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UN food meeting: Let’s not forget the positive role biofuels can play in promoting development

By Géraldine Kutas posted Oct 17, 2013
The United Nations’ Committee on World Food Security (CFS) met last week in Rome and, not surprisingly, biofuels were again at the centre of a hot debate. Governments, industry, civil society and academics all represented at the meeting could agree on an overall mild conclusion which asks for further assessment, given the very controversial topic to which they were confronted.

The United Nations’ Committee on World Food Security (CFS) met last week in Rome and, not surprisingly, biofuels were again at the centre of a hot debate. Governments, industry, civil society and academics all represented at the meeting could agree on an overall mild conclusion which asks for further assessment, given the very controversial topic to which they were confronted.

In the UN’s words, the CFS recognizes that biofuels development “encompasses both opportunities and risks in economic, social and environmental aspects, depending on the context and practices” and encourages all stakeholders to help countries assess the impact of their biofuel policies. This only demonstrates that the overall dimension of biofuel production is yet to be fully captured and this gives stakeholders the opportunity to show that not all biofuels policies have negative impacts, that good examples of a fair balance between food and fuel production exist and that best practices should be incentivized. Let’s hope that this further assessment phase will help to develop a less black and white approach to biofuels.

Brazil is one of these good examples. Brazilian Sugarcane Ethanol (BSCE) is classified in places like the U.S. as an advanced biofuel and the land producing ethanol also produces sugar. In fact, in the last 20 years the volume of sugarcane harvested has tripled to respond to the growing demand for ethanol and sugar, but food production hasn’t dropped at all. Over the same period, grains production has also almost tripled in Brazil. Production of BSCE only uses 0.5% of Brazil’s total area and the agro-ecological zoning regulations limit the land used for sugarcane to 7.5% of the Brazilian territory.

In conclusion, the CFS recognized the complexity of the links between biofuels and food security and the need to distinguish between short-term and long-term impacts, despite the intense reaction of Oxfam at the end of the meeting last Friday, which argued that “Unfortunately, powerful countries refused to act despite the evidence and preferred to put biofuel industry interests ahead of peoples’ right to food”.

Unfortunately, the CFS missed the opportunity to recognize the positive role that bioenergy production has played, particularly in minimizing the downward slope of agricultural investments and commodity prices. After all, investments in agriculture generate more economic growth in developing countries than investments in any other sector.  In addition, access to energy is a condition to produce food: the more sustainable the energy produced and used, the more sustainable the food production will be!

The CFS will meet again next year and according to the action points agreed, FAO will have to come up with proposals on “contingency plans to adjust policies that stimulate biofuels production and consumption when global food markets are under pressure and food supplies are endangered” as well as “provide toolkits to device and assess integrated food security and sustainable biofuels policies”. The newly elected Chair, Gerda Verburg, the Dutch Ambassador to UN agencies in Rome, said she wants to keep negotiating with all the stakeholders represented in the Committee and focusing on the outreach for the implementation of the decisions already taken.

At UNICA, we will continue our efforts to spread the word on how Brazil has emerged as a leader in providing both food and energy from its diversified and efficient agricultural sector.

For more details on the CFS conclusions, see the final report (press release) and the HLPE study (Executive Summary).

The issue was also covered by The Guardian, Oxfam, Reuters and Ethanol Producer Magazine

New Ecofys study guts "land grabbing" charges against EU biofuel policy

By Géraldine Kutas posted Oct 03, 2013
Ecofys, a well-respected Dutch consultancy, is out with a new study that effectively eviscerates the association of biofuels with “land grabbing,” that favorite charged-phrase NGOs pedal that industry is in the business of pushing locals off their land. The meaty conclusion from Ecofys: “At best, only 0.5% of all deals in the Land Matrix concern land grabs for EU biofuels.”

Ecofys, a well-respected Dutch consultancy, is out with a new study that effectively eviscerates the association of biofuels with “land grabbing,” that favorite charged-phrase NGOs pedal that industry is in the business of pushing locals off their land.

The meaty conclusion from Ecofys: “At best, only 0.5% of all deals in the Land Matrix concern land grabs for EU biofuels.”

Bear in mind, Ecofys is an environmentally minded consultancy, if you will, that does studies for the European Union, industry, and even NGOs. This particular study was commissioned by ePure, the European Ethanol Producers.

The Ecofys study says that biofuels used in the EU market basically do not come from feedstocks produced from “grabbed” lands, undermining among NGO arguments against EU biofuel policy is that biofuels “take land away” from food production and rural communities.

The study cross checked a number of entries in the Land Matrix of the International Land Coalition. Although the best informed global database on land deals, the Land Matrix “is based on reports from the media and NGOs which both often overestimate scale,” says Ecofys.

Nonetheless, the matrix had a total of 617 deals in its system, covering around 38 million hectares, as of March 2013.

This extract lays out the message Ecofys conveys with this study: “Of these 617 deals, we assessed 66 deals, which sum up to 25.8 Mha, or 67% of the total acreage in the database. This includes the 50 largest deals around the world, as well as the 5 largest deals given per sub-region in the Land Matrix. We checked these deals by collecting all possible and available information about these deals on the internet and sometimes from private investigation, by checking information with networks within the respective countries.”

What does Ecofys have to say about NGOs wild claims? “Action Aid claims that ‘it is estimated that biofuels have been involved in at least 50 million hectares being grabbed from rural communities.’ This is 28 times (!) our findings of about 1.8 Mha. The total extent of land deals that can maximally be connected to the EU biofuels policy in past and until 2020 is probably another ten times smaller.” Here is the latest report on social impact of EU biofuel policy by Action Aid.

Finally, the study argues that the voluntary schemes introduced in the framework of the so called RED (EU Renewable Energy Directive) actually helped the development of better regulation in third countries on social and economic aspects of biofuels production. A very successful example is Bonsucro, The Better Sugarcane Initiative, to which UNICA is member and which certifies -- according to EU standards -- 29 Brazilian mills, covering 6.5% of the total Brazilian sugarcane area and more than 2 billion liters of sugarcane ethanol.

The Ecofys study looks at the effect of the EU policy promoting biofuels, hence starting from 2009. It is worth to notice that from 2008, ethanol exports from Brazil to the EU considerably decreased as the graph here below shows (from 1,661.4 million liters in 2008 to 97.21 million liters in 2012); therefore there is clearly no connection between land “grabbing” and increasing demand and exports for biofuels to EU in the case of Brazil.

EU Total Ethanol Imports

For more, find the Ecofys report here. Pangea, which represents pan-African bio-energy interests, produced a short take on the report.

Looking forward to more reactions to this report.

Clearing up a few myths about Brazilian biofuels trade

By Leticia Phillips posted Sep 18, 2013
The late U.S. Senator Daniel Patrick Moynihan is often credited for quipping that everyone is entitled to their own opinions, but not to their own facts. Fresh export data from Brazil reminded me of that saying because it will come as an unwelcome reality check for naysayers of sugarcane ethanol. Let’s turn to the facts to debunk two leading myths circulating around Washington, D.C. about Brazilian sugarcane ethanol.

The late U.S. Senator Daniel Patrick Moynihan is often credited for quipping that everyone is entitled to their own opinions, but not to their own facts. 

Fresh export data from Brazil reminded me of that saying because it will come as an unwelcome reality check for naysayers of sugarcane ethanol.  Let’s turn to the facts to debunk two leading myths circulating around Washington, D.C. about Brazilian sugarcane ethanol.

Myth #1:  Brazil can’t supply sufficient sugarcane ethanol to meet America’s needs.

Reality: Brazilian sugarcane ethanol is on track to not only meet, but could exceed the amount regulators projected necessary to comply with the Renewable Fuels Standard (RFS) 2013 targets for advanced biofuels.

The U.S. Environmental Protection Agency (EPA) has forecast that the U.S. will need almost 600 million gallons of sugarcane ethanol to meet RFS requirements this year. As of August 31, Brazil’s sugarcane ethanol producers have shipped about 330 million gallons to U.S. markets, compared to 267 million gallons during the same period in 2012.  (For those keeping track of the imports and RINs after reading Sunday’s New York Times, just look at EPA’s data online to see that over 250 million gallons worth of RINs have been generated from imported advanced biofuels like sugarcane ethanol.)

Sugarcane Ethanol Graph

Some simple arithmetic shows Brazil’s exports year-to-date are only slightly more than half what’s needed for the year. Bad news, right?  With eight months down and just four to go, rumors are circulating that sugarcane ethanol imports won’t supply the necessary gallons. 

But those naysayers forget Brazil’s sugarcane harvest starts in April, meaning ethanol exports tend to start slow in the first half of each year before hitting high gear in the second half. In fact, American imports of sugarcane ethanol during the second half of each year have historically been three to five times higher than imports in the first half of each year. 

Compare the first half of 2013 with other historical data[i] and it’s clear that Brazil is easily on target to meet EPA’s expectations:

Imported Ethanol Graph

But don’t just take my word for it. In the agency’s final 2013 RFS rule, EPA notes that sugarcane ethanol imports this year have increased by 110% to 147% compared to 2012.  EPA then observes: “[t]his increase, combined with the fact that the majority of Brazilian ethanol exports to the United States have historically occurred in the second half of the calendar year, suggests that Brazilian ethanol exports to the U.S. are on a trajectory that would readily enable Brazil to supply 580 million gallons to the U.S. in 2013.”

Of course, the real driver of imports is U.S. demand. And here we have to again tell the RFS naysayers to check their facts. Despite the doom and gloom of some special interests, the biofuels industry has delivered the gallons. Not just conventional biofuels, like corn ethanol, but also the advanced biofuels, from biodiesel to sugarcane ethanol. In fact, thanks to robust growth in advanced biofuel production in the past few months, the U.S. may not demand the level of imports that EPA expected earlier this year. That’s more proof that the RFS is working.

Myth #2: The “ethanol shuffle” that sends corn ethanol to Brazil and sugarcane ethanol to the U.S. doesn’t help the economy or environment of either country.

Reality: The 2011 shuffle was a one-time event, and Brazil is a net-exporter of biofuels.

Brazil is committed to helping America meet its renewable fuels goals, and production has expanded over time to meet rising U.S. demand. Ethanol production so far in 2013 is up 7 percent compared to first-half August 2012, and 8 percent compared to second-half August 2012.

Growing sugarcane ethanol production and export levels also put to rest any fears of another “ethanol shuffle” between Brazil and the U.S. This term refers to the one-year anomaly experienced in 2011 when America exported a comparable amount of corn ethanol to Brazil as the volume of sugarcane ethanol imported from Brazil.  

As of the end of August, Brazil had only imported 31 million gallons of corn ethanol from America – which is less than 10% of the sugarcane ethanol Brazil has exported to the U.S. during the comparable period. Unfortunately for some critics, the music’s stopped on the ethanol shuffle, and the phenomenon is clearly not happening again in 2013.

Reality: A Committed Partnership On Renewable Fuels

Add it all up, and Brazil is far and away a net exporter of ethanol to the U.S. – a role that’s helping encourage innovation and expanding advanced biofuels use among American drivers.

Brazil’s sugarcane producers look forward to working with EPA to find the right advanced biofuels requirements under the RFS for 2014 and beyond, and stand ready to help America meet its growing goals for low-emission transportation options.

I think that even by Senator Moynihan’s high standards, we might all agree these observations are facts worth keeping in mind the next time an unfounded opinion gets in the way of reality.

 


[i] All data courtesy of the Brazilian Ministry of Trade & Development’s Secretary of Foreign Trade online database.

European Parliament Vote on Biofuels: the EU continues Search for a Resolution

By Géraldine Kutas posted Sep 12, 2013

A mixed bag from Wednesday’s full European Parliament vote on biofuels and that issue of indirect land use change, ILUC, after months of debate in the parliament.

The bad news is that the EP, as expected, voted to approve a cap on first generation biofuels, although the cap was approved at 6%, not the 5% that environmentalists were foaming at the mouth for. If approved by EU Member States, the cap would effectively lower the 10% renewables-in-transport target for 2020 that the EU set a few years back; that target is expected to be achieved largely by the use of biofuels.

The better news is that some positive amendments in UNICA’s interests were adopted, such as a 7.5% sub-target for ethanol and a sub-target of 2.5% for advanced biofuels, which includes bagasse and straw. And, proposals were rejected that would have applied protectionist and discriminatory measures and made it difficult, if not impossible, for sustainable, EU-compliant biofuels produced in non-European Union nations to be legally counted toward meeting EU renewable energy and fuel quality requirements.   

Much to the environmentalists’ irritation, this whole issue now goes to the EU’s 28 Member States, who are less enthusiastic about the ILUC issue than Members of the European Parliament. Member States will try to come up with their own position on the biofuel/ILUC topic – which must then, time-consumingly, go back to the Parliament to be reviewed and debated.

What’s all this mean?? Delay, Delay, Delay. That is not ideal, but at least this situation raises the prospect of a better deal coming from Member States—or maybe no deal at all, should Member States fail to agree on a common position.

So stay tuned. A lot more to come on this from Brussels.

Some of the coverage from yesterday’s vote via Reuters, BusinessGreen, The Guardian, BBC News,  Wall Street Journal, and Euractiv.

Another Study Puts “Food vs Fuel” into Much-Needed Perspective

By Géraldine Kutas posted Sep 09, 2013
Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

The key takeaway from the Ecofys report (found here: http://www.ecofys.com/en/news/report-biofuels-play-minor-role-in-local-food-prices/)

“The historic impact of EU biofuels demand until 2010 increased world grain prices by about 1-2% and, without any cap on  crop-based biofuel production may lead to another 1% increase through 2020.”  

Additionally: “Systemic factors, like reduced reserves, food waste, speculation, transportation issues, storage costs and problems, and hoarding play a much larger role in local food prices” than biofuels, Ecofys concluded.

Does these conclusions sound familiar? They should. Here’s a list of other studies from other reputable institutions -- including the European Commission, the European Union’s executive -- that have reached similar conclusions like what Ecofys has just churned out:

·  World Bank (Baffes and Dennis), 2013, "Long-term drivers of food prices"http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469382&menuPK=64166093&entityID=000158349_20130521131725

·  The European Commission report on the implementation of the EU Renewable Energy Directive (see p.12) http://ec.europa.eu/energy/renewables/reports/doc/com_2013_0175_res_en.pdf

·  The Institute for International Trade Negotiations (ICONE) in Brazil http://www.iconebrasil.com.br/publication/study/details/568 

E&ETV Explores Sugarcane Biofuels and the Future of the RFS

By Leticia Phillips posted Sep 05, 2013
With Labor Day behind us, Washington D.C. has officially ended summer vacation and gotten back to work. Brazil’s sugarcane ethanol producers are no exception, and we’ve renewed our efforts making the case for advanced biofuels.

With Labor Day behind us, Washington D.C. has officially ended summer vacation and gotten back to work. Brazil’s sugarcane ethanol producers are no exception, and we’ve renewed our efforts making the case for advanced biofuels.

To kick things off this week, Joel Velasco – senior vice president of California-based renewable fuels company Amyris and board advisor to the Brazilian Sugarcane Industry Association (UNICA) – sat down for an interview on E&ETV, an influential webcast on Capitol Hill featuring energy and environmental policy leaders.

Joel EETV Interview

Joel offers unique insights into the advanced biofuels industry because (besides his advisory role with UNICA) he is also senior vice president of California-based renewable fuels company Amyris and a board member of the Advanced Biofuels Association.  Joel shared his perspective on several key topics:

  • The state of play for renewable fuels in the U.S. The Environmental Protection Agency (EPA) may have officially lowered the 2013 target for cellulosic ethanol and announced it will probably reduce volumes for other advanced biofuels starting in 2014, but that doesn’t mean an end to sugarcane ethanol’s modest but important role supplying America with clean renewable fuel.  According to Velasco:

 “What EPA did during the summer break was to basically finalize the rule they had already proposed earlier this year that said, we don’t have the cellulosic fuels but we do have other advanced fuels – let’s continue going on that path.”

“We're really talking about an increase from 2013 to 2014, as the law was written, of about a billion gallons. Most of that was going to be cellulosic biofuels – those we know are probably not going to be available for 2014. The big question is how much of that cellulosic they’re (EPA) going to waive into the other advanced pools, and how much of that cellulosic is just going to disappear or is not going to be required.”

 “The committee should be commended for having this white paper process…I really think this was a unique way to get stakeholder input. It allowed everybody who had a stake in the game to actually provide input on a number of issues. I think the committee now has all the views that they need to look at.”

Obviously, if they get into this, we’re getting into a situation of then opening the Clean Air Act and making amendments to it…Once you start messing with the Clean Air Act all kinds of folks are going to get involved, and I just don’t think the legislative calendar will allow for some sort of (legislative) reform.“

“Brazil and the United States are the world’s two largest producers of biofuel…And I think both countries, whether it’s President Obama here or President Rousseff in Brazil are committed to pursuing that deep relationship. We have a lot to celebrate – neither country has barriers for their biofuels, the ethanol tariff is gone here, Brazil has maintained a zero tariff there, and the subsidies are pretty much ended. So now it’s time to talk about what markets can we build beyond our two countries, and how do we strengthen the relationship?”  

“The Advanced Biofuel Association, Renewable Fuel Association, and Unica are going to bring together companies in Brazil (for American biofuels companies)…And we will see what are the other options we have not just in Brazil or the U.S., but around the world. I think this is a great step in the right direction, and it’s proof that the RFS is working because these industries are being formed and we’re looking at how we can actually deepen the integration between these two economies.”

Joel’s interview comes at an important time for the advanced biofuels industry, both here and abroad. Sugarcane ethanol is a key component to America’s renewable fuel goals and Brazil is committed to continue growing as a trusted trade partner with the U.S. As debate over the future of the RFS continues, we’ll continue to highlight the importance of maintaining access to clean renewable biofuels. 

Back to Work Making the Case for Advanced Biofuels

By Leticia Phillips posted Sep 03, 2013

No American city enjoys its August vacations more than Washington. With Congress away on recess, most Washingtonians skip town for at least a week to rest and prepare for renewed policymaking in the fall. I’ll certainly confess to enjoying the sand between my toes last month!

But editorial writers did not take a similar holiday, and a trio of leading newspapers each opined in recent weeks that it is time for the federal Renewable Fuels Standard (RFS) to go. These editorials in The Washington Post, USA Today and The Wall Street Journal (subscription required) focused primarily on concerns with corn ethanol, and the difficulty blending more than 10 percent ethanol into gasoline – the so-called “blend wall.” The editorial boards at each paper largely ignored how the RFS has spurred innovation and encouraged production of cleaner alternatives to both gasoline and conventional biofuels.

With Labor Day behind us, sugarcane ethanol producers will renew our conversations with lawmakers, reporters and opinion leaders, reminding them that:

  • The RFS has successfully encouraged more advanced biofuel use in the United States. Yes, cellulosic biofuels have been slower to develop than Congress anticipated. Fortunately, other advanced renewable fuels like sugarcane ethanol and biodiesel are taking up the slack. Last year, Americans consumed 1.8 billion gallons of advanced biofuels, and the Environmental Protection Agency (EPA) expects consumption will rise to 2.75 billion gallons of ethanol equivalent in 2013 – the precise volumes called for by the RFS.
  • Advanced biofuels are cleaner and better for the environment than gasoline. EPA determines which fuels qualify as advanced biofuels, and a key condition for this designation is reducing lifecycle greenhouse gas emissions by at least 50 percent compared to fossil fuels. EPA named Brazilian sugarcane ethanol an advanced biofuel in 2010 after determining it reduces greenhouse gases by 61 percent.
  • Sugarcane ethanol plays a modest but important role supplying the U.S. with advanced biofuels. Last year, it comprised only 3 percent of all renewable fuel consumed by Americans, but sugarcane ethanol provided nearly one-quarter of the U.S. supply of advanced biofuels in 2012.
  • The RFS is fostering innovation, and more advanced biofuels are on the way. A new report from Environmental Entrepreneurs (E2), a project of the Natural Resources Defense Council, finds steady improvements in technology and production capacity. It estimates a sufficient supply of advanced biofuels will be available to meet current RFS requirements through 2016. That’s the case for sugarcane ethanol. Brazilian sugarcane producers are making investments to expand production, and Americans can depend on more advanced biofuel from sugarcane.

These vital facts about the contributions of Brazilian sugarcane biofuels can get lost in the debate over renewable fuels in Washington, but we think they’re important as our two countries work together to make transportation more sustainable. So vacation is over, and it’s time to get back to work.

Sugarcane Ethanol Producers Applaud EPA’s 2013 RFS Standards, Urge Reasonable Adjustments to 2014 Requirements

By Leticia Phillips posted Aug 06, 2013
Sugarcane ethanol producers applaud today’s EPA announcement on 2013 annual percentage standards for the RFS, which maintains the advanced biofuel volume at 2.75 billion gallons.

Sugarcane ethanol producers applaud the Environmental Protection Agency (EPA) announcement on 2013 annual percentage standards for the Renewable Fuels Standard (RFS), which maintained the advanced biofuel volume at 2.75 billion gallons.

We also support EPA extending the time for obligated parties to demonstrate compliance with 2013 standards to June 30, 2014 – a common sense approach that will allow ethanol producers to take anticipated 2014 RIN obligations into consideration as they determine 2013 compliance actions.

Sugarcane ethanol producers also look forward to working with the EPA to find the right requirements for 2014 and the years ahead. We urge regulators to support reasonable proposed adjustments as the EPA considers 2014 requirements – especially the cellulosic and advanced biofuels volumes.

Brazilian exports provided nearly one-quarter of the entire U.S. advanced biofuel supply in 2012, are projected to supply nearly 700 million gallons in 2013, and could supply up to one billion additional gallons in 2014 – all with at least 61% fewer emissions than gasoline, according to the EPA.

Sugarcane biofuels are an important component of a diversified strategy to meet America’s RFS targets, and Brazilian producers stand ready to help America meet its goals for low-emission transportation by keeping clean renewable advanced biofuels flowing into U.S. vehicles.

Calls For Common-Sense Advanced Biofuel Regulation Keep Coming In

By Leticia Phillips posted Jul 24, 2013
The latest comments come from both Shell and BP America, producers and importers of renewable fuel, and a joint letter by the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API), two trade associations that represent many importers of renewable fuel in the United States.

As Congress continues holding hearings on the future of America’s Renewables Fuels Standard (RFS), calls keep coming in for common-sense regulation and oversight of foreign renewable fuel producers by the Environmental Protection Agency (EPA).

When combined with formal comments submitted by other notable biofuel proponents and stakeholders, the din is hard to ignore. A growing chorus is raising concerns about EPA’s unnecessary proposed requirements on foreign biofuel producers and sounding the alarm that these changes could raise domestic fuel prices and threaten U.S. supplies of sugarcane ethanol, one of the cleanest and most advanced biofuels available to American drivers.

The latest comments come from both Shell and BP America, producers and importers of renewable fuel, and a joint letter by the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API), two trade associations that represent many importers of renewable fuel in the United States.

  1. New requirements are unnecessary – Shell, a global group of energy and petrochemical companies with more than 90,000 employees in more than 80 countries and territories, calls EPA’s proposal “overly complex, unworkable and unreasonably retroactive.”  The company also points out these changes are not necessary:
  2. “There is quite simply no basis to conclude that the additional requirements are necessary to ensure that the regulations can be enforced against these [foreign] parties. The current version of the rule puts the responsibility on the RIN generator to ensure that all of the regulations are met, including the provisions related to the definition of renewable biomass. We carefully adhere to the current rules and understand our obligation there under. The additional proposed requirements are simply unnecessary…

    “Each foreign producer, in our experience and per our internal requirements, has provided substantial land-use traceability documentation, and separated food waste and animal fat traceability documentation, of feedstock tied specifically to volume of each parcel processed into renewable fuel, in support of each cargo volume loaded for US import and RIN generation, so that we can be assured that RINs that we generate from such ethanol are valid.”

    Similarly the Independent Fuel Terminal Operators Association (IFTOA) wrote:

    “This proposal is an extreme measure that would place the importers of these foreign-produced renewable fuels at a significant competitive disadvantage and could effectively prevent the importation of such fuels – contrary to the overall objective of the RFS Program. [...] U.S. importers are already subject to U.S. jurisdiction, are fully registered with the EPA and are responsible to ensure the generation of valid RINs.  No additional safeguards are required.”

  3. Impractical segregation requirements will hinder supplies and increase costs Shell also predicted segregating sugarcane ethanol could halt U.S.-bound shipments for a full year: 
  4. “EPA’s proposal would require additional segregation of renewable fuels. This is problematic because insufficient renewable fuel tankage exists in foreign ports to segregate each foreign producer’s biodiesel or ethanol as gathered via trucks, rail, and barges, until an oceangoing cargo size volume is accumulated for export to US. The likely result of EPA’s proposal is that foreign renewable fuel producers, and the US importers of those renewable fuels, would be forced to suspend activity for approximately one year while additional tankage is constructed on foreign soil to accomplish the Agency’s desired degree of load port segregation.

    “In addition, even if additional tankage could be built in foreign ports, such a requirement would delay receipt of foreign renewable fuels needed to meet RFS mandate, and raise cost of foreign renewable fuels relative to domestic fuels, inflating cost of all US renewable fuels.”

     BP America echoed Shells concerns, highlighting “serious logistical barriers” to segregate ethanol in the proposed rule:

    “BP strongly opposes this proposed change to the RFS rules … This would likely result in decreasing the amount of biofuel available and reducing the pool of advanced and cellulosic ethanol volumes available for compliance with the RFS program. Keeping each Mill’s product segregated to vessel and then on vessel is overly burdensome and costly. Segregation will be very difficult given logistics constraints in foreign countries.”

  5. Assessing retroactive financial penalties is unreasonable – AFPM and API echoed Shell’s concerns.  The trade associations also weighed in on EPA’s proposal to retroactively require compliance with new regulatory requirements on all fuel produced and exported as of January 1, 2013: 
  6. “We are hopeful that this is simply a printing error and that EPA will correct this before finalizing the rule. It is not reasonable for EPA to impose such requirements retroactively. It is simply impossible for EPA to enforce a regulation looking back on actions foreign renewable fuel producers and RIN generators should have taken throughout 2013, when at the time of production, transportation, import and RIN generation, those foreign renewable fuel producers and RIN generators had no knowledge of any proposed rule change.”

  7. Stifling impact on new technologies. The Biotechnology Industry Organization (BIO), shared our concerns that while EPA’s aim is laudable the unintended consequences of the proposed rule could have a chilling effect on development of new biofuel technologies: 
  8. “We would encourage the [EPA] to ensure its enforcement of the rule does not inadvertently discourage legitimate feedstocks and fuels developed by producers who are already complying with section 80.1466 from being able to import to the U.S. Doing so may unintentionally impact domestic producers who use these feedstocks or fuels from developing domestic gallons of advanced or cellulosic biofuels.

In fact, a small ethanol producer in Canada, Growing Power Hairy Hill, noted this impact saying the proposed rule’s costs are:

“... prohibitive to small plants such as ours. The proposed bond multiplier for Advanced RINs of $0.8/gallon is simply too high. Such requirement can, in our opinion, only result in the further escalation of the Advanced RIN values and hence increase the cost of ethanol and resulting gasoline for US consumers.”

EPA’s quest to ensure regulatory accuracy of U.S. biofuel consumption is noble, but ultimately quixotic. If the proposed rulemaking were finalized without the sensible changes suggested by these formal comments, the cost of producing sugarcane ethanol and the price of pumping it into American vehicles would both rise, with no apparent benefits.

Congress has already heard EPA say it won’t be able to meet the RFS mandate for advanced biofuels without Brazilian sugarcane ethanol – so why would the agency want to test its own theory? 

Sugarcane Ethanol Producers Aren't Alone Opposing Unnecessary EPA Policy Change

By Leticia Phillips posted Jul 22, 2013
Last week we weighed in with formal comments opposing a proposed rulemaking by the Environmental Protection Agency (EPA). Many important economic and environmental causes for concern were echoed in other formal comments submitted to EPA by biofuel proponents and stakeholders.

Sugarcane Ethanol Producers Aren’t Alone Opposing Unnecessary EPA Policy Change

Last week we weighed in with formal comments opposing a proposed rulemaking by the Environmental Protection Agency (EPA) that could effectively end U.S. imports of Brazilian sugarcane ethanol, a clean renewable fuel key to meeting the Renewable Fuels Standard (RFS).

But this week, debate on the future of biofuels in America will reach a new level when Congress considers the issue. The House Energy and Commerce’s Energy and Power Subcommittee will hold hearings on potential RFS changes tomorrow and Wednesday, with testimony from industry groups and environmental organizations.

Our position is clear – language in EPA’s proposed rulemaking is unnecessary and threatens American access to one of the few advanced biofuels on the market today that reduces greenhouse gases by more than 60 percent compared to gasoline.

But don’t take our word for it. Many important economic and environmental causes for concern were echoed in other formal comments submitted to EPA by biofuel proponents and stakeholders. We’ve parsed these filings and highlighted a few below to reveal exactly what’s at stake.

  1. Expensive changes for both producers and consumers – Adecoagro, one of South America’s leading renewable energy companies and a foreign producer of undenatured sugarcane ethanol who has exported to the U.S. since 2011, said EPA’s proposed rules would boost costs for advanced biofuel producers and consumers:
  2. “All exported ethanol from Brazil to U.S. will have to be segregated by producer…meaning increased costs and operational difficulties. According to ship operators, one ship is loaded with product coming from five different producers on average. In our case, we will not be able to mix product produced by our two registered mills, even being under the same company. To make the transport economically and operationally feasible, either will (sic) be excluded from business or there will be need for smaller cargos or incurrence of losses in dead freight, both of which will increase costs and prices for sugarcane ethanol…consequently increasing prices for final consumers in the U.S.

  3. Redundant requirements could price out supplies with no benefit – Chevron, a major refiner and marketer of petroleum products in the U.S., and an obligated party under the RFS, reported redundant bureaucratic reporting would hike ethanol prices with no net benefits:
  4. “Chevron does not agree with EPA’s proposal to require both foreign ethanol producers and importers to meet the requirements…we believe this blurs the line that had previously been established between foreign producers who generate RINs and domestic producers and importers who already have compliance requirements under the program.”

    “Requiring foreign ethanol producers and importers to meet the requirements…will result in duplicate reporting of the same information by both parties. This will increase the cost of supplying ethanol from foreign locations and will complicate enforcement by having multiple sets of records for the same transactions.”

    “The requirement to segregate shipments of ethanol from the foreign producers will also increase the cost of supply and may not be possible in certain circumstances… The net effect of this proposal will increase the cost of supply of renewable fuels under the RFS. Under certain circumstance, it may also reduce the supply of renewable fuels from overseas providers.”

  5. Unnecessary Oversight Could Harm Future Biofuel Supplies – the Advanced Biofuel Association, representing over 40 member companies who produce advanced biofuels and biofuels feedstocks, mentioned EPA’s unnecessary regulations could limit the future of biofuel supplies in the U.S.:

  6. “The proposed amendment…would significantly impact not just advanced ethanol producers (mainly in Brazil, where no denaturant is added to sugarcane ethanol) but also other cellulosic biofuel producers currently building plants around the world. By requiring complete segregation of the biofuel until it reaches the port of entry, the proposed amendments unnecessarily increase compliance costs particularly for ethanol. While the goal of reducing potential RIN fraud is laudable, we are unaware of any alleged fraud related to RINs associated with imported advanced biofuels.”

    “In addition, and of greater concern to the nascent advanced biofuel industry, the required bonds are unreasonably and prohibitively high... Such expenditures would most likely make the export of advanced biofuels to the United States infeasible from a commercial standpoint, particularly for startup companies.”

    “Based on our analysis of the negative impact to advanced biofuels trade, the ABFA recommends that EPA withdraw these proposed provisions from the final rule in order to consult with industry on a better approach to ensure the robustness of the RFS is maintained without increasing cost and emissions.  We are also greatly concerned about the trade implications of these provisions as well as the ramifications with our relationship which we have been fostering over the last 5 years in the area of biofuels with Brazil.”

As Congress and EPA consider the future of the RFS, we hope they’ll hear the chorus of voices from across the biofuels community urging common sense for America’s renewable fuel policy, and ensure a continued supply of reliable and renewable sugarcane ethanol flowing into U.S. vehicles.

Our Authors

 

Géraldine Kutas, Head of International Affairs & Senior International Adviser to the President of UNICA Géraldine Kutas
Head of International Affairs & Senior International Adviser to the President

 

Leticia Phillips, Representative-North AmericaLeticia Phillips
Representative, North America

 

Sugarcane Solutions Blog

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Many observers were surprised last year when Brazil imposed a limit on duty free ethanol imports. With the tariff-rate quota (TRQ) policy in place since September, we take a closer look at this temporary solution to what UNICA hopes will be a temporary problem.

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