EPA will reconsider the Renewable Fuel Standard (RFS) mandate for cellulosic ethanol it required for blending in 2013. In a letter to oil industry groups late last week, EPA Administrator Gina McCarthy said a petition the industry submitted last year “demonstrates that the statutory criteria for granting a petition for reconsideration are satisfied.”

The 2013 output for U.S. cellulosic ethanol is estimated at about 1 million gallons, far below the 6 million gallons called for by EPA. The American Petroleum Institute (API) says the credits blenders would need to buy to make up the 5-million-gallon shortfall would cost $2.2 million.

The 6-million-gallon mandate was set last October and actually represents the second reduction in the 2013 target. EPA proposed a 14-million-gallon cellulosic target for 2013 last January. The agency also dropped the cellulosic mandates in 2011 and 2012, the latter coming after a January 2013 decision from the U.S. Court of Appeals for the District of Columbia calling on EPA to require the blending of only that cellulosic ethanol commercially available.

The agency had originally required 20 million gallons in both 2011 and 2012, and refiners were expected to make up the balance through the purchase of credits. But API and other industry groups successfully argued requiring the credits amounted to an illegal tax. The court agreed, making EPA a little more sensitive as to what it can demand in cellulosic ethanol.

The cellulosic ethanol numbers currently under debate are miniscule compared to the targets originally set by the RFS as expanded by the 2007 Energy Independence and Security Act. Lawmakers seven years ago set the cellulosic target for 2013 at 1 billion gallons and 1.75 billion this year.

But the development of fuels made from grasses, crop residues and other non-food feedstocks has struggled to overcome high costs associated with enzymatic treatments and equipment. KiOR, a next-generation biofuel company suffered setbacks that reduced total output from the company's Mississippi plant to about 1 million gallons last year, below the 5 million originally projected.

However, three advanced biofuel plants are set to begin operating at full capacity this year. In Iowa, a 30-million-gallon capacity biorefinery is being readied by DuPont Industrial Biosciences, while a 20-million-gallon plant being built by Poet and DSM Advanced Biofuels is nearly completed. In Florida, INEOS says it will have its 8-million-gallon capacity plant fully producing cellulosic ethanol later this year.


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