EPA is proposing to maintain the biomass-based diesel standard for 2014 and 2015 at the 2013 level of 1.28 billion gallons. Higher volumes of biomass-based diesel can be used to help meet the volume requirement for advanced biofuel in the absence of needed volumes of cellulosic biofuels.

Four separate percentage standards are required under the RFS program: cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuels. Cellulosic biofuel and biomass-based diesel categories are nested within advanced biofuel, which is itself nested within the total renewable fuel category.

The national volumes of renewable fuel to be used under the RFS program each year (absent an adjustment or waiver by EPA) are specified in CAA section 211(o)(2). However, under the RFS program, EPA is required to determine and publish annual percentage standards for each compliance year by November 30 of the previous year.

There are two different authorities in the statute that permit EPA to reduce volumes of advanced biofuel and total renewable fuel below the volumes specified in the statute. When EPA lowers the applicable volume of cellulosic biofuel below the volume specified in the CAA, EPA also has the authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or a lesser amount.

The Agency can also reduce the applicable volumes of renewable fuel under the general waiver authority provided by the CAA under certain conditions. This proposal uses a combination of these two authorities to reduce volumes of both advanced biofuel and total renewable fuel to address two important constraints:

• Limitations in the volume of ethanol that can be consumed in gasoline given practical constraints on the supply of higher ethanol blends to the vehicles that can use them and other limits on ethanol blend levels in gasoline—i.e., the ethanol “blend wall”.

• Limitations in the ability of the industry to produce sufficient volumes of qualifying renewable fuel.

EPA identified five companies it expects to produce cellulosic biofuel in 2014, with additional companies that may be in a position to produce cellulosic biofuel if additional pathways are approved by EPA:

Nearly all gasoline sold in the US is now E10 (10% ethanol). Production of renewable fuels has been growing rapidly in recent years, while at the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the Renewable Fuel Standard in 2007. As a result, EPA said, we are now at the “E10 blend wall,” the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.

In 2010, EPA approved E15 for use in vehicles newer than model year 2001 and developed labeling rules to enable retailers to market E15. In addition, since 2011, USDA has made funding available through the Rural Energy for America Program to support deployment of “flex-fuel” pumps that can dispense a range of ethanol blends.

The 2014 RFS proposal also seeks input on what additional actions could be taken by government and industry to help overcome current market challenges, and to minimize the need for adjustments in the statutory renewable fuel volume requirements in the future.

EPA notes that its proposal clearly indicates that growth in capacity for ethanol consumption would continuously be reflected in the standards set beyond 2014.

In a separate action, EPA is also seeking comment on petitions for a waiver of the renewable fuel standards that would apply in 2014. EPA expects that a determination on the substance of the petitions will be issued at the same time that EPA issues a final rule establishing the 2014 RFS.

Initial reactions. In response to the proposal, the Biotechnology Industry Organization (BIO) said that it and its advanced biofuel members will “make every effort to correct a flawed proposed rule.”

The proposed rule released today turns the logic of the RFS on its head and could significantly chill investments in advanced biofuels projects. We will focus over the immediate comment period on convincing the administration to right the course on this policy.

Over the past five years, the RFS has successfully opened the U.S. transportation fuel market to renewable fuels, encouraging significant domestic investments and the rapid commercialization of advanced biofuels. The research and development catalyzed by this program has given birth to biotech innovations for renewable chemicals and other biobased products. The current proposal would have the effect of closing the market to renewable fuels and undermining the investment community’s confidence in the program, starving advanced biofuel and biotech companies of the capital they need to successfully commercialize new and innovative technologies.

…Advanced biofuel companies have put more than $5 billion worth of private investment into this new technology so far, creating more than 7,600 permanent jobs. That investment has been put at risk by this proposal. It does not seem prudent for the United States to discourage this type of major investment in innovation and reward incumbent refiners that have been recalcitrant participants in the RFS program. We cannot strangle the advanced biofuels baby in the cradle.

—Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations.

Leticia Phillips, the Brazilian Sugarcane Industry Association’s (known by the acronym “UNICA”) North American Representative issued the following statement:

Slashing the 2014 target for advanced biofuels would be a huge step backwards from the Obama administration’s goal of decreasing greenhouse gases and improving energy security. Advanced biofuels, including Brazilian sugarcane ethanol, reduce carbon dioxide emissions by at least 50 percent compared to gasoline, and EPA has traditionally promoted these clean renewable fuels. That is why we are surprised and disappointed that EPA’s proposal minimizes the 650-800 million gallons of sugarcane ethanol Brazil is poised to supply to the United States in 2014.

Since the beginning of the RFS program, EPA has been a strong supporter of the modest but important role Brazilian sugarcane ethanol plays supplying Americans with sustainable fuel, certifying that it cuts carbon dioxide emissions by more than 60 percent and designating it an advanced renewable fuel. This federal proposal also dramatically impacts states like California, which considers Brazilian sugarcane ethanol the low-carbon fuel with the best performance today and the only fuel available at commercial scale to contribute to its low-carbon fuel standard.

American Petroleum Institute President and CEO Jack Gerard said EPA’s reduced 2014 ethanol mandate was a step in the right direction, but added that Congress must ultimately repeal the entire program.

Resources

• Proposed rule