The U.S. Environmental Protection Agency’s decision to postpone the release of its 2014 renewable fuel standard regulations will create uncertainty within the biofuels market and may cause investors to scuttle plans to build refineries in the U.S., biofuel advocates told reporters at a Nov. 24 briefing.
The standards—known as renewable volume obligations—set requirements for blending biofuels, such as ethanol, into gasoline at gasoline pumping stations.
EPA announced on Nov. 21 that it would not issue its 2014 renewable percentage standards until sometime in 2015. In addition, EPA will not finalize a controversial rule that would have made cuts to below 2013 levels for blending requirements, and enabled the EPA to waive the obligation requirements based on concerns about the distribution of renewable fuels to consumers.
Renewable fuel association officials said that EPA’s proposal, if made final, would have created a disincentive for producing and using biofuels. Brooke Coleman, Advanced Ethanol Council executive director, said “EPA’s decision to pull back the 2014 proposal is the right thing to do, but we need to move quickly in 2015” to get a better proposal in place.
EPA has said it plans to issue a proposal late in 2015. Bob Dinneen, Renewable Fuels Association president and CEO, said, “2015 is going to be another year of missed opportunities” unless EPA acts quickly in 2015.
The construction of refineries and supporting infrastructure has been a strong market for construction firms over the past several years. (ENR, 10/17/2011). A few commercial-scale, advanced biofuel refineries have opened in the past year, but the dozens of plants that are in the pipeline may be put on hold, or moved overseas, because of uncertainty about the future of the biofuels industry in the U.S., Coleman said.
The oil and gas industry, however, believes the entire Renewable Fuel Standard is problematic and should be scrapped.
Jack Gerard, American Petroleum Institute president and CEO, said in a statement, “The Renewable Fuel Standard was flawed from the beginning, horribly mismanaged, and is now broken."
He added, "Failure to repeal could put millions of motorists at risk of higher fuel costs, damaged engines and costly repairs.”
Gerard cited a Congressional Budget Office report that predicts higher gasoline and diesel costs under higher ethanol mandates. E15—a fuel blend with 15% ethanol—can damage engines and cause vehicles that use it to break down, according to Gerard's account of the Coordinating Research Council’s testing.
The American Fuel & Petrochemical Manufacturers went even further in response to EPA's announcement, calling the agency's inaction a "dereliction of responsibility." The group filed a notice on Nov. 21 saying it intended to sue EPA over its failure to to issue the 2014 regulations.
Sen. Lisa Murkowski (R-Alaska), the top Republican on the Energy and Natural Resources Committee, said, “With the agency responsible for implementing the standard now unable to finalize the rule for a calendar year within that year, let alone in accordance with statutory requirements, it is time for Congress to revisit and rethink this entire policy.”
But there is bipartisan support for the RFS and wider use of biofuels. In January 2014, a bipartisan group of lawmakers, including Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa), asked the EPA to modify its proposal to support “investments in the next generation of biofuels and the infrastructure necessary to deploy those fuels into the market.”