Stakeholders Must Be Ready to Challenge Attacks on the RFS

Renewable energy stakeholders this week received dramatic reminders that U.S. policy that drives domestically produced, sustainable transportation fuels – a policy that helps create jobs and reduce U.S. dependence on foreign oil – is under attack.

A federal court decision last week that set aside EPA’s volumetric requirement for cellulosic biofuel under the federal Renewable Fuel Standard (RFS) was excessively characterized this week by the oil industry and others – including many in the mainstream media – as a virtual death knell for the RFS.

That was followed this week by the release of a report commissioned by the oil industry’s principal trade group that purportedly shows gasoline blended with 15 percent ethanol (E15) can cause engine damage in vehicles made in 2001 and later.

It’s important to know that the decision from the U.S. Court of Appeals for the District of Columbia actually upheld the advanced biofuel requirements set by EPA under the RFS, including those for biodiesel, ethanol made from sugar and other biofuels with emissions at least 50 percent lower than gasoline.

Specifically, the three-judge panel found that the data supporting EPA’s mandate that refineries blend 8.7 million gallons of cellulosic ethanol in the nation’s transportation fuel supply in 2012 was not sufficient. Interestingly, in setting the 2012 nominal cellulosic requirement, EPA recognized that the industry is just short of commercial production and used its discretion authorized under the RFS’ enabling legislation to actually lower the 2012 requirement from 500 million gallons to the nominal 8.7 million gallons.

Does the court decision mean that EPA cannot impose a cellulosic requirement? No.

As analyzed by University of Illinois energy law professor Jody Endres and ag economics professor Bryan Endres, EPA in 2011 reached its 8.7-million-gallon projection for 2012 by considering the DOE’s Energy Information Administration projection that 6.9 million gallons of cellulosic ethanol would be produced in 2012, as well as the general progress made by the cellulosic biofuel industry, the EPA’s own assessment of the industry’s progress, and public comments submitted in response to the draft version of the rule.

The court accepted virtually all of EPA’s technical approach to projecting industry capacity. But the justices ruled that the EPA’s “tilt” towards “promoting growth” in the cellulosic biofuel industry, even if boosting the industry is the legislative intent of the RFS, exceeded the agency’s power, the analysts said. The court set aside the cellulosic portion of EPA’s 2012 RFS rule, but ONLY the cellulosic provisions.

The cellulosic biofuels industry currently has facilities and projects under development in more than 20 U.S. states, representing billions of dollars of private investment. The costs for enzymes needed for conversion of cellulosic material into biofuels have fallen 80 percent in the last decade. With the industry on the verge of wide commercial production of cellulosic biofuels for $2 per gallon or less, EPA will soon have more hard numbers to set the kind of cellulosic volume requirements envisioned when the RFS was updated by Congress in 2007.

Meanwhile the report released this week is actually the second issued by the American Petroleum Institute that finds fault with the use of E15. A similar study issued last year was found by EPA to be “deeply flawed,” and there are solid reasons to believe that this week’s report has similar shortcomings. After years of DOE testing on vehicles covering hundreds of thousands of test miles, EPA granted a waiver last year allowing for the use of E15 in 2001 and newer automobiles and light duty vehicles. Two federal court proceedings have dismissed legal challenge to E15, including one last week.

Still, the oil industry, intent on preserving its market share of the nation’s transportation fuels, persists in fighting the higher ethanol blends – and, in fact, the entire RFS – through ad campaigns, Capitol Hill lobbying and legal challenges. The testing trotted out this week used questionable protocols and aggressive fuel mixes to obtain results that similar, longer-term testing by the automotive industry itself did not show. Nonetheless, API touted the questionable results to gain a high, but soon-to-fade profile in the 24-hour news cycle.

Renewable energy advocates must stay attuned and ready to challenge questionable research and misleading assertions that serve to attack the Renewable Fuel Standard. The 25x’25 Alliance urges policy makers to sustain and strengthen the RFS, which is federal policy critical to the nation’s economic recovery and its energy and national security.

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