THE renewable fuel standard (RFS) came under scrutiny again, this time in a Senate Environment & Public Works Committee hearing, which gave senators an opportunity to weigh in and question top government officials as well as to hear from parties on both sides of the issue.
Christopher Grundler, director of the Office of Transportation & Air Quality at the Environmental Protection Agency, sat before the committee and defended the agency's actions in reducing the RFS volume requirements for 2014.
To the oil industry, EPA's move didn't go far enough, whereas the ethanol industry and a farmer who testified said the reduction moves away from the original intent of the law.
Grundler noted that what's being lost in the current debate is that the methodology EPA is trying for would provide a more "forward-looking path to address both realistic constraints that current market conditions impose as well as providing long-term growth over time."
This year, the RFS volume levels were released nine months after the statutory deadline, and when asked if those would be finalized in a more timely manner in the future, Grundler noted that biomass-based diesel levels have been proposed for 2014 and 2015, making the 2015 levels on schedule. He is "hopeful" that all of the 2014 standards can be finalized by next spring.
"The whole intention with this proposal is to put the RFS on a more manageable trajectory that provides for both growth over time of these fuels as well as recognizing the pace at which the market can respond to use them," Grundler said in questioning. "If we get it right, then perhaps the temperature will drop and people can unite behind our approach we're laying out."
Sen. Sheldon Whitehouse (D., R.I.) pointedly asked Grundler the reasoning behind EPA lowering the biomass-based diesel requirements below actual 2013 production levels. Grundler responded that the law doesn't require EPA to increase biomass-based diesel levels from year to year.
He said he views the proposed 1.28 billion gal. level as a "floor," not a target. He said the industry overachieved and produced an anticipated 1.7 billion gal. last year due to market conditions and tax policy ($1/gal. tax credit for biodiesel blending). Next year, the tax credit is not expected to be extended, which creates a number of uncertainties regarding what market conditions may be.
Biodiesel can qualify as advanced biofuel and biomass-based diesel, but with the lowering of the cellulosic RFS level, EPA also chose to lower the required standard for advanced biofuels.
"We made a policy choice that biomass diesel can compete within that advanced biofuels standard for that additional volume, just as they did very effectively this year," he noted.
Brooke Coleman, executive director of the Advanced Ethanol Council, noted that any assessment of the domestic renewable fuel industry begins and ends with the federal RFS.
"It is probably also safe to say that the RFS is a disruptive policy that has caught the attention of incumbent industries, the media and a wide range of public advocacy groups," Coleman said in his opening testimony. "The underlying question seems to be: Is the RFS garnering this much attention because it's not working or because it's working exactly as designed?"
Although much of the work to change the RFS has, up to this point, predominantly occurred on the House side, the Senate is gearing up for its own efforts to make changes to the standards passed in 2007.
Senate Environment & Public Works Committee chair Barbara Boxer (D., Cal.) and minority leader Sen. David Vitter (R., La.) have differing opinions on the current RFS. At the end of the hearing, Boxer reiterated that she won't allow legislators to "reverse course" on the advancements made under the RFS.
Vitter, on the other hand, cited manufacturers' concerns with higher ethanol blends such as E15 (15% ethanol) and also said he's working with colleagues on establishing a bill to make the RFS more "workable and take out the threat of hitting the blend wall."
He said it's a question of whether to let EPA continue to have to deal with waivers and litigation or instead offer a more "focused legislative fix."
Poultry and livestock groups threw their support behind a new bipartisan bill sponsored by Sens. Diane Feinstein (D., Cal.), Tom Coburn (R., Okla.) and Kay Hagan (D., N.C.) called the Corn Ethanol Mandate Elimination Act.
The bill would maintain the cellulosic and advanced biofuel mandates to provide an incentive for development of next-generation biofuels that do not rely on food-based feedstocks.
During the hearing, Environmental Working Group vice president of government affairs Scott Faber said removing corn-based ethanol from the limited pool that could be used in the gasoline supply would send a "powerful signal to the investment community" for the second generation of biofuels.
"It's time to face the simple facts: The way we're managing the RFS — delays of renewable volume obligations and likelihood of litigation — has created an enormous amount of uncertainty. It's time for Congress to step in and provide some new direction," Faber said.