…Proposal to Consider Impact of Indirect Land Use Generates Opposition at House Hearing…
The Obama administration on May 5 announced a pending rulemaking setting out its strategy for meeting the new standard mandated by Congress in 2007 that calls for producing 36 billion gallons of renewable fuels by 2022.
But the principal focus centered on the U.S. Environmental Protection Agency's (EPA) proposed methods for evaluating the impact of increased renewable fuel production on indirect land use, including the clearing of land in foreign countries, that biodiesel proponents contended would preclude the use of soy biodiesel to meet the new mandates.
Under the 2007 law, renewable fuels are required to meet specific greenhouse gas emission thresholds to qualify for the second generation renewable fuels mandate (RFS-2). Renewable fuels, including all corn ethanol from new plants (on which construction began after Dec. 19, 2007) are required to meet a 20 percent reduction in lifecycle greenhouse gas emissions. Corn-based ethanol plants on which construction began prior to Dec. 19, 2007 would be grandfathered in. Meanwhile, biomass-based diesel (such as soydiesel) would be required to reduce lifecycle greenhouse gas emissions by 50 percent to qualify under RFS-2; the 2007 legislation provided no similar grandfather provision for biodiesel. Cellulosic ethanol would be required to meet a 60 percent greenhouse gas-reduction threshold. EPA said it would propose to evaluate both direct greenhouse gas emissions from biofuel use and the indirect impact of countries using land to grow the crops for biofuels when assessing the greenhouse-gas emissions.
As required under the 2007 law, EPA's proposed RFS-2 standard would require by 2022 that: 16 billion gallons annually be generated from cellulosic biofuels; 15 billion gallons annually be derived from conventional biofuels (such as corn-based ethanol); 4 billion gallons annually consist of advanced biofuels; and 1 billion gallons annually be derived from biomass-based diesel.
EPA said it will provide a 60-day comment period on the proposal once it is published in the Federal Register, which had not occurred as of today (May 11). The agency also said it planned to issue a proposal each spring for the duration of the RFS-2 standard (covering through 2022), with final rules to be issued by each Nov. 30 as required under the 2007 law.
In a related development, President Obama issued a presidential directive that the U.S. Departments of Agriculture and Energy, as well as EPA, form a biofuels interagency working group to: 1) develop a comprehensive biofuel market-development plan; 2) coordinate infrastructure policies affecting the supply, secure transport and distribution of biofuels; and 3) identify new policy options to promote the environmental sustainability of biofuels feedstock production, taking into account land use, habitat conservation, crop-management practices, water efficiency and water quality, and lifecycle assessments of greenhouse gas emissions. Obama also said $786.5 million in the economic stimulus law will be used to accelerate advanced biofuels research and development, and expand commercialization.
Obama also directed Vilsack to refinance existing renewable fuel investments "to preserve jobs in ethanol and biodiesel plants, renewable electricity generation plants and other supporting industries," and make renewable energy financing opportunities mandated under the 2008 farm law available within 30 days. Those financial incentives include: 1) loan guarantees for developing, constructing and retrofitting commercial-scale biorefineries, as well as grants to help pay for development and construction of demonstration-scale biorefineries; 2) expedited financing to encourage production of next-generation biofuels from biomass and other non-corn feedstocks; and 3) guidance and support for collecting, harvesting, storing and transportation assistance for eligible materials for use in biomass-conversion facilities.
House Ag Committee Members Vent at EPA: During a May 5 hearing, the House Agriculture Committee's Subcommittee on Conservation, Credit, Energy and Research bore in on EPA's decision to evaluate indirect land use when measuring biofuels emissions. Full Committee Chairman Collin Peterson, D-Minn., took the unusual step of attending the hearing to lambaste EPA and the climate-change bill under development in the House. In a blunt, negative assessment, Peterson said he had no confidence or trust in EPA, and said precluding any rulemaking on greenhouse-gas emissions would be a precondition of any support from him for climate-change legislation. Peterson said EPA's proposal would "kill off" corn-based ethanol. His remarks were followed by as chorus from subcommittee Republicans and Democrats alike excoriating EPA for a rulemaking that they maintained would preclude certain methods of corn-based ethanol production or soybean-based biodiesel production from meeting the requirements under the new RFS-2 standard.
Consideration of Climate Change Legislation Delayed in House: In a related matter, consideration of climate-change legislation by the House Energy and Commerce Committee was delayed by continuing disagreements among committee Democrats over several key provisions, including how strict the emissions limits will be; the structure of any cap-and-trade offset provision; how carbon allowances will be distributed; and the structure of a renewable electricity standard. Waxman has called for a 20 percent emissions reduction by 2020, while the Obama administration’s fiscal 2010 budget proposed a 14 percent reduction and adversarial Democrats involved in the negotiations on a bill began by proposing a 6 percent reduction. As for the distribution of carbon allowances, current negotiations center on having 55 percent be available at no cost, with 45 percent available through a fee-based auction. Under this approach, 40 percent would be allocated free for electric utility distributors and 15 percent for certain industries that are considered highly vulnerable to international trade.
While initially indicating that the bill first would be considered and approved by the committee's Energy and Environment Subcommittee, it widely is believed that Waxman may move the bill directly to the full committee for action because he may not have sufficient votes within the subcommittee to ensure passage. With Republicans united in opposition to the measure, any agreement will require garnering several moderate Democrats. Several other committees will have jurisdiction over parts of the bill before it is considered on the House floor, including the House Agriculture and Ways and Means Committees.