EPA delays RFS2 ruling

By Kris Bevill
In early July, the U.S. EPA announced at a U.S. Senate subcommittee hearing that it would be delaying its proposal for implementing the second stage of the renewable fuels standard (RFS2).

Robert Meyers, principal deputy assistant administrator in the EPA's Office of Air and Radiation, told attending senators that because the RFS2 includes new elements that add complexity to the program, the EPA won't be able to issue a proposal before it becomes effective Jan. 1, 2009, as required. Instead, the proposal has been delayed until mid-2009.

Established with the signing of the Energy Independence & Security Act of 2007, RFS2 created five specific changes that must be implemented by the EPA, including:
› A volume mandate increase to 36 billion gallons of renewable fuel by 2022. For 2009, the mandate is 11.1 billion gallons, of which 1 billion gallons must be advanced biofuels.
› The inclusion of non-road gasoline and diesel fuel volume.
› The establishment of three new renewable fuels categories: advanced biofuels, biomass-based diesel and cellulosic biofuels.
› Life cycle greenhouse gas performance threshold standards applied to each renewable fuel category.
› The change in definition of renewable fuel feedstocks, limiting crops and crop residues used to produce renewable fuel to those from lands not cleared or cultivated prior to the enactment of the Energy Independence & Security Act, actively managed, or fallow and non-forested.

Arnie Klann, chief executive officer and chairman of California-based BlueFire Ethanol Inc., said he doesn't know of any company that will be producing cellulosic ethanol until mid-2009, so the EPA's delay is "probably ‘no harm, no foul.'" However, he said the potential problem resulting from a delay could be a lack of financial support for advanced biofuel projects. "How does the financial community perceive the risk of financing more ethanol plants if the mandate really isn't there?" he asked. He didn't think a delay will affect his company because BlueFire has already raised a substantial amount of funding for its first project. However, prolonged delays on the EPA's part could affect BlueFire's future projects.

Clayton McMartin, president of Clean Fuels Clearinghouse, a renewable identification number (RIN) registry, said a delay by the EPA will cause uncertainty throughout the entire renewable fuel chain, specifically in the area of RIN trading. "Without a specific standard for the advanced biofuels, refiners are not going to seek out RINs produced by those types of facilities," he said. "Even if they wanted to, they couldn't since the RIN is not specifically identified as being one produced from that type of facility."

EPA spokeswoman Cathy Milbourn said it's not unusual for the EPA to postpone a proposal, "especially one of this magnitude." Until the EPA announces its decision, the agency assumes the biofuels industry will continue to comply with the law as stated.