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Ethanol Rep Not Present
Rep. James Lankford (R-OK), who chairs the subcommittee, said there are two ways to “alleviate the pressure on consumers” from the RFS standard. One is to rewrite the EPAct and EISA, and legislation to do so has been introduced on Capitol Hill. Lankford noted that developing a new law is the responsibility of the House Energy and Commerce Committee. The second avenue is to persuade the EPA to make fuller use of its waiver authority to lower the requirement to produce a product that, says Lankford, “consumers can’t use and don’t want.” That is a role that can be played by Lankford’s subcommittee, which oversees how the executive branch is implementing the current law.
The House hearing was described as a “farce” by Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA). “It is flat out wrong that not a single representative from the ethanol industry was invited to speak or present facts on the proven success of the RFS in reducing our dependence on foreign oil, lowering gas prices, improving the environment, or creating jobs and economic opportunities for rural America.”
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The economics of renewable fuels and the RFS are complex. In a 2011 report, researchers with the National Academy of Sciences discussed the potential environmental harm and benefits of biofuels production and the barriers to achieving the RFS consumption mandate. “With all the expertise available to us, our clearest conclusion is that there is very high uncertainty in the impacts we were trying to estimate,” the researchers stated. “The uncertainties include essentially all of the drivers of biofuel production and consumption, and the complex interactions among those drivers: future crude oil prices, feedstock costs and availability, technological advances in conversion efficiencies, land use change, government policy, and more.”
That high level of uncertainty has not deterred many stakeholders from offering definitive solutions for the RFS. Following are some excerpts from the subcommittee hearing.
Unrealistic Cellulosic Standard
“Quite frankly, EPA’s implementation of RFS is galling. The agency has continued to set unrealistic cellulosic standards since 2010, resulting in refineries having to pay the government a fee for a fuel that doesn’t exist. Further, even after the industry successfully sued the government for a return of phantom fuel fees, EPA doubled down on its indefensible actions by setting the 2013 target volume even higher – flouting a U.S. Court of Appeals decision issued just days earlier striking down the 2012 mandate [American Petroleum Institute v. EPA, D.C. Court of Appeals, decided January 25, 2013].”
-Jack Gerard, president and CEO, American Petroleum Institute
RINs
“For 2013, we expect compliance with the RFS standards through the use of RINs generated in 2013 and those generated in 2012 that are available under the regulations for use (carryover RINs) in complying with 2013 standards. In 2014, the situation could be different. There are a number of factors that will play a role in determining how regulated parties will demonstrate compliance with the applicable RFS volumes. First, the advanced biofuel and total renewable fuel requirements rise substantially to 3.75 billion gallons and 18.15 billion gallons, respectively. While non-ethanol biofuels are anticipated to grow to help supply the advanced biofuel standards, an estimated 16 billion gallons or more of ethanol might still be needed to comply with the RFS program in 2014. Second, the number of carryover RINs from 2013 will also be a critical factor in determining how obligated parties show compliance with the 2014 RFS volume requirements.”
-Christopher Grundler, Director, EPA Office of Transportation and Air Quality
Waiver and Price Spike
“As long as volumetric blending mandates and the cost of achieving those levels remain highly uncertain (and costly), short-term waivers do not address what is essentially a long-term systematic constraint in absorbing higher volumes into the gasoline pool. The high costs associated with blending ethanol above 10 percent of the gasoline pool as well as evaluating the technical feasibility of bringing large volumes of advanced biofuels into the transportation sector will take time. EPA can only prevent large increases in gasoline prices by issuing a waiver holding blending at 10 percent and indicating it will likely extend the waiver through 2015.
“It is not ethanol per se that presents a risk of a price spike in gasoline or a major risk to automobile engines, but the federal mandate requiring ever larger volumes of ethanol into the gasoline pool. The current regulatory regime, if not reformed in some substantial manner, will likely spike gasoline prices. The high cost problems associated with the blend wall are exacerbated by the RFS requirement that ever larger volumes of cellulosic biofuels must be used even though only limited supplies exist.”
-Lucian Pugliaresi, President, Energy Policy Research Foundation
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Cellulosic biofuel
“The scale-up of cellulosic biofuels is not happening at the rate anticipated in the original RFS schedule. Even with robust investment and steady growth, cellulosic biofuel production capacity in 2022 will probably be closer to 2 billion gallons than 16 billion gallons. The RFS anticipated this possibility, and requires the EPA to adjust the mandates annually in line with projected capacity, a requirement reaffirmed in the recent court ruling. So in total, the real minimum mandate for 2022 is likely to be closer to 22 billion gallons than 36 billion gallons, and it will be 2030 before we are likely to see a full 36 billion gallon mandate reached.”
-Jeremy Martin, Senior Scientist, Clean Vehicles Program, Union of Concerned Scientists
House testimony on the RFS is at http://oversight.house.gov/hearing/up-against-the-blend-wall-examing-epas-role-in-the-renewable-fuel-standard.
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