Of Oil and Water: New crises loom for biofuels with blenders, RFS2, and water usage

It has been a remarkable week around the Digest editorial office — the EPA’s signal that it expects to approve E15 blends in ethanol in mid-2010 if engine tests continue as they have to date; the release of the 50 Hottest Companies in Bioenergy rankings, and the preliminaries of the Copenhagen climate change conference.

What next? Two cautionary notes amongst the  celebration. One regarding oil, the other regarding water.

Oil

“Honestly, the refiners are setting on the sidelines laughing themselves silly watching the show,” writes Digest contributor Clayton McMartin on reaction to the E15 debate. In a report in DTN, RINSTAR president McMartin said “Two key timing issues have essentially paralyzed the Environmental Protection Agency at this point regarding the Renewable Fuels Standard. The first is the pending issuance of the much awaited final rules for RFS2 and the second is the Nov. 30th deadline for the 2010 mandates. It appears that EPA cannot issue one without the other. Why is this? Because it is essentially a “Catch 22” leaving EPA in the unenviable position of establishing a mandate with what some will challenge they have no authority to do.

McMartin point to comments by Al Manato, fuels specifications guru for the American Petroleum Institute, on the notice of proposed rulemaking for the revised Renewable Fuel Standard. “It is API’s position that EPA cannot lawfully establish renewable fuel standards (either general or fuel-type specific) based on the volumes set forth in the Energy Independence and Security Act of 2007 (EISA) without completing the rulemaking specified in the final sentence of CAA 211(o)(2)(A)(i),” Manato said. ” In addition, EPA cannot lawfully extend the RFS program to fuels other than gasoline. API is concerned that the Agency has imposed the EISA-mandated total renewable volume in 2009. EPA should not attempt to enforce a 17 percent greater mandate in 2010 until the RFS2 rulemaking is finalized. The rules that were finalized according to the Administrative Procedures Act procedures which implemented the Energy Policy Act of 2005 (EPACT05) require no more than 6.8 billion gallons of renewables in 2010.”

Meanwhile, Nov. 30th came and went, McMartin wrote in DTN, “without EPA issuing the much awaited 2010 mandates for renewable fuels. According to statutes, this report is due no later than Nov. 30th of the year prior to the compliance year in which the mandates are being established.”

McMartin predicted: “You will see a final RFS2 rule issued in the next 30 days and with it the mandates for 2010.  At this point in time I am also anticipating some creative implementation approaches.”

Water

In Washington, the Government Accounting Office (GAO) prepared a report on water-useage in biofuels production, noting “Water plays a crucial role in all stages of biofuel production—from cultivation of feedstock through its conversion into biofuel. As demand for water from various sectors increases and places additional stress on already constrained supplies, the effects of expanded biofuel production may need to be considered.”

The GAO writes: “According to some of the experts and officials we spoke with, increased demand for biofuel feedstocks may also create incentives for farmers to place marginal lands back into production. Marginal lands generally have lower productivity soils, so cultivating them may require more nutrient and pesticide inputs than more productive lands, potentially leading to further water quality impairments. Furthermore, delivery of sediments, nutrients, and pesticides to surrounding water bodies may increase if these lands are placed back into production because these lands are often highly susceptible to erosion due to wind and water.”

However the GA allows, that “Next generation feedstocks for biofuels have the potential for fewer negative effects on water resources.”

The full report can be viewed here.

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