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Court remands renewable fuel standard DC Circuit says EPA erred in considering demand side factors in setting standards for transportation fuel blends for 2014 to 2016 Alan Bailey Petroleum News
The U.S. Court of Appeals for the District of Columbia has in part upheld a series of appeals against standards set in 2015 by the Environmental Protection Agency for the blending of renewable fuels such as corn ethanol in transportation fuels in the United States. The standards in question apply to years 2014 to 2016. A further rule published in December 2016 set the standards for 2017.
Several organizations had appealed the 2015 rule on various grounds. However, the court dismissed all of the challenges to the rule except one, a challenge that EPA, when setting the renewable fuel standards, had improperly considered factors relating to the demand for renewable fuel rather than just renewable fuel supply constraints. The court has remanded the rule to EPA for reconsideration.
The Renewable Fuel Standard The Renewable Fuel Standard, introduced in 2007 as a component of the Clean Air Act and the Energy Independence and Security Act to address concerns about carbon emissions from the use of fossil fuels, requires EPA to publish standards for the use of renewable fuels as a component of liquid transportation fuels. However, the standards have proven controversial, especially since the renewable fuels are often more expensive to produce than fossil fuels.
By far the most common fuel component designed to meet the renewable fuel standard is ethanol, typically corn ethanol, that is added to gasoline. Other types of renewable fuels consist of cellulosic biofuel, generated from plant material, and biomass-based diesel fuel, produced for example from vegetable oil. EPA places the onus on fuel importers and refiners to ensure that sufficient renewable fuel is used to meet the renewable fuel standards, the concept being that, with sufficient renewable fuel in the fuel mix, fuel blenders, distributers and users will end up meeting the required standards.
Constraints The idea is to gradually increase the proportion of renewable fuels in the transportation fuel mix. But there are constraints in the rate to which this can be achieved. For example, gasoline engines cannot operate with more than a certain proportion of ethanol mixed with the gasoline, an issue that has led to a “blendwall,” typically set at 10 percent. Moving the proportion of renewables above this blendwall requires the use of forms of renewable fuel other than ethanol. Possibilities include advanced biofuels such as cellulosic biofuels.
The other constraint relates to the availability of renewable fuel supplies in sufficient volume to meet the renewable fuel standards. Under the statutes, EPA is allowed to consider supply constraints, if necessary setting the standards lower than the statutory targets. And, in its 2015 rule, EPA did set standards somewhat below targets set by statute, citing the lack of availability of sufficient quantities of advanced biofuels and of total renewable fuels.
Supply side only But in determining the renewable fuel volume requirements the EPA inadmissibly considered fuel demand side factors in addition to supply side constraints, the court found. As a consequence, the court has remanded the 2015 rule back to EPA.
The supply side constraints consider the volumes of renewable fuel that can realistically be supplied to the fuel importers and refiners that are responsible for meeting the renewable fuel standards. Demand side factors consist of parameters relating to consumer demand for renewable fuels, including factors such as the availability of vehicles that are able to use renewable fuels and the number of retail outlets that can offer renewable fuel blends.
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