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Proposal Would Require 16.55 Billion Gallons Of Renewable Fuels in 2013 Gasoline Supply

Friday, February 1, 2013

The Environmental Protection Agency is proposing to require 16.55 billion gallons of renewable fuels, including 14 million gallons of cellulosic ethanol, be blended into the nation's gasoline supply in 2013.

EPA in a proposed rule released Jan. 31 indicated it intends to increase the cellulosic ethanol requirement by more than 60 percent from 2012 levels despite a recent federal appeals court decision criticizing the agency for consistently overestimating cellulosic biofuel production.

The 2013 proposal would increase the renewable fuel standard requirements by 1.35 billion gallons over 2012 levels. Renewable fuels will account for 9.63 percent of the nation's fuel supply in 2013, the agency said. The proposed standard includes a requirement that petroleum refiners blend 2.75 billion gallons of advanced biofuels, which includes cellulosic ethanol, into the gasoline supply.

Additionally, EPA issued a separate proposed rule that would establish a voluntary quality assurance program for renewable identification numbers (RINs) (see related story).

Cellulosic Requirement Increased

The 14-million-gallon cellulosic ethanol mandate for 2013 is up from 8.65 million gallons in 2012. Cellulosic ethanol production has lagged behind other renewable fuels with only 20,069 gallons of the fuel produced in 2012, according to EPA.

The renewable fuel standard numbers are largely dictated by the Energy Independence and Security Act (Pub. L. No. 110-140), but EPA has the discretion to reduce the cellulosic ethanol component of the standard. The act requires 1 billion gallons of cellulosic ethanol in 2013.

The U.S. Court of Appeals for the District of Columbia Circuit Jan. 25 vacated the 2012 requirement after it was challenged by the petroleum industry. The court said EPA must set the annual blending standard based on projections of actual cellulosic ethanol production rather than setting inflated targets meant to spur investment in the fuel (American Petroleum Institute v. EPA, D.C. Cir., No. 12-1139, 1/25/13; see related story).

EPA Seen Abiding by Decision

Paul Winters, a spokesman for the Biotechnology Industry Organization, which includes cellulosic ethanol producers, told BNA Jan. 31 that EPA is abiding by the court's decision even though it chose to increase the requirement for 2013.

“EPA is actually potentially underestimating, since they are only looking at the facilities that are already complete,” he said. “They are discounting any gallons from facilities scheduled to be complete before year's end. So, they are actually being very conservative compared to the court's ruling.”

The INEOS Bio Indian River BioEnergy Center in Florida, which produces 8 million gallons per year, and the KiOR facility in Mississippi, which produces 11 million gallons per year, are the first commercial-scale cellulosic ethanol producers to be registered as renewable fuel producers with EPA.

“By the time of our final rule the facilities owned by KiOR and INEOS Bio are scheduled to have already begun fuel production, making our 2013 projections more reliable than prior year projections,” EPA said. “We believe the sum of these individual projected available volumes (14 million ethanol-equivalent gallons) is a reasonable representation of expected production. This projection reflects EPA's best estimate of what will actually happen in 2013.”

Cellulosic Requirement 'Beyond Ludicrous'

Despite the progress made by the cellulosic ethanol industry, petroleum refiners were skeptical of EPA's proposal.

“For four years running, biofuel producers have promised high cellulosic ethanol production,” Robert Greco, downstream group director for the American Petroleum Institute, said in a statement. “EPA uses these aspirational claims to set mandates, but the promised production hasn't happened. With today's announcement, EPA has proven yet again that its renewable fuels program is unworkable and must be scrapped.”

Petroleum refiners would have had to purchase $8 million worth of renewable fuel credits from EPA in 2012 because there was no cellulosic ethanol available, the American Petroleum Institute said in its lawsuit challenging the requirement.

The 14 million-gallon requirement for cellulosic ethanol in 2013 is “beyond ludicrous,” Sen. David Vitter (R-La.), ranking Republican on the Senate Environment and Public Works Committee, said in a statement.

“EPA has been getting away with mandating exaggerated fuel standards based on a pie in the sky wish, and even after last week's embarrassing loss, they persevere in ignoring the cold hard facts,” he said.

Advanced Biofuels Requirement Retained

Although EPA reduced the cellulosic ethanol component of the renewable fuel standard, it chose to not reduce the overall advanced biofuels requirement. Cellulosic ethanol is a subset of advanced biofuels. That worried some environmental advocates as well as some renewable fuels producers.

EPA has not waived the overall advanced biofuel requirement in past years when it has reduced the cellulosic ethanol mandate. Instead, the agency has said sugar cane ethanol and biodiesel would be able to cover the difference.

The Renewable Fuels Association said it was concerned that retaining the advanced biofuels requirement would increase imports of more expensive sugarcane ethanol from Brazil. According to the ethanol trade group, imports accounted for 92 percent of the advanced biofuels used to comply with the 2012 standard.

Jonathan Lewis, a staff attorney at the environmental advocacy group Clean Air Task Force, told BNA Jan. 31 that increasing demand for Brazilian sugarcane ethanol could lead to more land being cleared to grow sugarcane.

“Scale is everything when it comes to biofuels and their climate impact,” Lewis said.

Biomass-Based Diesel Requirement Issued

EPA previously issued its biomass-based diesel requirement for 2013, stipulating that 1.28 billion gallons be used. Petroleum groups have filed lawsuits challenging that requirement (American Petroleum Institute v. EPA, D.C. Cir., No. 12-1465, 11/26/12; American Fuel & Petrochemical Manufacturers v. EPA, D.C. Cir., No. 12-1464, 11/21/12; 43 ER 3034, 11/30/12).

EPA will accept comments on its proposed renewable fuel standard volume requirements rule for 2013 for 45 days after it published in the Federal Register. Comment can be made at http://www.regulations.gov and should reference Docket No. EPA-HQ-OAR-2012-0546.

By Andrew Childers  


The proposed rule for setting renewable fuel requirements for 2013 is available at http://www.epa.gov/otaq/fuels/renewablefuels/documents/rfs-2013-standards-nrpm.pdf.

For more information, contact Julia MacAllister in EPA's Office of Transportation and Air Quality at (734) 214-4131 or macallister.julia@epa.gov.