Another EU-Brazil Summit on the way, but Can Leaders do What’s Right to liberalize trade on renewable energy?

Géraldine Kutas — posted 21/02/2014

The annual EU-Brazil summit will take place next week here in the European Union capital, Brussels. There will be plenty of bonhomie as these summits go. We can reasonably expect trade to be one of the most important items of the political agenda, alongside other global challenges such as economic growth and climate change. That includes the EU-Mercosur trade agreement negotiations, since the EU is Brazil’s biggest trading partner and Brazil is the most important market for the EU in the Latin American region.

But will Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso and European Council President Herman Van Rompuy dare to take one step further towards trade liberalization on renewable energy?

This could, for example, take the form of a renewed political commitment to exchange offers and conclude the EU-Mercosur trade agreement negotiations, with a view to substantially reduce tariffs on goods and services from both sides, and, more specifically, increase market access for sustainable biofuels. This may be wishful thinking, but both sides, who will meet on Feb. 24, have flirted with moving closer to promoting real free trade for sustainably and responsibly produced biofuels since 2010, when the EU-Mercosur trade talks were relaunched.

At the EU-Brazil Summit in 2013 in Brasilia, both parties reiterated the importance of sustainable biofuels as a viable alternative to fossil fuels, to reduce greenhouse gases emissions in the transportation sector. Accordingly, they agreed to promote sustainable production and use of bioenergy. However, words and actions still do not match. Brazilian sugarcane ethanol, which has the best environmental credentials among commercial-scale biofuels, still faces unjustifiably high tariffs and other trade restrictions in the EU market. Such policy is not only contrary to the pledge taken by Brazil and the EU but it also prevents EU consumers and industry to have access to sustainable biofuels and raw materials at competitive prices. Ultimately, it distances the UE from its own goal to reduce carbon emissions and move towards a bio-based economy.

We were happy to see some progress in the last EU-Brazil Summit, with the commitment to discuss the possibility of the establishment of an agreement recognizing the compatibility of Brazilian legislation and European sustainability requirements for biofuels. Now leaders have the opportunity to take a step forward and make a strong political statement to take this pledge to the next level.

Of course, such developments matters for Brazil, but it would also have important positive implications for Europe. Increased market access for Brazilian sugarcane ethanol would foster competition in the EU market, pushing down energy prices and promoting competitiveness and innovation for the EU industry while preserving the environment. The benefits would then translate into economic growth and more jobs.

Free trade is not a zero-sum game. Let’s hope that President Dilma and European Commission President Barroso will spread this message to the world at the VII EU-Brazil Summit and make meaningful commitments to liberalize trade on renewable energy.

UNICA’s Comments to EPA on the 2014 Renewable Fuel Standards

Leticia Phillips — posted 29/01/2014

Brazil’s sugarcane ethanol producers submitted formal comments to the EPA Tuesday that expressed the industry’s serious concerns about the agency’s proposed standards for the 2014 Renewable Fuel Standard (RFS). UNICA’s (The Brazilian Sugarcane Industry Association) comments encourage the EPA to revise the proposed extreme and unjustified reductions in statutorily-specified volume requirements for advanced biofuels. The comments urge the EPA to amend the proposal to set volume targets that are in line with Congress’ and the Administration’s twin goals of replacing fossil fuels with advanced biofuels and other renewable fuels, and reducing greenhouse gas (GHG) emissions from transportation fuels.

You can read UNICA’s full comments here.

Previewing Our Comments to EPA on Proposed 2014 Renewable Fuel Standards

Leticia Phillips — posted 24/01/2014

The Environmental Protection Agency shocked the biofuels community in November by proposing to slash consumption requirements for advanced biofuels in the Renewable Fuel Standard (RFS). Even though advanced biofuel producers easily exceeded EPA’s 2013 target of 2.75 billion gallons, and in fact delivered nearly 3 billion ethanol-equivalent gallons of advanced renewable fuel last year, EPA suggests setting the 2014 requirement at 2.2 billion gallons – a 20 percent cut. EPA is currently accepting public comments on their proposal. Next week, Brazil’s sugarcane ethanol producers – under the auspices of UNICA, our trade association – will submit formal comments expressing the industry’s profound concerns about EPA’s unnecessary and unjustified proposed reductions in statutorily-specified volume requirements for advanced biofuels. UNICA’s well-founded comments (more than 80 footnotes and growing!) will urge EPA instead to set volume targets that are in line with Congress’ and the Administration’s twin goals of replacing fossil fuels with advanced biofuels and other renewable fuels, and reducing greenhouse gas (GHG) emissions from transportation fuels.

Here’s a preview of a few key points we plan to stress with environmental regulators.

OUR PRINCIPAL CONCERNS
First, UNICA believes implementing the proposal would mark a significant step backward from recent progress toward increased use of efficient, renewable biofuels with low lifecycle GHG emissions. Insofar as the proposal prioritizes more carbon intensive fuels over cleaner, more efficient advanced biofuels like sugarcane ethanol, it is contrary to the purposes of the Clean Air Act and to the President’s Climate Action Plan. Second, UNICA believes that all or a significant portion of the proposed reductions for advanced biofuels and total renewable fuels are beyond the scope of EPA’s authority under the Clean Air Act. Congress, as evidenced by the legislative history and reaffirmed by courts, intended the RFS to force technological change through increased production and mandatory use of biofuels.

A DEPENDABLE PARTNER
Brazilian sugarcane producers have made a long-term commitment to providing clean, renewable advanced biofuels to meet energy and environmental goals in Brazil and the United States, along with many other countries. We have invested billions in increasing production and infrastructure to meet the expected demand for clean renewable fuels. As a result, the Brazilian sugarcane industry has more than adequate capacity to help achieve the statutorily-mandated volumes of advanced biofuel. We continue to lead the way in showing that higher blends of ethanol (hint: we’ve been using E25 in Brazil for three decades!) are not only possible but also beneficial to the environment and economy.

BENEFITS OF ADVANCED BIOFUELS
Multiple studies confirm that sugarcane ethanol is the most efficient and environmentally responsible advanced renewable fuel in widespread commercial use today, generating precisely the type of environmental benefits Congress sought to promote in carving out a preference for advanced biofuels in the RFS and that President Obama seeks to further in his Climate Action Plan. To be consistent with both Congressional intent and Administration policy, EPA should avoid taking steps—such as those in this proposed rule—that prioritize other, less GHG-efficient fuels over more GHG-efficient advanced biofuels like sugarcane ethanol.

EPA CANNOT IGNORE SUGARCANE ETHANOL
Congress did not in any way distinguish between ethanol and non-ethanol biofuels when it created the advanced biofuel category in the RFS. The statute treats both equally and indistinguishably as the same thing – advanced biofuels. EPA has previously determined that sugarcane ethanol is an advanced biofuel because of its low lifecycle GHG emissions, a conclusion it reaffirmed most recently in its 2013 RFS final rule. There is no basis in the statute for discounting, excluding, or otherwise ignoring sugarcane ethanol volumes or other ethanol advanced biofuel volumes in calculating the advanced biofuel required volumes for 2014, as EPA has proposed to do. When Congress specified volumes for the subcategories of advanced biofuels (like cellulosic biofuels and biomass-based diesel) but not others, it deprived EPA of discretion to create and either favor or discriminate against other subcategories. EPA must consider and include the available volumes of ethanol advanced biofuels when calculating the total required volume of advanced biofuels to be used in 2014.

INSUFFICIENT AUTHORITY UNDER THE CLEAN AIR ACT
To justify its proposed reduction of the total renewable fuel volume from 18.15 billion gallons to just 15.21 billion gallons, EPA cites two statutory provisions in the Clean Air Act: (1) the cellulosic waiver authority and (2) the general waiver authority. While no one contests the necessary reduction of cellulosic biofuels obligations to reflect lower-than-anticipated production of such biofuels, EPA grossly exaggerates this authority – and engages in regulatory gymnastics – in proposing a much larger than allowed reduction in the RFS. First, the “cellulosic waiver provision” cannot support the reduction because EPA’s authority under that provision is limited to reducing the required volumes of advanced biofuel and total renewable fuel by, at most, an amount equivalent to the projected production shortfall for cellulosic biofuel. For 2014, EPA projects a cellulosic biofuel shortfall of roughly 1.73 billion gallons, yet it proposes to cut required total renewable fuel volumes by 2.94 billion gallons—1.21 billion gallons more than the cellulosic biofuel waiver authority authorizes under any circumstance. Second, the “general waiver provision” cannot support the reduction because EPA has not even attempted to show that severe economic or environmental harm, at least one of which EPA must show to justify a cut, would result if the statutorily-mandated volumes were required. Adding insult to injury, EPA proposes a reading of “inadequate domestic supply” that stands Adam Smith on his head and defines inadequate supply to mean inadequate demand. What’s next? Changing the rules of soccer so red cards now count as goals? Let’s get real: Congress meant for the RFS to be technology-forcing. Otherwise they would have called it Renewable Fuels Suggestion.

THE BOTTOM LINE
The proposed rule will inevitably have two effects. First, it will reduce investment in, and production of, advanced biofuels at a critical time, as investors and producers reevaluate EPA’s commitment to the standards and goals Congress clearly set out in the RFS program. Second, by reducing incentives to produce and supply advanced biofuels, the proposed rule will increase the use of less-eco-friendly fuels, increasing GHG emissions and exacerbating the very environmental harms the law was meant to correct.

As environmental regulators consider the future of the RFS, we hope they’ll hear the chorus of voices from across the biofuels community urging common sense for America’s renewable fuel policy and urging EPA to ensure that a continued supply of reliable and renewable sugarcane ethanol keeps flowing into U.S. vehicles. If you agree with us, make sure that EPA regulators hear your concerns.

Telling Sugarcane Ethanol’s Full Sustainability Story

Leticia Phillips — posted 22/01/2014

The debate over America’s Renewable Fuels Standard (RFS), and the role that advanced biofuels like sugarcane ethanol play in meeting our clean energy goals, has largely focused on what the Environmental Protection Agency’s (EPA) appropriate volume targets should be moving forward.

But centering the debate on volume targets for all biofuels has let two key benefits of advanced biofuels slip out of focus: the potential for non-corn ethanol to drastically cut lifecycle emissions compared to gasoline, and the ability of biofuel feedstocks to be sustainably grown without harming the environment.

LAND-USE ADVANTAGES COMPARED TO CORN

Let’s start with emissions reductions, arguably the most important imperative to fighting climate change. EPA certified sugarcane ethanol as an advanced biofuel that cuts emissions 61% compared to gasoline after a careful lifecycle analysis of the entire production-to-consumption process in 2010.

Examining the “well-to-wheels” impact of this clean fuel shows sugarcane ethanol cut emissions from American drivers 2.2 million tons in 2012, equal to growing 57 million trees for 10 years. By itself, that’s impressive data, but the full sustainability sum is revealed when land-use benefits are included in the equation.

Sugarcane fields store roughly 60 tons of carbon per hectacre, including above and below ground and soil organic carbon. That is a significant amount of carbon sequestration potential, but it’s made even more impressive because unlike corn, sugarcane only needs to be replanted every six years. This reduces land tilling, cutting the amount of carbon released from the soil.

In turn, each hectacre of sugarcane produces around 7,000 liters (1,850 gallons) of ethanol, roughly twice the ethanol yield of corn. This means more energy is created on less land with less fuel burned to harvest the crops.

One step further along the production process, self-sufficient sugarcane mills in Brazil use leftover stalks and leaves (called “bagasse”) to power operations instead of fossil fuels, often producing enough power to sell clean electricity back to the grid. In 2010 alone, bioelectricity from these mills powered the homes of 20 million people.

INCREASING PRODUCTION WITHOU INCREASING ENVIRONMENTAL IMPACTS

And it gets better. Brazil’s sugarcane ethanol production can continue to grow while still protecting its native ecosystems and rainforests. A recent analysis by the international think tank Climate Policy Initiative concluded “there is room to increase Brazilian agricultural production via productivity gains, at no apparent cost to environmental conservation.”

These key sustainability facts are important to keep in mind when considering Brazil as a reliable partner for supplying Americans with advanced biofuels. Indeed, Brazil has the potential to replace 14% of global transportation fuel demand without altering current sugar production.

Brazilian sugarcane ethanol plays a modest but important role supplying America with clean renewable fuel, but it also plays an equally important role in creating a healthier and cleaner planet. By 2050, global energy needs could double, potentially increasing emissions 80% – unless we continue to pursue low-carbon and environmentally sustainable fuel options.

As Congress and the EPA deliberate over the future of the RFS, we hope they’ll consider the entire sustainability story of this advanced biofuel in their decision and set volume targets that continue to encourage the production and consumption of all available biofuels.

The European Commission now does Full U-Turn on Decarbonizing European Transport

Géraldine Kutas — posted 22/01/2014

Apparently, the current European Commission’s long term strategy is now formally not to have one.

On Wednesday, this Commission formally mapped out, in the first step in a long legislative process ahead, its much awaited perspective on what it thinks the European Union’s longer term climate abatement goals should be to 2030. This perspective is dubbed the ‘2030 Framework on Climate and Energy’.

The Commission proposed, as expected, no longer term extension or increase to the 10% renewables-in-transport target set for 2020 (that target will be achieved almost entirely by sustainably produced biofuels.) But it went one step further today and dropped an EU goal for reducing the greenhouse gas intensity of fuels used in road transport.

Currently, under the EU’s Fuel Quality Directive, EU Member States are required to oversee a 6% carbon intensity reduction of  fuels by  2020 versus a 2010 baseline; the law applies to suppliers of gasoline, diesel and biofuels used in road transport, and  to gasoil used in non-road-mobile machinery.

So after 2020, the Commission thinks we can quit worrying about carbon emissions in transport. Great, I’m relieved to know.

But seriously, you’d expect the Commission, which is supposed to look out for the interests of all Europeans, not to play the shrinking violet in the face of pressure on such important transport and environmental issues.

Transport emissions account for 25% of the EU’s total greenhouse gas emissions; and by 2020, transport will be the largest source of carbon emissions in the EU, according to the EU’s own forecasts.

The Commission has been feeling the heat in past months from certain Member States on high energy costs (which the region has had for years but which have become a political problem only recently because of Europe’s depressed economy) and from Big oil companies, many of which — though certainly not all — hate and moan about alternatives to oil.

By not proposing any renewables-in-transport target nor any new extension to reduce the greenhouse gas intensity of road transport fuels in Europe, this Commission is effectively throwing up its hands on important environmental issues as it counts down its term, which ends later this year. Moreover, it is choosing to ignore recommendations in several reports, including some  from the Commission itself, according to which, sustainable biofuels, like Brazilian Sugarcane ethanol, are still the one solution to curb carbon emissions in EU transport cost effectively, at scale, and doing so in an environmentally responsible way.

The Commission tried to explain itself, in a rather hollow way, by saying: “The focus of policy development should be on improving the efficiency of the transport system, further development and deployment of electric vehicles, second and third generation biofuels and other alternative, sustainable fuels …”. Nevertheless, we already know that electric cars  can be as pollutant as fossil fuel based vehicles. And the incentives for advanced biofuels are simply not there.

It also claimed, again unsuccessfully, that “it is clear that first generation biofuels have a limited role in decarbonizing the transport sector.” That’s bunk.

The biofuels industry has proven through all sorts of sustainability efforts, as required by EU law, that sustainably produced biofuels are a better environmental alternative to gasoline and diesel. Brazilian sugar cane-based ethanol can achieve over 70% greenhouse gas emissions reductions versus fossil fuel– and that’s certified by independent authorities; it also causes minimal direct and indirect environmental impacts.

This Commission had an opportunity to lay out a necessary plan to address Europe’s longer term transport and environmental challenges by including such things as a longer term target for sustainable biofuels to give industry investment confidence. Judging by today’s proposal, it is still unclear how the Commission expects the EU to reach its goal to reduce GHG emission from transport by 20% in 2030, when it’s effectively pulling the policy incentive-rug out from underneath producers.

Fortunately there is much debate ahead on this matter.

This formal opening salvo from the Commission today is the start of a process that probably won’t reach a final conclusion until 2015. New Members of the European Parliament (MEPs) and new European Commissioners (the heads of all the various EU departments, like energy) will takeover by the third quarter and all of this new blood will have, hopefully, fresh and informed perspectives on this matter.

A flavor of what is to come is scheduled for March 20-21 when the EU’s Environment ministers will meet to discuss the Commission’s plan announced today. Stay tuned.