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Calls For Common-Sense Advanced Biofuel Regulation Keep Coming In

As Congress continues holding hearings on the future of America’s Renewables Fuels Standard (RFS), calls keep coming in for common-sense regulation and oversight of foreign renewable fuel producers by the Environmental Protection Agency (EPA).

When combined with formal comments submitted by other notable biofuel proponents and stakeholders, the din is hard to ignore. A growing chorus is raising concerns about EPA’s unnecessary proposed requirements on foreign biofuel producers and sounding the alarm that these changes could raise domestic fuel prices and threaten U.S. supplies of sugarcane ethanol, one of the cleanest and most advanced biofuels available to American drivers.

The latest comments come from both Shell and BP America, producers and importers of renewable fuel, and a joint letter by the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API), two trade associations that represent many importers of renewable fuel in the United States.

1 – New requirements are unnecessary – Shell, a global group of energy and petrochemical companies with more than 90,000 employees in more than 80 countries and territories, calls EPA’s proposal “overly complex, unworkable and unreasonably retroactive.”  The company also points out these changes are not necessary:

“There is quite simply no basis to conclude that the additional requirements are necessary to ensure that the regulations can be enforced against these [foreign] parties. The current version of the rule puts the responsibility on the RIN generator to ensure that all of the regulations are met, including the provisions related to the definition of renewable biomass. We carefully adhere to the current rules and understand our obligation there under. The additional proposed requirements are simply unnecessary…

“Each foreign producer, in our experience and per our internal requirements, has provided substantial land-use traceability documentation, and separated food waste and animal fat traceability documentation, of feedstock tied specifically to volume of each parcel processed into renewable fuel, in support of each cargo volume loaded for US import and RIN generation, so that we can be assured that RINs that we generate from such ethanol are valid.”

Similarly the Independent Fuel Terminal Operators Association (IFTOA) wrote:

“This proposal is an extreme measure that would place the importers of these foreign-produced renewable fuels at a significant competitive disadvantage and could effectively prevent the importation of such fuels – contrary to the overall objective of the RFS Program. […] U.S. importers are already subject to U.S. jurisdiction, are fully registered with the EPA and are responsible to ensure the generation of valid RINs.  No additional safeguards are required.”

2 – Impractical segregation requirements will hinder supplies and increase costs Shell also predicted segregating sugarcane ethanol could halt U.S.-bound shipments for a full year:

“EPA’s proposal would require additional segregation of renewable fuels. This is problematic because insufficient renewable fuel tankage exists in foreign ports to segregate each foreign producer’s biodiesel or ethanol as gathered via trucks, rail, and barges, until an oceangoing cargo size volume is accumulated for export to US. The likely result of EPA’s proposal is that foreign renewable fuel producers, and the US importers of those renewable fuels, would be forced to suspend activity for approximately one year while additional tankage is constructed on foreign soil to accomplish the Agency’s desired degree of load port segregation.

“In addition, even if additional tankage could be built in foreign ports, such a requirement would delay receipt of foreign renewable fuels needed to meet RFS mandate, and raise cost of foreign renewable fuels relative to domestic fuels, inflating cost of all US renewable fuels.”

 BP America echoed Shells concerns, highlighting “serious logistical barriers” to segregate ethanol in the proposed rule:

“BP strongly opposes this proposed change to the RFS rules … This would likely result in decreasing the amount of biofuel available and reducing the pool of advanced and cellulosic ethanol volumes available for compliance with the RFS program. Keeping each Mill’s product segregated to vessel and then on vessel is overly burdensome and costly. Segregation will be very difficult given logistics constraints in foreign countries.”

1 – Assessing retroactive financial penalties is unreasonable – AFPM and API echoed Shell’s concerns.  The trade associations also weighed in on EPA’s proposal to retroactively require compliance with new regulatory requirements on all fuel produced and exported as of January 1, 2013:

“We are hopeful that this is simply a printing error and that EPA will correct this before finalizing the rule. It is not reasonable for EPA to impose such requirements retroactively. It is simply impossible for EPA to enforce a regulation looking back on actions foreign renewable fuel producers and RIN generators should have taken throughout 2013, when at the time of production, transportation, import and RIN generation, those foreign renewable fuel producers and RIN generators had no knowledge of any proposed rule change.”

2 – Stifling impact on new technologies. The Biotechnology Industry Organization (BIO), shared our concerns that while EPA’s aim is laudable the unintended consequences of the proposed rule could have a chilling effect on development of new biofuel technologies:

“We would encourage the [EPA] to ensure its enforcement of the rule does not inadvertently discourage legitimate feedstocks and fuels developed by producers who are already complying with section 80.1466 from being able to import to the U.S. Doing so may unintentionally impact domestic producers who use these feedstocks or fuels from developing domestic gallons of advanced or cellulosic biofuels.

In fact, a small ethanol producer in Canada, Growing Power Hairy Hill, noted this impact saying the proposed rule’s costs are:

“… prohibitive to small plants such as ours. The proposed bond multiplier for Advanced RINs of $0.8/gallon is simply too high. Such requirement can, in our opinion, only result in the further escalation of the Advanced RIN values and hence increase the cost of ethanol and resulting gasoline for US consumers.”

EPA’s quest to ensure regulatory accuracy of U.S. biofuel consumption is noble, but ultimately quixotic. If the proposed rulemaking were finalized without the sensible changes suggested by these formal comments, the cost of producing sugarcane ethanol and the price of pumping it into American vehicles would both rise, with no apparent benefits.

Congress has already heard EPA say it won’t be able to meet the RFS mandate for advanced biofuels without Brazilian sugarcane ethanol – so why would the agency want to test its own theory?

Leticia Phillips