Industry has mixed feelings on RFS volume standards for 2013

By Holly Jessen | January 31, 2013

Groups representing the U.S. ethanol and advanced biofuel industries responded swiftly to the 2013 renewable fuel standard (RFS) volumetric requirements released Jan. 31, pointing out both positives and negatives, while pledging to submit comments on the proposal.

Growth Energy said it was long overdue. “We are encouraged that it is a proposed rule with the opportunity for public comment,” said Tom Buis CEO of Growth Energy. “There are a number of issues that should be considered, which could have serious impacts on the U.S. production of biofuels.”

Renewable Fuels Association President and CEO Bob Dinneen called the 2013 volume requirements a catalyst that will compel oil companies to move past the blend wall necessitating the use of high-level ethanol blends, such as E15 and E85. “Injecting larger volumes of biofuels into the U.S. fuel supply and spurring a more rapid transition to domestically produced renewables is exactly what the RFS was intended to do,” he said. “The program is working as envisioned by Congress.”

EPA said its proposal to waive the cellulosic biofuel requirement from one billion gallons to 14 million gallons was consistent with a January court ruling that vacated the 2012 cellulosic biofuel volume requirements.  The same court ruling also rejected arguments aiming at repealing the RFS.

Dinneen pointed to the fact that the 2013 cellulosic biofuel requirements were based on current volumes and “in no way exaggerates the volumes that will be available.” He added that, with cellulosic ethanol in production today with other facilities under construction, 14 million gallons could end up being a conservative number.

Brooke Coleman, executive director of AEC said the EPA’s due diligence in getting to the right volume number for cellulosic biofuels was appreciated. “The cellulosic biofuels industry is just breaking through at commercial scale with the most innovative and cleanest liquid fuel in the world,” he said. “EPA worked hard to ensure that the cellulosic biofuels volume standard for 2013 would be tied directly to the commercial production of cellulosic biofuels expected to come online this year. While weaning the United States off of its addiction to foreign oil is not easy, the volume standards proposed today will continue to provide advanced biofuel investors and innovators with a predictable and durable path forward in that effort.”

On the other hand, in its press release, the American Petroleum Institute criticized the EPA for ignoring the court decision, called cellulosic biofuel nonexistent and called for repealing the RFS. “For four years running, biofuel producers have promised high cellulosic ethanol production,” said Bob Greco, API downstream group director.  “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.”  

The concern with the proposed RFS volume requirements, Dinneen said, was that it could spur more imports of Brazilian sugarcane ethanol. While the RFA hopes the RFS requirements could be met with cheaper, domestic advanced biofuels it pointed to the fact that imports made up 92 percent of the 2012 advanced biofuel standard. “EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel RIN that is currently trading at 48 cents,” he said, adding that recent peer-reviewed reports suggest sugarcane ethanol actually offers greenhouse gas reductions between only 40 to 62 percent. “High-priced sugar ethanol imports began to cannibalize the U.S. market in 2012 and today’s decision potentially adds fuel to the fire.”

The American Coalition for Ethanol had the same concern. “With ethanol supply currently exceeding ethanol demand, we are concerned about the way the advanced biofuel pool serves as a magnet for imports of Brazilian ethanol and the impact that has on our members,” said Brian Jennings, executive vice president of ACE. “We appreciate EPA providing us the opportunity to elaborate on this concern and look forward to continuing the dialogue on how to ensure Brazilian imports don't displace domestic ethanol.” He added that the organization believes key breakthroughs in the area of U.S. sorghum advanced biofuel and cellulosic biofuel will happen in the next year.

BIO also welcomed the announcement, calling 2013 a pivotal year for cellulosic and advanced biofuels. The RFS works and the progress of these industries is proof. The group also said it would work with EPA in finalizing the volume requirements. “By contrast, we fully expect the trade organizations for oil companies and their allies to continue to use every regulatory and legalistic ploy at their disposal to delay finalization of these rules, block the growth of the renewable fuel industry and attempt to preserve their control of the fuel market,” the group said in a press release.

Fuels America, a coalition of groups working to protect the RFS, took the opportunity to point out that the RFS is working. “Cellulosic biofuels are being produced now and millions of gallons of cellulosic fuel are expected to come online in the next two years,” the group said. “With the release of EPA’s 2013 RFS volumes, cellulosic innovators and producers around the country are continuing to work towards these targets.”