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The U.S. Senate is holding an oversight hearing today examining the Renewable Fuel Standard. The head of the American Fuel and Petrochemical Manufacturers (AFPM) is scheduled to testify before the Environment and Public Works Committee, and according to prepared remarks, will make an exaggerated claim that deserves further scrutiny.
Among a litany of grievances and complaints, AFPM president Charles Drevna includes the following statement: “The prevalence of imports and failure of the RFS to develop domestic second and third generation biofuels ensures that RFS will continue to rely on imported ethanol to satisfy its advanced biofuel volumes. This situation belies the argument that the law is enhancing energy independence.” (Emphasis added)
Well, as the old saying goes, everyone is entitled to their own opinion, but only one set of facts. A little fact checking finds Mr. Drevna’s assertion deficient on three counts.
1 – First, a little context. The U.S. Environmental Protection Agency has designated Brazilian sugarcane ethanol as an advanced renewable fuel after determining it reduces greenhouse gas emissions by over 60% compared to gasoline. And advanced biofuels are a category of fuel that Congress hopes to grow significantly during the next decade.
However, the fact is imports are not prevalent. Instead, sugarcane ethanol plays a modest but important role supplying the United States with advanced renewable fuel. Last year, Brazilian sugarcane ethanol comprised only 3% of all renewable fuel consumed by Americans, but provided nearly one-quarter of the U.S. supply of advanced biofuels. The final numbers for 2013 are still coming in, but the proportions should go down a little this year with sugarcane ethanol providing less than 3% of all U.S. renewable fuel and less than 20% of advanced biofuels consumed by Americans.
2 – Far from a failure, the RFS is helping the domestic market for American biofuels to grow rapidly. For evidence, let’s look at EPA’s forecast for 2013. The agency originally projected that the U.S. would need to import around 660 million gallons of Brazilian sugarcane ethanol to meet the 2013 advanced biofuel standard. However, total sugarcane ethanol imports will end this year at only 450-500 million gallons – not because Brazil has exhausted its capacity for exports – but because American production of advanced biofuels is expanding quicker than EPA predicted.
3 – Finally, EPA’s proposed formula for setting the 2014 advanced biofuel standard ignores – rather than relies on – Brazilian sugarcane ethanol. It’s a change we oppose, and one we hope EPA will correct following the public comment period. But for now, EPA has proposed a methodology that excludes any available volumes of advanced ethanol from the formula that sets the 2014 RFS targets for advanced biofuels.
The current debate over the renewable fuels standard is an important one with far-reaching implications for America’s energy security and environmental goals. Many different opinions are involved, but Brazilian sugarcane producers hope we can all agree to stick to the facts.
EPA Signals Retreat on Greenhouse Gases by Minimizing Contributions from Foreign Producers of Advanced Biofuels
Leticia Phillips — posted 15/11/2013
In response to the Environmental Protection Agency (EPA) unveiling a proposal that could cut next year’s Renewable Fuel Standard (RFS) target for advanced biofuels by 20 percent, Leticia Phillips, the Brazilian Sugarcane Industry Association’s (known by the acronym “UNICA”) North American Representative issued the following statement.
Slashing the 2014 target for advanced biofuels would be a huge step backwards from the Obama administration’s goal of decreasing greenhouse gases and improving energy security. Advanced biofuels, including Brazilian sugarcane ethanol, reduce carbon dioxide emissions by at least 50 percent compared to gasoline, and EPA has traditionally promoted these clean renewable fuels. That is why we are surprised and disappointed that EPA’s proposal minimizes the 650-800 million gallons of sugarcane ethanol Brazil is poised to supply to the United States in 2014.
Since the beginning of the RFS program, EPA has been a strong supporter of the modest but important role Brazilian sugarcane ethanol plays supplying Americans with sustainable fuel, certifying that it cuts carbon dioxide emissions by more than 60 percent and designating it an advanced renewable fuel. This federal proposal also dramatically impacts states like California, which considers Brazilian sugarcane ethanol the low-carbon fuel with the best performance today and the only fuel available at commercial scale to contribute to its low-carbon fuel standard.
Our association looks forward to commenting on this inadequate 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.
A History Lesson on the World’s “Most Successful Biofuel Industry”
Leticia Phillips — posted 21/10/2013
The 40-year anniversary of 1973’s OPEC oil embargo is an important milestone in the world’s transition toward renewable sources of fuel. Many media outlets and respected energy leaders have been looking back over the past four decades, searching for lessons learned. Among the best retrospectives I’ve read is a feature story in E&E News’ ClimateWire – a respected policy-insider publication headquartered here in Washington – that recounts how price spikes and fuel shortages prompted a renewable fuels revolution in Brazil and helped create “the most successful biofuel industry in the world.”
This “Brazilian experience” with renewable energy and sugarcane ethanol reads like a primer on how stable policy and investment in new technologies can fuel a green economy while cutting emissions and dependence on foreign oil. Today, sugarcane ethanol has replaced almost 40% of Brazil’s gasoline demand while cutting nearly 200 million tons of carbon dioxide emissions.
The full ClimateWire article is an excellent read, and a few key excerpts jump off the page to underscore the power of clean and renewable fuels:
Stable government policy was necessary at first – Brazil initially relied on government mandates to start the transition away from gasoline. By mandating ethanol blending in gasoline, requiring installation of pumps dispensing pure ethanol, funding research and development, and encouraging carmakers to build vehicles that could run on ethanol, sugarcane ethanol became a reality virtually overnight.
“By 1977, gasoline-ethanol blends had arrived at the pump. The sugarcane industry invested in new fields. New ethanol mills dotted the landscape. The World Bank and national financial institutions structured a financing system to support the investment.”
Sudden policy changes threatened growth – When Brazil transitioned to a democracy and the price of oil dropped in the 1980s, the national government considered dropping ethanol support, threatening a fast-growing industry even though consumer demand was clear.
“The government could not shut it down in one step because so many people had ethanol cars…there was a lot of tension between fiscal pressure and the number of cars in the street.”
But stable technology investments saved the day – Even though Brazil’s cut funding, automakers maintained investments in new ethanol vehicle technologies. By the time oil prices rose again in the early 2000s, flex-fuel vehicles were ready to meet market demand.
“The decision on which fuel people would use was transferred from the government to consumer…Flex-fuel vehicles rapidly became the best-selling cars in Brazil.”
Brazilian consumers have real options at the pump – The combination of technological investments, environmental and economic benefits, and steady government policy helped create a booming domestic biofuels economy and holds lessons for America’s policymakers.
“’We need to focus on being as smart as the Brazilians,’ R. James Woolsey, former director of the CIA and chairman of the Foundation for Defense of Democracies, said in a discussion on energy security and independence.”
“Because the United States had not widely encouraged the development of flex-fuel vehicles, the country now faces the possibility of a blend wall: too much ethanol and not enough gas tanks to take it…The goal for the United States shouldn’t be to completely displace oil, experts said, but to encourage a greater mix of fuel sources.”
Brazil will continue to be a strong, dependable partner helping America meet its clean energy goals. And Brazilian sugarcane producers will continue to play an active role in the RFS rulemaking process serving as a source for credible information and analysis about the efficiency and sustainability of sugarcane ethanol.
E&ETV Explores Sugarcane Biofuels and the Future of the RFS
Leticia Phillips — posted 23/09/2013
With Labor Day behind us, Washington D.C. has officially ended summer vacation and gotten back to work. Brazil’s sugarcane ethanol producers are no exception, and we’ve renewed our efforts making the case for advanced biofuels.
To kick things off this week, Joel Velasco – senior vice president of California-based renewable fuels company Amyris and board advisor to the Brazilian Sugarcane Industry Association (UNICA) – sat down for an interview on E&ETV, an influential webcast on Capitol Hill featuring energy and environmental policy leaders.
Joel offers unique insights into the advanced biofuels industry because (besides his advisory role with UNICA) he is also senior vice president of California-based renewable fuels company Amyris and a board member of the Advanced Biofuels Association. Joel shared his perspective on several key topics:
The state of play for renewable fuels in the U.S. The Environmental Protection Agency (EPA) may have officially lowered the 2013 target for cellulosic ethanol and announced it will probably reduce volumes for other advanced biofuels starting in 2014, but that doesn’t mean an end to sugarcane ethanol’s modest but important role supplying America with clean renewable fuel. According to Velasco:
“What EPA did during the summer break was to basically finalize the rule they had already proposed earlier this year that said, we don’t have the cellulosic fuels but we do have other advanced fuels – let’s continue going on that path.”
“We’re really talking about an increase from 2013 to 2014, as the law was written, of about a billion gallons. Most of that was going to be cellulosic biofuels – those we know are probably not going to be available for 2014. The big question is how much of that cellulosic they’re (EPA) going to waive into the other advanced pools, and how much of that cellulosic is just going to disappear or is not going to be required.”
Congress’ next steps on the Renewable Fuel Standard (RFS). While EPA sets the annual targets and administers the program, Congress has also been working on the future of renewable fuels policy, starting with the House Energy and Commerce Committee’s white paper process. Joel opined:
“The committee should be commended for having this white paper process…I really think this was a unique way to get stakeholder input. It allowed everybody who had a stake in the game to actually provide input on a number of issues. I think the committee now has all the views that they need to look at.”
Obviously, if they get into this, we’re getting into a situation of then opening the Clean Air Act and making amendments to it…Once you start messing with the Clean Air Act all kinds of folks are going to get involved, and I just don’t think the legislative calendar will allow for some sort of (legislative) reform.“
Expanding Brazil-U.S. biofuels trade. Global ethanol trade is creating economic and environmental benefits for both Brazil and the U.S. That growing relationship is anchored by fair trade and the RFS, and may expand during the first-ever biofuels trade mission coming up between the two countries. Velasco explained:
“Brazil and the United States are the world’s two largest producers of biofuel…And I think both countries, whether it’s President Obama here or President Rousseff in Brazil are committed to pursuing that deep relationship. We have a lot to celebrate – neither country has barriers for their biofuels, the ethanol tariff is gone here, Brazil has maintained a zero tariff there, and the subsidies are pretty much ended. So now it’s time to talk about what markets can we build beyond our two countries, and how do we strengthen the relationship?”
“The Advanced Biofuel Association, Renewable Fuel Association, and Unica are going to bring together companies in Brazil (for American biofuels companies)…And we will see what are the other options we have not just in Brazil or the U.S., but around the world. I think this is a great step in the right direction, and it’s proof that the RFS is working because these industries are being formed and we’re looking at how we can actually deepen the integration between these two economies.”
Joel’s interview comes at an important time for the advanced biofuels industry, both here and abroad. Sugarcane ethanol is a key component to America’s renewable fuel goals and Brazil is committed to continue growing as a trusted trade partner with the U.S. As debate over the future of the RFS continues, we’ll continue to highlight the importance of maintaining access to clean renewable biofuels.
Clearing up a few myths about Brazilian biofuels trade
Leticia Phillips — posted 18/09/2013
The late U.S. Senator Daniel Patrick Moynihan is often credited for quipping that everyone is entitled to their own opinions, but not to their own facts.
Fresh export data from Brazil reminded me of that saying because it will come as an unwelcome reality check for naysayers of sugarcane ethanol. Let’s turn to the facts to debunk two leading myths circulating around Washington, D.C. about Brazilian sugarcane ethanol.
Myth #1: Brazil can’t supply sufficient sugarcane ethanol to meet America’s needs.
Reality: Brazilian sugarcane ethanol is on track to not only meet, but could exceed the amount regulators projected necessary to comply with theRenewable Fuels Standard (RFS) 2013 targets for advanced biofuels.
The U.S. Environmental Protection Agency (EPA) has forecast that the U.S. will need almost 600 million gallons of sugarcane ethanol to meet RFS requirements this year. As of August 31, Brazil’s sugarcane ethanol producers have shipped about 330 million gallons to U.S. markets, compared to 267 million gallons during the same period in 2012. (For those keeping track of the imports and RINs after reading Sunday’s New York Times, just look at EPA’s data online to see that over 250 million gallons worth of RINs have been generated from imported advanced biofuels like sugarcane ethanol.)
Some simple arithmetic shows Brazil’s exports year-to-date are only slightly more than half what’s needed for the year. Bad news, right? With eight months down and just four to go, rumors are circulating that sugarcane ethanol imports won’t supply the necessary gallons.
But those naysayers forget Brazil’s sugarcane harvest starts in April, meaning ethanol exports tend to start slow in the first half of each year before hitting high gear in the second half. In fact, American imports of sugarcane ethanol during the second half of each year have historically been three to five times higher than imports in the first half of each year.
Compare the first half of 2013 with other historical data[i] and it’s clear that Brazil is easily on target to meet EPA’s expectations:
But don’t just take my word for it. In the agency’s final 2013 RFS rule, EPA notes that sugarcane ethanol imports this year have increased by 110% to 147% compared to 2012. EPA then observes: “[t]his increase, combined with the fact that the majority of Brazilian ethanol exports to the United States have historically occurred in the second half of the calendar year, suggests that Brazilian ethanol exports to the U.S. are on a trajectory that would readily enable Brazil to supply 580 million gallons to the U.S. in 2013.”
Of course, the real driver of imports is U.S. demand. And here we have to again tell the RFS naysayers to check their facts. Despite the doom and gloom of some special interests, the biofuels industry has delivered the gallons. Not just conventional biofuels, like corn ethanol, but also the advanced biofuels, from biodiesel to sugarcane ethanol. In fact, thanks to robust growth in advanced biofuel production in the past few months, the U.S. may not demand the level of imports that EPA expected earlier this year. That’s more proof that the RFS is working.
Myth #2: The “ethanol shuffle” that sends corn ethanol to Brazil and sugarcane ethanol to the U.S. doesn’t help the economy or environment of either country.
Reality: The 2011 shuffle was a one-time event, and Brazil is a net-exporter of biofuels.
Brazil is committed to helping America meet its renewable fuels goals, and production has expanded over time to meet rising U.S. demand. Ethanol production so far in 2013 is up 7 percent compared to first-half August 2012, and 8 percent compared to second-half August 2012.
Growing sugarcane ethanol production and export levels also put to rest any fears of another “ethanol shuffle” between Brazil and the U.S. This term refers to the one-year anomaly experienced in 2011 when America exported a comparable amount of corn ethanol to Brazil as the volume of sugarcane ethanol imported from Brazil.
As of the end of August, Brazil had only imported 31 million gallons of corn ethanol from America – which is less than 10% of the sugarcane ethanol Brazil has exported to the U.S. during the comparable period. Unfortunately for some critics, the music’s stopped on the ethanol shuffle, and the phenomenon is clearly not happening again in 2013.
Reality: A Committed Partnership On Renewable Fuels
Brazil’s sugarcane producers look forward to working with EPA to find the right advanced biofuels requirements under the RFS for 2014 and beyond, and stand ready to help America meet its growing goals for low-emission transportation options.
I think that even by Senator Moynihan’s high standards, we might all agree these observations are facts worth keeping in mind the next time an unfounded opinion gets in the way of reality.
[i] All data courtesy of the Brazilian Ministry of Trade & Development’s Secretary of Foreign Trade online database.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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