Lawmakers pitch plan to tweak renewable mandate

Lawmakers have unveiled the first major proposal to rewrite a mandate forcing refiners to blend biofuels into gasoline, amid a growing outcry against the eight-year-old requirement.

Rep. Gregg Harper, R-Miss., and Rep. Jim Matheson, D-Utah, introduced the legislation in the House, which would effectively force the Environmental Protection Agency to use the previous year’s biofuels production stats to dictate new annual targets. A companion measure was introduced in the Senate by Jeff Flake, R-Ariz., David Vitter, R-La., and Michael Crapo, R-Idaho.

The Renewable Fuel Standard requires refiners to blend steadily increasing amounts of ethanol and other alternatives — up to 36 billion gallons in 2022 — into the nation’s transportation fuel supply. But the EPA sets annual targets for renewable fuels under the mandate, including next-generation biofuels made from non-edible materials.

The EPA just proposed establishing a 14 million gallon target for cellulosic biofuel made from grasses, solid waste and other non-edible material in 2013, though virtually none was commercially available last year. The move came on the heels of a federal appeals court in Washington, D.C., ruling that the EPA’s 2010 requirement for blending 8.65 million gallons of cellulosic biofuels with gasoline was unrealistic.

Because very few cellulosic biofuels have been available, refiners can be hit with noncompliance fines or purchase waiver credits from the EPA at a rate of 78 cents per gallon. Oil industry trade groups have been asking Congress to repeal the renewable fuel standard, because, they say, it is unfair to penalize refiners for not hitting “aspirational” targets for elusive “phantom fuels.”

“EPA continues to set absurd mandates based on production promises by biofuel producers that disappoint year after year,” said American Petroleum Institute Downstream Group Director Bob Greco. “This is bad public policy and it’s time for Congress to step in and put a stop to it.”

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“Companies have paid millions of dollars to the EPA for a fuel that isn’t commercially produced, and those costs are being passed onto consumers in the form of higher gas prices,” Matheson said.

Matheson cast his and Harper’s legislation as a “common-sense bill that requires the EPA to take into account actual production numbers and protects business and consumers from unrealistic goals resulting in higher costs.”

“EPA’s actions make clear that only legislative remedies will constrain the agency’s haphazard and irresponsible implementation of this unworkable mandate,” said Charlie Drevna, head of the American Fuel and Petrochemicals Manufacturers. “This bill highlights and would solve just one of the many inherent problems with the RFS, and magnifies the need for Congress to repeal an unnecessary and costly law.”

But biofuels boosters said the legislation would effectively kill the future development of next-generation biofuels required under the Renewable Fuel Standard, by eliminating a major incentive driving innovation and production.

Tom Buis, the CEO of Growth Energy, said the bill “is nothing more than a well-disguised end run around the RFS, attempting to eliminate the use of biofuels in the commercial marketplace.”

And the biofuels coalition Fuels America said the measure “plays into the hands of oil companies looking to undermine the renewable fuel industry and deny Americans choice at the gas pump.”

Although this is the first major bill proposed to rework the RFS, it is sure to be far from the last, as refiners and oil companies ask lawmakers to repeal or dramatically rewrite the mandate.

The American Petroleum Institute has insisted that nothing short of a full repeal would be sufficient, because the RFS is fundamentally flawed.

Renewable Fuels Association President Bob Dinneen told ethanol producers at a conference in Las Vegas that the industry is “under siege,” but also “fighting back,” partly by defending the RFS in Washington.

Read ongoing FuelFix coverage of the debate over federal biofuel mandates:
Unusual allies fight renewable fuel standard (Feb. 4)
EPA adds to controversial biofuel mandate (Jan. 31)
Court rejects EPA biofuel mandate (Jan. 25)
Refiners ask Congress to scrap renewable fuels mandate (Jan. 15)
Perry loses bid for renewable fuel waiver (Nov. 16)
Fake biofuel credits prompt push for better screening system (Sept. 25)