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Entering The Homestretch On EPA’s Journey Toward RFS Volume Standards
Leticia Phillips — posted 12/11/2015
The Office of Management and Budget has begun reviewing the U.S. Environmental Protection Agency’s (EPA) final Renewable Fuel Standard (RFS) volume targets for 2014-2016, signaling an end to the long and winding road toward regulatory certainty for America’s advanced biofuels market.
The Brazilian Sugarcane Industry Association (UNICA) has supported EPA’s RFS implementation decisions in the past, but formally opposed EPA’s proposal to significantly reduce RFS volume targets for 2014, 2015, and 2016 based on three fundamental issues:
Lower Statutory Volumes Are Unsupported And Unnecessary
Reducing statutory volumes of advanced biofuels and total renewable fuels is unnecessary, in part because Brazil can increase production and export higher volumes of sugarcane ethanol under the right market conditions to help meet EPA goals.
According to the latest sugarcane harvest estimates, Brazil is on track to produce nearly six percent more ethanol this year compared to last – an additional 450,000 gallons. And under the right market conditions, Brazil has the capacity to produce up to 2 billion more gallons of sugarcane ethanol for export to America in future years, according to installed capacity figures from Brazil’s National Agency of Petroleum, Natural Gas, and Biofuels (ANP). But sugarcane producers need consistent, long-term policy signals if they are to plan properly and deliver these higher volumes of clean biofuel.
Volume Reductions Outstrip EPA Authority And Undermine RFS Intent
EPA lacks the proper rationale to lower advanced biofuels and total renewable fuels volume targets in the proposed manner and amount, and the RFS statute does not support this action. EPA was never granted complete discretion to reduce advanced biofuels – instead it is only authorized to reduce biofuel volumes when projected volumes are less than minimum applicable standards.
In addition, EPA’s proposed reductions run counter to Congressional intent to increase domestic consumption of low-emission fuel. Congress structured the RFS so advanced biofuels would eventually supplant conventional biofuels in America’s fuel supply, but the proposed rule discourages cleaner fuels while incentivizing less-efficient and more polluting conventional and fossil fuels.
Eschewing clean and renewable biofuels in favor of gasoline undermines President Obama’s Climate Action Plan, the recently announced bilateral climate agreement between America and Brazil, and both countries’ INDC pledges for December’s COP21 international climate summit.
Transportation fuel generates 28 percent of U.S. emissions and 17 percent of Brazil’s emissions, but EPA and lifecycle analyses from around the world have found sugarcane ethanol is 90 percent cleaner than conventional gasoline on a full lifecycle basis. Ethanol has consistently been proven the cheapest and most efficient fuel feedstock produced at a commercial scale to replace fossil-based transportation fuels. Every gallon of biofuel creates long-term climate benefits as well as short-term public health benefits, and EPA’s proposal threatens climate action.
Don’t Reverse Course On The Road To Sustainable Transportation
America and Brazil have built a global biofuels market through good policy implementation, creating economic growth and environmental benefits. EPA’s proposed RFS volume reductions threaten that growth and hamstring the promise of advanced biofuels to create sustainable transportation.
UNICA urges EPA to not rewrite the RFS program goals before they can be achieved, but if it continues to assert it has authority and rationale to reduce statutory volumes for biofuels, EPA should do responsibly by:
– Only lowering statutory volumes by an absolute minimum, because ample supply of advanced biofuels exists and can meet increased annual volumes.
– Keeping volume requirement reductions for advanced biofuels and renewable fuels above 20 percent in 2015 and 2016, considering statutory reset previsions.
– Changing Equivalence Values for low-lifecycle emission fuels like sugarcane ethanol to help increase advanced biofuel supply and help obligated parties meet statutory volume requirements.
EPA has the power to spur advanced biofuels by maintaining their statutory volume requirements and encouraging production of low-lifecycle emission fuels. Let’s not reverse course on the road to sustainable transportation by artificially lowering demand.
In the past UNICA has supported EPA’s decisions implementing the RFS and as a result of Brazil’s long-term commitment to sugarcane ethanol, Brazilian sugarcane ethanol producers have supplied the majority of the U.S.’ undifferentiated advanced biofuels since EPA began implementing the RFS.
But now, UNICA urges EPA to reconsider its proposal to reduce required volumes of advanced biofuels and total renewable fuels for 2015, 2016, and possibly beyond. UNICA has three issues with EPA’s proposed significant reductions of the statutory volume requirements:
– Lowering the statutory volumes by the specified amounts is not supported by the statue nor necessary, at least in 2016 when Brazil could export higher volumes of advanced biofuels under the right market conditions. We believe EPA understates the capacity and ability of Brazilian imports to assist in implementation.
– EPA lacks proper rationale to lower the advanced biofuels and total renewable fuels volumes in the manner and amount it proposes.
– EPA’s proposed reductions do not support Congressional intent on the RFS jeopardize progress toward increased use of low-emission fuels, nor do they support President Obama’s Climate Action Plan or the recently announced bilateral climate agreement between the U.S. and Brazil.
Brazilian Investments Mean More Supply Than EPA Estimates
Brazil’s sugarcane ethanol producers are investing over $3.5 billion through 2017 in new ethanol pipelines, inland waterways, and port facilities. Sugarcane ethanol production is continuing to rise and preliminary figures for 2015-2016 estimated 7.8 billion gallons produced.
About 65 percent of Brazil’s vehicle fleet is composed of flexible fuel vehicles, which can run on E25 instead of E100, allowing hydrous ethanol production to be dehydrated and fulfill export contracts. This flexible hydrous ethanol market means export commitments would not suffer even if faced with a negative harvest season and thus, lower volumes of sugarcane ethanol.
EPA’s proposal opines Brazil cannot supply the 3-4.7 billion gallons in advanced biofuels it calculates would be required between 2015-2016 under the RFS statutory volumes, and Brazil would be unlikely to reach such figures when its highest level of U.S. exports was 680 million gallons in 2006. But in fact, UNICA forecasts under the right market conditions, Brazil can have the capacity to produce an estimated 2 billion gallons of sugarcane ethanol for export to America in 2016, according to installed capacity figures from Brazil’s National Agency of Petroleum, Natural Gas, and Biofuels (ANP).
EPA’s At An RFS Crossroads – Avoid The Wrong Route
Congress’ intent in establishing the RFS, EPA’s action to date, President Obama’s Clean Power Plan goals, and the U.S.-Brazil climate accord show international leadership and commitment to ensuring emissions reductions. But EPA’s Proposed Rule threatens the integrity of these commitments and UNICA urges EPA to avoid action reducing advanced biofuel imports or prioritizing less-efficient fuels over sugarcane ethanol, certified as 90 percent cleaner than conventional gasoline.
If EPA continues to assert it has authority and reasonable justification to reduce statutory volumes for biofuels, UNICA urges EPA to:
– Lower statutory volumes only to the absolute minimum. UNICA supports efforts to increase the annual volumes for these fuels and believes they should not be lowered any further in 2015, 2016 or beyond.
– Avoid reducing volume requirements for advanced biofuels or total renewable fuels below 20 percent in 2015 and 2016 in view of statutory reset provisions.
– Consider changing Equivalence Values (“EVs”) for low-lifecycle emission fuels like sugarcane ethanol to spur further growth in advanced biofuels and help obligated parties meet statutory volume requirements.
UNICA understands EPA finds itself at an RFS crossroads, but EPA needn’t rewrite the program’s goals before they can be achieved, and should not unfairly affect Brazilian exports. EPA can stimulate the market for advanced biofuels by keeping as close to the statutory volume requirements as possible and encouraging importation and production of low-lifecycle emissions renewable fuels, rather than discouraging them by lowering demand.
Working Together to Benefit Brazil, America, and the World
Leticia Phillips — posted 30/06/2015
Today, Brazilian President Dilma Rousseff is visiting Washington, D.C. to strengthen the relationship between two of the Western Hemisphere’s biggest nations. But as with any successful relationship, compromise is key on important issues, and President Rousseff plans to discuss several three issues critical to the global ethanol trade with President Obama.
America’s Renewable Fuel Standard
The issue: The Renewable Fuel Standard (RFS) is significant for both America and Brazil’s ethanol industries, and is a central topic for President Rousseff’s visit. The U.S. Environmental Protection Agency (EPA) identifies sugarcane ethanol as an advanced biofuel because it reduces emissions 61 percent compared to gasoline.
Between 2012-2014, over one billion gallons of sugarcane ethanol flowed from Brazil to U.S. vehicles, and while sugarcane ethanol comprised only two percent of all renewable fuel consumed by Americans, it provided nearly 15 percent of the U.S. advanced biofuel supply. EPA’s recent RFS proposal significantly reduced target volumes for advanced biofuels below Congressionally mandated levels, but increased requirements for advanced biofuels in 2015 and 2016.
Our position: Americans deserve access to the cleanest possible fuels, but reducing RFS target volumes threatens the future of U.S. ethanol supplies. EPA should protect the RFS’ integrity by maintaining volume requirements for advanced biofuels, and should guard against using the regulatory process to impose anti-competitive requirements on foreign biofuels.
Climate Change and Transportation Emissions
The issue: Brazil and the U.S. must consider transportation sector emissions as negotiators work toward an international climate change agreement at December’s COP21 conference in Paris. The World Energy Council reports fossil fuels currently represent 63 percent of all global emissions, with transportation fuel generating 28 percent of total U.S. emissions and 17 percent total Brazilian emissions.
Transportation emissions aren’t limited to ground transport however, and biofuels must become viable alternatives to aviation fuel. The international aviation industry is committed to growing at a carbon-neutral rate until 2020 then reducing emissions 50 percent by 2050, but biofuel production and consumption must expand to achieve this goal. The U.S. and Brazil have cooperated on technological innovation exchange since 2011, and numerous commercial and military flights have since demonstrated the potential of aviation biofuels.
Our position: Ethanol is arguably the cheapest option available to replace fossil-based transportation fuel at large scale. Some commercial technologies can reach virtually zero emissions, and every gallon of biofuel creates long-term climate benefits and short-term public health benefits. The U.S. and Brazil must work together to develop solutions on a global scale, including incentive policies (tax or environmental) to encourage production and consumption, or private sector cooperation to drive investment and innovation.
Bilateral Cooperation to Benefit Both Countries
Brazil and the U.S. are proof pragmatic public policy can create economic growth and environmental benefits. Earth has an urgent need for low-carbon, sustainable transportation fuels, and as the two biggest ethanol producers and exporters in the world, our countries have much to share in experience and technology with other nations.
As the world’s two largest ethanol producers, Brazil and the U.S. have a responsibility to collaboratively build a global biofuels market providing clean, affordable, and sustainable solutions to the planet’s growing energy needs. Brazil’s government and sugarcane ethanol industry are committed to not only expanding the mutually beneficial relationship with America, but to growing the international biofuels market.
UNICA comment on EPA proposed mandates under RFS
Leticia Phillips — posted 29/05/2015
The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) issued the following statement in response to the U.S. Environmental Protection Agency’s rules proposal for the 2014, 2015, and 2016 Renewable Fuels Standard. It should be attributed to Elizabeth Farina, UNICA President.
While UNICA is disappointed that today’s Renewable Fuels Standard proposal from the U.S. EPA significantly reduces target volumes for advanced biofuels below Congressionally mandated levels, we are pleased to see growing requirements for advanced biofuels in 2015 and 2016. This leaves the door open for continued American access to sugarcane ethanol, one of the cleanest and most commercially ready advanced biofuels available today.
EPA identifies Brazilian sugarcane ethanol as an advanced biofuel because it reduces greenhouse gases by more than 60 percent compared to gasoline. This advanced biofuel from an American ally plays a modest but important role supplying the United States with clean renewable fuel. For the past three years, more than one billion gallons of sugarcane biofuel imported from Brazil flowed into American vehicles. During this time, sugarcane ethanol has comprised only 2 percent of all renewable fuel consumed by Americans, but has provided nearly 15 percent of the U.S. advanced biofuel supply.
Our association looks forward to commenting on this proposal and will continue to play an active role in the RFS rulemaking process, serving as a source of credible information about the efficiency and sustainability of sugarcane ethanol. Likewise, Brazil will continue to be a strong, dependable partner helping America meet its clean energy goals.
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The Brazilian Sugarcane Industry Association is the leading trade association for the sugarcane industry in Brazil, representing 60 percent of the country’s sugarcane production and processing. More information on sugarcane ethanol and its role as an advanced biofuel is available at www.sugarcane.org/rfs
Looking For Sensible RFS Answers In The Halls Of Congress
Janet McCabe, EPA’s Assistant Administrator for Air and Radiation, is expected to be the sole witness and face questions about EPA’s delay on releasing RFS targets. Unfortunately, the hearing may also call the program itself into question. While several members of the subcommittee, including Chairman James Lankford (R – OK) have criticized the RFS as unworkable and urged its repeal, we hope the hearing sticks to the facts.
The RFS has worked for America, cutting both emissions from vehicle fuels while elevating the United States to become the second-highest exporter in a growing international ethanol market. As we mentioned in our statement on EPA’s decision last month, the RFS has helped lower U.S. emissions through clean renewable fuels – including 435 million gallons of sugarcane ethanol from Brazil in 2013 alone.
While EPA missed a golden opportunity to increase the volume of low-carbon fuels flowing to American drivers by not finalizing the 2014 volume standards, it at least stepped back from proposed cuts to advanced biofuel targets, preserving U.S. advanced biofuel supplies for the time being.
Slashing RFS targets, or scrapping the program altogether, would be a fundamental step backward for America’s renewable energy industry, threaten U.S. access to low-carbon fuel, and run counter to international emissions reduction goals.
During tomorrow’s hearing, we hope to hear clarity on when and how EPA will address the 2014, 2015, and 2016 RFS mandates so Brazil’s sugarcane ethanol producers can ensure a dependable supply of advanced biofuels to America’s drivers – not hyperbole about a program that’s driving economic and environmental benefits.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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