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.
The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) today commented on the final 2017 renewable fuel standards from the Environmental Protection Agency (EPA). The association’s statement should be attributed to UNICA’s President, Elizabeth Farina.
The Paris Agreement on Climate Change entered into force in September, starting a coordinated effort by the world’s governments to reduce carbon dioxide emissions and limit climate change impacts. It’s far from the end, though. Entering into force starts the hard work—meeting each nation’s decarbonization targets. Every country’s intended nationally determined contributions (INDCs) will reduce emissions and expand economic opportunities for clean energy. More than any other nation, Brazil’s INDC relies on biofuels to meet these goals.
Brazil’s INDC targets 37 percent lower emissions by 2025 compared to 2005, with further reductions by 2030. This assumes biofuels supply approximately 18 percent of the country’s energy mix by 2030 through greater sugarcane ethanol production, expanded second-generation biofuels and additional biodiesel for transportation.
Biofuels can meet this challenge. Ethanol and bioenergy produced from sugarcane already constitute 15.7 percent of Brazil’s energy mix, replacing more than 40 percent of gasoline and avoiding 600 million tons of carbon dioxide emissions since the beginning of the ethanol program in the 1970s. Just this past harvest, Brazil produced 7 billion gallons of advanced ethanol and 15 million megawatt-hours of bioelectricity from cogeneration.
While Brazil’s INDC and its related biofuel goals are ambitious, experience shows they are also realistic. Ultimate success relies on three fundamental pillars: predictable policy, sustainable production and technological innovation.
First, government policy must be clear and stable. Well-established rules of the road fostered Brazil biofuels with the first wave of ethanol’s growth government driven from the mid-1970s to the 1980s. The second wave of growth, starting in 2003, resulted from the introduction of flex-fuel vehicles. In the past few years, however, regulatory uncertainty has reduced investments and inhibited technological development. The lack of predictable policy has its cost and instead of having 10 to 30 new mills built per year, we see mills shutting their doors.
Brazil should maintain a regulatory framework, incorporating the positive externalities of renewable fuel into prices via consumption mandates or tax differentials favoring biofuel over gasoline.
Second, we must ensure sugarcane production continues to expand sustainably. Brazil’s Agro-Ecological Zoning policy prevents sugarcane expansion in the most sensitive biomes and in native vegetation, while authorizing expansion into 64.7 million hectares of suitable land. That’s about 7.5 percent of Brazil’s territory, compared to the one percent of land currently used for sugarcane production. Sustainability extends to paying sugarcane growers fair prices for their product. Brazil’s current approach is very effective, with the Council of Sugarcane Industry and Growers creating clear rules for cane prices and minimizing potential conflicts.
While there’s no sustainability silver bullet, Brazil’s current policies are a good start and must be maintained. In addition, we should consider innovative models like self-regulatory commitments and third-party certifications.
Third, we must enhance research and development to unlock next-generation biofuels and increase ethanol’s competitiveness. Second-generation ethanol is a reality in Brazil. Raizen is producing ethanol from cane bagasse in Sao Paulo and Granbio is producing ethanol from bagasse and straw in Alagoas. The Center for Sugarcane Technology has demonstrated we can quadruple ethanol’s productivity through innovation in the near future. Optimizing production, advancing genetic enhancements and expanding agronomy to increase feedstocks, on top of industrial re-engineering of our first-generation production to second-generation ethanol, can raise production from 1,850 gallons per hectare to 6,500 gallons per hectare.
From the beginning of Brazil’s ethanol program, technological innovations multiplied ethanol production by 20-fold, doubled cane yields and cut prices in half. We believe current innovations will create similar results in the next few decades, if research and development continue on track.
Reducing power sector emissions is an important start to slowing climate change, but to truly decarbonize, we must tackle transportation emissions. Earlier this year, U.S. transportation emissions passed power sector emissions for the first time since 1979 as new clean energy came online, and this trend will likely play out elsewhere as countries decarbonize. Biofuels are a proven solution to replace fossil-based transportation fuel. Together, America and Brazil have built a global biofuels market, showing how stable policy can create economic growth and environmental benefits.
The Office of Management and Budget has begun reviewing the U.S. Environmental Protection Agency’s (EPA) final Renewable Fuel Standard (RFS) volume targets for 2014-2016, signaling an end to the long and winding road toward regulatory certainty for America’s advanced biofuels market.
The Brazilian Sugarcane Industry Association (UNICA) has supported EPA’s RFS implementation decisions in the past, but formally opposed EPA’s proposal to significantly reduce RFS volume targets for 2014, 2015, and 2016 based on three fundamental issues:
Lower Statutory Volumes Are Unsupported And Unnecessary
Reducing statutory volumes of advanced biofuels and total renewable fuels is unnecessary, in part because Brazil can increase production and export higher volumes of sugarcane ethanol under the right market conditions to help meet EPA goals.
According to the latest sugarcane harvest estimates, Brazil is on track to produce nearly six percent more ethanol this year compared to last – an additional 450,000 gallons. And under the right market conditions, Brazil has the capacity to produce up to 2 billion more gallons of sugarcane ethanol for export to America in future years, according to installed capacity figures from Brazil's National Agency of Petroleum, Natural Gas, and Biofuels (ANP). But sugarcane producers need consistent, long-term policy signals if they are to plan properly and deliver these higher volumes of clean biofuel.
Volume Reductions Outstrip EPA Authority And Undermine RFS Intent
EPA lacks the proper rationale to lower advanced biofuels and total renewable fuels volume targets in the proposed manner and amount, and the RFS statute does not support this action. EPA was never granted complete discretion to reduce advanced biofuels – instead it is only authorized to reduce biofuel volumes when projected volumes are less than minimum applicable standards.
In addition, EPA’s proposed reductions run counter to Congressional intent to increase domestic consumption of low-emission fuel. Congress structured the RFS so advanced biofuels would eventually supplant conventional biofuels in America’s fuel supply, but the proposed rule discourages cleaner fuels while incentivizing less-efficient and more polluting conventional and fossil fuels.
Reducing Clean Fuels Consumption Threatens Climate Goals
Eschewing clean and renewable biofuels in favor of gasoline undermines President Obama’s Climate Action Plan, the recently announced bilateral climate agreement between America and Brazil, and both countries’ INDC pledges for December’s COP21 international climate summit.
Transportation fuel generates 28 percent of U.S. emissions and 17 percent of Brazil’s emissions, but EPA and lifecycle analyses from around the world have found sugarcane ethanol is 90 percent cleaner than conventional gasoline on a full lifecycle basis. Ethanol has consistently been proven the cheapest and most efficient fuel feedstock produced at a commercial scale to replace fossil-based transportation fuels. Every gallon of biofuel creates long-term climate benefits as well as short-term public health benefits, and EPA’s proposal threatens climate action.
Don’t Reverse Course On The Road To Sustainable Transportation
America and Brazil have built a global biofuels market through good policy implementation, creating economic growth and environmental benefits. EPA’s proposed RFS volume reductions threaten that growth and hamstring the promise of advanced biofuels to create sustainable transportation.
UNICA urges EPA to not rewrite the RFS program goals before they can be achieved, but if it continues to assert it has authority and rationale to reduce statutory volumes for biofuels, EPA should do responsibly by:
- Only lowering statutory volumes by an absolute minimum, because ample supply of advanced biofuels exists and can meet increased annual volumes.
- Keeping volume requirement reductions for advanced biofuels and renewable fuels above 20 percent in 2015 and 2016, considering statutory reset previsions.
- Changing Equivalence Values for low-lifecycle emission fuels like sugarcane ethanol to help increase advanced biofuel supply and help obligated parties meet statutory volume requirements.
EPA has the power to spur advanced biofuels by maintaining their statutory volume requirements and encouraging production of low-lifecycle emission fuels. Let’s not reverse course on the road to sustainable transportation by artificially lowering demand.
On Sunday, Brazil’s President Dilma Rousseff formally announced her country’s GHG emission reduction pledge at the United Nations Headquarters in New York. Looking back at some of her country’s achievements in the fight against climate change, Mrs. Rousseff said ambitious actions would still be undertaken.
And they are ambitious indeed! Brazil will reduce its greenhouses gas emissions of 37% by 2025 and 43% by 2030, compared to 2005 levels, Mrs. Rousseff declared. In perspective, that’s even more ambitious than the EU’s pledge of 40% in 2030 compared to 1990 levels!
For a leading developing economy to make such a commitment sends two messages.
The first is that yes, developing countries also need to do their part. As Mrs. Rousseff put it in her speech, COP21 is an opportunity to shape a “common response to the global challenge”, with “common but differentiated responsibilities”.
The second is that world leaders are finally confident that economic growth does not necessarily have to go in pair with dirty energy consumption. Clean energy sources are no longer a dream, or the luxury of rich countries. It’s now a fact: technology is ready; all we need is to use it and encourage its deployment wherever possible.
By 2030, said Mrs. Rousseff, Brazil will get 66% of its electricity from hydropower and 23% from other renewables, such as bioelectricity. It will also raise the share of renewables in its total energy mix to 45% (the role of renewables in Brazil have declined in percentage over the past years), with a 16% share for first and second-generation ethanol. Strong government objectives and steering will give the right signal for investors too, who will eventually make it happen and revamp the sugarcane sector.
It’s true the detailed breakdown of these numbers – needed to know how we’ll convert the targets into meaningful reality – remain to be known. This is something which will have to be discussed as a second step, by establishing a permanent dialogue between the government and stakeholders such as the Brazilian Coalition for Climate, Forest and Agriculture for instance.
But in the meantime, let’s celebrate Brazil’s ambitious pledge to the global effort against climate change, and the recognition that ethanol will be called to play a key role in it.
The advanced biofuels industry may get some answers tomorrow during a House Subcommittee on Energy Policy, Health Care, and Entitlements hearing on the U.S. Environmental Protection Agency’s (EPA) recent decision to not finalize 2014 volume targets under the Renewable Fuels Standard (RFS).
Janet McCabe, EPA’s Assistant Administrator for Air and Radiation, is expected to be the sole witness and face questions about EPA’s delay on releasing RFS targets. Unfortunately, the hearing may also call the program itself into question. While several members of the subcommittee, including Chairman James Lankford (R – OK) have criticized the RFS as unworkable and urged its repeal, we hope the hearing sticks to the facts.
The RFS has worked for America, cutting both emissions from vehicle fuels while elevating the United States to become the second-highest exporter in a growing international ethanol market. As we mentioned in our statement on EPA’s decision last month, the RFS has helped lower U.S. emissions through clean renewable fuels – including 435 million gallons of sugarcane ethanol from Brazil in 2013 alone.
While EPA missed a golden opportunity to increase the volume of low-carbon fuels flowing to American drivers by not finalizing the 2014 volume standards, it at least stepped back from proposed cuts to advanced biofuel targets, preserving U.S. advanced biofuel supplies for the time being.
Slashing RFS targets, or scrapping the program altogether, would be a fundamental step backward for America’s renewable energy industry, threaten U.S. access to low-carbon fuel, and run counter to international emissions reduction goals.
During tomorrow’s hearing, we hope to hear clarity on when and how EPA will address the 2014, 2015, and 2016 RFS mandates so Brazil’s sugarcane ethanol producers can ensure a dependable supply of advanced biofuels to America’s drivers – not hyperbole about a program that’s driving economic and environmental benefits.
After more than a year of deliberation, the Environmental Protection Agency (EPA) today announced it will not finalize 2014 volume standards under the renewable fuel standard (RFS) program before the end of the year. The Brazilian Sugarcane Industry Association (UNICA) issued the following statement in response, which should be attributed to Elizabeth Farina, UNICA President.
“EPA is at least stepping back from proposed cuts to advanced biofuel targets and ensuring American drivers will continue to benefit from a steady supply of clean renewable fuels like sugarcane ethanol. In 2013, 15 percent of America’s advanced biofuels – 435 million gallons – came from Brazil, delivering at least a 50 percent reduction in emissions compared to gasoline. Slashing the 2014 renewable fuels standard target would have fundamentally threatened both America’s supply of low-carbon fuel and the Obama Administration’s emissions reduction goals.
The Brazilian sugarcane ethanol industry has collaboratively worked with the U.S. to lower emissions through the RFS for over seven years, and while we’re relieved this decision doesn’t roll back environmental gains made over that time, EPA has missed a golden opportunity to increase the volume of cleaner fuel flowing to American drivers.
We encourage EPA to publish the 2015 RFS targets as soon as possible so advanced biofuel producers have clarity on production targets before the season starts.”
UNICA is the largest organization representing sugar, ethanol, and bioelectricity producers in Brazil. For more information, visit www.sugarcane.org or join the conversation on Twitter at @CaneBiofuel.
Brazil may be the world’s largest producer of sugar, but the nation’s sugarcane stalks aren’t just winding up in your morning cup of coffee. They’re also flowing into your car’s gas tank as sugarcane ethanol, reducing emissions and creating the future of clean renewable fuel.
As 18,000 representatives of the world’s sugar industry gather at this week’s Platts Kingsman Miami Sugar conference, we think the time is perfect to consider the modest but important role Brazilian sugarcane ethanol exports play in meeting not only the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS) targets, but the world’s biofuel needs.
Platts’ conference will examine major trends facing the global sugar industry, and Brazilian sugarcane producers are particularly well positioned to contribute to two main conference themes – a reason we’re proud to be official conference media sponsors.
Regional sugar markets and challenges of over-supply
In 2013 Brazil sent 588 million tons of sugarcane to crush, producing 32 million tons of sugar, and exporting nearly 27 million tons. As the top global producer, Brazil’s also uniquely experienced in how sugar supplies can be brought to market and avoid oversupply challenges – a major theme for the conference.
Sugarcane ethanol has proven to be an extremely effective outlet for Brazil’s sugar output. UNICA members produced 23 billion liters (6 billion gallons) in 2013, ranking second in ethanol output worldwide. Nearly 3.5 billion liters (924 million gallons) was exported, with roughly half shipped to the United States. Nearly all of the 1.5 billion gallons of fuel ethanol imported by the U.S. since 2007 has been from Brazilian sugarcane, with at least 61% fewer emissions than gasoline.
Those numbers are significant, but they pale in comparison to Brazil’s domestic consumption. The country first used ethanol to fuel vehicles nearly 100 years ago, and today 90% of new cars sold in Brazil are flex fuel. In fact, sugarcane ethanol has replaced almost 40% of Brazil’s domestic gasoline demand, cutting nearly 200 million tons of carbon dioxide emissions.
Updates on ethanol programs and cogeneration
Even with existing sugarcane ethanol successes, Brazil is advancing technology further into the future. Increased production efficiencies mean even more sugarcane ethanol flows from fields to fuel tanks.
Indeed, Brazil has the potential to replace 14% of global transportation fuel demand without altering current sugar production – a big boost in the fight to cut emissions. By 2050, global energy needs could double, increasing emissions up to 80% unless we pursue low-carbon fuel options.
Sugarcane ethanol producers are also pushing the envelope on cogeneration using leftover stalks (bagasse). Self-sufficient sugarcane mills use bagasse to power their operations instead of fossil fuels, often producing enough power to sell clean electricity back to the grid. In 2012 alone, bioelectricity from these mills supplied 3% of Brazil’s total electricity demand.
Brazil’s recipe for a sweeter sugar(cane) future
Add it all together, and the “Brazilian experience” of using sugarcane to power a renewable energy future is a recipe for success on how stable policy and investment in new technologies can fuel a green economy while cutting emissions and dependence on foreign oil.
In fact, without cleaner-burning sugarcane biofuels fueling Brazilian vehicles and sugarcane field bagasse generating bioelectricity, the country’s greenhouse gas emissions from transportation and power generation would have been 22% higher in 2006 and could be 43% higher in 2020.
So when it comes to creating a sweeter future for sugar and biofuels, follow the leader – Brazil.
Today’s decision by the United States Supreme Court not to consider three cases challenging California’s Low Carbon Fuel Standard (LCFS) settles a major challenge to America’s low-carbon fuel transition, and brings the full emissions reductions potential of biofuels closer to reality.
At the heart of this lawsuit was methodology CARB established to calculate the carbon intensity of various biofuel’s lifecycle emissions – covering every aspect of biofuel use, from growth to harvest to transportation and eventual consumption of fuels.
Policy That Improves Over Time
To meet CARB’s methodology, biofuel producers must either meet a specified annual intensity or purchase credits to offset any difference. Considering the entire fuel lifecycle is critical to the environmental integrity of biofuels – after all, what good are renewable fuels that burn cleaner than gasoline if emissions associated with production and transportation create a similar pollution profile as fossil fuels?
CARB has repeatedly revisited its lifecycle emissions modeling process to ensure fair regulations as science has evolved, most notably in the area of indirect land use changes (ILUC). The Brazilian Sugarcane Industry Association (UNICA) has consistently supported these decisions, and continues to support the LCFS as a powerful tool in cutting emissions and slowing global warming.
Brazil Proves LCFS Naysayers Wrong
Opponents of CARB’s LCFS – primarily corn-based ethanol and fossil fuel-based gasoline producers – argued the landmark policy discriminates against out-of-state biofuel producers through higher carbon intensity standards that assign weight to long transportation distances, but like today’s Supreme Court decision, the Brazilian experience shows that’s not the case.
Despite ever-stricter standards, CARB has re-iterated sugarcane ethanol has one of the lowest emissions profiles of any biofuel supplying today’s biofuels market – even when our product ships internationally, not just across state borders.
We’re proud of the steps we’ve taken to ensure a sustainable ethanol lifecycle compared to other biofuels, including less frequent replanting and soil tilling requirements, higher fuel production yields, use of leftover stalks and leaves (bagasse) for bioelectricity, and efficient shipping methods.
Implications For Clean Fuel’s Future
CARB’s strict standards requiring transportation fuels sold in-state to be 10% less carbon intensive by 2020 are important to America’s low-carbon transportation future. Not only is California the largest U.S. transportation fuel market, but several other states are also considering adopting similar legislation.
By refusing to hear these challenges to the LCFS, the Supreme Court has both reaffirmed California’s progressive leadership and propped open the door for additional measures intended to maximize the emissions-cutting potential of biofuels.
Brazil’s sugarcane ethanol industry shows assessing the full lifecycle emissions of biofuels works from both an economic and environmental perspective, especially when biofuels producers work with, not against regulators as they improve policy.
We applaud the Supreme Court’s choice to listen to a chorus of voices supporting a low-emissions transportation future by reaffirming the LCFS and keeping truly cleaner fuels flowing to American drivers.
Sometimes, we all need friendly reminders. Our favorite World Cup soccer players get reminded on the field to play by the rules, and we often get reminded about our commitments. Commitments to our family, commitments to our friends, and commitments to our international trading partners.
The United States has commitments as a member of the World Trade Organization (WTO). WTO member countries have trade obligations, such as commitments to nondiscrimination in terms of product origin.
So consider this blog post a friendly reminder to Rep. James Lankford (R-OK) who last week introduced a bill in the U.S. House of Representatives to repeal the current conventional ethanol requirements under the U.S. Renewable Fuel Standard (RFS) and limit the biomass-based diesel, advanced biofuel and cellulosic biofuel volumes to domestic production only.
By discriminating against foreign biofuel manufacturers, this legislation would violate important American commitments to the WTO.
The bill would also limit America’s access to clean renewable fuels that reduce greenhouse gas emissions by 50 percent or more. One such advanced renewable fuel is made from Brazilian sugarcane – an affordable and low-carbon biofuel that brings consumers cleaner air, reduced greenhouse gas emissions, better performance and a lower dependence on oil.
The United States and Brazil are the world’s top two biofuel exporters, and both nations enjoy the economic and environmental benefits of global trade in renewable fuels. But not everyone is aware of this long-lasting and mutually beneficial trading history. So consider it another friendly reminder that the U.S. and Brazil should lead by example in creating a free market for clean, renewable energy.
Legislation that restricts access to advanced biofuels from other countries harms global efforts to develop clean and renewable energy. It also backslides on American commitments to open markets.