Unintended Consequences from EPA Proposal Could Limit U.S. Access to Advanced Biofuels

Leticia Phillips — posted 17/02/2017

The U.S. Environmental Protection Agency (EPA) has accepted comments on a proposal that would allow, among other things, biofuel producers to partially process renewable feedstocks at one facility and further process them into renewable fuels at another facility. EPA intends this broad rule to increase the economics and efficiency of producing biofuels, particularly advanced and cellulosic biofuels, a goal Brazil’s sugarcane biofuel producers broadly support.

However, we are seriously concerned the proposal as currently written would upend nearly a decade of established practice and effectively prevent Americans from importing and using Brazilian sugarcane ethanol, one of the cleanest and most available advanced biofuels on the market, by changing how “biointermediates” are treated.

Since the beginning of the Renewable Fuel Standards (RFS) program, sugarcane ethanol has played a modest but important role supplying Americans with nearly 2 billion gallons of advanced biofuel. This important designation under the RFS indicates that a fuel reduces greenhouse gas emissions by at least 50 percent compared to fossil fuels.

The troubling concern with EPA’s proposal is characterizing undenatured imported ethanol, like sugarcane ethanol from Brazil, as a biointermediate product. Denaturing is the addition of chemicals to ethanol to ensure the alcohol is both not suitable for human consumption and clearly “marked” for use in automobile fuel tanks in the United States. For many technical and regulatory reasons, nearly all sugarcane ethanol leaves Brazil in an undenatured state and the denaturing chemicals are then added in the United States to comply with regulations set by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department. To underscore, this approach has worked well for the past decade without any reported cases of fraud that have hampered other parts of the RFS program.

Categorizing undenatured imported ethanol as a biointermediate will impose significant and costly new obligations that may be infeasible and unfair for Brazilian sugarcane producers to meet. The unintended consequence may be blocking American access to this important source of advanced biofuel, and would treat foreign products differently from domestic biofuel supplies.

We also believe EPA’s definition of biointermediate does not fit undenatured sugarcane ethanol. The Brazilian ethanol producing process does not involve “sequential” production of pre-processing feedstock at one facility and transportation to another nearby facility for the ultimate conversion to renewable fuel. Rather, the product exported to the United States is a finished product, not a feedstock. It is a liquid fuel that can be used, without further processing, for transportation.

Formal comments from Brazil’s sugarcane ethanol producers urge EPA to clarify that the biointermediate definition does not include undenatured sugarcane ethanol fuel that is subsequently imported into the United States and denatured.  This exception will not alter the status quo for foreign ethanol producers, but would allow EPA to provide the biointermediate provisions to the few US-based producers to which they should logically apply.

Decarbonizing transport in a post-fact world

Géraldine Kutas — posted 02/02/2017

2016 was the warmest year on record since the industrial revolution. At Politico’s recent debate on decarbonizing Europe’s transport, that was held in Brussels, DuPont’s Jan Koninckx recognised that the most immediate way to decarbonise transport is through cleaner fuels.  He correctly said that if implemented, the European Commission’s proposed reduction of first-generation biofuels from 7% to a cap of 3.8% would result in increased European dependency on oil.

Maroš Šefčovič said, last week, that there is an international consensus that first-generation biofuels should be phased out. This is simply not true. Countries such as Australia, Brazil, Canada, Colombia, India, Thailand and the US are all producers of first-generation biofuels and have no intention of phasing out these important CO₂-reducing petrol alternatives. It is also important to note that none of these countries regard first- and second-generation biofuels as being in opposition with one another, as the European Commission seems to, but see them as complementary. This is exactly the spirit of the Biofuture Platform led by Brazil that was launched at COP22. The Biofuture Platform reflects the international consensus, and underscores the fact that the EU is, absurdly, the only major economy that is focused on phasing out first-generation biofuels.

This is precisely what Brazil’s Agriculture Minister emphasised during a recent roundtable discussion in Brussels. Brazil, Minister Maggi said, is committed to fighting climate change, and sugarcane ethanol is an important tool in its energy sustainability strategy. More than 40% of Brazil’s energy production comes from bioenergy and hydropower, and sugarcane is the number one source of renewable energy in the country. Minister Maggi advocated for the sustainability of first-generation biofuels, while welcoming the development of second-generation ethanol. He mentioned the Sugarcane Agro-Ecological Zoning, adopted in 2009, a law that prohibits the clearing of any type of native vegetation to plant sugarcane.

Vested interests in Europe are also pushing the falsehood that using first-generation biofuels means taking food from people’s mouths to run your car. This is a highly emotive accusation that has some European policymakers running scared. But while it makes a great headline, again, it is simply untrue. Swedish Minister for the Environment Karolina Skog said that she considered that differentiating conventional from advanced biofuels based on whether the feedstocks can be used to produce food is not an appropriate criterion, and does not make biofuels less or more sustainable. As Minister Maggi stated, there is absolutely no food-versus-fuel issue in Brazil in terms of the production of first-generation biofuels. Indeed, ethanol production accounts for only 1% of land use and Brazil is the world’s third largest agricultural product exporter.

Šefčovič has said that first-generation biofuels should be phased out, and has asked for innovation in the agriculture and chemical industries to deliver advanced biofuels. But the European Commission will not see the investments in second-generation biofuels it wants if policymakers do not also support traditional biofuels. You cannot kill the biofuels sector by eliminating first-generation biofuels and then expect it to rise miraculously phoenix-like from the ashes to deliver second-generation fuels.

If Europe is to achieve its ambitious targets and reduce its reliance on fossil fuels in transportation, the Commission should not pick winners. All the sustainable alternatives should be promoted and the proposed indiscriminate 3.8% cap on first-generation biofuels must be abandoned.

The ‘year of delivery’ comes to an end

Géraldine Kutas — posted 22/12/2016

Dear readers,

This is our last post of the year. 2016 will definitely go down in history as an eventful year, both on the political and policy levels. I hope you will all get to disconnect from work, rest, and enjoy the Winter Holidays with families and friends.

The Commission had promised us a ‘year of delivery’, and it did deliver indeed. We hadn’t seen such an amount of proposals in years – this is likely to keep us busy through 2017 and beyond. It’s not all perfect, but we know what we have to work with now.

We often hear in Brussels that the Juncker Commission is very ‘political’. But the downside of being ‘political’ is that you can be tempted to shut an eye on the facts and give in to pure political considerations instead, regardless of the actual consequences. This is precisely what happened with biofuels in the proposed legislation on renewable energy, and the decision to significantly reduce the use of all first generation biofuels, regardless of their GHG emission performance.

So, in 2017 our job is going to be to try and put back some nuance into the proposed legislation for 2030. In particular, we are going to try and convince policymakers that a black and white approach to conventional biofuels, while easier to understand, will not solve the problem of transport emissions and might actually make it worse. The problem is that many policymakers are still ‘traumatized’ by the never-ending discussions around indirect land-use change and do not want to reopen the debate. NGOs on the other hand are trying to convince everyone that only e-mobility can reduce emissions in transport, and that biofuels consist in taking people’s food and running your car with it.

Reality is a bit different. Yes, there are some conventional biofuels whose sustainability is uncertain, but not all of them. You just need to have a look at the latest studies to see it (hint: one of these, known as ‘GLOBIOM’ was commissioned by… the Commission). And guess what: sugarcane ethanol is one of the most sustainable biofuels even when ILUC is considered. The problem is that the Commission felt under so much pressure from public opinion that it did not fight it and adopted instead this simplistic narrative. Now we have to go and explain to people that the most common misconceptions on biofuels are not always true, especially when it comes to sugarcane ethanol, and why the proposed policies have a big chance of backfiring.

Despite the task at hand, we are really looking forward to 2017. We will be hearing more about Mercosur too, with a first civil society meeting scheduled for mid-January and another round of negotiations in March. We’re hopeful that progress can be made on the deal over the next few months and will follow closely the debate.

Thanks again for reading us and have a nice holiday!

Many questions and not enough answers

Géraldine Kutas — posted 07/12/2016

Are we not losing sight of the main objective: reduce GHG emissions from transport?

My feeling after having read and digested the new proposal on the Renewable Energy Directive is that by 2030 there will probably not be a massive change in how much we emit from our transportation activities.

These are my doubts:

Trajectory is not realistic – I doubt that the trajectory proposed for the phase out of conventional biofuels will be actually feasible. Don’t take me wrong, I am very much in favour of advanced biofuels – some of UNICA’s members produce them – and I think it is good to have a specific sub-target for fuel suppliers. But, my question is: will advanced biofuels be able to replace the conventional biofuels at the rhythm foreseen by the Commission? I don’t think so! Advanced biofuels production often relies on conventional biofuels existing investment, infrastructures, biomass. This basis will not be there, after years of legislative instability and yet another change proposed last week, the situation is already looking gloomy. As a biofuel producer I would probably not dare to invest again in the sector under such premises.

Risk of more fossil fuels – In fact, I see the risk of more use of fossil fuels when conventional biofuels cannot be replaced with advanced!!! Certainly, it will not be electricity to come to the rescue. Also here, don’t get me wrong, I don’t think electric vehicles are in competition with biofuels. At least not in the foreseeable future! The Commission did not even go for a big push for electrification of transport as its recent narrative suggested. As I see it, we will end up, in perhaps other 20 years, with hybrid cars which can run with electricity and biofuels. Nor will come to the rescue other alternative fuels. Member States showed already during the negotiations on the Alternative Fuels infrastructure deployment directive, that they do not want to be told how to promote alternative fuels. So, no mandatory targets and national plans were to be submitted to the Commission on 18 November this year. We will have to wait until the end of the year to see how much countries are committed on this front.

GHG emission reduction target – I am very much in favour of the blending mandate. I think it is the right approach which keeps the focus on the main goal of reducing emission. But what about leaving fuel suppliers free to simply choose the less emitting fuels to meet their 6.8% target? This would have finally recognised and given a role to bioethanol, which is conventional but actually reduces GHG emissions and has a low ILUC impact, as assessed by the Commission itself.  I think this would have been feasible from a scientific perspective, but unfortunately not so much on a political one, based on public misconceptions (see my blog on ‘Why science matters’ here).

Now, my question remains: how are we going to reduce emissions from transport in the next decade?

I look forward to the beginning of negotiations in the institutions and I will be happy to bring the positive example of Brazil, where sugarcane ethanol, one of the best performing conventional biofuels, is actually reducing transport emissions, improving the agricultural sector and creating the conditions for the next generation of biofuels to develop and become commercially viable.

Brazilian Sugarcane Biofuel Producers Applaud Increased EPA Support for Advanced Renewable Fuels

Elizabeth Farina — posted 23/11/2016

The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) today commented on the final 2017 renewable fuel standards from the Environmental Protection Agency (EPA). The association’s statement should be attributed to UNICA’s President, Elizabeth Farina.

“Brazil’s sugarcane ethanol producers applaud EPA for its continued leadership and support of advanced renewable fuels. By setting a higher final 2017 RFS volume requirement for advanced biofuels than originally proposed in May, EPA makes a powerful statement on the economic and climate benefits of renewable fuels.”

“Increasing requirements for advanced biofuels help ensure continued American access to sugarcane ethanol, one of the cleanest and most commercially ready advanced biofuels available today. This signal of support will also encourage innovations and increase production of second-generation biofuels, which hold incredible potential to increase per-acre ethanol productivity and unlock vast new cellulosic feedstocks.”

“We are proud of the modest but important role Brazil plays supplying the United States with clean, low-carbon renewable fuel.  Over the past four years, nearly 1.2 billion gallons of sugarcane ethanol imported from Brazil flowed into American vehicles.  During this time, sugarcane ethanol comprised only two percent of all renewable fuels consumed by Americans, but provided one-tenth of the entire U.S. advanced biofuel supply.”

“With the right market conditions, Brazil has the capacity to supply the U.S. with significantly greater quantities of advanced biofuel than the 200 million gallons assumed by EPA’s 2017 rule. Together, America and Brazil have built a global biofuels market, and we look forward to continuing to ensure the road to sustainable transportation is fueled by renewable biofuels.”

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The Brazilian Sugarcane Industry Association is the leading trade association for the sugarcane industry in Brazil, representing nearly 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.