By Lauren M. Graham, Ph.D.
On August 15, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled two to one that the U.S. Environmental Protection Agency (EPA) exceeded its statutory authority under the Clean Air Act (CAA) when it denied Sinclair Oil Corporation’s request for a hardship exemption from the Renewable Fuel Standard (RFS) program. The statute requires that EPA grant exemptions on a case-by-case basis to small refiners that would suffer a “disproportionate economic hardship” in complying with the RFS program. According to the court ruling, EPA’s interpretation that there needed to be a threat to the refinery’s survival as an ongoing operation to be eligible for the exemption is outside the range of permissible interpretations of the statute and, therefore, inconsistent with Congress’s statutory mandate. To support its ruling, the court cited the U.S. Department of Energy’s (DOE) matrix analysis that lists three viability metrics that determine hardships, including reduced profitability, temporary negative events, and risk of closure. As a result of the ruling, EPA will have to reconsider Sinclair’s request for an exemption.
Justice Lucero respectfully dissented, stating that the majority decision did not consider EPA’s lengthy discussion, which demonstrates that the Agency considered all of the viability factors.
By Lauren M. Graham, Ph.D.
On August 1, 2017, the U.S. Environmental Protection Agency (EPA) held a public hearing to hear from all segments of the fuel industry on the proposed rule to set the 2018 renewable volume obligations (RVO) under the Renewable Fuel Standard (RFS) program. Among the nearly 150 individuals and organizations scheduled to testify at the hearing were numerous biofuel industry stakeholders who praised EPA for issuing the proposed rule on time and for maintaining the statutory 15 billion gallon volume requirement for conventional renewable fuels, but urged the agency to increase the proposed requirements for advanced and cellulosic fuels.
During its testimony, the Renewable Fuels Association (RFA) stated that it believes that EPA “erred on the side of pessimism with regard to the potential for significant growth in cellulosic ethanol commercialization.” According to Bob Dinneen, Chief Executive Officer (CEO) of the RFA, many plants are in the process of adding bolt-on fiber conversion technology to their existing facilities, which could dramatically increase cellulosic ethanol production next year. RFA intends to provide EPA with updated projections for cellulosic fuel before the comment period ends. Dinneen also highlighted concerns with Renewable Identification Number (RIN) market manipulation and suggested that EPA continue to allow imported biofuels to help comply with the RFS program.
With a group of approximately 20 speakers, the National Biodiesel Board (NBB) highlighted key data and information regarding market realities and underutilized capacity, and the impacts on small businesses and manufacturing, feedstock availability, and consumer choice. Donnell Rehagen, NBB CEO, stated that the “current numbers shortchange the progress we have made. They are a step back for the RFS, job creation, small businesses and rural economies.” Rehagen clarified that “these steps backwards are not about paper but people.”
The Renewable Energy Group (REG) informed EPA that ample feedstocks, technology and quality advances, and subsidized imported biofuel are three reasons why the agency should increase the biomass-based diesel and advanced biofuel minimum volumes. Derek Winkel, Executive Director of Manufacturing, stated that “investments [into the biofuel sector] would not have been made without increasing demand for biodiesel and renewable diesel. This demand, in part, is supported by a strong, growing and consistent RVO and RFS.” Paul Nees, Executive Director of REG’s Operations Control Team, testified that “[t]he domestic biodiesel industry is ready and able to fulfill demand gaps with low-cost, high-quality fuel with no market disruption.”
During its testimony, the Iowa Renewable Fuels Association (IRFA) suggested that the recent verdict in Americans for Clean Energy v. EPA should radically alter the factors EPA considers when determining RFS levels this year and going forward. “The Court clearly affirmed that Congress’ intent for the RFS from the very beginning was to crack the petroleum monopoly and to push biofuels into the marketplace,” stated Monte Shaw, IRFA Executive Director. “Whether in a reset discussion or in setting biodiesel and ethanol levels, the EPA must act according to the clear directive from the Court.”
The American Coalition for Ethanol's (ACE) testimony highlighted its view on conventional biofuel levels, the general waiver authority as it relates to inadequate domestic supply, the use of the reset provisions, and updating the greenhouse gas modeling for corn ethanol as it relates to Brazilian sugarcane ethanol. The Coalition intends to detail its position on these topics in written comments. Jonathon Lehman, ACE legislative counsel, also praised Nebraska Governor Pete Ricketts and Iowa Governor Kim Reynolds for their strong public support for keeping the RFS on track.
Stakeholders representing the oil industry were also present to testify to the problems they see with the RFS program, including the representatives from the American Petroleum Institute (API), the American Fuel and Petrochemical Manufacturers (AFPM), and Valero.
Written statements and supporting information concerning the proposed rule are available under Docket ID No. EPA-HQ-OAR-2017-0091. As stated in the Federal Register notice, EPA will consider the written comments with the same weight as any oral comments presented at the public hearing.
By Lauren M. Graham, Ph.D.
On July 26, 2017, the U.S. Environmental Protection Agency (EPA) published its analysis of the upstream greenhouse gas (GHG) emissions attributable to the production of sugar beets for use as a biofuel feedstock. EPA considered a scenario in which non-cellulosic beet sugar is extracted for conversion to biofuel and the remaining beet pulp co-product is used as an animal feed. Based on the findings, EPA anticipates that biofuels produced from sugar beets could qualify as a renewable fuel or advanced biofuel under the Renewable Fuel Standard (RFS) program, depending on the type and efficiency of the fuel production process technology used.
Comments on the analysis are due by August 25, 2017. The pre-publication version of the notice was issued on January 18, 2017, as previously reported in the Biobased and Renewable Products Advocacy Group (BRAG®) blog post EPA Seeks Comments on GHG Analysis of Sugar Beets for Biofuel Feedstock.
By Kathleen M. Roberts
On July 18, 2017, the U.S. Environmental Protection Agency (EPA) published in the Federal Register its proposed rule on the Renewable Fuel Standard (RFS) Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019. The rulemaking proposes the annual percentage standards for cellulosic biofuel, advanced biofuel, and total renewable fuel for motor vehicle gasoline and diesel produced or imported in 2018, as well as biomass-based diesel in 2019, as reported in the Biobased and Renewable Products Advocacy Group’s (BRAG®) blog post EPA Releases Proposed 2018 RFS Volume Requirements. The proposed volume requirements are:
- 238 million gallons for cellulosic biofuel in 2018, down from 311 million gallons in 2017;
- 4.24 billion gallons for advanced biofuel in 2018, down from 4.28 billion gallons in 2017;
- 19.24 billion gallons for renewable fuel in 2018, down from 19.28 billion gallons in 2017; and
- 2.1 billion gallons for biomass-based diesel in 2018 and 2019.
These volumes would set the percentage standards at 0.131 percent for cellulosic biofuel, 2.34 percent for advanced biofuel, 10.62 percent for renewable fuel, and 1.74 percent for biomass-based diesel. Comments on the proposed rule must be received by August 31, 2017
While the proposed reduction in the amount of renewable fuel is relatively small, many in the biofuels industry are concerned that it sends the signal to the market that the U.S. renewable fuel industry will no longer grow. The proposed volume requirements may undercut the Administration’s goal of reducing U.S. reliance on foreign energy and reviving U.S. manufacturing, despite President Trump’s repeated pledge to support the ethanol industry.
As previously reported in the BRAG blog post EPA Announces Public Hearing On RFS Program,
EPA will hold a Public Hearing for Standards for 2018 and Biomass-Based Diesel Volume for 2019 Under the RFS Program
to listen to arguments from all interested stakeholders to inform future rulemakings on the volume requirements. The hearing will take place at 9:00 a.m. on August 1, 2017
, in Washington, D.C. EPA has until November 30, 2017
, to issue the rulemaking in final.
By Kathleen M. Roberts
The U.S. Environmental Protection Agency (EPA) will hold a public hearing on the Renewable Fuel Standard [RFS] Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019 proposed rule. The hearing will take place at 9:00 a.m. on August 1, 2017, and will provide an opportunity for EPA to gather data, views, and arguments on the proposed rulemaking from interested stakeholders. While EPA does not plan to respond to presentations, the Agency may ask clarifying questions. EPA intends to use the information to inform a future rulemaking to reset the statutory volumes for cellulosic, advanced, and total biofuels pursuant to the Clean Air Act. In resetting the mandatory biofuel production requirements under the RFS program, EPA will need to review the implementation of the program during previous years and coordinate with the Secretary of Energy and the Secretary of Agriculture. Factors that EPA must consider in its analysis include:
- The impact of renewable fuels on the environment;
- The impact of the fuels on energy security;
- Production rates of fuels;
- Economic impacts of fuels; and
- The impact of renewable fuel on U.S. infrastructure.
By Lauren M. Graham, Ph.D.
On July 11, 2017, the Energy Information Administration (EIA) issued its June Short-Term Energy Outlook (STEO). EIA considered EPA’s recent rulemakings on the 2017 RFS volume requirements and proposed 2018 RFS volume requirements when developing its STEO for 2017 and 2018.
Biodiesel production averaged 101,000 barrels per day (b/d) in 2016, and, according to EIA, is expected to increase to an average of 105,000 b/d in 2017 and to 109,000 b/d in 2018. Biomass-based diesel imports are expected to fall from 54,000 b/d in 2016 to 53,000 b/d in 2017 but rise to 59,000 b/d in 2018.
Ethanol production averaged 1.0 million b/d in 2016 and is expected to average slightly above 1.0 million b/d in 2017, which would be a record, but will likely decline slightly in 2018. Ethanol consumption averaged about 940,000 b/d in 2016 and is forecast to increase slightly in 2017 and 2018. As a result, the ethanol share of the total gasoline pool will increase to nearly 10.1% in both 2017 and 2018. Only marginal increases in higher-level ethanol blends are assumed to occur during the STEO forecast period.
By Kathleen M. Roberts
On July 5, 2017, the U.S. Environmental Protection Agency (EPA) issued proposed volume requirements under the Renewable Fuel Standard (RFS) program for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2018, as well as biomass-based diesel for 2019. The proposal lowers the blending requirement for all renewable fuel with the exception of biomass-based diesel, which maintains the 2017 blending requirement. The proposed volume requirements are:
Cellulosic biofuel, from 311 million gallons in 2017 to 238 million gallons in 2018;
Advanced biofuel, from 4.28 billion gallons in 2017 to 4.24 billion gallons in 2018;
Renewable fuel, from 19.28 billion gallons in 2017 to 19.24 billion gallons in 2018; and
Biomass-based diesel, 2.1 billion gallons in 2018 and 2019.
These volumes would set the percentage standards at 0.131 percent for cellulosic biofuel, 2.34 percent for advanced biofuel, 10.62 percent for renewable fuel, and 1.74 percent for biomass-based diesel. The proposed rule will be open for comment for 45 days following the official publication in the Federal Register.