Reaching 2022 RFS goals could be difficult, House subcommittee told

Substantially increased use of biofuels by 2022 under more ambitious goals set by the 2007 Energy Independence and Security Act won’t be achieved with the low percentages of ethanol and biofuel that account for nearly all of their current use, a US Energy Information Administration official told a US House Energy and Commerce subcommittee.

Potential alternative pathways include increased use of ethanol blends above 10% by volume; more use of biodiesel blends above 5% by volume; the advent of drop-in biofuels such as renewable gasoline, diesel, or jet fuel that can be used as direct replacements for their petroleum counterparts; and development and use of new renewable fuel components, such as bio-butanol, that might be more easily blended in increased volumes, EIA Deputy Administrator Howard K. Gruenspecht said.

“To date, none of these options has achieved a significant market role,” Gruenspecht told the committee’s Energy and Power Subcommittee on June 22. “The premise that advanced biofuels, particularly liquid cellulosic biofuels, would be available in significant quantities at reasonable costs within 5-10 years following adoption of the 2007 RFS targets has not been borne out. Ethanol faces demand, distribution system, and regulatory challenges that make it difficult to increase its use as a motor fuel regardless of its source.”

A top US Environmental Protection Agency official who testified alongside him said EPA used its waiver authority to establish quotas below statutory targets for total, advanced, and cellulosic biofuels “but only to the extent necessary and appropriate in light of supply limitations, and to levels that will drive ambitious, achievable growth.”

Janet McCabe, EPA acting assistant administrator for air and radiation, told the subcommittee that quotas the agency proposed on May 16 “would require significant growth in renewable fuel production and use over historical levels, directionally consistent with congressional intent.”

When Bobby Rush (D-Ill.), the subcommittee’s ranking minority member, asked her if EPA has what it needs to reach the 2022 goals, she replied, “Congress had a long vision for this program, and it takes a long time to implement these changes. We’re confident we have the tools to do this.”

Implementation problems

But a second panel of witnesses disagreed over whether lower motor fuel product demand and significantly higher US crude oil production changed conditions to a point that EPA’s implementation of rules has created serious problems.

Biofuel advocates charged that its use of waivers undercut the program’s effectiveness and created uncertainty. Refiners, product retailers, and a leading national wildlife group cited unintended consequences ranging from being held accountable for situations beyond their control to losing millions of acres of wildlife habitat to more corn production for ethanol.

“AFPM members are not antibiofuel,” American Fuel & Petrochemical Managers Pres. Chet Thompson said. “They are, however, anti-mandates, oppose limiting consumer choice, and oppose propping up some interests at the expense of others. AFPM believes that consumers and the free market should decide which fuels are used in the marketplace—not the federal government.” The Clean Air Act clearly provides EPA with authority to issue waivers, which biofuel groups legally challenged as inappropriate, he added.

Renewable Fuels Association Pres. Bob Dineen responded that the 2007 RFS is accomplishing its goals. “While some stakeholders may not like the policy objectives this program was designed to address, the fact is energy diversity and security, rural economic development, reducing carbon, and spurring investment in new technologies remain critical policy priorities today,” he said in his written testimony.

R. Timothy Columbus, a partner at Steptoe & Johnson LLP who testified on behalf of the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America, said that his clients believe EPA struck an appropriate balance in its latest ruling.

“It is important to keep in mind, however, that SIGMA’s and NACS’s support for the RFS is based upon an expectation that the program will be administered in a manner that reflects the realities of the market as it exists today, rather than how Congress projected the market would look in 2005 and 2007,” he went on. Constraints on retailers selling more renewable fuels include insufficient demand and retailers being held liable for recordkeeping and misfueling, Columbus said.

Misfueling may occur

“Research has shown, and EPA has agreed, that use of E15 in small nonroad engines can have harmful and costly consequences on small engines and outdoor power equipment. Research on warning label effectiveness suggests that an E-15 warning label will do very little to mitigate misfueling,” Briggs & Stratton Corp. Chief Executive Todd J. Teske said.

Behavioral studies of customers at the gas pump conclude that consumers overwhelmingly favor the lowest priced option, regardless of the consequences, Teske said. “Misfueling due to lack of education to consumers regarding the proper use of E15 will be significant. The use of Biofuels or ‘drop-in fuels’ has been tested and could prevent misfueling,” Teske said in written testimony.

National Wildlife Federation Pres. Collin O’Mara noted that Congress expanded the RFS in 2007 to reduce dependence on fossil fuels, accelerate development of sustainable biofuels, and reduce greenhouse gas emissions.

“Unfortunately, 9 years later, there have been severe unintended consequences—large-scale loss of wildlife habitat (especially native grasslands) and degradation of water quality—and wildlife has borne the brunt of these impacts,” O’Mara said. “These unintended consequences threaten some of our most beloved and rare wildlife species, including sage grouse, meadowlarks, longspurs, swift fox, and the monarch butterfly, as well as a range of fish and other aquatic life.”

But Brooke Coleman, Advanced Biofuels Business Council Executive Director, said the biofuels industry is being unfairly blamed for changing land uses that actually are part of a bigger agricultural push onto previously unused land in response to growing demand. “From an RFS perspective, the production capacity of the broader advanced biofuels industry (i.e. all types of fuel qualifying as advanced biofuel under the RFS) exceeded the 2013 statutory target of 2.75 billion gal established by Congress via RFS2,” he said.

“While there are areas of the RFS that could be improved, it has facilitated the delivery of more biofuels to the American public. Last year alone, American consumers used nearly 2.1 billion gal of biodiesel and renewable diesel out of an overall diesel market of about 60 billion gal,” asserted National Biodiesel Board Executive Vice-Pres. Anne Steckel. EPA’s proposal sets a 2.1 billion gal biomass-based diesel quota for 2018, a level the industry looks on pace to exceed in 2016, she said.

In a separate statement before the hearing, American Petroleum Institute Downstream Director Frank Macchiarola said federal lawmakers need to fix the RFS, which he described as outdated and broken. “We need Congress to repeal or significantly reform the RFS,” Macchiarola said. “Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act.”

Contact Nick Snow at nicks@pennwell.com.

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