U.S. Federal and State Biofuel Policy News: February 27, 2014

Here’s an update on recent news items and other public policy developments relating to biofuel policies at the federal and state levels in the U.S.

Federal Legislative Developments

Farm Bill Passage. As has widely been reported in the trade press and lay press, in late January Congress passed, and President Obama signed, a new Farm Bill to replace the Farm Bill of 2007 that had expired at the end of 2012. The bill restored mandatory funding for the Energy Titles of the bill, an also extended eligibility of these programs to processes for production of renewable chemicals. The bill, which was widely heralded as a rare example of bipartisanship in the U.S. Congress, is also viewed as a victory for the biofuels and industrial biotechnology industry.

Biodiesel tax incentive extension. On February 12, 2014, Sens. Maria Cantwell, D-Wash., and Charles Grassley, R-Iowa, introduced a bill to extend the expired biodiesel tax incentive for three years. This incentive would apply to biodiesel, renewable diesel and renewable aviation fuel. The bill, S. 2021, would extend the tax incentive until 2017. However, the tax code overhaul bill more recently introduced by Rep. Dave Camp, R-Mich., would repeal and not reinstate any of the expired biofuel incentives or credits. Prospects for passage of the Camp overhaul bill in the current Congressional session are generally considered to be dim.

Bill filed to assist fuel retailers invest in alternative fuels. Representative Dave Loebsack (D-Iowa) has introduced the Renewable Fuel Utilization, Expansion and Leadership, also known as the Re-FUEL-Act. This bill, H.R. 4051, would create a competitive grant program to provide funds for fuel retailers to use to make investments in renewable and alternative fuel and energy sources. It is meant to address the need for infrastructure changes at the retail level to allow improved consumer access to renewable fuels such as biodiesel and higher ethanol blends.

State Legislative and Policy Developments

New Hampshire legislation introduced. A bill has been introduced in the New Hampshire State Legislature, HB 1220, that would prohibit the blending of more than 10% corn-based ethanol in gasoline in the state. A hearing on the bill was held by the House Science, Technology and Energy Committee on February 11, 2014, at which several proponents of ethanol, including the Biotechnology Industry Organization and the Advanced Ethanol Coalition, testified against the bill.

Missouri ethanol blending policy. In Missouri, on February 6, 2014, a State Senate committee debated whether to block a proposal that would allow ethanol/gasoline blends of up to 15% (E15) be sold in the state. The state’s Agriculture Department issued a rule in 2013 that would have allowed the sale of E15, but that rule was blocked by a legislative committee, due to concerns touted by business groups, car manufacturers and the petroleum industry that E15 blends might damage engines. Permanently blocking the rule would require approval by early March 2014 of both branches of the Missouri legislature and the signature of the governor, who is on record as supportive of E15.

Low Carbon Fuel Standard News

California Low Carbon Fuel Standard. In February 2014, The California Air Resources Board (CARB) issued an update to its scoping plan which indicated that it intends to extend the requirements of the California Low Carbon Fuel Standard through 2030. CARB did not provide further details of its plans, except to say that it plans during 2014 to propose “more aggressive targets for 2030”.

Oregon Low Carbon Fuel Standard. On February 13, 2014, Oregon’s governor John Kitzhaber announced his intention to use executive authority to extend Oregon’s Clean Fuels Program beyond its scheduled December 2015 expiration. Legislative efforts to extend the program past this “sunset” date failed last year and have not sufficiently progressed so far this year, and so Gov. Kitzhaber said he would direct the Department of Environmental Quality to move to the second phase of the program, under which fuel distributors would be required to meet targets for low-emission motor vehicles fuels.

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

International Biofuel News: February 20, 2014

Here’s an update on recent news items and other public policy developments in recent weeks relating to the development and commercialization of renewable fuels in Europe.

European Union Renewable Energy Directive

In news relating to the EU Renewable Energy Directive (RED), it was announced that the European Commission had filed suit in the EU Court of Justice against the Republic of Ireland for its alleged failure to implement its obligations under the RED.

Also in February, the U.K. Department of Energy and Climate Change issued updated statistics for the U.K.’s compliance with its RED obligations, showing that 1.34 billion liters of renewable fuels were used in the12-month reporting period that ended in April 2013. This represented 3% of the total road transport fuels used in the U.K. in that time period.

On January 22, 2014, the European Commission issued its 2030 framework for climate and energy policies, to extend EU’s goals for greenhouse gas emission reductions beyond 2020 when the RED will end. Many in the biofuel industry were disappointed that this proposal did not include any proposals for binding targets for renewable fuel use in motor vehicle transport beyond 2020.

European Union Ethanol Policies

EU ethanol anti-dumping actions. In late January 2014, the European ethanol trade association ePure filed a formal complaint with the European Commission, alleging that U.S. ethanol producers are illegally dumping ethanol at low prices onto the European market in circumvention of the anti-dumping duties the EU imposed on U.S. ethanol in February 2013. The allegation is that U.S. ethanol is being exported to Norway, which is not an EU member state, and then exported from Norway into the EU in the form of E48 ethanol/gasoline blends. ePure says that Norwegian ethanol imports from the U.S. have grown tenfold in the past year.

More recently, ePure has also pointed to rising exports of ethanol from Peru into the EU, following the entry into force of the EU’s Free Trade Agreement with certain Central and South American countries in August 2013. The association claims that a three-fold increase of ethanol exports from Peru to the EU to over 93 million liters in the first ten months of 2013 has corresponded to exports from the U.S. into Peru of about 84 million liters in the same time period.

The subject of dumping and the EU ethanol tariffs was the cause for a spirited debate at a panel session of the National Ethanol Conference on February 18, 2014, in which Rob Vierhout, the head of ePure, defended the need for tariffs against assertions made by Bob Dineen, the executive director of the Renewable Fuels Association and other North American industry representatives.

Previous Biofuel Policy Watch posts on international biofuel news:

Biofuel Policy Updates January 24, 2014

Here’s a quick wrap-up of some recent developments relating to biofuel policies in the U.S., particularly relating to the U.S. Renewable Fuel Standard (RFS) and the California Low Carbon Fuel Standard (LCFS).

2014 RFS volume mandates. The end of the public comment period is approaching on the US EPA’s proposed rule for the 2014 volume mandates (renewable volume obligations, or RVOs) under the RFS. As I reported in my 2013 year-end summary, this proposal represented the first time that EPA was proposing to reduce not only the targets for cellulosic fuels, but also the mandated volumes both for advanced biofuels (a category which includes cellulosic fuels) and the overall target for all renewable fuels. The biofuel industry and its proponents have been up in arms about this proposal, conducting an intense war of words in the media, the Twittersphere, and elsewhere, with numerous companies, trade groups, elected officials and others publicly voicing their opinions opposing these reductions in the RVOs. The public comment period closes on January 28, 2014, and it is not known how quickly EPA will respond and set the final 2014 volume mandates. My prediction is that EPA will respond to the public comments by raising the volumes from the levels in the proposed rule, but not restore them to the levels originally set in the RFS legislation.

Challenges to the RFS. In October 2013, the American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM) filed petitions with the EPA challenging the 2013 cellulosic biofuel volume mandates, in view of an August 2013 announcement from KiOR that the company was lowering its projections for the amount of cellulosic biofuels it would be able to produce that year. On January 23, 2014, EPA announced, in letters to API and AFPM posted on its website, that it was partially granting these petitions for reconsideration of the 2013 cellulosic RVOs, based on the “new information” from KiOR, and that EPA expected to propose such revised volume mandates in upcoming rulemaking. I haven’t yet seen any industry reaction to this announcement, but I’m sure that responses from the biofuel industry will be swift and harsh, especially coming so closely on the heels of EPA’s proposed reduction in the 2014 RVOs. Note that the October 2013 petitions are different from the petitions filed by API and AFPM in August 2013 asking for a partial waiver of the 2014 RVOs, and are also in addition to a lawsuit these groups and others had filed in the U.S. Court of Appeals challenging the 2013 volume mandates.

California Low Carbon Fuel Standard. The full 9^th Circuit U.S. Court of Appeals issued a decision on January 22, 2014 that it would not, after all, rehear a case previously decided in favor of the California Air Resources Board (CARB), when a 3-judge panel of the Court ruled by a 2-1 vote that the LCFS did not unconstitutionally discriminate against out-of-state fuel producers. That panel decision reversed a lower court decision that went against CARB. The decision not to rehear the case leaves the decision by the 3-judge panel in place and would allow CARB to continue to administer the LCFS program. However, seven justices on the Court signed on to a dissent that is widely believed could signal the path for the industry groups who are the plaintiffs to appeal the case to the U.S. Supreme Court. The crux of the dispute is whether the requirement that the energy costs of transporting fuel into California from other states be considered in determining the carbon intensity of fuels under the LCFS discriminates against out-of-state fuels in violation of the Constitution’s provisions that prohibit states from interfering with interstate commerce.

Year-End Biofuel Policy Wrap-Up

The close of 2013 seems to be a good time to post a quick wrap-up of some recent developments relating to biofuel policies in the U.S. and Europe, particularly relating to the U.S. Renewable Fuel Standard (RFS) and the European Renewable Energy Directive (RED). As some of these stories have already been widely reported in the trade press and onlnie, I have not included links for all the stories — please contact me for more information on any of these developments.

2014 RFS volume mandates. As has been widely reported, the US EPA published its proposed rule for the 2014 volume mandates (renewable volume obligations, or RVOs) under the RFS. In the proposal, EPA used its statutory authority to propose reduction of certain of the volume mandates below what was called for in the original 2007 legislation. This included a substantial reduction in the target for cellulosic fuels, as has been done in recent years, to a level corresponding to EPA’s assessment of actual gallons of cellulosic fuel expected to be produced next year. But for the first time, EPA used its authority to also lower the mandated volumes both for advanced biofuels (a category which includes cellulosic fuels) and the overall target for all renewable fuels, the latter being reduced by about 3 billion gallons. Combined, these adjustments also lead to about a 1 billion gallon reduction in the portion of the mandates corresponding to corn ethanol.

This is only a proposed rule, and EPA is taking comments on the proposal until January 28, 2014. The proposal elicited the expected vehement reactions on both sides of the renewable fuels debate, and biofuel supporters have been pulling out all the stops to convince EPA to scale back or eliminate the proposed reductions in the mandates.

EPA has held public hearings on this proposal. A hearing in Washington DC on December 5 drew approximately 150 commenters over a 12-hour period. Reportedly, RFS supporters outnumbered RFS opponents roughly 2-to-1. The outcome of all the public comments and debate will likely not be known until after the close of the public comment period.

Challenges to the RFS. Among pending actions challenging the RFS are the following.

EPA has requested public comment on the petition asking for a waiver of the 2014 RVOs filed in August 2013 by the American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM). Public comments have been requested by January 28, 2014.
The U.S. Court of Appeals has agreed to expedite review of a pending lawsuit challenging the 2013 volume mandates that EPA issued in August 2013. The Court had previously consolidated three separate lawsuits filed by API, AFPM, and Monroe Energy. A number of organizations have filed briefs on both sides of the issue, including BIO and the National Biodiesel Board in defense of the 2013 volume mandates. The case should move quickly after a February 2014 deadline for submission of all briefs.

Congressional action. Although EPA’s proposal to lower the 2014 mandates may have temporarily quieted Congressional Republican efforts to repeal the RFS in its entirety, at least two new bills have been, or are expected to be, filed in Congress to revise the RFS, in addition to at least one bill addressing the tax credits due to expire today, December 31, 2013.

On December 13, Senators Dianne Feinstein (D-Calif.), Tom Coburn (R-Okla.) and eight cosponsors introduced the Corn Ethanol Mandate Elimination Act of 2013. The bill eliminates the corn ethanol mandate within the Renewable Fuel Standard (RFS), which requires annual increases in the amount of renewable fuel that must be blended into the total volume of gasoline refined and consumed in the United States. Cosponsors of the bill are Richard Burr (R-N.C.), Susan Collins (R-Maine), Bob Corker, (R-Tenn.), Kay Hagan (D-N.C.), Jeff Flake (R-Ariz.), Joe Manchin (D-W.Va.), Jim Risch (R-Idaho) and Patrick Toomey (R-Pa.).
Senators Ben Cardin (D-Md.) and David Vitter (R-La), the top Republican on the Senate Environment and Public Works Committee, have been widely reported to also be working on legislation that would curtail corn’s portion of the RFS mandate. Details on this bill have not yet been disclosed.
On December 11, the Senate Environment and Public Works Committee held a hearing on the RFS. Although testimony and statements from committee members were heard on both sides of the issue, Committee Chair Senator Barbara Boxer (D-Calif.) reportedly closed the hearing by indicating that her committee would not be pursuing any legislation that would “reverse course” on the RFS.
On Dec. 12, Rep. Scott Peters (D-Calif), introduced H.R., 3758, which would extend the second generation biofuel producer credit and the special allowance for second generation biofuel plant property. The bill, entitled the “Second Generation Biofuel Extension Act of 2013,” would extend both the second generation biofuel tax credit and the second generation biofuel plant property allowance for one year, extending the expiration dates from to Jan. 1, 2015.

California Low Carbon Fuel Standard. The full 9^th Circuit U.S. Court of Appeals will rehear a case previously decided in favor of the California Air Resources Board (CARB), when a 3-judge panel of the Court ruled by a 2-1 vote that the LCFS did not unconstitutionally discriminate against out-of-state fuel producers. That panel decision reversed a lower court decision that went against CARB. Briefs have been filed on both sides of the issue, but it is not known when the full Appeals Court will decide the issue.

European Union Renewable Energy Directive. In meetings December 12-13, the Energy Ministers from EU nations failed to reach agreement on the path forward for amendments to the Renewable Energy Directive. In particular, the ministers rejected a compromise proposal from Lithuania that would have capped crop-based biofuels at 7% (up from the 6% limit passed by the European Parliament) but would also have required mandatory reporting of indirect land use change (ILUC). This action apparently means that the proposal will not advance any further until after the 2014 parliamentary elections, and assures that there will not be final action until sometime in 2015. In the meantime, the provisions of the Renewable Energy Directive remain in place as originally adopted.

EU Parliament Adopts Revisions to Proposed Amendment to the Renewable Energy Directive

On September 11, 2013, the European Parliament held its vote on proposed amendments to the EU’s Renewable Energy Directive (RED) and its companion legislation the Fuel Quality Directive (FQD). This amendment, first proposed in October 2012, has been the subject of considerable debate and controversy, as well as spirited debate by several EU parliamentary committees. The Parliament adopted the amendment with a number of revisions, although the path to final enactment of the new provisions is far from clear, with final adoption not expected until 2014 at the earliest.

The Renewable Energy Directive was put in place in 2009 to ensure that all EU member states achieve specified targets for use of renewable fuels and reduction of greenhouse gas (GHG) emissions across all energy sectors, with specific requirements for the subset of fuels used for transportation. These targets are to derive 20% of overall energy consumption, across all sectors, from renewable sources by 2020, to derive 10% of energy consumption within the transport sector from renewable sources by 2020, and to achieve greenhouse gas emission reductions of at least 35%, relative to fossil fuels, by mid-2010, with this target rising to 50% in 2017 and 60% in 2018 for fuels produced in 2017 or later. The Fuel Quality Directive has additional, complementary requirements for GHG reductions within the transport sector. (Note that European Union legislation takes the form of “Directives”, which are adopted centrally by the European Commission and which are binding upon all EU member states, which must then adopt national laws that conform with the provisions of the directive). I’ve described these directives in more detail in an earlier post on my Advanced Biotechnology for Biofuels blog.

On October 17, 2012, the European Commission (EC) announced a proposed directive that would amend both the RED and the FQD. The complete text of the proposed amendment can be found here. I described the October 2012 proposal in an earlier post on Biofuel Policy Watch. In making this proposal, the EC made clear that the driving force behind the proposed revision was the growing belief by some observers in Europe that the overall carbon footprint and environmental impact of biofuels derived from food crops like corn were not favorable, and by general concern over the “food vs. fuel” issue and the impact of biofuel production on land use. The press release also stresses the desire to promote the development and use of second generation biofuels, which are presumed to have more favorable carbon intensities and environmental impacts.

The key components of the original proposal were as follows (see my earlier post for more details).

A proposed 5% cap on the amount of food crop-derived biofuels used to meet the EU’s goal of meeting 10% of transport energy usage with renewable fuels by 2020.
Multiple counting of credits for second-generation biofuels: that is, that, when calculating a member state’s progress towards meeting the 10% goal, the contribution of certain listed biofuels would be counted as doubled and others on the list counted as quadrupled.
A 60% greenhouse-gas-saving threshold that will apply to new biofuels production plants coming online on or after July 1, 2014.
A review of policy and scientific evidence on indirect land use change (ILUC), which will take place in 2017, coupled with a requirement for mandatory reporting by fuel producers of the indirect land use that could possibly result from their process.

This proposal generated a substantial amount of discussion and criticism in the months that followed. Some of the early reactions were summarized in my original post. I have covered some of the ongoing discussion in several “International Biofuel News” updates on this blog, including posts of March 6, 2013, April 3, 2013, and May 6, 2013. As reported in a May 21, 2013 post, the proposal was reviewed by several committees of the EU Parliament, and differing views emerged about the cap for food-derived fuels, the policies on ILUC, and the strategies for promoting the use of advanced biofuels. The EU’s Environment Committee ultimately proposed a 5.5% cap on food-derived fuels and the Industry Committee proposed a 6.5% cap for food derived fuels. The idea also emerged of having a separate target for advanced biofuels, nested within the overall 10% target by 2020.

On September 11, 2013, the Parliament approved the proposal as revised by a significant number of amendments, by a vote of 356-327. A complete listing of the amendments adopted by Parliament are available here. The following is a very brief summary of the key points.

Retains the current goal of 10% renewable fuels for the whole transport sector in each member state by 2020.
Sets the goal of 7.5% renewable fuels in petrol (gasoline) in each member state by 2020.
Sets a limit of 6.0% for the extent to which food-derived fuels could contribute to the 10% target. This limit applies not only to fuels derived from food crops, but also to “other energy crops grown on land”.
Sets separate targets for the use of advanced biofuels in the overall transport sector at 0.5% by 2016 and 2.5% by 2020.
Revised how certain advanced biofuels would be eligible for multiple counting, by creating three categories.
- Group A, where feedstocks are from certain food-derived wastes and residues, would count for only 1x their energy content, but would be eligible to be counted towards the 2.5% target for advanced biofuels.
- Group B: where feedstocks are from cooking oil or animal fats, would count for 2x their energy content, but would not be counted towards the advanced biofuels target.
- Group C: including fuels derived from algae or bacteria, along with fuels derived from waste carbon dioxide streams as feedstock, would count 4x their energy content and be eligible to be counted towards the 2.5% advanced biofuels target.
Requires the EU to develop by June 30, 2016, data and methodology to take ILUC into account, and to report this to the Parliament by December 31, 2017.

From here, the proposal must be debated and approved by the European Council, the body made up of the heads of government of all 28 EU members. However, according to at least one press report, a motion in Parliament to proceed to this step failed to pass, which apparently means there must be a second reading before Parliament before the measure can be passed along to the EU Council. This could delay final adoption of the measure until next year, perhaps even after the scheduled May 2014 EU elections.

Reaction to Parliament’s action was (predictably) mixed. Many environmental groups and other NGOs were critical (often in sharp rhetoric) of the decision to raise the cap on food-derived fuels to 6 percent from the originally proposed 5 percent. Even within the industry, the response was somewhat mixed – while most industry spokesmen praised the adoption of the separate target for advanced biofuels, there was also concern expressed from within the traditional ethanol community over the fact that there was any cap at all for food-derived fuels. And most industry commenters opposed the inclusion of ILUC accounting in the proposal. With the extended timeline for final adoption of this amendment, we can count on these debates to continue in the media and other public forums.

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ regulatory affairs consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels

Renewable Fuel Standard News: August 12, 2013

Here’s an update on recent news items and other public policy developments relating to the U.S. Renewable Fuel Standard (RFS).The most significant of these is the increased momentum within the U.S. Congress towards legislation to revise the RFS. Although it reportedly has some bipartisan support, this movement has largely been led by Republicans in the House of Representatives, who wish to address oil company concerns over the RFS but who have concluded that there is not sufficient support for outright repeal of the law. Congress is now in recess until September, and swift action is not expected in any event, but it now seems likely that some form of “compromise” reform legislation (e.g., perhaps lowering the yearly mandates for corn ethanol and/or cellulosic fuels) will be proposed in the House sometime this fall. Prospects for RFS repeal or reform continue to appear remote, because of Democratic control over the Senate and the presidency, but it would nevertheless be a significant development if a broad-based, possibly bipartisan, consensus for RFS reform emerges in the coming months.

Legislative Developments

House subcommittee holds hearings on RFS in late July. The Energy & Power Subcommittee of the House Committee on Energy and Commerce held two days of hearings on the RFS July 24 and 25. The hearing was entitled “Overview of the Renewable Fuel Standard: Stakeholder Perspectives,” and featured four panels with witnesses from both sides of the RFS debate. The first panel on July 24 focused on the impact of the RFS on fuel production, and the second on that day covered fuel sales and use. The witness panels on July 25 addressed the impact on the agricultural sector and the food supply. The complete witness list, plus links to all the testimony and other materials, is available here on the Committee website. Commentary on the hearings can be found in Biofuels Digest, among other places on the Web.

The two sides of the debate are maintaining their respective positions, with the oil industry continuing to press for complete repeal of the law, and the renewable fuels industry maintaining that legislative revisions are not needed and that any corrections needed can be accomplished through EPA’s rulemaking powers or through market forces. However, the consensus coming out of the hearings is that the Republican Committee leadership seems serious about developing legislation to address what many see as the shortcomings of the RFS, and that, in spite of the position of some Republican members, full repeal of the law is unlikely with Democrats controlling the Senate and the presidency. See next item for more details on the follow-up steps being taken.

House committee chair appoints group to work on RFS reform. In the wake of the July 24-25 hearings, House Energy and Commerce Committee Chairman Fred Upton (R-Mich) has appointed four Republican members of the committee to take the lead on developing legislation for reform of the RFS. The leader of this group will be Rep. John Shimkus of Illinois, joined by Reps. Cory Gardner of Colorado, Lee Terry of Nebraska, and Steve Scalise of Louisiana. It is reported that, of these four, only Rep. Scalise has advocated full repeal of the law, and that the other three have what are called “more nuanced” positions. The group reportedly plans to reach out to House Democrats to try to reach a consensus on the planned legislation..

EPA Actions

EPA finalizes RFS volume mandates for 2013. On August 6, EPA published a final rule specifying the 2013 volume mandates under the RFS. The major difference in the final rule relative to the proposed mandates published in February 2013 is the lowering of the mandate for cellulosic biofuels to 6 million gallons, from the 14 million gallons that was proposed in February. EPA stated that it derived this figure from its estimate of the volume of cellulosic fuels actually expected to be available in 2013. EPA kept all the other mandates as originally proposed, and in particular the agency maintained the Advanced Biofuels volume at the originally-proposed level. The final figures are as follows, along with the percentage each fuel type comprises of the nation’s overall volume of gasoline and diesel: .

Biomass-based diesel (1.28 billion gal; 1.13%–as finalized in a separate ruling in September 2012)
Advanced biofuels (2.75 billion gal; 1.62%)
Cellulosic biofuels (6 million gal; 0.004%)
Total renewable fuels (16.55 billion gal; 9.74%)

In other aspects of the August 6 announcement, EPA said that it would extend the deadline for obligated parties to demonstrate compliance until June 30, 2014, and that it was planning adjustments to the 2014 volume mandates to reflect the fact that the agency “does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the [existing 2014 mandates].” Although EPA’s announcement was largely welcomed by representatives of the renewable fuels industry, some expressed concern about the possible downward adjustment of next year’s mandates.

EPA denies petition from API, AFPM on 2013 biomass-based diesel mandate. At the same time it issued the final 2013 volume mandates, EPA announced that it had denied petitions filed in late 2012 by the American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM) challenging EPA’s November 2012 determination of the 2013 volume mandate for biomass-derived diesel. EPA determined that the evidence put forth by API and AFPM did not meet the relevant criteria specified in the regulations for a successful challenge to EPA’s decision. EPA has denied other petitions filed by these groups in recent years that had also challenged specific RFS volume mandates, some of which have later led to the filing of lawsuits to overturn EPA’s decisions.

EPA publishes RIN results for first half of calendar year 2013. EPA’s monthly reporting of RIN generation now includes data through June 2013. The month of June saw the generation of RINs both for D3 cellulosic biofuels (73,271 generated) and D7 cellulosic biodiesel (32,728). Overall for the first half of the year, over 1 billion D4 RINs were generated for biomass-based diesel, about 242 million D5 RINs for advanced biofuels (most of which likely corresponding to Brazilian sugar cane ethanol) and over 6.3 billion D6 RINs for renewable fuel (most of which representing U.S.-produced cornstarch ethanol). See this article in Ethanol Producer magazine for a more detailed summary.

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

Biofuel Policy News Update: July 23, 2013

Here’s an update on recent news items and other public policy developments relating to the U.S. Renewable Fuel Standard (RFS), and other U.S. and international biofuel policies.

Renewable Fuel Standard

EPA issues LCA data for possible RFS barley pathway. The Environmental Protection Agency has issued a Notice of Data Availability to release the results of its lifecycle analysis under the RFS of the use of barley to produce ethanol. According to EPA’s analysis, when barley is used as feedstock at ethanol facilities that use natural gas for all process energy, are powered by grid electricity, and dry 100% of their distillers grains, the resulting fuel meets the 20% greenhouse gas (GHG) reduction threshold required by the RFS to qualify as a conventional “renewable fuel” as defined in the RFS. Furthermore, under certain process conditions, barley ethanol is can achieve the 50% GHG reduction threshold so that it would qualify an “advanced biofuel” under the RFS. EPA is making the information available for public comment, as the first step in possible rulemaking to establish these processes as pathways under the RFS qualified to generate RINs. More information: Ethanol Producer Magazine, EPA website.

House Committee issues final RFS White Paper; Subcommittee schedules hearing. The U.S. House of Representatives Energy and Commerce Committee released its fifth and final white paper in a series of paper’s reviewing the renewable fuel standard (RFS). The focus of the fifth white paper is on the Implementation Issues of the RFS. The white paper poses 7 questions for stakeholder comment, with responses requested by Friday, July 26. Also, the Committee’s Subcommittee on Energy and Power has scheduled a two-day hearing for Tuesday, July 23 and Wednesday, July 24, on a topic entitled “Overview of the Renewable Fuel Standard: Stakeholder Perspectives.” The preliminary witness list indicates that stakeholders on both sides of the RFS debate will be included, although there appears to be a slight bias towards those opposed to the RFS.

California Low Carbon Fuel Standard

California Appeals Court rules against Air Resources Board on Low Carbon Fuel Standard. In one of the two pending court cases relating to the California LCFS, a state appeals court has ruled that the California Air Resources Board (ARB) violated several provisions of state law when it adopted the LCFS in 2009. Specifically, these were procedural violations of the state’s Environmental Quality Act and Administrative Procedures Act. In its ruling on this case, which was brought by the ethanol producer POET against the state, the Appeals Court decided to allow the LCFS regulations to remain in place but required ARB to complete the administrative actions which it failed to carry out when originally adopting the rules. For more information: Biofuels Digest, California Environmental Law Blog.

European Union Renewable Energy Directive

EU Environment Committee approves package of amendments to RED, to be voted by full Parliament in September. On July 11, the Environment Committee of the European Parliament voted to accept the proposal of its Rappateur Corinne Lepage regarding the proposed amendments to the Renewable Energy Directive (RED) and its companion legislation the Fuel Quality Directive (FQD). The Committee voted to impose a 5.5% ceiling on the amount of food-based biofuels that would count towards the overall goal under the RED of 10% renewable fuels across the EU (originally proposed at 5%). The Committee also adopted a 2% target for advanced biofuels, while apparently retaining the proposed multiple counting mechanism (e.g. quadruple-counting) for such fuels. The Committee recommended that consideration of indirect land use change be made mandatory beginning in 2020. Also adopted was a recommended amendment to the FQD that would require fuel producers to reduce the carbon intensity of their fuels by 9% by the end of 2025, up from the current requirement of 6% by 2020. The Committee’s proposal will be debated and voted on by the full Parliament in September. Reaction to the Committee action was predictable. Although there was fairly broad support for the advanced biofuel sub-target, trade groups representing corn ethanol or biodiesel producers were critical of the proposed cap on food-based biofuels, which they viewed as detrimental to the continued growth of that sector of the biofuel industry. For more information: Biofuels Digest, Ethanol Producer Magazine, DomesticFuel.com.

Other Biofuel Policy News

Federal Appeals Court throws out EPA’s “Deferral Rule” for biogenic carbon emissions. A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion which vacated a 2011 EPA regulation governing greenhouse gas (GHG) emissions arising from biofuel production or other industrial uses of biomass. The vacated regulation arose from EPA’s 2010 action to begin regulating GHG emissions from existing facilities. These regulations, known as the “Tailoring Rule,” specified that facilities that emit more than 100,000 tons of CO2 per year were required to obtain permits from EPA under the Clean Air Act. This led the National Alliance of Forest Owners to file a petition asking EPA to review this requirement for biomass-burning facilities, on the basis that the CO2 emitted from such factories arose from “biogenic” sources (i.e. fixation of atmospheric carbon by plants) rather than from fossil carbon, and thus had a net zero carbon emissions. In response to the petition, EPA decided in 2011 to defer for three years any permitting requirements for facilities burning or utilizing biomass, to allow the agency the time to study the issues and determine the best approach to regulating emissions arising from such “biogenic carbon”. In throwing out the Deferral Rule, the Court noted that EPA misapplied applicable law and did not have the statutory authority to regulate biogenic carbon emissions any differently than fossil-derived carbon emissions, although the Court’s opinion noted that EPA may have had other avenues for imposing less onerous restrictions on biomass-burning plants, such as providing a route for biomass plants to obtain waivers from permit requirements. The impact of the Court’s decision is not clear, especially since EPA has been moving forward with its study of the issue in the years since 2011, and was scheduled to issue regulations for biogenic carbon by July 2014. Absent any further action by EPA or appeal of the Court decision, it appears that any biomass-burning plant emitting more than 100,000 tons of CO2 per year will need to obtain a permit, just as fossil-carbon burning plants exceeding this threshold must now do. More information: Biomass Magazine, Politico.com.

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

U.S. Biofuel Policy News: July 2, 2013

Here’s an update on recent news items and other public policy developments relating to the U.S. Renewable Fuel Standard (RFS), and other U.S. biofuel policies.

Renewable Fuel Standard

House subcommittee holds hearing on RFS. The House Energy and Commerce Committee Subcommittee on Energy and Power has held a hearing on June 26, entitled “Overview of the Renewable Fuel Standard: Government Perspectives.” The witnesses were from the EPA, the Energy Information Administration, and the U.S. Department of Agriculture. Subcommittee chair Ed Whitfield (R-Ky.) has said that the goal of the hearing was to compare original expectations for the RFS with actual experience to date. In notable highlights, Christopher Grundler of the EPA testified that the agency doesn’t expect the “blend wall” to be exceeded until 2014, and Joseph Glauber, USDA’s chief economist, stated the department’s view that biofuel production has had only a small effect on U.S. food prices. Further hearings on the RFS from the full Committee are expected later this year, to follow up the four white papers released by the Committee in recent months, on which public comment was solicited.

Other Biofuel Policy News

Supreme Court rejects appeal on E15 waiver litigation. On June 3, the American Petroleum Institute filed a brief with the U.S. Supreme Court, asking the Court to agree to hear the appeal of EPA’s decision to grant approvals for E15 ethanol-gasoline blends. As previously reported, three industry groups including API filed a petition asking the Court to overturn an Appeals Court decision that the groups did not have legal standing to challenge EPA’s actions allowing E15 to be sold in the U.S., and the API brief made similar arguments before the Court. The U.S. Solicitor General filed a brief in late May in support of the Appeals Court decision, and urging the Supreme Court not to take the case. On June 24, the Supreme Court announced that it would not take the case, thus allowing the Appeals Court ruling against API and its coplaintiffs to stand, and effectively ending this attempt to overturn the E15 waiver decisions.

Defense Department biorefinery contracts awarded. The Defense Department has announced that it has awarded three contracts for development of biorefineries to produce renewable fuels for military use. These contracts, which resulted from the RFA issued in the summer of 2012, were given to Emerald Biofuels LLC of Golf, Illinois; Natures BioReserve LLC of South Sioux City, Nebraska; and Fulcrum Brighton Biofuels LLC of Pleasanton, California. The three contracts together include $16 million in funding, which will be matched by contributions from the awardees.

New legislation introduced in House of Representatives. Rep. Charles Rangel (D-NY) has filed a bill in the House, H.R. 2564, that would extend the current 2.5% tariff on imports of fuel ethanol. Also in the House of Representatives, Reps. Eliot Engel (D-NY) and Ileana Ros-Lethtinen (R-Fla.) introduced H.R. 2493, the Open Fuel Standard Act, that would require an increasing percentage of the nation’s automobile fleet to operate on non-petroleum fuels.

Prospects for new Farm Bill uncertain. Although the U.S. Senate passed a version of a new Farm Bill that contained mandatory funding for the energy titles, the U.S. House rejected a Republican-sponsored version of the bill. This vote betrayed a substantial rift within the Republican House delegation, leading to a great deal of uncertainty as to whether the House would be able to pass a Farm Bill at all this year.

Previous Biofuel Policy Watch posts on RFS policy:

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

Renewable Fuel Standard News: June 25, 2013

Here’s an update on recent news items and other public policy developments relating to the U.S. Renewable Fuel Standard (RFS), and the efforts to produce commercial quantities of cellulosic biofuels which qualify to generate Renewable Identification Numbers (RINs) under the RFS.

Legislative Developments

New bill filed that would repeal RFS. Senator John Barrasso (R-Wyo.) along with one Democratic and six Republican cosponsors, has introduced S. 1195, “The Renewable Fuel Standard Repeal Act”. The bill would repeal the RFS in its entirety. In a statement, Sen. Barrasso said that the RFS “is fundamentally broken and beyond repair”. The language of this bill is identical to an amendment to the Farm Bill that Sen. Barrasso filed but which the Senate did not consider. Please see a previous post on my Advanced Biotechnology for Biofuels blog for information on other bills pending in Congress relating to the RFS and other biofuels policies.

House committee issues fourth white paper on RFS, subcommittee plans June 26 hearing. The House Energy and Commerce Committee has released the fourth of its series of white papers soliciting discussion on topics relating to the RFS. This paper addresses several energy policy considerations related to the RFS, including its role in enhancing energy security. Stakeholder responses were requested by June 21. More recently, the Committee’s Energy and Power Subcommittee has announced a hearing to be held tomorrow, June 26, entitled “Overview of the Renewable Fuel Standard: Government Perspectives.” Scheduled witnesses are from the EPA, the Energy Information Administration, and the U.S. Department of Agriculture. Look for a report on the outcome of this hearing in a future post on this blog.

House subcommittee hearing on RFS features one-sided testimony. The RFS was the subject of a hearing held on June 5 by a subcommittee of the U.S. House Committee on Oversight and Government Reform. According to the statement of the Subcommittee Chair, James Lankford (R-Okla.), the purpose of the hearing was to “see how we can alleviate the pressure on consumers” from consequences alleged to have arisen from the RFS. The line-up of witnesses betrayed the same focus, featuring three industry representatives from interests that oppose the RFS, and including only an EPA official and a representative of the Union of Concerned Scientists to defend the policy. A good summary of the testimony, and the reaction of biofuel industry spokespersons to the hearing, can be found here.

Senate committee jurisdiction over RFS. It has been reported that two Senate committees have been jostling for control over the RFS. These are the Environment and Public Works (EPW) Committee, chaired by Sen. Barbara Boxer (D-Calif.) and the Energy and Natural Resources (ENR) Committee, chaired by Sen. Ron Wyden (D-Ore.). The EPW Committee historically has oversight over the EPA and the Clean Air Act (of which the RFS is a part), which administers the RFS, but the ENR Committee has jurisdiction over energy policy, including fuels. Sen. Wyden and the ENR Ranking Member, Sen. Lisa Murkowski (R-Alaska) have both expressed the view that the RFS may need to be revisited, while Sen. Boxer has been quoted as supportive of the RFS and skeptical that hearings would be needed to investigate possible changes to the law.

Previous Biofuel Policy Watch posts on RFS policy:

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

Low Carbon Fuel Standard News: June 14, 2013

Here’s an update on news items and other recent developments relating to the “Low Carbon Fuel Standard” (LCFS) programs enacted by California and Oregon and adopted or under consideration in other states, Canadian provinces and regions, to promote the increased use of low-carbon transportation fuels (i.e., fuels with more favorable greenhouse gas emissions than traditional gasoline or diesel).

California Low Carbon Fuel Standard

California state court ruling on the LCFS regulations. The California Court of Appeal for the Fifth Appellate District has issued a ruling in a lawsuit that was described in an earlier blog entry: POET LLC et al. vs. California Air Resources Board, which challenged the state’s Low Carbon Fuel Standard regulations for alleged failure to complete an environmental assessment before the regulations were finalized. In a ruling released June 3, the Court required the state’s Air Resources Board (ARB) to revisit the regulations it issued for the LCFS and for regulation of NOx emissions, and to reissue the regulations only after an environmental assessment has been completed. The court order allows the current LCFS regulations to remain in force until appropriate corrective action is completed. An unrelated federal lawsuit against these regulations remains pending.

New pathways proposed under California LCFS. The California Air Resources Board (ARB) has posted fourteen new LCFS pathways on the LCFS web site. All of these pathways are for processes for the production of corn ethanol, proposed by different companies. Although finalization of these pathways depends on ARB staff review of the petitions submitted by the proposing companies, under the LCFS regulations the pathways are available for reporting and credit-generation as of the date of their website posting.

California Energy Future report on the potential for biofuels. The California Council on Science and Technology has released a final report in its “California’s Energy Future” project, a program with the goal of assessing how the state can meet its mandate of 80% greenhouse gas emission reductions by 2050 (relative to 1990 levels) under Assembly Bill 32, the law which created the LCFS and other state regulations. Using economic modeling of several different scenarios, the report found that substantial amounts of low-carbon biofuels will be required to meet California’s emission reduction goals, even when assuming optimistic increases in efficiency, electrification and the availability of other renewable energy sources. The report concluded that, although next-generation biofuels would be available to meet the GHG reduction goals, the availability of advanced drop-in fuels is critical for the ability to more significantly cut fossil fuel use in the longer-term.

Another report shows that the LCFS is helping meet greenhouse gas reduction goals. On June 12, ICF International released a report commissioned by the California Electric Transportation Coalition and other partners, assessing compliance with the LCFS and the prospects for its meeting it GHG reduction goals. The report, which is the first of two phases assessing the impacts of the LCFS, found that so far, the blending of biofuels into both gasoline and diesel helped achieve compliance with the regulations. The report also found that the regulations were driving innovation and investment in fuels with reduced carbon intensities, and as a result, fuels such as cellulosic ethanol are coming to be available for the California markets, in spite of the delays experienced in bringing commercial production of such fuels online.

These two reports come on the heels of two other reports which were described in an earlier blog entry. These were a status report on the LCFS that was published by the Institute of Transportation Studies at the University of California-Davis, and a report from the Policy Institute for Energy, Environment and the Economy at the University of California at Davis critiquing an unfavorable report on the LCFS that had been issued by the Boston Consulting Group in June 2012.

Previous Blog posts on Low Carbon Fuel Standards:

May 8, 2013 LCFS News Update (updated May 15, 2013)
March 13, 2013 LCFS News Update
February 6, 2013, Other States LCFS (Advanced Biotechnology blog)
January 31, 2013, California LCFS (Advanced Biotechnology blog)

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels.

Biofuel Policy Watch

Tracking public policy developments affecting biofuels and bio-based chemicals

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