In a radio interview in Iowa late last week, EPA Administrator Scott Pruitt made pretty clear the rational that went into his agency proposing lower levels of cellulosic biofuels, advanced biofuels, and total renewable fuels that would be required for blending under the next Renewable Fuel Standard rule: “Production levels and demand matter.”
Pruitt goes on to express his concern that his agency is being “used in setting those [RFS blending targets] in a way to encourage ‘blue-sky’ thinking.” He is referring to the concept that the standard’s annual blending targets (Renewable Volume Obligations, or RVOs) were set by the 2007 law that reauthorized and strengthened the RFS to encourage oil refiners to build the infrastructure required to meet the blending levels prescribed.
Pruitt’s characterization of EPA and its role in setting the RFS RVOs does not set well with renewable fuel advocates because it seems to run contrary to a federal appellate court ruling earlier this month that found that the EPA was wrong in previous years when it set lower biofuel levels.
The U.S. Circuit Court of Appeals for the District of Columbia held that EPA exceeded its authority in previous years when the agency interpreted the law establishing the RFS as giving it the authority to reduce biofuel mandates if it determined there was insufficient infrastructure to deliver it.
Furthermore, the court ruling finds that EPA erred when it allowed the oil industry to control the volumes of renewable fuels offered to consumers, and said the RFS statute does not allow the agency to rely on demand-side factors under the oil industry’s control as a basis for setting annual volumes.
What Pruitt calls “blue-sky thinking” is, in fact, what Congress designed 10 years ago – an RFS program that will drive investment and innovation by providing stability and incentives for the development of clean alternative fuels.
With the public comment period open until Aug. 31 and a final rule set to be adopted by Nov. 30, 25x’25 has submitted remarks to EPA that shares the biofuel industry’s belief that in lowering RVOs of cellulosic biofuels in 2018 and maintaining level biomass-based diesel volumes in 2019, the agency “has ignored the intent of the RFS – establishing a market for a prolonged period of time – and has focused solely on current actual production volumes in setting the yearly RVO targets.”
In calling on Pruitt and EPA to increase the target for cellulosic biofuels – a biofuel that is made from woody biomass, purpose-grown grasses, wastes and byproducts and can generate at least 60 percent fewer greenhouse gas emissions than gasoline – from a mere 283 million gallons, 25x’25 says the slow development of this advanced biofuel over the past decade has been due, in part, to a lack of policy incentives caused by low blending targets set under the RFS in years past.
“By not taking into account the evolving and growing state of the cellulosic biofuels industry and by applying an overly-restrictive standard for cellulosic ethanol, EPA is sending a signal that it does not appreciate nor acknowledge the significant potential of this sector,” 25x’25 says.
The alliance also question’s EPA logic in setting a target for biomass-based diesel – 2.1 billion gallons – that remains unchanged from the previous year, despite the fact that the biodiesel industry is operating at only about 60 percent of capacity, and is seeking an RVO of at least 2.9 billion gallons. Biomass-based diesel, like cellulosic ethanol, is also an EPA-designated “advanced” biofuel due to the big reductions in carbon emissions it offers when compared to petroleum-based diesel.
The appellate court ruling puts the burden on EPA to accommodate for the past shortfall in total renewable fuel volumes resulting from the agency’s flawed interpretation of “insufficient domestic supply.”
25x’25 requests that the EPA establish and implement a plan as part of the 2018 Final Rule that will restore the shortfalls in total renewable fuel volumes experienced in 2014-2016. 25x’25 is confident such a plan will help to spur investment in infrastructure needed to distribute higher-biofuel blends, and that it will bring underutilized production capacity back online, while also lifting feedstock prices that will benefit rural America.
The 25x’25 Alliance calls on stakeholders to urge EPA and the Trump administration to revise their proposal and increase volume targets for cellulosic, advanced and total biofuels in order to drive the investment and growth needed to maintain the expansion of cellulosic and advanced biofuel production. Failure to do so will discourage the prospects for billions of dollars of future investments in second- and third-generation production technologies – investments that will go to rural areas where jobs are crucial.