Senate hearing addresses 2014 RFS proposal
The U.S. Senate Committee on Environment & Public Works held a hearing Dec. 11 to consider the U.S. EPA’s proposed rule to set 2014 volume requirements under the renewable fuel standard (RFS). The hearing, titled “Oversight Hearing on Domestic Renewable Fuels,” featured testimony from representatives of the EPA, U.S. DOE, Growth Energy, DuPont, American Fuel & Petrochemical Manufacturers, Holzfaster Farm, Environmental Working Group, and the Advanced Ethanol Council.
Committee Chairman Barbara Boxer, D-Calif., opened the hearing by speaking about the importance of the RFS in creating energy independence and reducing greenhouse gas (GHG) emissions. “Advanced and cellulosic biofuels play a very important role in the RFS, and I personally believe that the federal government should promote their use,” she said.
While the cellulosic biofuels industry was launched during the most severe economic downturn in U.S. history, Boxer noted that with a sustained commitment to support renewable fuels, the EPA predicts that five companies will produce cellulosic ethanol on a commercial scale in 2014.
Sen. David Vitter, D-La., also delivered a statement. “The folks who wrote the RFS lad laudable goals in mind at the time, but I believe it’s really time to admit that the RFS is fundamentally flawed and limps along year after year, mostly benefiting a small sector of our economy committed to government mandates, while also causing real damage and dislocation to others, including the American consumer,” he said. Vitter went on to address claims that the RFS increases food prices and that E15 can damage vehicles.
The hearing’s first panel featured testimony by Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, and Steven Chalk, deputy assistant secretary for renewable power in the DOE’s Office of Energy Efficiency and Renewable Energy.
In his testimony, Grundler described EPA’s decision to set proposed 2014 RFS volumes at levels below those established in statute. Specially, he spoke about the E10 blend wall gasoline consumption that has fallen short of estimates made in 2007, when the RFS program was updated. While E15 and E85 aren’t subject to these blending limitations, Grundler said there are factors limiting their use, including a lack of distributing, blending and dispensing infrastructure, and flex fuel vehicles.
According to Grundler, the EPA’s approach applies two different authorities in the statute that permit EPA to reduce volumes of advanced biofuel and total renewable fuel below the volumes specified in statute. When the volume of cellulosic biofuel is lowered below that in the statute, he said the EPA also has the authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or lesser amount. In addition, the EPA has the authority to reduce the volumes of renewable fuel under certain conditions, including a determination of “inadequate domestic supply.”
In his testimony, Chalk addressed the DOE’s role in the research, development and demonstration of advanced biofuel and associated vehicle technologies. “Biomass is a direct, near-term alternative energy resource for supplying liquid transportation fuels to the nation,” he said in his official written statement. “Starch-based ethanol is a well-established commodity fuel with wide market acceptance through low- level blends in conventional vehicles and at higher blends in flex-fuel vehicles.”
The second panel kicked off with testimony from Gen. Wesley Clark, co-chairman of Growth Energy’s Board of Directors. Clark noted that one of the biggest reasons for the establishment of the RFS was to break our nation’s addition to foreign oil. Since 2005, U.S. dependence on foreign oil has decreased from 60 percent to 40 percent, he said, resulting in a 33 percent reduction.
“My message to the committee is this: the Renewable Fuel Standard (RFS) is an overwhelming success,” said Clark in his official testimony. “It has reduced our dependence on foreign oil and made our nation more energy independent, created American jobs, revitalized rural America, injected much-needed competition into a monopolized vehicle fuels market, lowered the price at the pump, and improved the environment. That is a great record of accomplishment – one that I would call a brilliant success. It is wise policy, and a tribute to its bipartisan passage.”
James Collins, Jr., senior vice president of DuPont Polymers and Industrial Biosciences, focused on the investment DuPont has made in biofuels and how those investments have made transformative contributions to our nation’s energy security, reduced GHG emissions and strengthened rural economies.
Collins stressed that his company’s 30 MMgy cellulosic plant in Iowa is on track to begin producing cellulosic ethanol in 2014. “When you look at the complex challenge before us – this has actually gone incredibly fast,” he said. “We had to unlock the sugars trapped in cellulose, biochemically convert them into advanced liquid fuel and create an entirely new supply chain to deliver this raw material with the economics capable of competing with fossil fuels. DuPont has over 200 years of bringing scientific innovation to market. We’ve never delivered this type of disruptive innovation so fast.”
Collins also talked about DuPont’s other biofuel ventures, including its Butamax joint venture with BP. That project aims to produce biobased butanol. “Butamax is constructing the first phase of a retrofit of an ethanol plant in Lamberton, Minn., which after a two phase construction process will be producing commercial scale biobutanol by 2015,” he continued.
He also stressed the importance of the RFS. “The RFS works well. Reversing course on the RFS would deny the country of a true alternative fuel with real climate benefits and economic upside for consumers and producers across the U.S. It would be a mistake to in any way alter the RFS which would certainly result in the United States losing its lead in the development of advanced renewable fuels. A change in this bedrock policy will assure that investors and entrepreneurs step back and wait to see how a new policy will develop, while they take their investments and resources elsewhere. Without the RFS, America can be all but certain that investment in advanced renewable fuels like cellulosic and biobutanol will halt for at least a generation,” Collins continued.
Charles Drevna, president of the AFPM, submitted testimony on behalf of his organization asking for the RFS to be repealed. “The annually increasing amounts of biofuel required to be blended into a declining fuel supply mean the federal biofuel mandate threatens to create fuel supply shortfalls and risk damaging consumer engines. The combination of these factors demonstrates that the RFS is unnecessary, unworkable, and should be repealed,” said the AFPM in its official statement.
Jon Holzfaster, owner and operator of Holzfaster Farm, delivered testimony on how the RFS impacts his Nebraska farm. “The Renewable Fuel Standard (RFS) is a critical piece of our nation’s energy policy,” he said in his official statement. “Since its enactment in 2005, it has accomplished what it was designed to do, namely, it has created jobs, lessened our dependence on foreign oil and thereby increased national security and improved the environmental footprint of our nation’s transportation fuels.”
Scott Faber, senior vice president for government affairs at the Environmental Working Group, was critical of corn ethanol in his testimony, but spoke more favorably about second-generation advanced biofuels. He called for the RFS to be reformed to accelerate the development of drop-in biofuels. “Accelerating development of promising second-generation fuels, especially drop-in fuels, is critical to reducing the carbon intensity of the overall fuel supply, but this is not happening quickly enough to offset the negative environmental impacts of conventional biofuels. To date, the RFS, as currently designed, is not providing sufficiently powerful incentives to develop these second-generation fuels,” he said in his official statement.
Finally, Brooke Coleman, executive director of the Advanced Ethanol Council, delivered his testimony to the committee. He noted that the RFS has caught the attention of incumbent industries, the media and a range of public advocacy groups, and posed the question, “Is the RFS garnering this much attention because it’s not working, or because it’s working exactly as designed?”
“One of the focal points of the oil industry’s attempt to rationalize amendment or repeal of the RFS at the legislative level is the miscasting of recently increasing RIN prices relative to the so-called blend wall and gas prices. Some major oil companies are arguing that they cannot blend more renewable fuel because of the “blend wall;” that higher RIN prices reflect the need to buy RINs instead of gallons to meet the RFS; and, that higher RIN prices will ultimately result in higher gas prices during the economic recovery. This is a creative argument, but it is not true,” Coleman said in his official statement.
Within his testimony, Coleman pointed out that the RFS is working as designed and stressed that advanced and cellulosic biofuels are breaking through at commercial scale even though the financial markets are very challenging. He also noted that the U.S. government has always used federal policy to promote energy security and jobs, and that government support is not limited to biofuels. Rather, the fossil fuel industry receives substantial government support.
According to Coleman, weakening the RFS would make the U.S. economy more vulnerable to the risk of depending on one fuel type. In fact, he said the RFS hedges oil supply risk for the U.S. economy while promoting innovation. Weakening the program would also lead to reduced air and water quality and increase the impacts of climate change. Alternating the program would also send a negative signal to investors interested in committing to clean energy projects in the U.S.
Several biofuel industry associations have weighed in on the hearing. Bob Dinneen, president and CEO of the Renewable Fuels Association, sent a letter to the committee that addressed renewable identification numbers (RINs). Specifically, the letter provided perspective on the importance of a viable RIN market to future growth in domestic renewable fuels production, and to correct misconceptions about the influence of RINs on consumer fuel prices.
The Biotechnology Industry Organization submitted a statement to the committee noting that commercial development of advanced and cellulosic fuels, along with other biotechnology applications, could come to a halt if the 2014 RFS proposal is enacted as is.
“This proposal will leaving us increasingly dependent on oil, which increasingly comes from volatile regions of the world or is extracted in environmentally detrimental ways such as Canadian oil sands or deep water drilling. Setting the 2014 RFS obligations lower than the 2013 levels would mean that America will use 100 million additional barrels of oil next year alone. This would result in more than 30 million added tons of greenhouse gases going into the atmosphere,” said BIO in its testimony. “This proposed rule, if finalized and carried into the future will stymie the growth of advanced and cellulosic production, discourage additional innovation in the biotechnology industry, harm economic growth, undermine U.S. energy security, and enable significant backsliding on the nation’s environmental goals.”
Additional information on the hearing, including written testimony and an archived webcast, can be downloaded from the committee’s website.