EPA issues long-awaited RFS volume obligations

On Friday, May 29, 2015, EPA finally issued a proposed rule setting the annual volume obligations for renewable fuels under the Renewable Fuel Standard (RFS). This proposal included the long-delayed volume mandates for 2014 as well as newly-proposed mandates for 2015 and 2016. More details on EPA’s proposal can be found at the agency’s website, and the yearly volume mandates are shown in the table below, taken from the Fact Sheet available at the EPA website. This is only a proposed rule, which EPA intends to finalize by November 30, 2015.

EPArvo

The proposal is being widely reported and commented upon, so my observations today will be brief. I’ll primarily make two observations. First, as expected, EPA pulled back somewhat from its original proposed mandates for 2014, which attracted considerable controversy when issued in November 2013, but the current proposal for 2014 still falls short of the original Congressional mandates. For example, in November 2013 EPA proposed a total mandate of 17 million gallons for cellulosic biofuels: the current proposal is for 33 million; in 2013 the proposed mandate for advanced biofuels was 2.2 billion gallons; the current proposal calls for 2.68 billion. EPA based the 2014 mandates on its estimates of actual production for the year, but these targets still represent a substantial pullback from the volumes originally called for in the 2007 RFS2 legislation, to the detriment of several sectors of the biofuel industry, particularly including corn starch derived ethanol. Although arguably moot, so long after 2014 has ended, this proposal is sure to continue to generate controversy within the industry.

My other observation is that, through its modestly-escalating proposed mandates for 2015 and 2016, EPA has attempted to preserve the spirit and intent of the RFS law, which was to encourage the growth of the renewable fuel industry in order to reduce greenhouse gas emissions and the nation’s dependence on foreign fossil fuels. But here too, the volumes fall short of what is specified in the original law, and are sure to be opposed by many in the biofuel industry, particularly the corn ethanol sector. Industry representatives have, so far, expressed concern that these mandates were influenced by undue concern over the so-called ethanol blend-wall, which has effectively limited the amount of ethanol in the nation’s fuel supply to about 10% of the volume of gasoline sold.

This is only a proposed rule, and EPA will be taking public comments and holding a public hearing, all before making the rule final later this year. Expect much further controversy. In fact, I’m heading today to the Fuel Ethanol Workshop in Minneapolis, where I expect that EPA’s announcement will be a major topic of discussion, particularly in tomorrow’s plenary sessions. I hope to report on the FEW either in this blog or in Advanced Biotechnology for Biofuels later this week.

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 previously served 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 any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels

Recent Developments on Renewable Fuels Policies

It’s been a busy start to 2015 for me, and so I haven’t had much free time for new posts to the blog. However, there have been numerous developments relating to the regulations and policies affecting renewable fuels. The following are brief summaries of some of these developments.

U.S. Renewable Fuel Standard


Schedule announced for issuance of annual volume mandates
.The U.S. EPA has still not issued a final rule to set the volume mandates under the RFS for 2014. Instead, the agency has been working on a single proposal to cover volume mandates for 2015, 2015 and 2016. More recent developments have affected these plans. On March 18, the American Fuel & Petrochemical Manufacturers and American Petroleum Institute filed suit against EPA in the U.S. District Court of the District of Columbia, asking the Court to require EPA to promptly issue the delayed volume mandates for 2014 and 2015. Late last week, it was reported that EPA will enter into a consent agreement with AFPM and API to settle this suit, under which EPA will commit to a schedule for issuing the delayed mandates. According to EPA’s website, this schedule is as follows.

  • Finalize the 2014 volume mandate by November 30. In addition, although not covered by the consent order, EPA said that it would issue a new proposal for the 2014 mandates by June 1, reflecting the volumes of renewable fuel that were actually used in 2014, to be the basis for the final rule due by November.
  • Issue proposed 2015 and 2016 volume mandates by June 1 and finalize them by November 30 (the 2016 commitment is outside the scope of the consent decree).
  • Also outside the consent decree, EPA said it will finalize the biomass-based diesel volume requirements for 2017, as required under the law, on the same June-to-November schedule.

Cellulosic waiver credits. In the meantime, the agency has announced other activities, including issuance of a direct final rule clarifying how EPA calculates cellulosic waiver credit prices under the RFS. Cellulosic waiver credits are available for obligated parties to show compliance with the cellulosic biofuel standard in any year in which EPA reduces the cellulosic volume mandate, as it has done for the past several years.

New RFS pathway petitions. EPA has also begun granting petitions for new fuel pathways under the RFS, under the procedures it announced in September 2014 (as described in my October 2, 2014 entry and follow-up posts in Advanced Biotechnology for Biofuels). Most of the approved petitions are for corn starch-to-ethanol pathways under the newly-instituted Efficient Producer program, but recent approvals have also included a new pathway for production of ethanol from algae, submitted by Algenol Biofuels.

EU Renewable Energy Directive


Proposed revisions to the RED. There’s been quite a bit of back-and-forth about the proposed amendment to the EU Renewable Energy Directive (RED) and its companion legislation the Fuel Quality Directive, but it appears that a political compromise has been reached. As last reported in Biofuel Policy Watch, European legislators and bureaucrats have been trying to reach agreement on amendments to these directives that would cap the contribution that food-based biofuels could make to the EU-wide goal of deriving at least 10% of energy in the transport sector from renewable fuels by 2020, while also finding a way to encourage the development and use of advanced biofuels not relaying on agricultural feedstocks. On April 1, 2015, representatives of the European Commission, the Parliament and the individual member states, meeting in so-called “trilogue” sessions, have agreed to cap food-based fuels at 7%, up from the original level of 5% first proposed in 2012. However, there appears to be no binding target for the percentage of the fuel supply to be attained by advanced biofuels.

A final compromise appears to have been reached by members of Parliament on April 14. According to reports, the amendment to the RED will cap food-based biofuels at 7%, will set an optional target of 0.5% for advanced biofuels, and would require reporting of indirect land use change (ILUC) but not require that ILUCs be taken into account when calculating carbon intensities under the directive. The proposal still needs the approval of the full Parliament, which is reportedly scheduled for April 29.

Oregon Low Carbon Fuel Standard


Oregon Clean Fuels Program will be fully implemented
. The early months of 2015 saw a great deal of activity regarding the Oregon Clean Fuels Program, a state law similar to the low-carbon fuel standard that has been in place in California for some time. It was last reported in the blog that the state’s Environmental Quality Commission had issued regulations to implement the Program, but that the legislature was about to again begin work on passing legislation to remove the “sunset date” under which the law would have expired at the end of 2015. A bill to remove the sunset date was approved by the Oregon Senate in February and debate in the House took place through early March, amidst a political scandal that drove newly-reelected Governor John Kitzhaber from office. Final House approval of the bill came on March 4. Kitzhaber’s successor, Governor Kate Brown, signed the bill on March 12, ensuring the continued implementation of the law going forward. I hope to analyze the regulations in a future blog post, but it is good to see that this law will remain on the books and will begin to be implemented. If progress can also be made in Washington State, we may yet see a situation where the entire U.S. and Canadian west coast would maintain incentives for adoption of renewable transportation 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. Dr. Glass previously served 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 any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels

 

Biofuels Law Conference: Discussion of Renewable Fuel Standard

On May 2, 2014, I presented a talk at the Energy Bioscience Institute (EBI) 6th Annual Biofuels Law and Regulation Conference at the University of Illinois, summarizing a number of key legal, policy and regulatory issues affecting the development of the biofuels industry in the U.S. and internationally. The slides from that presentation can be found here. In a series of posts in Biofuel Policy Watch beginning today, I’m elaborating on the issues I discussed in the presentation.  These posts are not meant to provide comprehensive summaries of the issues at hand, but instead to highlight some key aspects of my presentation and other discussions at the EBI conference. For most of these policy issues, you can find background information in other posts on this blog and my Advanced Biotechnology for Biofuels blog, and I’ll provide links to such previous posts where possible.

Today’s post covers issues relating to the U.S. Renewable Fuel Standard (RFS). The RFS is widely considered the most important piece of legislation for the promotion of the biofuel industry in the U.S. I’ve described this law in detail in several posts in the Advanced Biotechnology for Biofuels blog (for example, starting with this post from January 2013), and additional information can be found on the EPA website  and plenty of other places on the Web. The key features of the RFS are the establishment of goals for reduction of greenhouse gas emissions from transportation fuels, and setting mandated, escalating volumes of four different categories of renewable fuels that must be included within the U.S. motor vehicle fuel supply each year, as well as defining which fuels fall into which categories based on their expected levels of greenhouse gas emission reductions. By setting the yearly volume obligations at aggressive levels, the RFS set ambitious goals for the industry to meet, and by having the levels escalate from year to year, the law also provided the basis for future growth of the industry.

In the early years under the law, these goals were spectacularly met – usage of renewable fuels, particularly ethanol and renewable biodiesel, rose markedly to meet each year’s volume obligations, and the law provided the market stability that has encouraged and facilitated investment in the biofuel sector. However, the amount of ethanol approved for blending in the nation’s gasoline market has been limited by the maximum 10% blend percentage that EPA had originally approved, and although EPA recently gave its OK for 15% blends with some limitations, the 10% figure has created the so-called “blend wall” that has begun to limit the upside market potential for ethanol in the U.S. Concerns over the blend wall, along with the delays that have been seen in commercializing cellulosic biofuels, has led to Congressional scrutiny of the law, with Republican calls for its repeal or substantial revision, as well as court challenges to EPA’s yearly volume obligations. In the fall of 2013, EPA generated substantial controversy by proposing significant reductions to the 2014 volume mandates, partially in response to these criticisms and partially reflecting the slower than expected progress in commercialization of advanced biofuels such as cellulosic ethanol. At this writing, EPA is still reviewing public comments and has not finalized the 2014 volume mandates.

The following are three key points I made in my presentation about the RFS and its importance for the development of the biofuel industry.

Ensure the stability of the RFS and its policies. Most industry observers would probably agree that this is the highest priority of all that relates to the U.S. biofuel industry and markets. As noted above, the several years culminating in 2013 saw intensified pressure from Congressional Republicans and competing interest groups for the repeal or substantial revision of the RFS. It has therefore become somewhat of an industry mantra in recent years to say that the RFS must be retained in its current form, without modification, in order to preserve its ability to continue to promote the growth of the industry. However, in discussions at the EBI conference, several speakers, while acknowledging the importance of the RFS, also focused on the shortcomings of the law and the need to fix it. Several speakers acknowledged that the ethanol blend wall poses problems for the aggressive volume mandates for the next several years as included in the original legislation, and there were suggestions that it might be appropriate to change the RFS to be more like the California Low Carbon Fuel Standard, so that fuels providing greater reductions in greenhouse gas emissions are better rewarded, and therefore incentivized relative to first generation biofuels. Although no one had concrete suggestions for any such revisions, at least one speaker expressed the view that “we need to revise the RFS in order to save it”.

I don’t disagree with that sentiment, except to say that in today’s political climate it is not realistic to expect a bitterly-divided Congress to find a sensible bipartisan approach to revising the RFS, so that the best the industry can do is to try to head off blatant attempts to simply repeal the law. I think the industry should engage in any substantive, good faith discussions about revisions to the law, but in the short term, I’m hopeful that EPA’s actions to scale back some of the more aggressive volume mandates will stave off Republican attempts to repeal the law, and that EPA can strike a balance between setting volume mandates that are reasonable but which are still aggressive enough to provide the incentive for continuing investment and development of advanced biofuels in the years to come. In the meantime, the biofuels industry awaits EPA’s decision on the final rule for the 2014 volume mandates, expected for June, with baited breath.

Expedite, streamline RFS pathway reviews. The more practical problem facing biofuel companies wishing to benefit from the RFS is EPA’s backlog in approving petitions for new fuel production pathways. Under the RFS each renewable fuel is assigned into one of four categories, based on their production method and expected greenhouse gas (GHG) emission reduction. These four categories are “renewable fuel” (with at least 20% GHG reduction); “advanced biofuel” (at least 50% reduction); “biomass-based diesel” (also with at least 50% reduction); and “cellulosic biofuel” (requiring a cellulosic feedstock and at least a 60% reduction in GHG emissions). Certain fuels were assigned to a category when the “RFS2” regulations were instituted in 2010, but for fuels produced by other, newer pathways, it is necessary for companies to file petitions with EPA to have the agency review the pathway, its life cycle analysis and expected GHG reductions, and other factors, so that the pathway can be approved and assigned into a category, after which the company can issue Renewable Identification Numbers (RINs) for its fuel.

EPA was caught unawares by how many companies would need to take advantage of this procedure and how many petitions they would receive. As a result, a substantial backlog of petitions has arisen (36 pending as of this writing) and the average time EPA has needed to review and approve each petition has also risen to levels of concern to the industry. This has been described in more detail in several recent posts on Advanced Biotechnology for Biofuels: see this post for more information. As a result, in a Program Announcement dated March 2014, EPA announced that it was initiating activities to improve the petition process for new fuel pathways under the RFS.  EPA said that it found “that improvements should be made to the petition process to enable more timely and efficient decision-making” in the RFS program.

Several speakers at the EBI conference highlighted the need for a more efficient, transparent petition process, and I agree. Although I think that, overall, EPA’s move is a good one, the one troubling aspect of EPA’s announcement is that they have asked companies to voluntarily hold off on submitting new pathway petitions for six months (i.e. until roughly September 2014) while the internal review is underway. Although some in the industry are concerned about this unofficial “moratorium”, I’m not particularly troubled, because any company submitting a new petition at this time would have gone to the back of the queue anyway, and so would not be likely to see any EPA action in the near term under any circumstances, so I doubt any company will be unduly disadvantaged by this short delay. Let’s hope EPA is able to improve its processes in a meaningful way.

Create viable, reliable RIN validation schemes to avoid RIN fraud. One of the major advantages of the RFS for renewable fuel producers is the ability to generate Renewable Identification Numbers (RINs) for each gallon of fuel they produce. RINs are tradable on the open market, and have fluctuating value based on changing market and economic situations at any given time. When responsible parties (e.g. gasoline sellers) are not able to obtain enough quantities of renewable fuels to meet their volume obligations, they can purchase RINs on the open market to help meet their obligations. Therefore, RINs (which are issued in different categories corresponding to the different renewable fuel types under the RFS) tend to have a higher value when actual supplies of fuels are, or are expected to be low, and tend to have a lower value when supplies are more plentiful and responsible parties don’t need to buy RINs to meet their obligations (although like many financial instruments, RINs are subject to price fluctuations due to market speculation and other factors).

To some extent, the system depends on the reliability of the system and the authenticity of the RINs on the market. RINs are not issued by EPA – RINs are 38-character numeric codes that are created by the entity that first produces the fuel, using a formula EPA established in the RFS rule. The system works in a sort of “honor system” whereby the RINs generated are supposed to correspond to tangible volumes of fuel. Unfortunately, there were several very well publicized instances of RIN fraud, largely in 2012, where companies created and sold RINs for volumes of diesel fuel that did not actually exist, and when this fraud was uncovered, not only were the offending companies subject to fines and criminal penalties, but the companies which unknowingly purchased the fraudulent RINs were also subject to penalties for missing their volume obligations. This situation created quite a bit of uncertainty in the RIN markets at the time, particularly for biomass-derived diesel RINS.

In response, in January 2013 EPA proposed rules to establish a voluntary quality assurance program that would include auditing and validation of RINs by independent third-parties, so that purchasers of the RINs could be assured that the RINs were valid. The proposal did not place the burden of validation on EPA itself, but instead would allow third parties to qualify to provide auditing and validation services, and the proposed rule specified the minimum requirements any such third party would need to adopt to develop a quality assurance program. Under a critical part of the proposal, obligated parties would be able to invoke an affirmative defense against civil liability arising from the transfer and use of invalid RINs that had been verified under a quality assurance plan. EPA published the proposed rule for public comment and in the wake of what was likely substantial comment from industry parties, the agency has not yet finalized the rule.

Even before adoption of a final rule, several independent consulting firms announced that they were developing plans for such quality assurance programs, and no doubt regulated parties have themselves become more cautious about the RINs they purchase. There have been no reported instances of RIN fraud since 2012, and at least two of the alleged perpetrators were convicted in 2013 and sentenced to jail time. So it may be that the problem will be solved by more vigorous internal policing from within the industry, but there is no doubt that the ongoing success of the RFS depends on the integrity, and the perceived integrity, of the RINs generated by fuel producers.

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

Upcoming Presentation: Biofuel Legal and Policy Issues

This Friday, May 2, 2014, I will be presenting a talk at the 6th Annual Biofuels Law and Regulation Conference at the University of Illinois. My talk, entitled “Legal and Policy Issues Affecting Biofuel Development,” will briefly summarize a number of key legal, policy and regulatory issues that are critical for the successful development of the biofuels industry in the U.S. and internationally. The slides from that presentation can be found here, and after the conference, I’m planning a series of posts here on in Biofuel Policy Watch to elaborate on the issues I intend to cover in the presentation. These topics are as follows (with links to the blog posts describing each topic):

In each post, I’ll briefly summarize the issues I’ve presented in the talk, and to the extent possible I’ll also report on any relevant discussion on these topics that arose during the conference. I’ll be happy to answer any questions anyone may have on this presentation, these topics, and the forthcoming blog entries.

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 atwww.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

 

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 9th 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 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.

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