The American Petroleum Institute filed a lawsuit Tuesday claiming the government is requiring refiners and gasoline importers to purchase renewable fuels that don’t exist.
The lawsuit, which was filed in a federal court in Washington, argued that the Environmental Protection Agency’s mandates are unreasonable, according to the API, an energy industry trade and lobbying group.
“EPA’s unattainable and absurd mandate forces refiners to pay a penalty for failing to use biofuels that don’t even exist,” Bob Greco, the API’s director of downstream and industry operations, said in a statement.
The EPA did not immediately respond to inquiries about the disputed renewable – cellulosic biofuel — ethanol fermented from products other than corn, which is the main source of U.S. biofuel now. The agency has said that wood chips, wood residue, grasses, agricultural residue, animal waste and municipal solid wastes can also be used to produce cellulosic biofuels.
In 2012, the EPA will require gasoline producers and importers to displace 0.006 percent of their total gasoline production with the purchase of cellulosic biofuels.
As is the case with other EPA-supported biofuel incentive programs, biofuel makers can sell a credit to gasoline producers for each gallon of biofuel they make. But no credits have been generated for cellulosic biofuels this year, or ever, according to the EPA’s website.
In the absence of credits, the EPA will allow gasoline producers to purchase cellulosic biofuel waivers at a cost of 78 cents a gallon to meet obligations at the end of the year.
Oil and gas lobbyists are arguing that the incentive program will require refiners and importers to pay for 6.6 million gallons of the “nonexistent biofuel.”
The agency has mandated cellulosic biofuel credit purchases since 2010, but no credits were available, so companies were required to buy waiver credits from the government. In total, the credits have cost the industry about $14 million over two years, Greco said in a telephone interview.
“That’s, in effect, a tax,” Greco said. “We’re having to pay for a fuel that doesn’t exist when the EPA could have adjusted the mandate to reflect that reality.”
The API filed a petition with the agency last year, asking the EPA to reconsider the 2012 mandates because of the limited availability of cellulosic biofuels. The agency has stuck with the mandate, with the intent of creating an incentive for more production of the fuel.
“API supports a realistic and workable (Renewable Fuel Standard) and continues to recommend that EPA base its prediction on at least two months of actual cellulosic biofuel production in the current year when establishing the mandated volumes for the following year,” the lobbying group said in a statement. “This approach would provide a more realistic assessment of potential future production rather than simply relying on the assertions of companies whose ability to produce the cellulosic biofuel volumes EPA hopes for is questionable.”