Biobased and Renewable Products Update
August 24, 2017
Appellate Court Rules EPA RFS Exemption Criteria Too Strict
On August 15, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled two to one that the U.S. Environmental Protection Agency (EPA) exceeded its statutory authority under the Clean Air Act (CAA) when it denied Sinclair Oil Corporation’s request for a hardship exemption from the Renewable Fuel Standard (RFS) program. The statute requires that EPA grant exemptions on a case-by-case basis to small refiners that would suffer a “disproportionate economic hardship” in complying with the RFS program. According to the court ruling, EPA’s interpretation that there needed to be a threat to the refinery’s survival as an ongoing operation to be eligible for the exemption is outside the range of permissible interpretations of the statute and, therefore, inconsistent with Congress’s statutory mandate. To support its ruling, the court cited the U.S. Department of Energy’s (DOE) matrix analysis that lists three viability metrics that determine hardships, including reduced profitability, temporary negative events, and risk of closure. As a result of the ruling, EPA will have to reconsider Sinclair’s request for an exemption.
Justice Lucero respectfully dissented, stating that the majority decision did not consider EPA’s lengthy discussion, which demonstrates that the Agency considered all of the viability factors.
Bill To Repeal Bioenergy Subsidies Introduced In The House Of Representatives
On July 26, 2017, the Farewell to Unnecessary Energy Lifelines Reform Act of 2017 or FUEL Reform Act (H.R. 3419) was introduced in the House of Representatives by Representative Andy Biggs (R-AZ). The bill would eliminate the following energy subsidies in Title IX of the Farm Security and Rural Investment Act of 2002:
■ Biobased Markets Program;
■ Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program;
■ Repowering Assistance Program;
■ Biorefinery Program for Advanced Biofuels;
■ Biodiesel Fuel Education Program;
■ Rural Energy for America Program;
■ Biomass Research and Development Initiative;
■ Feedstock Flexibility Program for Bioenergy Producers;
■ Biomass Crop Assistance Program; and
■ Community Wood Energy Program.
The bill, which is co-sponsored by Representatives Louie Gohmert (R-TX), Trent Franks, (R-AZ), Walter Jones (R-NC), and Jim Jordan (R-OH), was referred to the Committees on Agriculture; Oversight and Government Reform; and Science, Space, and Technology.
New Iowa State Study Shows Benefits Of RFS Program
In a paper forthcoming in the American Journal of Agricultural Economics, Iowa State researchers demonstrate that their tractable multi-market equilibrium model designed to evaluate alternative biofuel policies confirms that the current RFS program benefits the agriculture sector, and leads to overall welfare gains for the U.S. The model considers biodiesel and ethanol markets and is simulated to analyze alternative scenarios, including the repeal of all RFS mandates, the 2015 level of mandates, and the projected 2022 RFS mandates. The analysis shows that the U.S. benefited from lower gasoline, crude oil, and crude oil import prices. Researchers estimated a welfare gain of $2.6 billion to the U.S. from the RFS program, primarily due to the impact of the policies on trade.
Additionally, the analysis predicts that full implementation of the 2022 statutory mandates will be costly and produce limited welfare gains, stating that the agricultural terms of trade are a significant contribution to the RFS generating a positive impact. To compensate for this, researchers recommend the mandate for corn-based ethanol production expand beyond the 15 billion gallon cap envisioned by the Energy Independence and Security Act of 2007 (EISA). The report also recommends a reduction of biodiesel production from current levels, and no cellulosic biofuel production.
USDA Awards Funding For Study Of Biofuels Impact On Climate
The U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA) awarded researchers from Clemson University a $147,744, two-year grant to evaluate the effectiveness of producing biofuels to mitigate climate change. The project will analyze how switchgrass fields and loblolly pine forests affect local temperatures through the exchange of water, energy, radiation, and carbon with the atmosphere; and quantify below- and above-ground carbon fluxes in both loblolly pine and switchgrass plantations and assess the greenhouse gas emissions of the full biofuel production chain for each crop. The goal is to develop a comparative picture of the potential of these feedstocks to reduce carbon emissions when generating electricity by co-firing in a coal power plant, and ultimately to aid the development of effective land-use policies.
■ Illinois Sustainable Technology Center, “Project Moves Forward to Turn State Roadways into a Renewable Energy Source”
■ North Dakota State University, “Economic Impact of North Dakota’s Ethanol Industry in Fiscal Year 2015”
■ The University of British Columbia, “New Biofuel Technology Cuts Production Time Significantly”