Regulations imposed for bad reasons to implement bad law can't lead to anywhere good. And nowhere good is precisely where the US Environmental Protection Agency has steered the wayward Renewable Fuel Standard by increasing the requirement for biodiesel.
The RFS program is already broken beyond EPA's ability to repair it. Given its present shape in a law passed by politicians carried away by the joy of reengineering fuel markets, it soon will require more of one gasoline additive than the gasoline market can absorb and already mandates more of another additive than exists. Successful regulation of this mess would be miraculous.
The prudent course for EPA would be to minimize damage until Congress faces up to its mistakes with ethanol. But the incumbent EPA isn't known for prudence. On Sept. 24, EPA Administrator Lisa Jackson signed a final rule setting the 2013 requirement for diesel made from biomass at 1.28 billion gal.
Authority disputed
Dispute exists over whether EPA has authority to raise the biodiesel requirement above the 1 billion gal specified for 2012 in the statute, which is silent about succeeding years. EPA argues that the law's intent is for it to set biodiesel levels after 2012. Of course, this EPA always interprets law to favor expansion of its power.
So there is to be 280 million gal more biodiesel sold in 2013 than was required in 2011, when production slightly exceeded the mandate. Enough production capacity exists, although utilization sufficient to yield the required volume depends on economics and an on-again, off-again tax subsidy. And convictions this summer for fraudulent sales of biofuel credits threaten to undermine a crucial regulatory mechanism.
But never mind. EPA wants biofuel sales to grow. The question is why.
Acknowledging that cellulosic ethanol won't help meet statutory targets, EPA's final rule says most of the 2.75 billion gal of "advanced biofuel" required next year must come from biodiesel and imported ethanol made from sugar cane. EPA can lower the advanced-biofuel requirement on the basis of deficient supply of cellulosic ethanol when it sets the 2013 RFS, but it's saving that option for later, saying it's "not currently in a position to prejudge the results of that future rulemaking." Furthermore, raising the biodiesel requirement enhances the "certainty" that cutting the advanced-biofuel requirement won't be needed—even though doing so raises costs. "We believe that the potential for somewhat increased costs is appropriate in light of additional certainty of [greenhouse gas] reductions and enhanced energy security provided by the advanced biofuel volume requirement of 2.75 billion gal," the rule says.
Elaborating elsewhere in the rule about this "additional certainty" as it pertains to GHG emissions, EPA stipulates: "While we are not quantifying the GHG emission impact of this 2013 [biomass-based diesel] rule, qualitatively we believe that it will provide a reduction in GHGs." Quantitatively, there's not much certainty here.
No great stride
And in the 7 billon bbl/year US market for oil products, the 5.8 million bbl/year by which EPA reckons its rule will lower imports represents no giant stride toward energy security. To a comment it received about the statistical insignificance of this increment, EPA responded: "We assume that each extra gallon of biodiesel has an equal energy security benefit regardless of the overall size of the renewable fuels volume requirement. Thus, total energy security benefits are increasing with this rule." See? Because all gallons provide equivalent security benefits, the benefits are significant no matter how few of them exist.
These explanations are incoherent. EPA's move in fact makes no sense except in the context of its rule's description of the RFS program as "a long-term program aimed at replacing fossil fuels used in the transportation sector with low-GHG renewable fuels over time." That's the governing idea. EPA's decisions on energy home to any lowering of oil and gas use for any reason at almost any cost. Energy policy oriented like this can wreck an economy.