EPA cuts biofuel mandate to reflect production numbers

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The Environmental Protection Agency announced Tuesday it was lowering the mandate to blend cellulosic biofuels into the country’s fuel supply to reflect actual production numbers instead of agency projections.

The agency’s final rule sets the amount of cellulosic biofuels refiners are required to blend into their fuels or buy credits for to 810,185 ethanol-equivalent gallons, reflecting actual production numbers for 2013.

“EPA made the right decision today to lower the 2013 cellulosic biofuel requirement to what was actually produced last year,” Charles Drevna, president of the American Fuel and Petrochemical Manufacturers, said in a statement.

“It is reassuring to know that the agency would readjust the numbers to meet reality instead of continuing to operate in the environment of unrealistic optimism that it had in the past,” Drevna added. “I expect EPA to use the same rational thinking to revise its proposed 2014 ethanol and biodiesel requirements, which are already long overdue.”

The EPA originally mandated that 14 million gallons of cellulosic ethanol be produced in 2013, but last year lowered that mandate to 6 million. But so far, the EPA only reports that about 20,000 gallons of cellulosic ethanol was produced in 2012 — last year’s production numbers have not yet been released.

“In the first quarter, less than 75,000 gallons of cellulosic biofuel were actually produced – less than one percent of EPA’s projection,” Drevna added. We hope that EPA radically adjusts the 2014 mandate to reflect actual production and obviate the need for the industry to continually challenge these unrealistic mandates.”

The EPA’s announcement comes on the heels of a government-backed study which found that cellulosic ethanol — which is made from the inedible parts of corn and other plants — emits more carbon dioxide than gasoline — eviscerating the environmental benefits once touted by ethanol producers.

Refiners won a federal court decision in early 2013 which said the EPA could not mandate a biofuel that did not exist in commercial quantities. The court ruling was only a temporary reprieve for those refiners forced to pay fines or buy credits for a biofuel that simply wasn’t in the marketplace as the EPA continued to push forward with aggressive blending targets.

But the oil and gas industry stepped up the pressure on the EPA to lower blending requirements in the face of rising ethanol credit prices. Pressure on the agency was further ramped up by livestock producers and other industries who saw their feed prices increase as more corn went towards fuel-making instead of food. Food prices were being driven up as well.

The EPA finally gave in to a coalition of industries pressuring the agency and Congress to reform or repeal the ethanol mandate. The EPA’s decision to lower cellulosic requirements has been hailed as a recognition that the fuel isn’t commercially viable, despite heavy subsidies.

The EPA said “finalizing this adjusted 2013 cellulosic biofuel standard expeditiously will reduce regulatory uncertainty and avoid unnecessary cost or burden for obligated parties.”

“Nearly five months after the end of the year, EPA  has finally agreed to reconsider its 2013 mandate for biofuels that do not exist,” said Bob Greco, downstream director at the American Petroleum Institute. “But setting unreasonable mandates isn’t just bad public policy, it makes producing the fuels American consumers demand harder and more costly.”

“For four years running, biofuel producers have promised high cellulosic ethanol production that hasn’t happened,” Greco added. “EPA must also reconsider its unrealistic proposal to mandate 17 million gallons of cellulosic biofuels for 2014.”

The EPA’s action will be listed in the Federal Register as a “direct final rule”, since the agency doesn’t consider it to be controversial. The rule will take effect immediately if no one submits a comment against the EPA’s decision.

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