President Obama Takes Action to Advance Biofuels Production

President Barack Obama announced on Tuesday that his administration is taking several steps to advance biofuels research and commercialization. The president signed a Presidential Directive to help preserve biofuel industry jobs and to establish the Biofuels Interagency Working Group, which will develop the nation’s first comprehensive program for advancing the biofuels market. The president also announced that DOE will release $786.5 million in Recovery Act funds to accelerate advanced biofuels research, development, and deployment, and that the U.S. Environmental Protection Agency (EPA) has released a Notice of Proposed Rulemaking for the federal Renewable Fuels Standard (see separate articles below). The EPA proposal outlines the agency’s strategy for increasing the supply of renewable fuels.

The new Biofuels Interagency Working Group will be co-chaired by the Secretaries of Energy and Agriculture and the EPA Administrator, and it will work with the National Science and Technology Council’s Biomass Research and Development Board. It will use existing authorities and identify new policies to support the development of next-generation biofuels, increase the use of flexible-fuel vehicles, and assist in retail marketing efforts. The group will also coordinate policies for the infrastructure needed to produce and deliver biofuels and will work toward the sustainable production of biofuel feedstocks, taking into consideration land use, habitat conservation, crop management practices, water efficiency, water quality impacts, and lifecycle assessments of greenhouse gas emissions.

The president also directed Agriculture Secretary Tom Vilsack to preserve employment in the renewable fuels industry by immediately refinancing existing federal investments. The U.S. Department of Agriculture (USDA) will also make financing from the 2008 farm bill (the Food, Conservation, and Energy Act of 2008) available within the next 30 days, including loan guarantees for commercial-scale biorefineries, grants for demonstration-scale biorefineries, expedited funding for installing biomass energy systems at biorefineries, and expedited funding to encourage the production of next-generation biofuels. The Renewable Energy Systems and Energy Efficiency Improvements Program, which will be renamed as the Rural Energy for America Program, will be expanded to offer guarantees for larger loans and to include energy audits and hydropower projects. President Obama also tasked Secretary Vilsack with developing a comprehensive approach to accelerating the investment in and production of biofuels in the United States. See the press releases from the White House and the USDA.

EPA’s Proposed Renewable Fuel Standard Tackles GHG Emissions

President Barack Obama and the U.S. Environmental Protection Agency (EPA) announced on Tuesday the issue of a Notice of Proposed Rulemaking for the federal Renewable Fuel Standard (RFS). The Energy Independence and Security Act of 2007 (EISA) requires the national supply of renewable fuels to reach 36 billion gallons by 2022, causing a significant expansion of the current RFS. In keeping with the EISA, the proposed revision to the RFS program specifies the volume of cellulosic biofuel and biomass-based diesel that must be used in transportation fuel each year. The program classifies these fuels as “advanced biofuels,” defined as fuels other than corn-based ethanol and with greenhouse gas (GHG) emissions half that of the fuel they replace.

The program requires a volume of advanced biofuels that is greater than the combined requirements for cellulosic biofuel and biomass-based diesel, thereby allowing some competition among these and other advanced biofuels. By 2022, the proposed RFS program will require the annual use of 16 billion gallons of cellulosic biofuel, at least 1 billion gallons of biomass-based diesel, and a total of 21 billion gallons of advanced biofuels, leaving 4 billion gallons unspecified (although the EPA may require greater volumes of biomass-based diesel after 2012, which would leave fewer gallons unspecified). To allow for conventional biofuels, such as corn-based ethanol, the program sets an even greater volume requirement for all renewable fuels. To qualify as renewable fuels, biofuels produced at new facilities must achieve a 20% reduction in GHG emissions compared to the fuels they replace. By 2022, the proposed RFS program requires 36 billion gallons of renewable fuel altogether, which leaves room for up to 15 billion gallons of conventional biofuels, such as corn ethanol. Despite the many changes, the proposed program builds on the programmatic structure of the original RFS, including the use of tradable credits to track compliance with the program.

To determine which fuels qualify as advanced biofuels and new renewable fuels, the proposed program is the first federal program to assess the lifecycle GHG emissions associated with each fuel, including indirect emissions from land use changes, to determine which fuels qualify for the fuel standards. Lifecycle emissions include the emissions from growing, harvesting, and transporting the biomass and from producing and transporting the fuel. With land use changes included, the EPA proposes to allow only the five most sustainable process pathways for producing ethanol from corn starch to qualify as renewable fuels, while ethanol produced from sugar in a biomass-fueled facility can qualify as an advanced biofuel. Likewise, biodiesel from virgin plant oils qualifies as a renewable fuel, while biodiesel from waste grease and oils, animal fats, and non-food grade corn oil qualify as advanced biofuels. Recognizing the controversial nature of such analyses, the EPA plans to conduct peer reviews of the key components of its analysis and will hold a public workshop on the lifecycle analysis. The EPA will accept comments on the proposal for 60 days after its publication in the Federal Register, and the agency proposes to have the revised RFS program take effect on January 1, 2010.

While the EPA is focusing on the regulations for the RFS, the ethanol industry is concerned about having a distribution channel for all that ethanol. In early March, the industry group Growth Energy and 54 ethanol producers submitted a waiver application to the EPA, asking to allow conventional blends of gasoline to include up to 15% ethanol by volume, a blend that would be referred to as E15. Since 1978, the limit has been set at 10% ethanol (E10) for conventional blends of gasoline. However, the amount of ethanol required by the RFS will soon hit market constraints imposed by the 10% limit and by the relatively small market for ethanol-rich blends known as E85 (a blend of 85% ethanol and 15% gasoline). A 15% blend limit would expand the potential ethanol market by nearly 50%. The EPA published the waiver request in the Federal Register on April 21 and is accepting public comments on the request until May 21. Current statute calls for EPA to make a decision within 270 days of receipt, which is December 1.