Pending Biofuel-Related Bills in Congress May 2013

In the first few months of the U.S. 113th  Congress there have been a number of bills introduced into the House of Representatives and the Senate that, if enacted, might affect the development of ethanol or other renewable fuels. The ones of most potential concern are those, all introduced by Republicans, that are meant to repeal or curtail existing programs that currently benefit the renewable fuels industry. Although I’ve written about many of these bills in previous posts in this blog, I thought it would be useful to post a more complete summary, which I have done today in my Advanced Biotechnology for Biofuels blog.

In that entry, I’ve summarized 12 pending bills, all introduced by Republicans in either the House or the Senate, which would significantly affect or limit federal biofuel policies. Included are bills that would eliminate the Renewable Fuel Standard (RFS), or modify the RFS in several ways, e.g. to eliminate incentives for cornstarch-based ethanol or to change the way EPA calculates the annual volume mandate for cellulosic biofuels. There have also been several bills introduced that would prohibit the Environmental Protection Agency from approving ethanol/gasoline blends containing greater than 15% ethanol while also revoking EPA’s prior decisions to approve E15 fuel for certain motor vehicles. Other bills would eliminate some of the favorable tax treatment now available for biofuels and other sources of renewable energy.

That post, which has links to the text and up-to-date status of all these bills, can be accessed here. Please look to future posts on this blog for updates on the status of these bills and other U.S. Congressional or state legislative actions that may affect the renewable fuels industry.

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

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E15 and E85 Ethanol News: May 1, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15″) and other higher blends of ethanol such as E85.

E15 Federal Developments


Senate bill would allow MLPs for renewable fuels. On April 24, a bipartisan group of senators introduced a bill entitled the “Master Limited Partnerships Parity Act”, which would extend the benefits of these partnerships (MLPs) to renewable energy, biobased chemical, and energy efficiency technologies. MLPs, which have long been available for oil, gas and other traditional energy companies, have ownership shares that are traded like typical corporate stock but are taxed as partnerships rather than corporations. This structure is viewed as favorable to private investors but is not available to renewable energy companies. It is still too early to know the prospects for this bill in the current Congress, but it has apparently engendered strong support from across the political spectrum.

E15 Developments in the States 


Bills to repeal Florida’s Renewable Fuel Standard. As previously reported, House Bill 4001, a bill that would repeal the requirement that gasoline sold in Florida be blended with ethanol, was approved by the state House of Representatives on April 12, and the companion bill Senate Bill 320 was approved by the Senate Communications, Energy, and Public Utilities Committee. At an April 9 hearing held by the Senate Environmental Preservation and Conservation Committee, the Senate Bill was substantively amended to differ from the House version. The original version of the bill would have repealed the sections that required ethanol blending, but in the amended version, these sections would not be repealed, but would be amended to “encourage” ethanol blending rather than require it. Although the amended bill cleared the Committee by a 7-0 vote, on April 16 the full Senate adopted an amendment that once again made SB 320 identical to HB 4001, so that it would once again repeal the blending requirement. The Florida Senate passed the bill on a 33-1 vote on April 24. The bill now goes to the governor, with industry groups calling on Governor Rick Scott to veto the bill. A leading Florida biofuels company, Algenol, has said that the enactment of this legislation may cause them to reconsider a major expansion it has planned in the state.

Minnesota legislation. As reported in an earlier blog post, legislation is moving through the Minnesota legislature that would alter the state’s biofuel and ethanol mandates. Among the changes reported in the omnibus energy bill H.F. 976, the current requirement for 10% ethanol in all gasoline sold in the state would be revised to read “10% biofuel”; the requirement would be altered to require gasoline either to include the maximum percent of biofuel authorized by the EPA (i.e. E15) or to include 10% of an advanced biofuel;  and the tiered goals of current law would be amended to lower the short-term goals but raise the 2025 goal to 30% biofuels. Different versions of the bill have been passed by both houses, so the bill is now in conference committee to resolve these differences.

E85 News


E85 consumption, numbers of flex-fuel vehicles, rose in the U.S. in 2011. According to figures published by the U.S. Energy Information Administration, consumption of E85 in the U.S. increased 52% from 2010 to 2011, with over 500 million gasoline-equivalent gallons used in 2011. The rise in E85 usage came despite flat growth of E10 during the same period. EIA also reported that there were nearly 2.47 million E85-capable vehicles on the road in the U.S. in 2012. The full data set can be accessed on the EIA website.

Draft EPA policy may inhibit development of flex-fuel vehicles. EPA has published a Draft Guidance for how flexible fuel vehicles (FFVs) would be treated under its Light-Duty Greenhouse Gas Emissions Program for model years 2016–2019. The Emissions Program sets fleet-average limits on GHG emissions that all automakers must meet, and under current policy for model years 2012-2016, automakers receive a credit for FFVs based on the assumption that each FFV would be fueled with E85 50% of the time. The new draft guidance would reduce this “F factor” to 20% for model years 2016-2019. Many biofuel companies feel this will significantly discourage or deter further development of flex fuel vehicles. The comment period on this draft closed on April 22, but it is not known how quickly EPA will act to adopt a final policy.

High RIN prices and E85 sales. The Energy Information Administration, in its April Fuels Outlook issue, predicted that the high prices of ethanol RINs and the expected drawdown of banked RINs would stimulate E85 sales by lowering its price relative to E10, and also create increased incentive for biodiesel blending. Prices for ethanol RINs reached a two-week high on Monday, April 30: 2012 D6 RINs rose to $0.68/gallon and 2013 D6 RINs rose to $0.74/gallon.

Previous Biofuel Policy Watch posts on ethanol 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

 

E15 and E85 Ethanol News: April 10, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15″) and other higher blends of ethanol such as E85.

E15 Federal Developments


E15 Appeals Court ruling appealed to Supreme Court. The Alliance of Automobile Manufacturers has filed a petition to ask the U.S. Supreme Court to review and overturn the opinion of the Court of Appeals for the District of Columbia which threw out a lawsuit that had challenged EPA’s waivers approving E15 ethanol blends. The Appeals Court had ruled that the various plaintiffs (companies and trade associations) did not have legal standing to challenge EPA’s actions. The automakers association again cited the alleged damage that E15 may do to automobile engines, and their assertion that more study of E15’s effects is needed. The Supreme Court usually agrees to hear only a small fraction of the cases appealed to it, so the prospects for further review of this lawsuit are not clear.

Impact of EPA’s proposed sulfur rule on ethanol. The U.S. EPA has issued a proposed regulation revising the standards for sulfur emissions in gasoline (the so-called “Tier 3 Rule”). The proposed rule would require that sulfur emissions from gasoline be reduced from the current 30 ppm to 10 ppm by model year 2017.  Although this rule doesn’t directly affect ethanol mandates, it has several provisions relating to ethanol (there is a good summary of these provisions in Ethanol Producer magazine). In the rules, EPA assumes that the Renewable Fuel Standard volume requirements will at least partially be met by the time these new limits take effect in 2017, and therefore reflect a mix of E10 and E15 by 2017 and 100% E15 by 2030. The baseline test fuel for auto manufacturers to determine their emissions is proposed to be E15, although EPA has also requested comment on E10 as an alternative. The proposal also includes (apparently for the first time) detailed specifications for an E85 emissions test fuel to be used for flex-fuel vehicle certification and there is also a provision allowing manufacturers to request approval for mid-level ethanol blends such as E30. In addition, some feel that these more stringent emission standards may present a market opportunity for ethanol, if blenders wish to take advantage of ethanol’s higher octane rating.  This is a proposed rule and there will be a 30 day comment period beginning on the day of Federal Register publication. That period is likely to be extended for an additional 15-30 days if not longer. EPA will then take public comment into consideration and will issue a Final Rule, which under ordinary circumstances takes up to a year, and for controversial rules could take considerably longer.

E15 Developments in the States 


Legislation to repeal Florida Renewable Fuel Standard moves forward, but is amended at April 9 hearing. House Bill 4001, which would repeal the state’s Renewable Fuel Standard Act and end mandatory blending of ethanol into gasoline, was approved by two House committees in March, following a hearing held on March 22 by the Regulatory Affairs Committee of the Florida House of Representatives. Action has now moved to the State Senate, where companion bill Senate Bill 320 has been approved by the Senate Communications, Energy, and Public Utilities, and was scheduled for a hearing before the Environmental Preservation and Conservation Committee on April 9.  The favorable votes on this legislation have come in spite of significant opposing testimony from renewable fuel companies, trade associations, and other allies.  

In a more recent development, the Senate Bill was substantively amended at the April 9 Committee hearing. The original version of the bill would have repealed the sections that required gasoline sold in Florida to be blended with ethanol. In the amended version, these sections would not be repealed, but would be amended to “encourage” ethanol blending rather than require it. This amended bill, which cleared the Committee by a 7-0 vote, is still opposed by some within the Florida biofuel industry, although it is clearly less damaging than the original version of the bill. According to press reports, the Senate Committee was heading towards disapproving the original bill, and proposed this amendment as an alternative.

New Hampshire legislation to ban corn ethanol. As previously reported, House Bill 362, which would ban the use of “corn-based” ethanol in the state, was passed by the state House of Representatives on March 13. It is now before the State Senate, where a hearing is scheduled for April 10 before the Energy & Natural Resources Committee.

Maine ethanol legislation. As previously reported, there were four bills on fuel ethanol introduced in the Maine legislature this year. According to the Portland Press Herald, on March 28 the Joint Committee on Environment and Natural Resources sent one of these bills, LD 453, to the full legislature. This bill would prohibit sale of gasoline containing more than 10% ethanol. The other bills were reported out of Committee with unfavorable recommendations for the full legislature. A date has not yet been set for action by the full House or Senate on any of these bills.

E85 News


USDA grants available for blender pump installation. The U.S. Department of Agriculture has announced that will be accepting applications from gasoline retailers for grant funds to be used to install ethanol blender pumps. This is the third year that these grants, under the Rural Energy for America Program (REAP), will be available. A gas station in Jackson, Nebraska is one of the recent recipients of these grants.

E85 News Briefs

  • Sales of E85 in Minnesota declined 26% in 2012 relative to 2011, a drop that was attributed to the narrow price spread between E10 and E85.
  • Sales of E85 and other alternative fuels are said to be strong in Wisconsin, where there are reportedly 124 stations selling E85.

Previous Biofuel Policy Watch posts on ethanol 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

 

E15 and E85 Ethanol News: March 19, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15”) and other higher blends of ethanol such as E85.

E15 Federal Developments


House subcommittee holds one-sided hearing on E15. On February 26, the House Committee on Science, Space and Technology Subcommittee on Environment held a hearing on “Mid-Level Ethanol Blends: Consumer and Technical Research Needs”.  The only witnesses were representatives from the Automobile Association of America, the American Motorcyclist Association, and the Coordinating Research Council; the former two of whom are opposed to the sale of E15 ethanol blends, in large part based on the negative findings of the study conducted by the third witness’s organization; a study that has been criticized as flawed by DOE, EPA and the ethanol industry. These witnesses and the four Republican subcommittee members were all critical of E15 and said that more research is needed before it should have been approved. Among the documents introduced by subcommittee Republicans was the proposed anti-E15 legislation that Rep. Sensenbrenner (R-Wisc.) recently drafted. The only voice speaking out in favor of E15 was newly-elected Rep. Suzanne Bonamici (D-Ore.), the sole Democrat who attended the hearing.  Ethanol industry groups have criticized the hearing for not inviting E15 proponents, and have submitted written comments to the subcommittee in support of E15.

Sensenbrenner bill calls for further study of E15. Rep. Jim Sensenbrenner (R-Wisc.) has now introduced a bill relating to E15 ethanol that was originally discussed at the February 26 subcommittee hearing. The bill, H.R. 875, would not only repeal EPA’s granted waivers for E15, but would also require EPA to contract with the National Academy of Sciences to conduct a comprehensive assessment of available research on E15 and all “mid-level” ethanol blends. The bill would also prohibit EPA from granting additional E15 waivers until the results of the NAS study were submitted to Congress. The ethanol industry has criticized the bill as being unnecessary in view of the extensive testing E15 has already undergone.

E15 Developments in the States 


Updates on proposed state legislation affecting fuel ethanol
.

  • In New Hampshire, House Bill 362, which would ban the use of “corn-based” ethanol in the state, was passed by the state House of Representatives on March 13. Its prospects in the Senate are not known.
  • There are now four bills pending in Maine relating to ethanol: LD115, which would ban the sale of corn-based ethanol if at least two other New England states adopted a similar ban, LD453, which would ban the sale of gasoline with greater than 10% ethanol, also subject to similar action by two other New England states, LD105, which would allow blenders or retail dealers to sell gasoline with 5% ethanol, and LD261, which would specify that distributors, benders or dealers would not be required to sell gasoline containing 10% or more ethanol. All these bills have been referred to the Environment and Natural Resources Committees in both houses, and hearings are reportedly to be held the week of March 18.
  • In Florida, House Bill 4001 that would repeal that state’s Renewable Fuel Standard Act and remove the requirement that ethanol be blended into all gasoline sold in Florida, received a favorable vote on February 19 from the House Energy & Utilities Subcommittee  and is now before the full Regulatory Affairs Committee. An identical bill, SB 320, was filed in the Senate and has been referred to committee.
  • In Illinois, as previously reported, there is a bill pending in the legislature that would transfer a sales tax incentive now available for E10 fuel to E15. A hearing was held on the bill, Senate Bill 52, on March 12. Representatives of the state’s corn growers and ethanol industry supported the bill, while the oil industry, gas station owners and others opposed the bill. The bill has been sponsored by Senator John Sullivan, who is in favor of establishing incentives for adoption of E15.

Minnesota biofuels bill being considered. A state legislature committee in Minnesota was scheduled to hold a hearing on February 27 to consider a bill that would set a targeted goal for 30% of the state’s gasoline supply to consist of biofuels by 2025, which would be achieved in incremental stages. The bill would also amend currently laws relating to the use of ethanol as a fuel additive so that they would instead apply to “biofuels” and would thus cover butanol and other biofuels in addition to ethanol. The bill was written by Rep. Jeanne Poppe and is supported by the Minnesota Bio-Fuels Association. According to a later report, the bill, pending as Senate Bill 448 and House Bill 462, has progressed through several hearings.

Iowa E15 retail locations. Service stations in Baxter, Iowa and Cresco, Iowa have begun offering E15, bringing the state’s total of E15 retail locations to four. The Cresco location is a new station reportedly constructed explicitly to offer mid-level ethanol blends such as E15.

E85


E85 vehicle available on auction
. The Advanced Vehicle Research Center is auctioning a 2007 Pontiac G-6 that was part of a large E85 ethanol research project. The highly modified engine in this vehicle was designed and developed to be able to take advantage of the higher octane property of E85 fuel to increase thermal efficiency. Through the use of supercharging, optimized geometric compression ratio of 14.1 to 1 and other base engine changes, vehicle performance is comparable to that of a production V6 vehicle with four cylinders, while exhibiting only a negligible fuel economy penalty. Non-E85 gasoline operation is also possible with appropriate modifications. The auction site can be accessed here, or questions can be addressed by e-mail to Mr. Glenn Edmonds at glennedmonds@gmail.com. The Advanced Vehicle Research Center is a private for-profit company located in Raleigh North Carolina, that focuses on research and commercialization of alternative fuel vehicles and energy transportation technologies.

Previous Biofuel Policy Watch posts on ethanol 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

 

E15 and E85 Ethanol News: February 26, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15”) and other higher blends of ethanol such as E85.

E15 Federal Developments


API and its allies file Supreme Court appeal
. On February 21, 2013, the American Petroleum Institute and its co-plaintiffs filed an appeal with the U.S. Supreme Court of the January 15 decision by the U.S. Court of Appeals ruling that the plaintiffs did not have standing to challenge EPA’s partial waivers to approve the sale of E15 ethanol. In filing this appeal, API reaffirmed its belief that the petitioners had standing to challenge the decisions, and restated their assertion that “E15 is not safe for millions of vehicles now on the road”.

Senate bill would block EPA approval of E15. On February 14, 2013, Senators Roger Wicker (R-Miss.) and David Vitter (R-La.) introduced a bill, S.344, that would prevent EPA from approving ethanol blends of greater than 10%, and which would overturn EPA’s prior approval of E15 blends.  Statements by the senators alleged that EPA’s “flawed waivers” were “short-sighted regulations” issued by bureaucrats that would negatively affect families and businesses and which were made “without sufficient testing and analysis” of E15. Rep. Jim Sensenbrenner (R-Wisc.) is reportedly planning to submit an identical bill in the House.

New pump configuration approved. On Feb. 7, the EPA approved a new blender pump configuration for the sale of E15 and E10, in response to a proposal submitted by the Renewable Fuels Association. The new configuration addresses the problem arising when two different gasoline-ethanol blends are dispensed from the same hose and nozzle – because this may cause residual fuel from an E15 fueling to mix with a later E10 fueling, EPA had previously instituted a 4 gallon minimum purchase, but this posed a problem for vehicles and other small engines which could not receive as much as four gallons in a single fueling. Under the new option, a retailer could provide a dedicated pump only for gasoline with 10% or less ethanol, with accompanying signage directing customers to this pump, and with the requirement that the E15 dispenser be labeled with the message “Passenger Vehicles Only. Use in Other Vehicle Engines and Equipment May Violate Federal Law.”

E15 Developments in the States 


Update: Proposed anti-E15 legislation in Maine
. To clarify previously-reported items, the anti-ethanol bills filed in the Maine legislature by Representative Jeff Timberlake are distinct from the legislation that is being prepared by the state’s Department of Environmental Protection. One of Timberlake’s bills would ban ethanol completely from Maine’s gasoline if other New England states adopt similar bans. In fact, such a bill is pending in the New Hampshire state legislature: House Bill 362, which has been introduced in previous years, would ban the use of “corn-based” ethanol in the state. Committee hearings were held in New Hampshire in late January, but the bill’s chances of success are not known.

Illinois sales tax incentives. A bill introduced in the Illinois legislature would transfer a sales tax incentive now available for E10 fuel to E15. Rather than have the incentive apply to any ethanol-gasoline blends of greater than 10%, the  language of the bill would apparently remove the tax incentive completely from E10 in favor of E15, and because E15 may not be widely available in regions of the state, particularly Chicago (allegedly due to the need for upgrading vapor recovery systems), the bill has been criticized as increasing the tax burden on most motorists.

Previous Biofuel Policy Watch posts on ethanol 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

 

E15 and E85 Ethanol News: February 5, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15”) and other higher blends of ethanol such as E85.

E15 Federal Developments


Regulation of E15 storage at gas station underground storage tanks. The Petroleum Marketers Association of America (PMAA), in a January 8, 2013 letter, has called for EPA to withdraw a proposed rule updating the regulations for underground storage tanks (USTs), that included proposals for upgrading USTs to ensure compatibility with E15. This proposed rule was published on November 18, 2011, and attracted almost 200 responses during the public comment period that closed in April 2012. The proposed rule would specify how UST operators could prove tank compatibility with fuels having more ethanol than E10, more biodiesel than B20, or for other fuels such as biobutanol. Specifically, UST operators would need either to have UST system components certified or listed by a nationally-recognized testing laboratory, or to receive written approval of compatibility from the component manufacturer, or use another method acceptable to EPA. It is known that gas station operators are also concerned over these changes, which would be difficult to implement for UST that have been in place for many years, as well as other large capital expense infrastructure changes needed to accommodate E15 such as new gasoline dispensing systems (e.g. see these trade association comments on the EPA rule). In asking EPA to withdraw the proposed rule, PMAA has asked EPA to convene an expert panel to review and help mitigate the costs of the rule on small businesses.

E15 Developments in the States 


Update: Proposed anti-E15 legislation in Maine
. I had previously reported that the Maine Department of Environmental Protection was preparing to propose a bill that would ban the sale of gasoline containing more than 10% ethanol if at least two other New England states adopt a similar ban. It has now been reported that a state representative has introduced two related bills in the legislature. One of these bills would limit the percentage of corn-derived ethanol in Maine gasoline to 5%; and the other would allow the state to form a coalition with other New England states to create an ethanol-free gasoline market, which would be supplied by the Canadian petroleum-vendor Irving. The legislator, Rep. Jeff Timberlake, appears to have been motivated by the alleged damages ethanol causes to small engines, and by an opposition to the use of corn to produce fuel, and the subsidies he believes farmers are paid to grow corn for ethanol.

Update: Florida Renewable Fuel Standard Act. I previously reported on a bill that was filed in the Florida state legislature that would repeal that state’s Renewable Fuel Standard Act and remove the requirement that ethanol be blended into all gasoline sold in Florida. More recently, it has been reported that the Florida Agriculture Commissioner has dropped his opposition to this pending bill, House Bill 4001. The Commissioner’s opposition was reportedly key to blocking previous repeal attempts.

State Policies for E15. A recent article in Ethanol Producer News stated that E15 is available in Kansas, Iowa and Nebraska as well as one gas station in South Dakota. E15 is not yet available in Illinois although the infrastructure is in place and several retailers are preparing to sell E15. Other states may need to amend their laws to allow E15 sales: for example, although Missouri has an agriculture department that is generally friendly to ethanol, its laws specifically mention E10, so that legislative action will be needed to allow the sale of E15 in that state.

News Briefs:

Other E15 Developments 


Another study alleges that E15 causes engine damage. Another report has been issued that purports to show that E15 can damage fuel system components. The report, entitled “Durability of Fuel Pumps and Fuel Level Senders in Neat and Aggressive E15“, was issued by the Coordinating Research Council (CRC). As summarized in Biofuels Digest, the report claims to have shown that E15 can cause problems such as an elevated incidence of fuel pump failures, fuel system component swelling, and impairment of fuel measurement systems that could cause erratic and misleading fuel gauge readings or cause faulty check engine light illuminations. As reported in Ethanol Producer magazine, the ethanol industry is vigorously disputing this study, saying its study design is flawed and that it used an outdated fuel for this testing. For what its worth, this article in Ethanol Producer magazine also notes that the American Petroleum Institute is a “sustaining member” of CRC.

E85 News


E85 Availability in Virginia. The first three service stations offering E85 in Virginia have opened. The stations are operated by MAPCO Express, which is obtaining the fuel from Protec Fuel, and which has rebranded their retail stores under the “East Coast” brand. 

Previous Biofuel Policy Watch posts on ethanol 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

 

Proposed EU Trade Action Against US Ethanol

The European Commission (EC) has been moving forward with a proposed action that is likely to pit the interests of European ethanol producers against those of U.S. producers. The EC action, which might lead to changes of European Union (EU) policy to be implemented in all 27 EU member states, were triggered by requests made in October 2011 by ePURE, the trade association for European ethanol producers.

On October 12, 2011, ePURE requested that the EC investigate alleged unfair U.S. trade practices and their potential impact on the ethanol industry in the EU. In its press release announcing this action, ePURE stated that the U.S. had encouraged ethanol production “for the last twenty years, notably through the provision of generous subsidies benefitting ethanol producers directly or indirectly through the obligation to blend ethanol with gasoline”. In its release, ePURE specifically cited the federal excise tax credit and the federal income tax credit that were at that time available to ethanol producers. ePURE’s main concern was over the Volumetric Ethanol Excise Tax Credit (VEETC), which provided a benefit of 45 cents per gallon for gasoline blended with ethanol, which the blender could take either as a credit from the federal excise tax for gasoline or as a credit against federal income tax. In its complaint to the EC, ePURE alleged that U.S government subsidies and promotional programs had led to the saturation of the U.S. ethanol market, causing many U.S. ethanol producers to look to European and other international markets, and that the subsidies also allowed these producers to adopt “aggressive pricing practices” for ethanol in the European market.

ePURE’s request to the EC triggered two different inquiries, which have often been confused in press reports of this issue. One inquiry was to investigate the impact of U.S. ethanol subsidies on the European ethanol market and on European ethanol producers (the “anti-subsidy” investigation),  and the second was to look into charges that American producers were “dumping” their product in Europe at a low cost to harm European producers (the “anti-dumping” investigation). Both of these inquiries began in November 2011 and have proceeded towards resolution in the last several months of 2012 and early in 2013.

The anti-subsidy inquiry was the first to reach some resolution. On August 23, 2012, the EC announced that, although it had found evidence of “countervailing subsidization and material injury” caused to the European ethanol industry, it declined to institute countervailing duties on U.S. ethanol because the main subsidy scheme leading to such alleged injury, the VEETC credit, had expired (with the consent of the U.S. ethanol industry, Congress had allowed VEETC to expire at the end of 2011, and so was no longer in effect at the time of the EC’s investigation). However, because the EC felt there was “evidence that the United States might reinstate the main subsidy scheme … in the coming months with retroactive effects,” it decided to require that imports of U.S. ethanol into the EU be registered, so that the EU could later impose retroactive duties if the U.S. subsidy were reinstated. A press release from ePURE announcing the EC decision expressed the hope that such “strict monitoring” of U.S imports might discourage the U.S. government from reinstating the VEETC credits, although from my perspective, by August 2012 there was little or no interest within the U.S. government or industry to reinstate the credit. On December 20, 2012, The EC finalized its decision not to impose countervailing duties on U.S. ethanol in the “anti-subsidy” investigation, and also decided to stop requiring registration of U.S. ethanol importers. The formal EC notice can be found here.

The “anti-dumping” investigation was continuing, and also began to reach resolution in December. The European Commission announced on December 6, 2012 that, as a result of its yearlong investigation, it would propose that the EU impose what was originally reported as a 9.6% anti-dumping duty on U.S.-produced ethanol, for a five year period. Then, it was reported that a majority of EU member states voted on December 20 to impose this duty as the European Commission had proposed, subject to final approval from the Commission and the Council of the European Union (EU Council). The EC formally published its proposal on January 22, 2013, indicating that it would impose a 9.5% duty on all U.S. bioethanol imports, which would lead to a fixed charge of 62.30 euros per net tonne of bioethanol present in fuel, based on the expected blending ration of 10% ethanol in gasoline. The duty is proposed for a five-year period, which appears to be the “default” term of anti-dumping remedies imposed by the EU under its basic anti-dumping regulation. In a potentially confusing move, it appears that, under the anti-dumping proposal, the EC is once again proposing to institute registration of U.S. ethanol imports, even though such registration was halted in the termination of the anti-subsidy investigation as mentioned above.

From a legal perspective, the anti-dumping proposal needs to be approved by the EU Council, which the EC has proposed should take place by February 22, 2013. The voting rules of the EU Council are a bit confusing, but it appears that a majority vote of EU members states is required to adopt this proposal.

The U.S. Trade Representative’s office has objected to the proposed duty, which has also drawn criticism from U.S. ethanol trade groups, who characterized the proposal as unprecedented and legally vulnerable. In criticizing the proposal, the Renewable Fuel Association pointed out that the EC “selected six producers for investigation and none were found to be dumping; nonetheless, duties are being imposed.” Naturally, ePURE in Europe, which had initiated these EU inquiries, applauded the decision.

Although perhaps inevitable that a transatlantic rift would open up on international trade issues, it is somewhat distressing to see the industry divided in this way, particularly when U.S. and European biofuel trade associations share common positions on so many other issues, particularly those related to the “food vs. fuel” debate. It is also somewhat ironic that the EU might impose a tariff on U.S. ethanol so soon after the U.S. allowed its tariff on Brazilian ethanol to expire on December 31, 2011. Lifting the Brazilian tariff has led to a substantial increase in ethanol imports to the U.S. in 2012 (although several other economic and agronomic factors likely contributed to this trend), which in the short term has been beneficial in facilitating compliance with the U.S. Renewable Fuel Standard, particularly since sugarcane ethanol is treated more favorably than corn ethanol under the RFS. It certainly seems that imported ethanol, particularly cellulosic or other non-food-derived ethanol, once it becomes available, would be useful in ensuring EU-wide compliance with the EU Renewable Energy Directive (RED). This would be particularly true if the recently-proposed revision to the RED takes effect, with its preference towards biofuels not derived from food crops. On the other hand, the European transport sector uses more diesel than gasoline (petrol), meaning that renewable ethanol will play a smaller role in meeting the requirements of the RED than will renewable diesel replacement fuels. It remains to be seen what impact the proposed EU duty will have on the European ethanol market, if the duty is ultimately imposed, and whether it serves its purpose of preventing U.S. producers from exporting ethanol to Europe.

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