Unintended Consequences from EPA Proposal Could Limit U.S. Access to Advanced Biofuels

The U.S. Environmental Protection Agency (EPA) has accepted comments on a proposal that would allow, among other things, biofuel producers to partially process renewable feedstocks at one facility and further process them into renewable fuels at another facility. EPA intends this broad rule to increase the economics and efficiency of producing biofuels, particularly advanced and cellulosic biofuels, a goal Brazil’s sugarcane biofuel producers broadly support.

However, we are seriously concerned the proposal as currently written would upend nearly a decade of established practice and effectively prevent Americans from importing and using Brazilian sugarcane ethanol, one of the cleanest and most available advanced biofuels on the market, by changing how “biointermediates” are treated.

Since the beginning of the Renewable Fuel Standards (RFS) program, sugarcane ethanol has played a modest but important role supplying Americans with nearly 2 billion gallons of advanced biofuel. This important designation under the RFS indicates that a fuel reduces greenhouse gas emissions by at least 50 percent compared to fossil fuels.

The troubling concern with EPA’s proposal is characterizing undenatured imported ethanol, like sugarcane ethanol from Brazil, as a biointermediate product. Denaturing is the addition of chemicals to ethanol to ensure the alcohol is both not suitable for human consumption and clearly “marked” for use in automobile fuel tanks in the United States. For many technical and regulatory reasons, nearly all sugarcane ethanol leaves Brazil in an undenatured state and the denaturing chemicals are then added in the United States to comply with regulations set by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department. To underscore, this approach has worked well for the past decade without any reported cases of fraud that have hampered other parts of the RFS program.

Categorizing undenatured imported ethanol as a biointermediate will impose significant and costly new obligations that may be infeasible and unfair for Brazilian sugarcane producers to meet. The unintended consequence may be blocking American access to this important source of advanced biofuel, and would treat foreign products differently from domestic biofuel supplies.

We also believe EPA’s definition of biointermediate does not fit undenatured sugarcane ethanol. The Brazilian ethanol producing process does not involve “sequential” production of pre-processing feedstock at one facility and transportation to another nearby facility for the ultimate conversion to renewable fuel. Rather, the product exported to the United States is a finished product, not a feedstock. It is a liquid fuel that can be used, without further processing, for transportation.

Formal comments from Brazil’s sugarcane ethanol producers urge EPA to clarify that the biointermediate definition does not include undenatured sugarcane ethanol fuel that is subsequently imported into the United States and denatured.  This exception will not alter the status quo for foreign ethanol producers, but would allow EPA to provide the biointermediate provisions to the few US-based producers to which they should logically apply.