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EPA moves the goalposts on RFS

Hydrocarbon Engineering,

The Institute for Energy Research (IER) has released analysis of the decision by the US Environmental Protection Agency (EPA) to change the definition of what constitutes cellulosic biofuels. The new definition allows an energy product that is 75% cellulosic to count as if it is 100% cellulosic.

The expanded definition

The EPA has expanded the definition of cellulosic and advanced biofuels to include liquefied and compressed natural gas produced from biogas and landfills. According to the IER, the EPA is essentially inflating cellulosic fuel production so the numbers are more in line with their prediction of high cellulosic production.

EPA is recategorising an existing type of fuel to be cellulosic biofuel. From the IER’s perspective, what the EPA is really doing is lowering its standards to meet its outrageous mandates and to comply with a law that no longer makes sense.

In 2012, a federal court ruled that the EPA could not require refiners to blend non-commercially available biofuels into gasoline. Mandating more cellulosic biofuels than are commercially available forces refiners to buy millions of dollars of compliance credits (called renewable identification numbers, RINs) to pay for not using the cellulosic biofuels that they cannot buy.

Thus, the IER holds, the EPA is punishing refiners for the failure of producers to make enough cellulosic biofuel to meet EPA’s mandate. Despite the court’s ruling, for 2014, EPA is requiring refiners to blend 17 million gal. of cellulosic biofuel into the fuel supply, considerably higher than last year’s requirement of 810 000 gal. In order to meet the substantially higher requirement, EPA needed to make a definition change.

Cellulosic biofuel production in July, before EPA’s rule change, was just 4156 gal. for a seven month total of 62 187 gal. (just 4% of the proposed 2014 requirement. After the EPA announced its rule change, production in August totalled 3 492 106 gal., with all of that production coming from newly qualified natural gas biofuels. Thus, due to the definition change, for the first eight months of 2014, refiners have blended 3 554 293 ‘cellulosic’ gallons into the fuel supply (approximately 21% of EPA’s proposed requirement for 2014.

In order to fully meet the proposed 2014 requirement, EPA must be banking on the continued monthly production of liquefied and compressed natural gas from biogas and landfills at around the August level, the IER holds.

However, the EPA has not stopped there with its definition changes. In the final rule, EPA is also allowing renewable electricity made from certain biomass sources to qualify under the renewable fuel standard if that electricity is used to power electric vehicles.

EPA’s rationale is as follows: The statutory definition of cellulosic biofuel includes ‘renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass and that has lifecycle greenhouse gas emissions, as determined by the Administration, that are at least 60% less than the baseline lifecycle greenhouse gas emissions’. Although the renewable fuel standard enacted in 2007 has so far been used to boost ethanol and advanced biofuels sectors, because the standard applies broadly to biomass derived transportation fuel, EPA has determined that renewable electricity made out of biogas from landfills, municipal wastewater treatment and solid waste digesters, and agricultural digesters meets the 60% greenhouse gas reduction threshold need to qualify as a cellulosic biofuel.

IER conclusions

The federal biofuels program has become an absolute disaster because it is based upon a law that doesn’t reflect reality. Lowering standards and changing definitions will not alter the fact that the law on the books is nonsensical; it just leads to nonsensical behaviour on behalf of those trying to implement the broken law.

Adapted from IER analysis by Emma McAleavey.

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