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Heading into the New Year, it’s clear the decisions confronting lawmakers and EPA regulators on the RFS will have a great impact on our world’s journey towards decreasing greenhouse gases and improving energy security. So in the spirit of the season, here’s our wish list naming the top three presents we’d either like to see under the tree or delivered in 2014.
1 – EPA reconsiders the agency’s current proposal and sets renewable fuel standards that encourage production and consumption of all available advanced biofuels. Slashing 2014’s target for advanced biofuels is a leap backwards on the path to reach the Obama Administration’s energy and environmental goals. Advanced biofuels, including Brazilian sugarcane ethanol, reduce carbon dioxide emissions by over 50 percent compared to gasoline and are a proven solution for addressing climate change. We hope EPA won’t finalize a proposal that ignores the 650-800 million gallons of sugarcane ethanol that are available to supply the United States with more advanced biofuel in 2014.
2 – No unnecessary, burdensome requirements on foreign biofuel producers.
Under a separate EPA proposal, sugarcane producers would be subject to a host of onerous new requirements when exporting to America. Requirements like physically segregating exported ethanol from the production plant all the way to port arrival in the U.S. and spending considerable amounts on third-party auditors would cost roughly $1 million for every 5 million gallons exported by our estimates. EPA’s intentions are laudable, and we support the agency’s goal of ensuring the regulatory system that tracks U.S. biofuel consumption is accurate. But as currently written we are concerned the regulatory process is being used to impose burdensome, anti-competitive requirements on foreign biofuels.
3 – Global free trade in biofuels continues to flourish. In 2013, the U.S. domestic market for biofuels grew rapidly. EPA 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 in 2013 at around 450-500 million gallons. The reduction in imports is because American production of advanced biofuels is expanding quicker than the EPA forecasted – NOT because Brazil has exhausted its capacity for exports. As I’ve said all along, Brazil and the U.S. have a responsibility to work together to build a global biofuels market that provides clean, affordable and sustainable solutions to the planet’s growing energy needs. We’re making progress that should continue in 2014.
Brazilian sugarcane producers look forward to continuing to play an active role in the RFS rulemaking process and tackling the challenges that lay before us in the next year. Happy Holidays and best wishes for a happy, healthy and prosperous New Year!
Biofuels in Europe to Remain in Policy Limbo after EU Member States Reject ILUC Compromise
Géraldine Kutas — posted 12/12/2013
EU Member States on Thursday confirmed what many European biofuel watchers had assumed for many weeks: the issue of biofuels and their potential indirect effects (so-called Indirect Land Use Change) won’t be addressed until the next European Parliament and the next European Commission takeover in late 2014.
Member States, via their Energy Ministers, failed Thursday to agree on a compromise plan that would have, among other things, put a 7% cap on the use of conventional biofuels in Europe; they also couldn’t agree on what level of incentive is necessary to stimulate the production of more advanced biofuels to help Europe decarbonize its transport system.
The EP had already voted to slap a 6% cap on first generation biofuels earlier in the autumn; many Member States (like Hungary and Poland) today either thought a compromise 7% cap would hurt the biofuel industry and farmers.
Others member states (Netherlands and Belgium) rejected the compromise plan, feeling a 7% threshold wasn’t ambitious enough. They wanted more like a 5% cap and required industry to account for the assumed indirect emissions that environmentalists claim the EU biofuel mandate causes. This mix of more ambitious and less ambitious countries prevented the adoption of the Lithuanian compromise text.
This no-decision outcome keeps everybody waiting and prolongs final investment decisions for the advanced biofuels industry. EU’s Energy head, Gunther Oettinger, complained at today’s meeting: “Postponing this issue won’t help anyone at the end of the day, certainly not market participants and consumers.”
However, as I said previously, this could provide with a good occasion to work on a more balanced approach to the biofuels policy in Europe. The discussion on biofuels and ILUC over this last year, since the Commission published its proposal, has jeopardized biofuels policies in EU member states and undermined investments in new technologies.
What is needed is a more nuanced approach to the issue that takes into account the real environmental credentials of the different types of biofuels, in a technology-neutral way.
What next then? The Council will have to keep discussing the issue back at working party level and the process is delayed until a political agreement is found in the Council. At that point, probably in the second half of 2014, the Parliament would be able to start with the second reading. Positions will be again quite different and the Commission might have to draft a new proposal.
Let’s hope that a more shaded approach to EU biofuel policy materializes in the next round.
Fact Checking the Petroleum Refiners
Leticia Phillips — posted 11/12/2013
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.
Countdown starts for the biofuels’ verdict in the EU
Géraldine Kutas — posted 10/12/2013
Ahead of the adoption of the Political Agreement on the ILUC dossier in the Energy Council on 12 December 2013, a group of NGOs put out a briefing on the biofuels policy review and on the three main issues in the debate: the cap for land-based biofuels, the weakening of the 20% RED target and the inclusion of ILUC factors for accounting purposes.
The briefing claims that “ILUC is a real and tangible problem affecting the sustainability of biofuels” and that “most land-based biofuels currently marketed in Europe offer no or limitedcarbon emissions savings compared to petrol and diesel”. On this basis, the NGOs criticise the suggestions of the Lithuanian Presidency and proposes 1) to have a cap for first generation biofuels at current consumption levels (or lower) also applied to the Fuel Quality Directive, 2) to make sure that biofuels produced from waste and residues are actually sustainable and 3) to include ILUC factors for accounting purposes in both the RED and FQD.
A cap such as the one proposed by the Commission and defended by the NGOs is just a clumsy attempt to find a quick remedy to issues that remained unsolved in 2009, bringing no evident benefit in the long term. In fact, such a black and white approach would not take into account the good performances of well-performing conventional biofuels such as sugarcane ethanol. It would actually cut them off the European market and – even worse – it would not take into consideration the bad performances of some advanced biofuels. Within another 5 years the EU might risk finding itself in the exact same situation as today.
Granted, not all the biofuels considered as advanced are actually sustainable. However, NGOs should have applied the same logic the other way around to conventional biofuels. Sugarcane ethanol achieves among the highest greenhouse gas (GHG) emission savings (over 70% relative to fossil fuel alternatives, according to the default values in the EU Renewable Energy Directive, and more than 55% when estimated ILUC emissions are accounted for) of all biofuels produced at scale because of its relatively low indirect impacts and the resource efficiency of its production. Let’s not forget that Brazilian sugarcane ethanol is considered an advanced biofuels in the U.S., and especially in California. Nevertheless, there would be no market for it in Europe if the cap ever enters into force.
While the argument for the introduction of ILUC factors in both the RED and FQD could actually be understood and would take into account important differences between biofuels’ environmental performance, having a strict cap wouldn’t match with it and would penalize, in any case, well-performing conventional biofuels.
Is it not perhaps the time to keep calm and work on a more nuanced and consistent approach to biofuels, without putting any extra burdens on the industries? These, after all, have already invested on biofuels and – this needs to be reminded from time to time – might not be able to invest more in advanced biofuels as a result of the implementation of the current proposal and the absence of a regulatory framework for the medium-long term.
A more structured and effective action to resolve the imbalance between diesel and gasoline in Europe would support the EU climate change policy objectives, and incentives to introduce higher blends of bioethanol in vehicles would help moving away from the most polluting biofuels. Sugarcane ethanol is definitely a good candidate for this purpose and could help the EU reach its objective of decarbonizing the transport sector.
Sustainable Biofuels Are Still the One to Help Decarbonizing EU Transport
Géraldine Kutas — posted 29/11/2013
A couple of new reports released this month in Brussels carry a similar message: Sustainable biofuels, like sugarcane-based ethanol from Brazil, will need to play a significant role if the decarbonization of European transport is going to happen longer term.
There’s also another important message in the two studies, one by E4Tech and the other by CE Delft/TNO: the EU still has an opportunity — especially with a new Commission and new European Parliament taking over in 2014 — to cultivate the right policy environment in order to move industry toward producing more advanced biofuels and enabling higher blending rates of sustainably produced biofuels for gasoline and diesel.
“Currently there is no 2030 policy environment for biofuels. There is also an urgent need for specifications for new biofuel blends for policy to promote high quality advanced biofuels and compatible vehicles, and a framework that addresses biofuel sustainability issues,” says E4Tech, a consultancy, which released its findings on Tuesday. E4Tech’s report was commissioned by a consortium of Daimler, Honda, Neste Oil, OMV, Shell and Volkswagen.
Through the E4Tech study, that group of automakers and fuel producers is pushing an Auto-Fuel Roadmap that recommends a series of achievable steps, based on evidence, that can be put into place in the coming years by policymakers and industry alike.
In particular, the E4Tech study lays out a timeline for a series of key actions, including an EU policy and fuel standards’ aim for the roll-out of maximum 10% ethanol, or E10, into gasoline by 2020; introducing E20 by 2025; and mandating, via policy, that all new gasoline vehicles are E20 compatible from 2018.
Such goals are already feasible with current technologies and with the direction that budding technologies are taking. The targets are also achievable in parallel with meeting critical sustainability requirements and cutting greenhouse emissions. In Brazil, the introduction of flex-fuel vehicles (FFVs) ten years ago has allowed Brazilians to freely decide which fuel they want to use. FFVs can run on either petrol or pure ethanol, or any blends of the two. That freedom of choice in Brazil also comes with the benefit of benefit of reduced carbon emissions, given the high CO2 emission reductions (71% according to EU Renewable Energy and Fuel Quality Directives) that sugarcane ethanol achieves versus fossil fuel. And Europeans should have the same freedom of choice and environmental benefits, particularly in light of recent World Health Organization assessments showing that air quality remains a pressing problem in many European cities and countries.
The E4Tech study’s findings are also echoed in another report unveiled earlier this month from CE Delft/TNO, which produced its study at the request of the European Commission. “It is essential for governments and industry to decide within 1 or 2 years on the way ahead and take necessary actions covering both, the fuels and the vehicles, to ensure their effective and timely implementation,” CE Delft/TNO said in its report.
Like the E4Tech study, CE Delft/TNO says higher blending ratios are technically feasible and would move Europe toward greater decarbonization in transport, which remains one of the main sources of global carbon emissions.
To be sure, to realize the projections and recommendations of both reports — like biofuels accounting for 15% of transport fuel in 2030 in Europe versus about 5% today, as E4Tech projects — a lot of things need to happen. Yet it’s an important signal that some key automakers and fuel suppliers are working in parallel to move Europe closer to its climate abatement and energy supply security goals.
But will the EU play its role in providing the proper longer-term policy signals? Let’s hope that the new Commission and Parliament will size this opportunity next year.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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