THE Environmental Protection Agency finalized the 2013 percentage standards for four fuel categories within the renewable fuel standard (RFS) established by Congress in 2007.
The final 2013 overall volumes and standards require 16.55 billion gal. of renewable fuels to be blended into the U.S. fuel supply (a 9.74% blend).
EPA did not reduce the overall required amount that petroleum refiners and importers must blend but now will only require 6 million gal. of cellulosic ethanol to be blended into the fuel supply this year, down from the 14 million gal. it had proposed in February.
A January 2013 ruling by the U.S. Court of Appeals required the agency to re-evaluate projections for cellulosic biofuels to reflect market conditions. EPA said the final 2013 standard for cellulosic biofuels announced Aug. 6 was developed in a manner consistent with the approach outlined in that ruling.
The EPA rule completed last Tuesday also finalizes an earlier proposal requiring that 2.75 billion gal. of advanced biofuels (1.62%) be blended into the U.S. fuel supply this year. Under the RFS, advanced biofuels must reduce life-cycle greenhouse gas emissions by at least 50% compared with petroleum fuels.
Biodiesel is the first and only advanced biofuel under the program to reach commercial-scale production nationwide and the first to break 1 billion gal. of annual volume.
With nearly 1.1 billion gal. of output last year, the National Biodiesel Board said the biodiesel industry produced enough fuel to fulfill 87% of the total advanced biofuel requirement in 2012 and "is on pace to fill a majority of the requirement again this year."
However, ethanol imports from Brazil have also been used to help meet the advanced biofuel requirement of the RFS. So, while the U.S. is exporting its ethanol to Brazil, Brazil is also exporting its ethanol to the U.S., which flies in the face of trying to increase domestic energy independence.
During this rule-making, EPA received comments from a number of stakeholders concerning the "E10 blend wall" of 10% ethanol in the fuel supply. Projected to occur in 2014, the E10 blend wall refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10. Most gasoline sold in the U.S. today is E10.
EPA, in its statement, recognized that the 2014 levels are nearing the blend wall.
In the rule issued Aug. 6, EPA announced that it will "propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal." What those flexibilities entail remains to be seen, and the industry will be watching closely.
Ahead of the announcement, Sen. David Vitter (R., La.), top Republican on the Senate Environment & Public Works Committee, as well as Sens. Mark Pryor (D., Ark.) and James Inhofe (R., Okla.), sent a letter to President Barack Obama asking the Administration to waive the 2014 volumes for biofuels while Congress examines long-term policy solutions for the RFS.
"The quicker-than-anticipated onset of the blend wall — coupled with stagnant demand for E85 and ongoing legal, market and technical challenges with E15 — now threatens to raise fuel prices and damage the engines of our constituents," the letter states. "In recent testimony before Congress, the Environmental Protection Agency noted, with respect to 2014, that the challenge becomes much greater as the statutory volumes increase substantially and asked the public for comments and advice on whether to waive the requirements."
Although livestock and oil industry groups have repeatedly called for a full repeal of the RFS, four members of the House Energy Committee are looking to find middle ground on the issue. Five white papers have been released over the past year as the committee begins to evaluate the effectiveness of the program. The Senate is also taking a closer look at the RFS with a hearing on the matter planned for this fall.
As advanced and cellulosic biofuel output continues to fall short of the RFS production levels, the Domestic Fuel Solutions Group is advocating expanding the feedstocks allowed under the definition of conventional biofuels to include natural gas and taking a more "all of the above" energy approach.
In a letter to the House Energy Committee, Corky DeMarco, executive director of the West Virginia Oil & Natural Gas Assn., explained that natural gas-based ethanol can be manufactured for roughly $1/gal. less than corn-based ethanol.
"I believe the RFS has improved our energy security by weaning us off of foreign oil, but its limitations and shortsightedness have put a drag on this positive development and the growth of the domestic alternative fuel industry in general," DeMarco said.