A Technical Detail with Big Implications

Leticia Phillips — posted 30/05/2014

The debate over American biofuels policy has centered on the Renewable Fuels Standard (RFS), but there’s another issue unfolding under the radar with significant implications for renewable fuels – the Reid vapor pressure (RVP) volatility waiver.

RVP may be a technical issue, but inconsistent application of the volatility waiver by the U.S. Environmental Protection Agency (EPA) is limiting widespread introduction of E15 ethanol-blended gasoline, threatening compliance with the RFS, and creating an arbitrary barrier to ethanol use in America.

That’s why UNICA has written to EPA urging consistent treatment of RVP requirements for both E10 and E15 – action that would reduce the potential for “boutique fuels,” maximize flexibility for refiners and gasoline marketers, and pave the way to greater ethanol use in the U.S. as mandated by the RFS.

Lower RVP, Lower Emissions – Brazil’s Experience

First, a little background on what RVP is and why it matters. The RVP is a common measure of gasoline’s volatility, defined as the absolute vapor pressure exerted by liquids at 100 degrees Fahrenheit. EPA regulates vapor pressure of fuel sold at retail stations during the summer ozone season to diminish health risks by reducing evaporative emissions of gasoline that contribute to ground-level ozone.

EPA currently allows E10 a one pound-per-square-inch (psi) RVP volatility tolerance, enabling ethanol to be blended into conventional gasoline year-round without requiring marketers to secure specially tailored gasoline blendstock. EPA currently does not extend this same one-psi waiver to E15, making sales extremely difficult for gasoline marketers, as they have to incur the added costs and logistics of obtaining appropriate blendstocks.

A higher percentage of renewable ethanol, as opposed to fossil fuel-based gasoline, makes environmental and climate sense: Less fossil fuel equals fewer harmful emissions. In Brazil, ethanol has been blended well above 10 percent in gasoline (up to 25 percent for all light-duty vehicles) while lowering emissions like carbon monoxide, sulfur oxides, and other particulate emissions without any degradation in general air quality.

Brazil has accepted RVP ranges between 6.5–10 psi for gasoline depending on ethanol blend levels for years as a reasonable compromise between refinery flexibility, gasoline quality, and environmental requirements.

In fact, Brazil’s experience over the past 30 years shows if high RVP becomes a concern for any given gasoline stock, then increasing the ethanol blend is a simple and cost-effective solution to lower RVP.

EPA Findings Extend From E10 To E15

Ample scientific justification exists for EPA to extend the RVP volatility waiver to E15, and recent analyses show the vapor pressure of E15 is slightly lower than E10 while creating greater reductions in carbon monoxide and exhaust hydrocarbon emissions.

EPA’s initial decision to grant the one-psi waiver to E10 was based on its findings that increased volatility associated with the waiver was offset by reduced emissions if low-RVP gasoline was available for E10 blending. Unfortunately, insufficient supply of low-RVP gasoline blendstock exists in the U.S. to accommodate broad E15 blending without the one-psi waiver.

Using the same reasoning EPA used to issue the one-psi waiver to E10, the waiver should also apply to E15. As long as the waiver applies to E10, there’s no logical reason it shouldn’t also extend to E10.

Another Market-Based Alternative

But even if EPA doesn’t follow this logic, another alternative exists. Instead of extending the one-psi waiver to E15, EPA could instead discontinue the E10 waiver; effectively ensuring “standard” gasoline blendstock would have an RVP low enough to facilitate both E10 and E15 blending.

Either way, EPA should treat both E10 and E15 consistently in the marketplace with regard to RVP. This issue is critical not only from an economic perspective, but from an environmental perspective, as E15 is attempting to enter the U.S. market and RFS-obligated parties are increasingly interested in higher-level ethanol blends.

Environmental And Economic Imperatives

Given both the Obama Administration’s efforts to combat climate change, and the unique role of U.S. regulations on global acceptance of alternative fuels, we encourage the EPA to act quickly by either extending the one-psi waiver to E15 or removing the waiver entirely for E10.

Our association has played an active role in smart fuels policy formation, and looks forward to the opportunity to continue working with EPA on this important issue – not only to help reduce U.S. dependence on fossil fuels while creating economic benefits for American drivers, but to help mitigate climate change.

EU Member States miss another opportunity to lead on advanced biofuels

Géraldine Kutas — posted 28/05/2014

After the stalemate at the December Council where a blocking minority of Member States prevented the adoption of a Council common position on ILUC, Member States’ Permanent Representatives finally agreed today on a compromise text proposed by the Greek Presidency after two Ad Hoc Working Party meetings took place in April and May. The compromise text was discussed already last week by the COREPER but there were still some concerns on the legal nature of the advanced biofuels targets and the text could not be agreed. The Council position will still need to be officially endorsed by EU Energy Ministers on 13 June.

The compromise text – which didn’t really introduce any ground breaking changes compared to the text proposed by the Lithuanians in December 2013 – proposes a non-binding 0.5% reference number for the use of advanced biofuels (with plenty of options for Member States to actually adopt an even lower target) and keeps a cap for conventional biofuels at 7%.

In the spirit of traditional European compromises, this low number bridges the gap between the more ambitious Member States wishing to develop advanced biofuels and those who don’t want to be bound by a commitment. Bottom line for the biofuel sector is that the compromise doesn’t offer any incentives to invest in second and third generation biofuels. Worse still, in its attempt to square the circle on the topic the Council is even likely to block any substantial investments.

Developing advanced biofuels requires considerable R&D efforts and their market uptake is necessarily slow before they reach commercial scale. Greater clarity on the policy environment is an essential parameter for such investments to take place. It is no wonder why “the need for regulatory certainty” have become such buzzwords in Brussels in the past few years.

I repeat: biofuels, despite all the discussion on ILUC, currently represent the only economically viable way to decarbonise transport, provided that the EU manages to find a way to guarantee they are produced in a sustainable way.

Despite this, EU decision-makers continue to overlook the economic parameters within which the biofuels industry operates. First of all, there is no legislative clarity and there will not be any until the whole legislative process is finalised, which isn’t likely to happen before 2015. Second, the current measures on the table would harm the conventional biofuels industry even though it is precisely from this part of the industry that investments in more sustainable production are likely to come from. Third, the EU is not providing any truly interesting incentive for the development of advanced biofuels. On which premises is the biofuels industry supposed to invest in more sustainable production solutions?

Outside Europe, the Brazilian Sugarcane Ethanol (BSCE) industry demonstrates that conventional biofuels can be produced sustainably, alongside advanced biofuels. UNICA member companies produce second generation biofuels from waste and residues (i.e. bagasse and straw) as well as bio-electricity (by 2020 bioelectricity produced from BSCE can cover 18% of Brazil’s electricity needs).

As a matter of fact, by 2015 Brazil will have four commercial plants producing cellulosic ethanol (GranBio, Raizen, Odebrecht Agroindustrial e Petrobras) with a production for the first year foreseen at 168 million liters according to BNDES. The EU would be an interesting market for Brazil, if only the legislative framework was a bit clearer.

But the game isn’t over yet. The second reading in the European Parliament is just around the corner. One can only hope that the new MEPs adopt a more balanced approach to the file once they reopen it in the second half of the year.

EU political groups are apathetic on transport issues

Géraldine Kutas — posted 08/05/2014

Having looked at the recently published manifestos of the European political groups, I realized surprisingly that the main groups, EPP and PES, do not even mention transport issues in their priorities for the next five years.

Isn’t it odd? Transport is still one of the main sources of emissions in Europe, and in the world really. According to the European Commission, transport is the only sector where GHG emissions are still rising, and yet this seems not to be a major concern for the European political groups. Only the Greens and the Liberals mention transport and only the Greens have priorities on greener and sustainable transport.

To be honest, this doesn’t appear to be in the top-10 issues for the European Commission either, which in January proposed to remove transport specific targets from the 2030 Policy Framework. And, now that I think about it, only very few Member States raised concerns over the lack of transport targets and the proposed end of the Fuel Quality Directive (FQD) during the Energy and Environment Council meetings in March.

In my blog on “Full U-Turn on Decarbonizing European Transport”, ahead of the publication of the 2030 Package, I ironically said that it is good to know that the Commission thinks we can stop worrying about carbon emission in transport. Clearly, this isn’t true and the scientific body of the Commission, the JRC, just released a study which concludes that in every scenario considered the existing targets for 2020 (10% RED and 6% FQD) cannot be sustainably met without blending in more advanced biofuels, assuming they are available.

If the solution doesn’t come from the energy policy, it will come from the transport side, I thought! Maybe the Commission is going to issue another Communication on Transport – equivalent to the 2030 Climate and Energy Package – revamping the objective of the White Paper of 2011, or assessing the results achieved so far and raising awareness of what still needs to be done in the road to 2050. However, the White Paper was published only 3 years ago and I learned that a mid-term review will most likely only happen between 2015 and 2016. The highest levels of DG MOVE are not even thinking about a new White Paper yet.

Well, I guess the uncertainty over the biofuels policy cannot be cleared from the transport side either!

Meanwhile, biofuels still remain the most promising way to reduce transport emissions in the short and medium term. However, the ILUC discussion stopped in the last couple of years the developments (and the investments) of the biofuel industry and so far the EU hasn’t managed to provide legal certainty on how sustainable biofuels should be counted against the 2020 targets. Not only did a legal certainty not come from the energy policy, but the proposal put on the table in 2012 by DG CLIMA and DG Energy even risked (and still does) damaging also those sustainable biofuels with a very low-ILUC impact, only because they are food-based, such as Brazilian sugarcane ethanol.

As pointed out several times in my blogs, the Commission should work on a more balanced approach to the biofuels policy and the targets for sustainable transport should not be taken out from of the picture. For the first time, the candidates for the Commission Presidency from the main pan-European parties are debating publically on their priorities ahead of the elections, as a result of the changes introduced by the Lisbon Treaty, and this could have had the potential of raising the awareness of a wider audience than the usual ‘Brussels bubble’ on topics such as sustainable transport and biofuels. However, the candidates for the next Parliament – which is usually the institution that most promotes high standards of sustainability – missed the opportunity to be carriers of sustainable transport ideas and makes me wonder what will be the level of interest on these issues in the next 5 years.

IPCC adopts a more nuanced approach and recognize benefits of biofuels

Géraldine Kutas — posted 17/04/2014

It’s good to see that a highly regarded institution, like the United Nations, has just released a new report that has the courage ‎to simply follow the empirical evidence about the benefits of responsibly produced biofuels.

The Intergovernmental Panel on Climate Change (IPCC) has taken an empirically sensible-based approach this time towards biofuels and recognizes that they can contribute to climate change mitigation, provided that some good practices are put in place. It adopts a much more nuanced approach to biofuels – an approach that I have been defending since the beginning of the discussion on ILUC – arguing that biofuels may have from 30 to 90% GHG emission reduction than fossil fuels (per kilometre travelled, Chapter 8), but acknowledging that public policies need to be determined on a case by case basis to take into account the specificities of different biofuels and possible direct and indirect LUC effects.

In fact, some biofuels (conventional and advanced) can be more or less well-performing in terms of GHG emission reduction and this needs to be evaluated in a more balanced way than the black and white approach proposed by the Commission with the cap on conventional biofuels. As I said in several other occasions, Brazilian sugarcane ethanol records excellent performances even though it is a so-called first-generation biofuels.

Additionally, the use of biofuels in transport, as a climate change mitigation measure, is mentioned in the report as a mean to reduce oil dependence and thus increasing energy security, which is definitely a key concern at the moment for the European Union.

Quite interestingly, the IPCC’s report makes two important points. First, it refers to the European Union policies on biofuels, claiming that the much contested Fuel Quality Directive is actually a “durable framework” and provides “flexibility to industry in determining how best to reduce fuel carbon intensity” (Chapter 8), just right now that the EU Commission proposed to get rid of it! Secondly, it expresses some doubts on the measurement of direct and indirect effects on land-use change.

Now, I wonder the impact of these considerations on the current debate on the 2030 Climate and Energy Package. The Package was mainly criticised for the lack of specific renewables targets for Member States as well as of specific transport targets. Without these elements, it is very difficult to expect the Member States to increase the amount of renewables and biofuels in their energy mix and meet the general objective of decarbonising transport. From its side, the IPCC is giving some credit to the FQD and proposes a conscious and balanced approach to biofuels.

I am also pleased to see the IPCC’s contextualized arguments on Brazil, which is mentioned several times in the report for some good examples in the sugarcane industry as well as for employment conditions and deforestation control policy. Notably, the Brazilian Action Plan for the Prevention and Control of Deforestation is brought as an example on how the cooperation between several level of government and the “combination of economic and regulatory approaches significantly increased the protected areas” (Chapter 11). Further, IPCC recognizes that “Brazilian sugar cane ethanol production provides six times more jobs than the Brazilian petroleum sector and spreads income benefits across numerous municipalities” and rightly mentions the development of the bio-refineries in Brazil, where 10% of ethanol goes into bio-products (Chapter 11).

The IPCC should be credited for finally amending past inaccuracies as regards biofuels, by delivering a balanced approach in a report that carries significant weight with policymakers around the world. ‎Unfortunately, various lawmakers in Brussels have too often let the erroneous and emotion-based arguments of NGOs to guide policy around biofuels. Let’s hope that policy makers will give this IPCC report a considered examination to inform policy intentions going forward around responsibly produced biofuels.

Sugarcane Ethanol Plays Modest but Important Role Supplying U.S. with Advanced Biofuels

Leticia Phillips — posted 08/04/2014

In advance of the Senate Agriculture Committee hearing  – entitled Advanced Biofuels: Creating Jobs and Lower Prices at the Pump – the Brazilian Sugarcane Industry Association (UNICA) released the following statement. It should be attributed to Leticia Phillips, UNICA’s representative in North America.

The United States and Brazil are the world’s top two ethanol exporters, and both nations enjoy the economic and environmental benefits of global biofuels trade.  The U.S. Environmental Protection Agency identified Brazilian sugarcane ethanol as an advanced biofuel in 2010 after determining it reduces carbon dioxide emissions by at least 60% compared to gasoline.  Thanks to those greenhouse gas savings, the benefits of using sugarcane ethanol are cleaner air and a healthier planet – benefits that will grow as Americans consume more advanced biofuels.

Sugarcane ethanol plays a modest but important role supplying the United States with clean renewable fuel.  Last year, even though Brazilian sugarcane ethanol comprised only 3% of all renewable fuel consumed by Americans, it provided 15% of the U.S. supply of advanced biofuels.  Experts expect those proportions to continue in 2014.

Brazilian sugarcane producers are making investments to expand production, and Americans can depend on more advanced biofuel from sugarcane. America imported nearly 435 million gallons of Brazilian sugarcane ethanol in 2013 – roughly half of all Brazilian biofuel exports last year.  Brazil produces about 7.2 billion gallons of sugarcane ethanol annually, and UNICA estimates that at least 600 million gallons will be available for export to the U.S. this year, with the potential for growth.

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The Brazilian Sugarcane Industry Association (UNICA) is the leading trade association for the sugarcane industry in Brazil, representing 60 percent of the country’s sugarcane production and processing.  UNICA works to encourage the continuous advancement of sustainable practices throughout the sugarcane industry and to promote sugarcane-based biofuels as a clean, reliable alternative to fossil fuels.  For more information, including the latest updates on the Sugarcane Solutions Blog, check out www.sugarcane.org/RFS.