Agricultural News
RFA on 2013 RFS Proposal: Program Working, But Imports a Concern
Thu, 31 Jan 2013 14:15:47 CST
The Environmental Protection Agency (EPA) released its proposed rule for 2013 Renewable Fuel Standard (RFS) volumetric requirements. The proposal waives the cellulosic biofuel requirement from one billion gallons to 14 million gallons, but retains overall advanced biofuel and renewable fuel requirements. In response, Renewable Fuels Association (RFA) President and CEO Bob Dinneen offered the following comments:
"The 2013 RFS requirements will be the catalyst that finally compels oil companies to get serious about breaching the so-called blend wall. This year's RFS requirements will necessitate the use of more E15, E85 and other higher-level blends. Injecting larger volumes of biofuels into the U.S. fuel supply and spurring a more rapid transition to domestically produced renewables is exactly what the RFS was intended to do. The program is working as envisioned by Congress.
"EPA again considered the best available information including projections from the Energy Information Administration to set the 2013 cellulosic biofuel requirement. The proposed standard in no way exaggerates the volumes that will be available in 2013 based on current information, and may ultimately prove to be conservative. Cellulosic ethanol is being produced today at commercial scale in Florida, and with construction nearing completion at several other commercial sites, we fully expect 2013 to be the breakthrough year for cellulosic ethanol. At the same time, the fact that EPA waived 98.6 percent of the statutory cellulosic biofuel standard demonstrates the extraordinary flexibility and adaptability of the RFS program.
"We are concerned, however, that the proposed 2013 advanced biofuel standard will open the door even wider to imports of more expensive Brazilian sugarcane ethanol. We hope the requirement can be met with domestic advanced biofuels, like waste-derived ethanol and biodiesel. However, we must be mindful that imports accounted for 92 percent of the 2012 advanced biofuel standard. In an unconstrained fuel market where E15 and other mid-level blends were broadly available, imports would not be a major concern. However, in today's constrained market, where oil companies continue to throw up roadblocks to E15 and other mid-level blends, every gallon of imported ethanol is one less gallon of domestically-produced ethanol that will be used. This occurs only because EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel RIN that is currently trading at $0.48. High-priced sugar ethanol imports began to cannibalize the U.S. market in 2012, and today's decision potentially adds fuel to the fire.
"RFA will continue to encourage EPA to revisit its lifecycle analysis, which graciously assigns advanced biofuel status to sugarcane ethanol. EPA's outdated analysis suggests sugarcane ethanol reduces greenhouse gas emissions by 52 to 71 percent relative to gasoline. However, the most recent peer-reviewed, published estimate found the range of sugarcane GHG reductions to be 40 to 62 percent, meaning nearly half of current sugarcane imports likely do not meet the 50 percent GHG reduction requirement."
RFA will be filing comments in response to today's proposal from EPA.
With regard to EPA's proposal to address biodiesel RIN fraud, Dinneen added, "We're encouraged that EPA has proposed a voluntary mechanism for obligated parties to assure the RINs they are using for compliance actually reflect a gallon produced. It addresses a major concern oil companies have raised regarding biodiesel RINs and assures the overall integrity of the RFS program. It is important to note that there have been no incidents of RIN fraud with ethanol gallons produced for the RFS in large part because ethanol producers generally do not separate the RINs from the gallons they produced, as is the case with other biofuels."
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