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 9th 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.

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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:

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: May 8, 2013 (updated May 15, 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 challenge to LCFS regulations. While the challenge to the California LCFS in federal court remains pending, the state’s Air Resources Board (ARB) is also defending the regulations in state court. The California Court of Appeal for the Fifth Appellate District, which has been hearing an appeal in the case of POET LLC et al. vs. California Air Resources Board, issued a letter on February 26 to all parties in the case asking for supplemental information on several issues. This action has been interpreted as an indication that the appeals court will find that ARB violated the California Environmental Quality Act by adopting the LCFS before completing an environmental assessment, among other reasons. The State filed its brief in response to this request on April 2, as have the other parties to the suit. There have also been a number of Amicus briefs filed by other parties on both sides of the issue.

New pathways under California LCFS. The California Air Resources Board (ARB) staff has posted four new LCFS pathways on its web site. Three of the newly posted pathways are Method 2 applications proposed by private parties and one is a staff-developed Method 1 pathway. The three Method 2 pathways are for Australian-tallow to renewable diesel, sugarcane molasses to ethanol, and mixed-feedstock to biodiesel; the staff-derived pathway is for compressed natural gas. According to the LCFS regulations, upon posting to the LCFS website, these pathways and their associated carbon intensity values may be used for reporting and credit generation purposes even before they are formally adopted and incorporated into the LCFS regulation. All are available on at the ARB website.

Status update of California LCFS published. The Institute of Transportation Studies at the University of California-Davis has published its second status report on the California LCFS. Among the report’s findings were that ethanol represented 78% of the LCFS credits generated in 2012, with 12% coming from natural gas and biogas, 9% from biodiesel, and 1% from electricity. Low carbon fuels were found to have displaced approximately 6.2% of the gasoline and diesel used for transportation in the state in 2012. The report also found that there were net credits of 1.285 million metric tons of carbon dioxide in the system at the end of 2012, which the report says equals about half of the credits that would be needed to meet 2013 obligations.

UC Davis critique of 2012 oil industry-commissioned report on California LCFS. The Policy Institute for Energy, Environment and the Economy at the University of California at Davis has issued a report evaluating and critiquing a report issued by the Boston Consulting Group in June 2012 which had been funded by the Western States Petroleum Association (WSPA). The 2012 report concluded that the LCFS would have significant negative effects on the California economy. The new UC Davis report faulted the 2012 report on several accounts, including a failure to assess impacts beyond the oil refining industry, the assumption that Brazilian cane ethanol would be the only significant source of low-carbon fuel, and the assumption that higher fuel prices would not cause Californians to drive fewer miles. The UC Davis report, which was funded by the WSPA along with the Rockefeller Brothers Fund and the Alliance of Automobile Manufacturers, can be downloaded here.

Oregon Low Carbon Fuel Standard 


Oregon Senate Committee holds hearings, approves bill to extend LCFS
. On March 18 the Oregon Senate Committee on Environmental and Natural Resources held a public hearing on S.B. 488, a bill which would repeal the December 31, 2015 sunset date of Oregon’s low carbon fuel standard program, officially known as the Oregon Clean Fuels Program. Testimony was heard from renewable fuel proponents as well as those who oppose the program and its extension. The hearing was carried over to continue on March 20. Written testimony from the hearings can be downloaded from the Oregon State Legislature website. On April 22, the Committee voted to send the bill to the Rules Committee with a “Do Pass” recommendation.

Previous Blog posts on Low Carbon Fuel Standards:

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: March 13, 2013

In previous posts on my Advanced Biotechnology for Biofuels blog, I described the 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). In this post, I’ll report on news items and other developments during the last few months of 2012 and early 2013 that are relevant to these “Low Carbon Fuel Standard” (LCFS) programs. Look for subsequent updates on other developments in the weeks to come.

California Low Carbon Fuel Standard


Amendments to be proposed to California LCFS. At a workshop held on March 5, 2013, staff from the California Air Resources Board (ARB) presented its plans to present regulatory amendments for consideration by the ARB Board at its October 2013 meeting. Among these proposed amendments will be 36 new applications covering 118 new fuel pathways for the Board’s consideration. Most of these have arisen from applicant petitions, while 15 pathways were developed internally by ARB staff. The pathways include new methods for producing biodiesel, biomethane, ethanol, renewable diesel, and liquefied natural gas. Also discussed at this workshop were issues relating to calculation of indirect land use change, enforcement provisions, and the reporting tool used for banking and trading of credits under the LCFS.

California LCFS quarterly data summary issued. On December 31, 2012, CARB staff released the LCFS status report for the 3rd quarter of 2012. The report showed that about 390,000 metric tons (MT) of credits were generated in Q3 2012 against approximately 250,000 MT of deficits. CARB had previously reported Q2 2012 figures of 310,000 MT of credits and 240,000 MT of deficits. Cumulatively through the end of Q3 2012, there have been a total of about 2.376 million MT credits and 1.271 million MT deficits, for a net total of about 1.105 million MT credits. Ethanol continues to make up about 80% of the credits. The report also disclosed that there were 17 documented trades of credits under the LCFS, which were in the range of $10-30 per MT, the same range as reported in the Q2 report.

Pro-biofuel campaign launched by environmental organization targets California LCFS. A new campaign has been announced to support the development of next-generation biofuels. The group, FuelingGrowth.org, was formed by Environmental Entrepreneurs, an affiliate of the Natural Resources Defense Council, and it includes a social media effort and a website that highlights 80 biofuel firms across 27 states. According to the group’s spokesman, the effort will largely focus on California due to the threats to that state’s Low Carbon Fuel Standard.

California LCFS Indirect Land Use Change policies. The Renewable Fuels Association has written to the Chair of the California Air Resources Board, encouraging the Board to revise its policies towards indirect land use change, which RFA maintains results in unfairly assigning less-favorable carbon intensities for certain fuels under the LCFS regulations.

Economic impacts of LCFS. In October 2012, the California Business Alliance for a Green Economy disputed a June 2012 report that alleged that the LCFS regulations would hurt California’s economy. The Business Alliance found that the study, issued by the Western States Petroleum Association (WSPA) and conducted by the Boston Consulting Group, was based on “several significant inaccuracies and faulty assumptions.” WSPA defended the study in its own statement.

Oregon Low Carbon Fuel Standard 


Oregon LCFS public meeting
. As I reported in my Advanced Biotechnology for Biofuels blog, Oregon’s draft LCFS rules were presented in a public meeting on December 6-7, 2012. At this meeting, the Environmental Quality Commission voted to move forward with the first phase of the program, and require gasoline and diesel suppliers to begin reporting the carbon intensity of their fuels beginning in 2013. The state legislature would then have to decide whether to move to the second phase, which would be to require fuel producers and importers to achieve a 10% reduction in carbon intensity by 2025. However, the legislation as adopted in 2009 included a sunset date of 2015 for the program, and Governor Kitzhaber has reportedly decided that the state won’t implement these reductions unless the Legislature lifts the sunset date in its 2013 session. It has been reported that proponents of the legislation will make a lobbying effort in 2013 in favor of extending the program past this sunset date.

Opposition to Oregon LCFS program. A group known as Oregonians for Sound Fuel Policy, a group of associations, businesses and organizations that represent heavy fuel-users, was formed shortly before the December 2012 EQB meeting, with the goal of opposing the LCFS policy. The members of this group are concerned that the policy will cause volatile fuel prices and create unnecessary government regulation, especially burdening small businesses. Other industry groups have been reported in the press to oppose the legislation as well.

Previous Blog posts on Low Carbon Fuel Standards:

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