API, AFPM urge EPA to consider actual production in biofuel quotas

The US Environmental Protection Agency should rely more heavily on actual production than on future projections in determining its 2014 renewable fuel quotas, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers jointly said in comments filed Jan. 28 with the agency.

“We think EPA’s decision to reconsider the 2013 mandate reflects recognition there were flaws in the way the rules were finalized,” API Senior Fuels Advisor Patrick Kelly told reporters in a Jan. 29 teleconference. “We think there’s a problem with EPA’s methodology in how it’s setting the mandates in the first place.”

API and AFPM agree with EPA’s recognition that an ethanol blend wall exists and support the agency’s use of its quota waiver authority. They said the agency’s proposed use of Monte Carlo simulations for setting standards had problems, including an overly optimistic 2014 cellulosic biofuel forecast.

“We recommend that EPA set the cellulosic standard at an annualized volume based on the most recent 3 months of cellulosic production,” API and AFPM said in their comments. “EPA should address these issues before finalizing this methodology.”

Kelly said, “We think its projections are optimistic. It’s evident that EPA is using some creative math in assuming facilities could reach capacity 6 months after they come on-line. We’ve never seen that.”

EPA’s calculations also fail to consider a facility that has been built actually not producing any biofuel, he continued. “EPA needs to look at what the facilities actually are doing, and not rely on company announcements about what they expect to do next year,” Kelly said. “About a half million gallons were produced in 2013.”

API and AFPM also said EPA’s calculation of 2014 compliance percentages is based on a diesel fuel demand forecast that is too low. Gasoline, diesel, and renewable fuel volume calculations used to calculate percentage standards should use an October 2013 US Energy Information Administration forecast which has not been provided, they said.

EPA also continues to overlook the statutory schedule and its central role in providing timely estimates for calculating annual percentage standards, the groups said in their comments. They urged the agency to continue using its waiver authority, as proposed in 2014, to reduce statutory volumes in recognition of the blend wall.

Contact Nick Snow at nicks@pennwell.com.

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