EPA proposes 2013 biofuels quota, RIN verification program

The US Environmental Protection Agency proposed 2013 biofuels quotas representing a more than 1.35 billion gal increase from what it mandated for 2012. Officials from two leading petroleum trade associations immediately called the 16.55 billion gal total representing 9.63% of total projected US motor fuel production unrealistic and unreasonable.

EPA also proposed a voluntary quality assurance program to verify the validity of research identification numbers purchased under the federal Renewable Fuels Standard. It will hold a hearing on the RIN verification proposal on March 19 and accept comments on it until Apr. 18.

Comments on the proposed 2013 biofuels quotas will be accepted for 45 days following their publication in the Federal Register. EPA called for production during 2013 of 1.28 billion gal of biomass-based diesel fuel (1.12% of projected total US motor fuel production), 2.75 billion gal of advanced biofuels (1.6%), and 14 million gal of cellulosic biofuels (0.008%).

EPA said in its notice that the proposed 2013 cellulosic biofuel volume is below what the RFS2 program specifies under the 2007 Energy Independence and Security Act. Annual renewable fuel volume targets steadily increase to 36 billion gal in 2022 under that program.

“The cellulosic biofuel industry is transitioning from research and development and pilot-scale to commercial scale facilities, leading to increases in production capacity,” EPA said. “Construction has begun on several facilities with multiple facilities having progressed to the start-up phase.” The 14 million gal quota is based on “detailed information from production companies and a consideration of various potential uncertainties,” it added.

American Petroleum Institute and American Fuel & Petrochemical Manufacturers officials separately criticized EPA’s two biofuels proposals.

‘Disturbed, surprised’

“We are disturbed that EPA is mandating 14 million gallons of cellulosic ethanol when zero gallons are available for compliance as of today,” AFPM President Charles T. Drevna said on Jan. 31. “In addition, we are surprised that EPA has not chosen to adequately consider a recent US Court of Appeals for the District of Columbia’s decision to vacate the agency’s 2012 cellulosic biofuel mandate.”

He said that EPA has been working on this rule for a long time, and AFPM is skeptical that the agency could re-evaluate the program in less than a week so that the proposed standards would comport with the court’s decision.

“The court recognized the absurdity of fining companies for failing to use a nonexistent biofuel,” said API Downstream Group Director Bob Greco.  “But EPA wants to nearly double the mandate for the fuel in 2013. This stealth tax on gasoline might be the most egregious example of bad public policy, and consumers could be left to pay the price. EPA needs a serious reality check.”

Drevna also said that AFPM was encouraged that EPA has finally released a proposal to protect refiners from biodiesel fraud, and will study it further.

“However, it is shocking that the Agency would mandate such high biodiesel volumes this year since 140 million biodiesel credits turned out to be fraudulent,” he continued. “Given such facts, it is unrealistic to assume the biodiesel industry will actually produce 1.28 billion gal of real biodiesel this year.”

Greco said that API is reviewing proposed changes to the RIN system and is still awaiting EPA’s interim enforcement policy for credits refineries purchase in good faith before the rule is finalized. “We hope EPA has provided the necessary safeguards so refiners can begin purchasing credits for this year’s biofuel requirements,” he said.

“EPA has uncovered more than 140 million invalid renewable fuel credits that were fraudulently generated by three biodiesel companies, representing between 5-12% of the biodiesel market,” Greco continued. “Refiners need EPA to provide certainty in the marketplace for these credits in order to comply with biofuel mandates.”

Contact Nick Snow at nicks@pennwell.com.

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