Optimism from the EPA about the role cellulosic biofuel will play in the nation’s transportation fuel profile is regularly deflated by the amount of the fuel companies are actually producing.  In the latest example, the Agency has issued a direct final rule lowering the 2013 renewable fuel standard (RFS) for cellulosic biofuel to 810,185 ethanol-equivalent gallons.  This contrasts with the 6 million ethanol-equivalent gallons for cellulosic biofuel the EPA set in an August 2013 rule.  The revised standard for cellulosic biofuel represents only 0.0005 percent of nonrenewable gasoline and diesel volume used in 2013. 

The Clean Air Act (CAA) requires that refiners and importers of transportation fuels possess renewable identification numbers (RIN) equivalent to the volumes of specific renewable fuels established by the EPA for a given year.  The EPA sets those volumes based on the lower of either the biofuel targets established in the CAA or the “projected” production of the biofuel.  In fact, the Agency must make “projections” after the year has ended; therefore, the EPA says it is more appropriate to base the target on actual cellulosic biofuel production.

Two companies

The August 2013 target was derived by the EPA from the production projected by only two companies.  Shortly after the August 2013 rule was published, one of those companies announced that it would not meet its earlier production projection of 3 to 4 million actual gallons of cellulosic biofuel (5 to 6 million ethanol-equivalent gallons) and instead estimated production at 1 to 2 million actual gallons.  Lacking a regulatory revision, obligated parties would still have to comply with the higher target. 

This situation necessitated the use of a direct final rule, which is issued without a public comment process.  However, direct final rules are accompanied by proposals that contain the same provisions and are open for public comment.  Should the proposal receive adverse public comment, the EPA withdraws the direct final rule and follows up with a conventional final rule that includes responses to comments.

The EPA also notes that since its revised cellulosic biofuel standard for 2013 is lower than the preexisting standard, it is possible that some obligated parties may have purchased more cellulosic waiver credits than will ultimately be needed for 2013 compliance.  The Agency says it will issue a refund for all such excess cellulosic waiver credits.

The revision was motivated in part by petitions to reconsider the August 2013 rule  submitted by American Fuel & Petrochemical Manufacturers and the American Petroleum Institute.

Onetime situation?

The EPA says it does not anticipate that future modifications companies make to their cellulosic biofuel production estimates will necessarily be grounds for reconsidering the cellulosic biofuel standard in future years.

“As the number of facilities from which cellulosic biofuel production increases, and as the potential production volume from each facility increases, it becomes increasingly less likely that changes in the production estimate from any single company will be of central relevance to the overall cellulosic biofuel standard,” says the Agency.  “The greater the number of companies expected to produce cellulosic biofuel, the more likely it is that a reduction in the expected volume from any single company would either be insignificant in the context of the total standard, or can be made up with higher production volumes from another, or more likely, several other companies.”

In other words, the EPA continues to be optimistic about a cellulosic biofuels production industry that so far has consistently fallen short of the Agency’s expectations for it.

The current action has no impact on other 2013 renewable fuel standards.

The direct final rule