Previewing Our Comments to EPA on Proposed 2014 Renewable Fuel Standards

The Environmental Protection Agency shocked the biofuels community in November by proposing to slash consumption requirements for advanced biofuels in the Renewable Fuel Standard (RFS). Even though advanced biofuel producers easily exceeded EPA’s 2013 target of 2.75 billion gallons, and in fact delivered nearly 3 billion ethanol-equivalent gallons of advanced renewable fuel last year, EPA suggests setting the 2014 requirement at 2.2 billion gallons – a 20 percent cut. EPA is currently accepting public comments on their proposal. Next week, Brazil’s sugarcane ethanol producers – under the auspices of UNICA, our trade association – will submit formal comments expressing the industry’s profound concerns about EPA’s unnecessary and unjustified proposed reductions in statutorily-specified volume requirements for advanced biofuels. UNICA’s well-founded comments (more than 80 footnotes and growing!) will urge EPA instead to set volume targets that are in line with Congress’ and the Administration’s twin goals of replacing fossil fuels with advanced biofuels and other renewable fuels, and reducing greenhouse gas (GHG) emissions from transportation fuels.

Here’s a preview of a few key points we plan to stress with environmental regulators.

OUR PRINCIPAL CONCERNS
First, UNICA believes implementing the proposal would mark a significant step backward from recent progress toward increased use of efficient, renewable biofuels with low lifecycle GHG emissions. Insofar as the proposal prioritizes more carbon intensive fuels over cleaner, more efficient advanced biofuels like sugarcane ethanol, it is contrary to the purposes of the Clean Air Act and to the President’s Climate Action Plan. Second, UNICA believes that all or a significant portion of the proposed reductions for advanced biofuels and total renewable fuels are beyond the scope of EPA’s authority under the Clean Air Act. Congress, as evidenced by the legislative history and reaffirmed by courts, intended the RFS to force technological change through increased production and mandatory use of biofuels.

A DEPENDABLE PARTNER
Brazilian sugarcane producers have made a long-term commitment to providing clean, renewable advanced biofuels to meet energy and environmental goals in Brazil and the United States, along with many other countries. We have invested billions in increasing production and infrastructure to meet the expected demand for clean renewable fuels. As a result, the Brazilian sugarcane industry has more than adequate capacity to help achieve the statutorily-mandated volumes of advanced biofuel. We continue to lead the way in showing that higher blends of ethanol (hint: we’ve been using E25 in Brazil for three decades!) are not only possible but also beneficial to the environment and economy.

BENEFITS OF ADVANCED BIOFUELS
Multiple studies confirm that sugarcane ethanol is the most efficient and environmentally responsible advanced renewable fuel in widespread commercial use today, generating precisely the type of environmental benefits Congress sought to promote in carving out a preference for advanced biofuels in the RFS and that President Obama seeks to further in his Climate Action Plan. To be consistent with both Congressional intent and Administration policy, EPA should avoid taking steps—such as those in this proposed rule—that prioritize other, less GHG-efficient fuels over more GHG-efficient advanced biofuels like sugarcane ethanol.

EPA CANNOT IGNORE SUGARCANE ETHANOL
Congress did not in any way distinguish between ethanol and non-ethanol biofuels when it created the advanced biofuel category in the RFS. The statute treats both equally and indistinguishably as the same thing – advanced biofuels. EPA has previously determined that sugarcane ethanol is an advanced biofuel because of its low lifecycle GHG emissions, a conclusion it reaffirmed most recently in its 2013 RFS final rule. There is no basis in the statute for discounting, excluding, or otherwise ignoring sugarcane ethanol volumes or other ethanol advanced biofuel volumes in calculating the advanced biofuel required volumes for 2014, as EPA has proposed to do. When Congress specified volumes for the subcategories of advanced biofuels (like cellulosic biofuels and biomass-based diesel) but not others, it deprived EPA of discretion to create and either favor or discriminate against other subcategories. EPA must consider and include the available volumes of ethanol advanced biofuels when calculating the total required volume of advanced biofuels to be used in 2014.

INSUFFICIENT AUTHORITY UNDER THE CLEAN AIR ACT
To justify its proposed reduction of the total renewable fuel volume from 18.15 billion gallons to just 15.21 billion gallons, EPA cites two statutory provisions in the Clean Air Act: (1) the cellulosic waiver authority and (2) the general waiver authority. While no one contests the necessary reduction of cellulosic biofuels obligations to reflect lower-than-anticipated production of such biofuels, EPA grossly exaggerates this authority – and engages in regulatory gymnastics – in proposing a much larger than allowed reduction in the RFS. First, the “cellulosic waiver provision” cannot support the reduction because EPA’s authority under that provision is limited to reducing the required volumes of advanced biofuel and total renewable fuel by, at most, an amount equivalent to the projected production shortfall for cellulosic biofuel. For 2014, EPA projects a cellulosic biofuel shortfall of roughly 1.73 billion gallons, yet it proposes to cut required total renewable fuel volumes by 2.94 billion gallons—1.21 billion gallons more than the cellulosic biofuel waiver authority authorizes under any circumstance. Second, the “general waiver provision” cannot support the reduction because EPA has not even attempted to show that severe economic or environmental harm, at least one of which EPA must show to justify a cut, would result if the statutorily-mandated volumes were required. Adding insult to injury, EPA proposes a reading of “inadequate domestic supply” that stands Adam Smith on his head and defines inadequate supply to mean inadequate demand. What’s next? Changing the rules of soccer so red cards now count as goals? Let’s get real: Congress meant for the RFS to be technology-forcing. Otherwise they would have called it Renewable Fuels Suggestion.

THE BOTTOM LINE
The proposed rule will inevitably have two effects. First, it will reduce investment in, and production of, advanced biofuels at a critical time, as investors and producers reevaluate EPA’s commitment to the standards and goals Congress clearly set out in the RFS program. Second, by reducing incentives to produce and supply advanced biofuels, the proposed rule will increase the use of less-eco-friendly fuels, increasing GHG emissions and exacerbating the very environmental harms the law was meant to correct.

As environmental regulators 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 urging EPA to ensure that a continued supply of reliable and renewable sugarcane ethanol keeps flowing into U.S. vehicles. If you agree with us, make sure that EPA regulators hear your concerns.