By Lynn L. Bergeson and Carla N. Hutton
On January 3, 2023, the U.S. Environmental Protection Agency (EPA) announced the release of a draft document entitled Biofuels and the Environment: Third Triennial Report to Congress (External Review Draft) for public comment. 88 Fed. Reg. 72. EPA’s Office of Research and Development (ORD) and Office of Air and Radiation (OAR), in consultation with the U.S. Departments of Agriculture (USDA) and Energy (DOE), prepared the document. The draft report is responsive to Section 204 of the 2007 Energy Independence and Security Act (EISA). The purpose of the report is to examine the effects of the Renewable Fuel Standard (RFS) Program on the environment, including the impacts to date and likely future impacts to the nation’s air, land, and water resources. It focuses on the dominant biofuel sources in the United States: (1) domestic corn ethanol from corn starch; (2) domestic biodiesel from soybean oil; (3) domestic biodiesel from fats, oils, and greases (FOG); and (4) imported ethanol from Brazilian sugarcane. The draft report concludes that the RFS Program likely played a relatively minor role (0-0.4 billion gallons per year) in the growth of corn ethanol in the United States from 2002-2012 and may have played a more important role (0-2.1 billion gallons per year) since 2013. According to the draft report, the more prominent role of the RFS Program on corn ethanol production in the United States in more recent years is consistent with the methyl-tert-butyl-ether (MTBE) phaseout by 2006, expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of 2010, and lower oil prices after 2015. For biodiesel and renewable diesel, which may be produced from a variety of feedstocks (e.g., soybean, FOGs), the draft report states that the conclusion on the attributional effect of the RFS Program is different. There is evidence that the RFS Program has driven a significant portion of the use of these biofuels since 2010; there is insufficient information available to quantify the attributional effect of the RFS Program, however. The draft report notes that despite the finding of relatively modest effects of the RFS Program nationally for the environmental impacts assessed, these may have important cumulative impacts on the environment. The draft report states that international effects associated with imported biofuels are even more uncertain than national effects but are likely modest as well given the relatively small quantity of imports relative to domestic biofuel production since the RFS Program went into effect.
The draft report reinforces the broad conclusions from the first and second Reports to Congress on biofuels in general and further evaluates attribution of those effects to the RFS Program more specifically. According to the draft report, biofuels continue to have the potential for both positive and negative environmental effects, depending on the many factors identified in the report. The draft report notes that at the time of writing, the likely future effects of the RFS Program are highly uncertain. The first and second Reports to Congress “had the benefit of statutory biofuel volumes established by EISA as a guideline for the likely future,” but these statutory volumes ended in 2022. EPA continues to work on issuing final annual biofuel standards under the RFS Program for future years. These standards are critical to estimating accurately the likely future effects of the RFS Program. Since these final standards for future years are not yet available, they are not included in this report. The draft report notes that several other factors contribute to additional uncertainty, including ongoing recovery from the global COVID-19 pandemic, uncertainty in the penetration of E15 in the marketplace, competition with other technologies such as electric vehicles, and continued but slow growth of cellulosic ethanol production from agricultural or marginal lands. As policy and market conditions change, so may the factors to consider and the estimate of the likely future effects of the RFS Program.
EPA states that it is releasing the draft document to seek review by a contractor-led peer review panel. EPA will post the external peer review panel, peer review meeting dates, and registration information on its website. Comments on the draft report are due March 6, 2023.