofuels Digest:

  • National Biodiesel Board is very frustrated with the delay and sees it undermining the biodiesel industry. While it acknowledges that the decision is complex, it makes no sense that the decision on how volume should be produced has been delayed again. Biodiesel producers have laid off workers, idled production, and some have shut down completely, says Anne Steckel, VP of federal affairs at National Biodiesel Board.
  • BIO President and CEO Jim Greenwood appreciated the delay in finalizing the proposal with what he considers to be flawed methodology for setting renewable fuel volumes. He’s concerned to see that the delay in the EPA decision has chilled investment and financing of future cellulosic biofuel plants.
  • Advanced Biofuels Association President Michael McAdams thinks the EPA has recognized that cutting requirements for advanced biofuels would be a mistake. He thinks the EPA has “hit the big reset button.”
  • Advanced Ethanol Council, Renewable Fuels Association, and Growth Energy are tired of seeing it being dragged out but are confident that the EPA understands it was wrong about its original ruling. The influence of “Big Oil” has been extreme, and the EPA will likely be issuing standards more supportive of biofuels, the groups say.
  • The American Fuel & Petrochemical Manufacturers (AFPM), speaking for the oil industry, wasn’t too happy about it. “Today’s announcement indicates that the Administration plans to continuously mismanage this program in a manner that equates to playing Russian roulette with the nation’s fuel supply at the American consumer’s ultimate expense,” said Charles Drevna, the association’s president. The AFPM filed a notice of its intent to sue the EPA over its failure to issue the 2014 RFS regulations.
  • The Environmental Working Group thinks that the corn ethanol blend in gasoline needs to be reduced and that Congress should reform what it calls “our badly broken food-to-fuel policies.” The group thinks that corn ethanol needs to go away and truly “green” biofuels need to be adopted for reducing greenhouse gas emissions.
  • Friends of the Earth Climate agrees with that argument. “Final volume levels or no, the simple fact is that the statute requires too much climate-busting corn ethanol,” according to Friends of the Earth Climate’s Lukas Ross. “Today’s announcement shows that Congress handed the EPA an unworkable policy. Now it’s time for Congress to step in and fix the corn ethanol problem they created.”