WASHINGTON, Nov. 25, 2015 - The Environmental Protection Agency could release three years’ worth of biofuel blending requirements as early as today, and it’s anyone’s guess what the final figures will be.
The release will set renewable volume obligations (RVOs) for 2014, 2015, and 2016, but 2016 is the year everyone will be watching. The 2014 figures will be set at actual usage and 2015 is 36 days from turning into 2016, so the first two years are essentially a lost cause in the eyes of most stakeholders following the announcement.
For 2016, renewable energy interests are hoping for the 22.25 billion gallon blending requirement set in the Energy Independence and Security Act of 2007. That would be almost 5 billion gallons more than the 17.4 billion EPA proposed in May, a figure that angered both renewable fuel and oil interests alike.
On the other side of the debate, Bob Greco with the American Petroleum Institute told reporters last week that API wants to see RVOs set at 9.7 percent of gasoline demand. The Energy Information Administration projects that 2016 motor gasoline consumption will be almost 140 billion gallons, putting API’s desired figure at about 13.5 billion gallons, about 8.75 billion gallons less than the statutory levels sought by renewable energy interests.
The administration isn’t tipping its hand about the figures it will announce, but EPA Administrator Gina McCarthy said in September that her goal is to get the RFS “back on track,” adding that the “our goal is the congressional targets.” However, in a speech to the renewable fuels group Growth Energy, she added that she has to reach for those targets “in a way that I think will pass muster.”
‘The last thing I want to do is give you what you want and we fall flat when we get to the courts,” she said.
Make no mistake, the legal system is where this announcement will be heading. The RFS is no stranger to litigation, and the only reason an announcement is expected by Nov. 30 is due to a consent decree reached in April in a lawsuit brought by API and the American Fuel and Petrochemical Manufacturers. If the blending requirements aren’t set high enough, a lawsuit from renewable fuel interests is likely, and vice versa with API and other oil stakeholders.
“What would be a shame is if farmers ended up having to sue EPA for the first time ever because EPA abandoned the program,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in an interview with Agri-Pulse. He said there was “no doubt” there would be a lawsuit from farmers and ethanol groups if the final rule shows no change from the May proposal, but added that their challenge wouldn’t have as much to do with the final number as it would the methodology used to arrive at it.
In the May proposal, EPA acknowledged the “blend wall” – a perceived cap on the amount of renewable fuels that can be used by the marketplace – as a reason for setting RVOs lower than the congressional mandates, a move that enraged the renewable fuels community, which accused EPA of buying into an oil industry narrative.
Tom Buis, CEO of Growth Energy, told Agri-Pulse that after years of uncertainty with the RFS, this announcement is truly a critical moment for the life of the program.
“The real issue is whether or not they study the facts and go forward like Congress intended,” Buis said. “It’s a very pivotal announcement, and they set precedence with it.”
However, oil companies contend that today’s energy picture is not the same as it was in 2007 when the current form of the RFS was established. Americans are driving fewer miles, vehicles are more efficient, and less gasoline is needed, so “our new energy realities have made the RFS obsolete,” API’s Greco said.
“We don’t think the American consumer should be a guinea pig for EPA to test the blend wall,” Greco said last week.
The announcement is coming as President Obama, McCarthy and other administration members prepare to leave for the international climate talks in Paris, which could be pressuring the administration to be more supportive of renewable fuels
Dinneen said he didn’t think it would look good for Obama to enter the talks just as “his administration has potentially rolled back the single most important and successful transportation- fuel climate program our country has ever had.”
“Tell me how much credibility he’s going to have talking about these issues on a global stage when he is not serious about doing so here at home,” Dinneen said.
The signals from the administration have been somewhat confusing. While Obama has been working to reduce greenhouse gas emissions through regulations like the Clean Power Plan, he has also mystified farmers by what appears to be little support for the RFS.
“The only conclusion I can come to is that there is somebody within the inner circle of the White House that I think is a die-hard environmentalist that does not like the RFS and continues to be a roadblock,” Chandler Goule with National Farmers Union recently told Agri-Pulse, adding that the suspicion was “confirmed a little bit more a couple of months ago when we were actually at the White House.”
National Corn Growers Association President Chip Bowling slightly disagrees, noting that Obama promotes renewable energy, and ethanol is a renewable product. “We think the hang-up is within the EPA,” he said.
Whatever the case, we should know the winners and losers within a matter of days.
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