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Court faults EPA on biofuel projection American Petroleum Institute hails ruling on mandate for refiners to use a renewable fuel that so far is commercially ‘nonexistent’ Wesley Loy For Petroleum News
A federal court recently dealt a setback to the government’s advancement of biofuels as a substitute for oil.
The Jan. 25 decision from the U.S. Court of Appeals for the District of Columbia had to do with the Environmental Protection Agency’s forecast of cellulosic biofuel production for 2012.
Under federal law, EPA implements regulations to ensure that transportation fuel sold in the United States has a minimum volume of renewables such as cellulosic biofuel blended in.
Cellulosic biofuel is an “advanced biofuel,” less polluting than other kinds of renewables, derived from sources such as switchgrass and agricultural wastes.
“When Congress introduced the cellulosic biofuel requirement in 2007, there was no commercial-scale production at all,” the court ruling said.
But on the expectation of significant development in the biofuel industry, Congress mandated the use of millions of gallons of cellulosic biofuel each year. EPA forecasts annual cellulosic biofuel production, forming the basis for how much refiners are required to buy to comply with the federal renewable fuel standard.
The trouble is, cellulosic biofuel hasn’t yet become commercially available, argued the American Petroleum Institute, which went to the court to challenge EPA’s 2012 projection.
In its 14-page opinion, the court said “we agree with API that because EPA’s methodology for making its cellulosic biofuel projection did not take neutral aim at accuracy, it was an unreasonable exercise of agency discretion.”
‘Absurd mandate’ API is a national trade association for oil and gas producers, refiners and marketers.
“We are glad the court has put a stop to EPA’s pattern of setting impossible mandates for a biofuel that does not even exist,” API’s Bob Greco said in a Jan. 25 press release. “This absurd mandate acts as a stealth tax on gasoline with no environmental benefit that could have ultimately burdened consumers.”
Refiners and importers of gasoline and diesel would have had to pay over $8 million for credits to cover the 2012 mandate of 8.65 million gallons of the nonexistent biofuel, API said.
“This decision relieves refiners of complying with the unachievable 2012 mandate and forces EPA to adopt a more realistic approach for setting future cellulosic biofuel mandates,” Greco said. “The court has provided yet another confirmation that EPA’s renewable fuels program is unworkable and must be scrapped.”
The court noted that while EPA based its 2012 cellulosic biofuel production forecast on information from the Energy Information Administration and elsewhere, EPA also was interested in promoting the growth of the biofuel industry. And EPA indicated a concern that setting too low a production outlook could depress the market for cellulosic biofuel.
This effectively put refiners in a tough spot, as they have no control over how much cellulosic biofuel is produced.
It was as though EPA was saying, “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers,” the court opinion said.
Biofuel producers react The ruling wasn’t entirely favorable for API. The court rejected API’s challenge of EPA’s refusal to lower required volumes of other advanced biofuels. In its 2012 regulation, EPA concluded other sources of advanced biofuels, such as imported sugarcane ethanol and biomass-based diesel, could make up for the shortfall in projected cellulosic biofuel.
The Renewable Fuels Association, in a Jan. 25 press release, said the court “vacated the cellulosic biofuel standard because it believed that EPA had impermissibly set the volume with the objective of promoting growth in the industry, rather than simply making an accurate prediction. The biofuels organizations strongly disagree with the court’s characterization of what EPA did — EPA did not determine a reasonably achievable volume and then inflate it. Rather, it set the volume based on the best information available to it at the time.”
In affirming EPA in part, the court decision “once again rejects broad-brushed attempts to effectively roll back” the federal renewable fuel standard, the association said.
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