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Another Study Puts “Food vs Fuel” into Much-Needed Perspective
Géraldine Kutas — posted 09/09/2013
Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.
“The historic impact of EU biofuels demand until 2010 increased world grain prices by about 1-2% and, without any cap on crop-based biofuel production may lead to another 1% increase through 2020.”
Additionally: “Systemic factors, like reduced reserves, food waste, speculation, transportation issues, storage costs and problems, and hoarding play a much larger role in local food prices” than biofuels, Ecofys concluded.
Does these conclusions sound familiar? They should. Here’s a list of other studies from other reputable institutions — including the European Commission, the European Union’s executive — that have reached similar conclusions like what Ecofys has just churned out:
Back to Work Making the Case for Advanced Biofuels
Leticia Phillips — posted 03/09/2013
No American city enjoys its August vacations more than Washington. With Congress away on recess, most Washingtonians skip town for at least a week to rest and prepare for renewed policymaking in the fall. I’ll certainly confess to enjoying the sand between my toes last month!
But editorial writers did not take a similar holiday, and a trio of leading newspapers each opined in recent weeks that it is time for the federal Renewable Fuels Standard (RFS) to go. These editorials in The Washington Post, USA Today and The Wall Street Journal (subscription required) focused primarily on concerns with corn ethanol, and the difficulty blending more than 10 percent ethanol into gasoline – the so-called “blend wall.” The editorial boards at each paper largely ignored how the RFS has spurred innovation and encouraged production of cleaner alternatives to both gasoline and conventional biofuels.
With Labor Day behind us, sugarcane ethanol producers will renew our conversations with lawmakers, reporters and opinion leaders, reminding them that:
– The RFS has successfully encouraged more advanced biofuel use in the United States. Yes, cellulosic biofuels have been slower to develop than Congress anticipated. Fortunately, other advanced renewable fuels like sugarcane ethanol and biodiesel are taking up the slack. Last year, Americans consumed 1.8 billion gallons of advanced biofuels, and the Environmental Protection Agency (EPA) expects consumption will rise to 2.75 billion gallons of ethanol equivalent in 2013 – the precise volumes called for by the RFS.
–Advanced biofuels are cleaner and better for the environment than gasoline. EPA determines which fuels qualify as advanced biofuels, and a key condition for this designation is reducing lifecycle greenhouse gas emissions by at least 50 percent compared to fossil fuels. EPA named Brazilian sugarcane ethanol an advanced biofuel in 2010 after determining it reduces greenhouse gases by 61 percent.
– Sugarcane ethanol plays a modest but important role supplying the U.S. with advancedbiofuels. Last year, it comprised only 3 percent of all renewable fuel consumed by Americans, but sugarcane ethanol provided nearly one-quarter of the U.S. supply of advanced biofuels in 2012.
– The RFS is fostering innovation, and more advanced biofuels are on the way. A new report from Environmental Entrepreneurs (E2), a project of the Natural Resources Defense Council, finds steady improvements in technology and production capacity. It estimates a sufficient supply of advanced biofuels will be available to meet current RFS requirements through 2016. That’s the case for sugarcane ethanol. Brazilian sugarcane producers are making investments to expand production, and Americans can depend on more advanced biofuel from sugarcane.
These vital facts about the contributions of Brazilian sugarcane biofuels can get lost in the debate over renewable fuels in Washington, but we think they’re important as our two countries work together to make transportation more sustainable. So vacation is over, and it’s time to get back to work.
We also support EPA extending the time for obligated parties to demonstrate compliance with 2013 standards to June 30, 2014 – a common sense approach that will allow ethanol producers to take anticipated 2014 RIN obligations into consideration as they determine 2013 compliance actions.
Sugarcane ethanol producers also look forward to working with the EPA to find the right requirements for 2014 and the years ahead. We urge regulators to support reasonable proposed adjustments as the EPA considers 2014 requirements – especially the cellulosic and advanced biofuels volumes.
Brazilian exports provided nearly one-quarter of the entire U.S. advanced biofuel supply in 2012, are projected to supply nearly 700 million gallons in 2013, and could supply up to one billion additional gallons in 2014 – all with at least 61% fewer emissions than gasoline, according to the EPA.
Sugarcane biofuels are an important component of a diversified strategy to meet America’s RFS targets, and Brazilian producers stand ready to help America meet its goals for low-emission transportation by keeping clean renewable advanced biofuels flowing into U.S. vehicles.
Calls For Common-Sense Advanced Biofuel Regulation Keep Coming In
Leticia Phillips — posted 24/07/2013
As Congress continues holding hearings on the future of America’s Renewables Fuels Standard (RFS), calls keep coming in for common-sense regulation and oversight of foreign renewable fuel producers by the Environmental Protection Agency (EPA).
When combined with formal comments submitted by other notable biofuel proponents and stakeholders, the din is hard to ignore. A growing chorus is raising concerns about EPA’s unnecessary proposed requirements on foreign biofuel producers and sounding the alarm that these changes could raise domestic fuel prices and threaten U.S. supplies of sugarcane ethanol, one of the cleanest and most advanced biofuels available to American drivers.
1 – New requirements are unnecessary – Shell, a global group of energy and petrochemical companies with more than 90,000 employees in more than 80 countries and territories, calls EPA’s proposal “overly complex, unworkable and unreasonably retroactive.” The company also points out these changes are not necessary:
“There is quite simply no basis to conclude that the additional requirements are necessary to ensure that the regulations can be enforced against these [foreign] parties. The current version of the rule puts the responsibility on the RIN generator to ensure that all of the regulations are met, including the provisions related to the definition of renewable biomass. We carefully adhere to the current rules and understand our obligation there under. The additional proposed requirements are simply unnecessary…
“Each foreign producer, in our experience and per our internal requirements, has provided substantial land-use traceability documentation, and separated food waste and animal fat traceability documentation, of feedstock tied specifically to volume of each parcel processed into renewable fuel, in support of each cargo volume loaded for US import and RIN generation, so that we can be assured that RINs that we generate from such ethanol are valid.”
“This proposal is an extreme measure that would place the importers of these foreign-produced renewable fuels at a significant competitive disadvantage and could effectively prevent the importation of such fuels – contrary to the overall objective of the RFS Program. […] U.S. importers are already subject to U.S. jurisdiction, are fully registered with the EPA and are responsible to ensure the generation of valid RINs. No additional safeguards are required.”
2 – Impractical segregation requirements will hinder supplies and increase costs – Shell also predicted segregating sugarcane ethanol could halt U.S.-bound shipments for a full year:
“EPA’s proposal would require additional segregation of renewable fuels. This is problematic because insufficient renewable fuel tankage exists in foreign ports to segregate each foreign producer’s biodiesel or ethanol as gathered via trucks, rail, and barges, until an oceangoing cargo size volume is accumulated for export to US. The likely result of EPA’s proposal is that foreign renewable fuel producers, and the US importers of those renewable fuels, would be forced to suspend activity for approximately one year while additional tankage is constructed on foreign soil to accomplish the Agency’s desired degree of load port segregation.
“In addition, even if additional tankage could be built in foreign ports, such a requirement would delay receipt of foreign renewable fuels needed to meet RFS mandate, and raise cost of foreign renewable fuels relative to domestic fuels, inflating cost of all US renewable fuels.”
“BP strongly opposes this proposed change to the RFS rules … This would likely result in decreasing the amount of biofuel available and reducing the pool of advanced and cellulosic ethanol volumes available for compliance with the RFS program. Keeping each Mill’s product segregated to vessel and then on vessel is overly burdensome and costly. Segregation will be very difficult given logistics constraints in foreign countries.”
1 – Assessing retroactive financial penalties is unreasonable – AFPM and API echoed Shell’s concerns. The trade associations also weighed in on EPA’s proposal to retroactively require compliance with new regulatory requirements on all fuel produced and exported as of January 1, 2013:
“We are hopeful that this is simply a printing error and that EPA will correct this before finalizing the rule. It is not reasonable for EPA to impose such requirements retroactively. It is simply impossible for EPA to enforce a regulation looking back on actions foreign renewable fuel producers and RIN generators should have taken throughout 2013, when at the time of production, transportation, import and RIN generation, those foreign renewable fuel producers and RIN generators had no knowledge of any proposed rule change.”
“We would encourage the [EPA] to ensure its enforcement of the rule does not inadvertently discourage legitimate feedstocks and fuels developed by producers who are already complying with section 80.1466 from being able to import to the U.S. Doing so may unintentionally impact domestic producers who use these feedstocks or fuels from developing domestic gallons of advanced or cellulosic biofuels.
“… prohibitive to small plants such as ours. The proposed bond multiplier for Advanced RINs of $0.8/gallon is simply too high. Such requirement can, in our opinion, only result in the further escalation of the Advanced RIN values and hence increase the cost of ethanol and resulting gasoline for US consumers.”
EPA’s quest to ensure regulatory accuracy of U.S. biofuel consumption is noble, but ultimately quixotic. If the proposed rulemaking were finalized without the sensible changes suggested by these formal comments, the cost of producing sugarcane ethanol and the price of pumping it into American vehicles would both rise, with no apparent benefits.
Congress has already heard EPA say it won’t be able to meet the RFS mandate for advanced biofuels without Brazilian sugarcane ethanol – so why would the agency want to test its own theory?
Last week we weighed in with formal comments opposing a proposed rulemaking by the Environmental Protection Agency (EPA) that could effectively end U.S. imports of Brazilian sugarcane ethanol, a clean renewable fuel key to meeting the Renewable Fuels Standard (RFS).
But this week, debate on the future of biofuels in America will reach a new level when Congress considers the issue. The House Energy and Commerce’s Energy and Power Subcommittee will hold hearings on potential RFS changes tomorrow and Wednesday, with testimony from industry groups and environmental organizations.
Our position is clear – language in EPA’s proposed rulemaking is unnecessary and threatens American access to one of the few advanced biofuels on the market today that reduces greenhouse gases by more than 60 percent compared to gasoline.
But don’t take our word for it. Many important economic and environmental causes for concern were echoed in other formal comments submitted to EPA by biofuel proponents and stakeholders. We’ve parsed these filings and highlighted a few below to reveal exactly what’s at stake.
1- Expensive changes for both producers and consumers – Adecoagro, one of South America’s leading renewable energy companies and a foreign producer of undenatured sugarcane ethanol who has exported to the U.S. since 2011, said EPA’s proposed rules would boost costs for advanced biofuel producers and consumers:
“All exported ethanol from Brazil to U.S. will have to be segregated by producer…meaning increased costs and operational difficulties. According to ship operators, one ship is loaded with product coming from five different producers on average. In our case, we will not be able to mix product produced by our two registered mills, even being under the same company. To make the transport economically and operationally feasible, either will (sic) be excluded from business or there will be need for smaller cargos or incurrence of losses in dead freight, both of which will increase costs and prices for sugarcane ethanol…consequently increasing prices for final consumers in the U.S.
2 – Redundant requirements could price out supplies with no benefit – Chevron, a major refiner and marketer of petroleum products in the U.S., and an obligated party under the RFS, reported redundant bureaucratic reporting would hike ethanol prices with no net benefits:
“Chevron does not agree with EPA’s proposal to require both foreign ethanol producers and importers to meet the requirements…we believe this blurs the line that had previously been established between foreign producers who generate RINs and domestic producers and importers who already have compliance requirements under the program.”
“Requiring foreign ethanol producers and importers to meet the requirements…will result in duplicate reporting of the same information by both parties. This will increase the cost of supplying ethanol from foreign locations and will complicate enforcement by having multiple sets of records for the same transactions.”
“The requirement to segregate shipments of ethanol from the foreign producers will also increase the cost of supply and may not be possible in certain circumstances… The net effect of this proposal will increase the cost of supply of renewable fuels under the RFS. Under certain circumstance, it may also reduce the supply of renewable fuels from overseas providers.”
3 – Unnecessary Oversight Could Harm Future Biofuel Supplies– the Advanced Biofuel Association, representing over 40 member companies who produce advanced biofuels and biofuels feedstocks, mentioned EPA’s unnecessary regulations could limit the future of biofuel supplies in the U.S.:
“The proposed amendment…would significantly impact not just advanced ethanol producers (mainly in Brazil, where no denaturant is added to sugarcane ethanol) but also other cellulosic biofuel producers currently building plants around the world. By requiring complete segregation of the biofuel until it reaches the port of entry, the proposed amendments unnecessarily increase compliance costs particularly for ethanol. While the goal of reducing potential RIN fraud is laudable, we are unaware of any alleged fraud related to RINs associated with imported advanced biofuels.”
“In addition, and of greater concern to the nascent advanced biofuel industry, the required bonds are unreasonably and prohibitively high… Such expenditures would most likely make the export of advanced biofuels to the United States infeasible from a commercial standpoint, particularly for startup companies.”
“Based on our analysis of the negative impact to advanced biofuels trade, the ABFA recommends that EPA withdraw these proposed provisions from the final rule in order to consult with industry on a better approach to ensure the robustness of the RFS is maintained without increasing cost and emissions. We are also greatly concerned about the trade implications of these provisions as well as the ramifications with our relationship which we have been fostering over the last 5 years in the area of biofuels with Brazil.”
As Congress and EPA 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 ensure a continued supply of reliable and renewable sugarcane ethanol flowing into U.S. vehicles.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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