EPA abandons RFS rulemaking for 2014

In Washington, the U.S. EPA announced it is delaying finalization of the long-awaited 2014 Renewable Fuel Standard Renewable Volume Obligations until 2015.

The proposed 2014 rule ran into a steamroller of opposition from renewable fuel groups, who said the proposed rule substantially cutting biofuels targets “pulled the rug” from underneath billions of dollars investment made in reliance upon targets.

The EPA Statement

The Agency said:

“Today EPA is announcing that it will not be finalizing 2014 applicable percentage standards under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the 2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015.

“EPA will be making modifications to the EPA- Moderated Transaction System (EMTS) to ensure that Renewable Identification Numbers (RINs) generated in 2012 are valid for demonstrating compliance with the 2013 applicable standards.”

The Agency adds:

“On November 29, 2013, EPA published a notice of proposed rulemaking to establish the 2014 RFS standards. The proposal has generated significant comment and controversy, particularly about how volumes should be set in light of lower gasoline consumption than had been forecast at the time that the Energy Independence and Security Act was enacted, and whether and on what basis the statutory volumes should be waived. Most notably, commenters expressed concerns regarding the proposal’s ability to ensure continued progress towards achieving the volumes of renewable fuel targeted by the statute.

“EPA has been evaluating these issues in light of the purposes of the statute and the Administration’s commitment to the goals of the statute to increase the use of renewable fuels, particularly cellulosic biofuels, which will reduce the greenhouse gases emitted from the consumption of transportation fuels and diversify the nation’s fuel supply.

“Finalization of the 2014 standards rule has been significantly delayed. Due to this delay, and given ongoing consideration of the issues presented by the commenters, EPA is not in a position to finalize the 2014 RFS standards rule before the end of the year. Accordingly, we intend to take action on the 2014 standards rule in 2015 prior to or in conjunction with action on the 2015 standards rule.

The complete EPA announce is here.

Industry reaction

BIO President & CEO Jim Greenwood

“We appreciate that EPA will not be finalizing a proposed 2014 RFS rule containing a flawed methodology for setting the renewable fuel volumes. We will continue to work with the agency to get this successful program back on track as soon as possible.

“The RFS supports companies that invest in, build and start up new advanced and cellulosic biorefineries here in the United States. It’s clear that the advanced biofuel industry has made rapid strides to increase production capacity to meet the annual volume requirements. Unfortunately, the delay in this year’s rule already has chilled investment and financing of future projects, even as first-of-a-kind cellulosic biofuel plants are right now starting up operations. The industry needs a final rule that is legally appropriate and continues to support our efforts.”

Michael McAdams, ABFA President, Advanced Biofuels Association

“Today, EPA hit the big reset button.  Given the fact that we are already at the end of 2014, we appreciate EPA’s recognition that the real importance is to set the program on a clear glide path for 2015 and 2016. The numbers do matter, and utilizing the actual production will be a positive step from what was a proposed. We appreciate how EPA recognized that cutting requirements for advanced biofuels would be a mistake. This emerging industry deserves better considering it has already demonstrated the capacity to generate 3.2 billion gallons of advanced biofuel annually. But, at least EPA’s decision leaves the glass more than half full and allow us to get back on track next year.

“We are hopeful that this resets the bar to allow EPA to release 2015 numbers as quickly as possible and give certainty to the program. It has been the uncertainty that has created issues for the advanced and cellulosic sectors to move forward.

“Congress intended the RFS to improve America’s energy security by fostering development of the next generation of cleaner, more sustainable biofuels. Considering EPA is nearly a year late, which has left the air of uncertainty around the program, perhaps it is time for lawmakers to take a fresh look at whether the program is meeting expectations and following Congress’s desired goal of creating an advanced and cellulosic industry.”

National Biodiesel Board Vice President of Federal Affairs Anne Steckel

“This Administration says over and over that it supports biodiesel, yet its actions with these repeated delays are undermining the industry. Biodiesel producers have laid off workers and idled production. Some have shut down altogether. We know that fuels policy is complex, but there is absolutely no reason that the biodiesel volume hasn’t been announced. We are urging the Administration to finalize a 2014 rule as quickly as possible that puts this industry back on track for growth and puts our country back on track for ending our dangerous dependence on oil. We also urge them to move quickly on 2015 so that we don’t repeat this flawed process again next year.”

Advanced Ethanol Council Executive Director Brooke Coleman

“Pulling back on the 2014 RFS rule is the right thing to do at this stage in the game when it comes to preserving the integrity of the program. While the cellulosic biofuel industry will not get the policy certainty it needs from this decision, it does suggest that the Administration is listening when it comes to our concerns about giving oil companies too much power to avoid its obligations under the RFS going forward. This battle was never about the 2014 volumes for the oil industry, and we appreciate the Administration’s willingness to pivot in the right direction this late in the game. The key now for advanced biofuel investment is to move quickly to fix what needs to be fixed administratively so we can reestablish the RFS as the global gold standard for advanced biofuel policy.”

Bob Dinneen, president and CEO, Renewable Fuels Association

“Deciding not to decide is not a decision. Unfortunately, the announcement today perpetuates the uncertainty that has plagued the continued evolution of biofuels production and marketing for a year. Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers.

“Moreover, it is clear that one of the reasons we find ourselves in this position is that the oil industry has steadfastly refused to make the investments in infrastructure or allow their marketers to offer higher ethanol blends like E85 or E15. In the absence of their dogged efforts to undermine the RFS, this would be far simpler for EPA.

“The monopoly-protecting talking points of the oil industry notwithstanding, the RFS has been enormously successful. It has compelled competition in motor fuel markets, lowered consumer gasoline costs, and reduced the carbon footprint of transportation fuels. We look forward to working with the Administration to assure this critically important program is implemented consistent with congressional intent, to the benefit of consumers and with the goal of advancing the evolution of biofuels production and marketing.

“Refiners will continue to resist the competition from biofuels. The RFS must be allowed to be the market forcing mechanism it was designed to be. In the end, the verdict on today’s announcement can only be made after a decision on a path forward for biofuels is identified.

Growth Energy CEO Tom Buis CEO 

“The EPA made the appropriate decision today to not finalize the 2014 RVO numbers. We commend them for listening to all stakeholders. Today’s announcement is a clear acknowledgement that the EPA’s proposed rule was flawed from the beginning. There was no way the methodology in the proposed rule would ever work, as it went against the very purpose and policy goals of the RFS. The EPA wisely decided not to finalize the rule so they could fix the flawed methodology. Their initial proposal over a year ago was unacceptable and simply acquiesced to the demands of Big Oil and their refusal to blend more renewable fuels into the marketplace.

“The decision to withdraw the rule is a win for the renewable fuels industry. While a further delay is unwelcome news, at the end of the day, the most important aspect is that the EPA gets the final rule right. The EPA must implement the RFS as it was originally envisioned and supported by a bipartisan majority in Congress. This policy was established to help improve our environment, create jobs that cannot be outsourced and reduce our dangerous dependence on fossil fuels and foreign oil, all while providing consumers with a choice and savings at the pump by increasing market access to cleaner burning renewable fuels.

“Growth Energy stands ready to work with the administration to ensure that America stays on a path to energy security and innovation by ending the decades old, shortsighted practice of ‘putting our eggs in one basket’ by relying only on foreign oil and fossil fuels. I encourage the EPA to act swiftly to produce a final rule that ensures the methodology allows our industry to move forward and invest in additional production of biofuels, which will help grow an American industry that creates jobs, reduces our dependence on foreign oil and fossil fuels, reduces carbon pollution and creates new economic opportunities all over the country.”

Novozymes North America president Adam Monroe

“We want to thank the EPA for listening to the concerns of the renewable energy industry, and not finalizing a clearly flawed proposal that would have had major ramifications for the US economy and the climate. We now look forward to working with the agency to maintain a strong RFS.

“The biofuels industry has grown in the United States because of a predictable and supportive federal policy. Novozymes has invested millions of dollars in research, construction, and innovation to create biofuel technologies that are cutting carbon emissions. We have hired and trained local workers for positions in our labs and production facilities. We invested $200 million in a new advanced manufacturing plant in Blair, Nebraska.

“We made these strategic choices because America’s Renewable Fuel Standard was strong, stable and clear. The EPA now has a great opportunity to restore confidence in the Obama Administration’s clean energy and climate agenda by returning to its historical administration of the RFS.”

Reaction from outside the industry

American Fuel & Petrochemical Manufacturers President Charles T. Drevna 

“The Obama Administration’s decision to further delay issuing the 2014 Renewable Volume Obligations (RVO) is a gross dereliction of responsibility that leaves fuel refiners and the biofuels industry alike to navigate a course of ambiguity. Today’s announcement indicates that the Administration plans to continuously mismanage this program in a manner that equates to playing Russian roulette with the nation’s fuel supply at the American consumer’s ultimate expense. The Administration’s inaction demonstrates once again that the non-functioning Renewable Fuel Standard program is irreparably broken. AFPM calls upon Congress to expeditiously resume work on repealing or significantly reforming the RFS. In the meantime, AFPM will seek legal intervention.  

“For three years in a row, the Administration has thumbed its nose at Congress and ignored a crystal clear statutory deadline to issue RVOs by November 30 of the preceding year. For this reason, AFPM today filed a notice of intent to sue EPA over its failure to issue the 2014 RFS regulations, which has languished at the White House Office of Management and Budget since August 22, 2014.”

Environmental Working Group policy analyst Mike Lavender

“Today’s announcement is further evidence that Congress must reform our badly broken food-to-fuel policies. By failing to reduce the amount of corn ethanol blended into gasoline, the Obama administration today missed an opportunity to immediately reduce greenhouse gas emissions. If we hope to reverse climate change, we need greenhouse gas reductions now, not in 2025, and reducing the amount of corn ethanol in gasoline is among the most effective tools at the administration’s disposal. We urge the administration to quickly finalize a RVO that paves the way for truly “green” biofuels.”

Friends of the Earth Climate and energy campaigner Lukas Ross

“Today’s announcement confirms that the Renewable Fuel Standard system is in absolute chaos. Frankly, this announcement has biofuel watchers stumped. No one is sure  how the standard will be administered now or what the implications will be for the industry. Final volume levels or no, the simple fact is that the statute requires too much climate-busting corn ethanol. Today’s announcement shows that Congress handed the EPA an unworkable policy. Now it’s time for Congress to step in and fix the corn ethanol problem they created.”