RFA: EPA Needs to Avoid Paralysis by Analysis

The EPA received more than 80,000 comments regarding the E15 waiver and with responses coming in a tidal wave, there may well be another 80,000 more. Yesterday, the EPA submitted a letter to “postpone” making a decision regarding the E15 waiver petition.

rfa-logo-09“This delay from EPA threatens to paralyze the continued growth of the American ethanol industry because of its decision to over analyze this decision,” said Renewable Fuels Association (RFA) spokesperson, Matt Hartwig.

According to Hartwig and seconded by many in the ethanol industry, the data that has been submitted to the EPA in support of this request, “demonstrates that there are no ill effects of ethanol with vehicles today.”

He continued, “In order to avoid this paralysis by analysis, we believe EPA should immediately approve an intermediate ethanol blend such as E12 or E13.” This would represent several more billion gallons of ethanol in the marketplace and, “signal a willingness by the EPA to work with the industry to expand renewable fuels.” It would also, concluded Hartwig, provide a “glimmer of hope,” for those second generation ethanol companies that there will be a market for their product.

You an listen to the full interview with Matt Hartwig here.

EPA Rules to Not Rule on E15 Waiver Petition

EPA_LogoThe deadline was met yesterday on the Environmental Protection Agency’s (EPA) ruling on the E15 waiver, or was it? The EPA, in a letter to Growth Energy, the organization that filed the E15 Waiver, also known as the Green Jobs Waiver, has ruled to not rule. According to the letter the EPA wrote, “we want to make sure we have all the necessary science to make the right decision.” The letter also stated, “our engineering assessments indicate that the “robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15.”

Today, that decision is to postpone a ruling on the petition until the DOE completes a study between May- August 2010. In addition, the EPA is looking at “addressing fuel pump labeling issues” should ethanol be blended up to 15 percent in the future. It appears that the EPA won’t make a decision on this petition until the end of 2010 but that when it does, it will be positive.

In response to the letter, Growth Energy Co-Chairman Gen. Wesley Clark said, “This announcement is a strong signal that we growth-energy-logoare preparing to move to E15, a measure that will create 136,000 new U.S. jobs, cut greenhouse gas emissions and lessen America’s dependence on imported oil.”

Tom Buis, CEO of Growth Energy, noted, “The Growth Energy Green Jobs Waiver brought to light the issue of the regulatory cap on ethanol and is responsible for moving this process forward. The importance of increasing the blend is now universally understood. This expanded market opportunity is necessary to draw capital investment for cellulosic ethanol and allows the industry to comply with the Renewable Fuel Standard.”

Buis also commended the EPA for its intent to begin the labeling and public education process in anticipation for higher ethanol blends in the marketplace.

Click here to read the EPA letter and Growth Energy’s response.

Listen to the Growth Energy press conference opening statements from this morning here:

Ethanol Industry Reacts to EPA Decision

Ethanol industry groups are reacting to the announcement this morning from the Environmental Protection Agency that may be another six months before a final decision can be made on increasing the allowable ethanol content in fuel to 15 percent.

Growth EnergyGrowth Energy, the coalition of U.S. ethanol supporters that filed the Green Jobs Waiver seeking E15, is optimistic that the agency will approve E15 upon the completion of ongoing tests early next year.

“This announcement is a strong signal that we are preparing to move to E15, a measure that will create 136,000 new U.S. jobs, cut greenhouse gas emissions and lessen America’s dependence on imported oil,” said Gen. Wesley Clark, Co-Chairman of Growth Energy.

“While we believe the data included in the Green Jobs Waiver supports raising the blend to E15, critics have called for additional testing. We are confident the ongoing tests will further confirm the data we submitted in the Growth Energy Green Jobs Waiver and silence those critics, allowing more American-produced energy to enter the market.” said Tom Buis, CEO of Growth Energy.

Renewable Fuels Association LogoThe Renewable Fuels Association says the delay threatens the future growth of the ethanol industry.

“In order to avoid paralysis by analysis, EPA should immediately approve intermediate ethanol blends, such as E12,” said RFA president and CEO Bob Dinneen in a statement. “Allowing for a 20 percent increase in ethanol’s potential share of the market would provide some breathing room for the industry while EPA finishes its testing on E15. Additionally, it would represent a good faith gesture that underscores the commitment President Obama has pledged to biofuels.”

EPA’s announcement in a letter to Growth Energy today indicated that it will be the middle of 2010 before they have enough data to make a final decision on the waiver.

Ethanol Industry Waiting on EPA Decision

EPADecember 1 is the deadline for the Environmental Protection Agency to issue a decision on the waiver to allow up to 15 percent ethanol in regular gasoline and the industry is anxiously awaiting a positive outcome.

The waiver request was submitted by Growth Energy and an alliance of ethanol producer organizations and companies in early March and by law EPA must take action on it by December 1 and the word from EPA officials last week was that they are committed to making an announcement by the deadline. Growth Energy CEO Tom Buis says they are optimistic. “We think we made the case,” Buis said. “The data we submitted proves there is no impact on engine performance or durability that would prevent the EPA from deciding in favor of E15.”

Matt Hartwig with the Renewable Fuels Association says the decision could go in several directions, three of which his group suggested in comments to the agency. “Obviously one is, yes – E15 is a safe and effective fuel. That’s the one we believe should be their decision,” said Hartwig. “Another option is the E12 pathway, taking that intermediate step while they continue to work on the full E15 waiver.”

He says a third option might be a partial waiver, “Where they say you can use up to E15 blends for on-road vehicle engines, but would put off a complete decision on the waiver with small engines or marine engines until they were comfortable with the data.”

The fate of the ethanol industry hinges on the EPA’s decision, since the so-called “blend wall” has already been reached and without the waiver there will be no way to utilize the production of ethanol required under the Renewable Fuel Standard mandated by the Energy Independence and Security Act of 2007. However, if the EPA denies the waiver, the industry may consider other regulatory or legislative options to overcome the blend wall issue.

Brazil Renews Tax Break for FFVs

brazilian_fianceministerBrazilian Finance Minister Guido Mantega has confirmed that government will extend tax breaks to flexible fuel vehicles (FFVs) and others that are “environmently friendly”. According to Reuters, the Brazilian government will allow and extension on tax breaks given to E85 compatible cars with 1-liter engines until March of 1010 and trucks until June of 2010. Reversely, taxes on traditional gasoline-powered vehicles will rise in December.

brazil_map“We want the automobile industry in Brazil to consolidate and to bring new environmental technologies to the country” Mantega told reporters at a news conference in Brasilia.

The government will lose an estimated 1.3 billion reais ($751 million) in revenue as a result of the measure. But taking into account potentially higher car sales, saved jobs, and unemployment benefits not paid, the government would come out even, Mantega said.

“If we look at the whole package, we may neutralize this (tax) loss,” Mantega said.

Biodiesel Makers Worry About Hit During Tax Break Wait

USCapitolBiodiesel producers are worried the wait for the renewal … or even worse, the failure of renewal … of a crucial tax credit, set to expire in just more than a month, could be a death knell for the industry.

The Houston Chronicle reports that despite efforts already underway in the U.S. House and Senate to renew the $1 per gallon biodiesel tax credit, lawmakers don’t seem to be moving this measure to the forefront:

Losing the biodiesel tax incentive would be another blow to an industry that has closed many plants this year and slashed jobs amid rising costs of raw materials, weak domestic demand and on-again, off-again backing from the government.

“It would be devastating for the national and the Texas biodiesel industries,” said Jeffrey Trucksess, a consultant to Green Earth Fuels, which is operating a 90-million- gallon-per-year biodiesel plant below capacity at the Houston Ship Channel…

Today, U.S. biodiesel plants have the capacity to produce about 2.5 billion gallons a year of the fuel. Yet more than half of that plant capacity is sitting idle amid uncertainty on several fronts… Continue reading

DF Cast: Crunching the Renewable Identification Numbers

df-logoA big issue in the current Renewable Fuels Standard … as well as the new RFS2 under consideration by the EPA … is the Renewable Identification Numbers (RINs).

In this edition of the Domestic Fuel Cast, we listen in on the conversation from the recent 2nd Annual RINWorld Summit held in Dallas, TX where the EPA’s John Wienrauch, Office of Transportation and Air Quality (OTAC) and Erv Pickell, Office of Enforcement Compliance Insurance briefed attendees on some issues with RINs and the current RFS and what we could see with the new RFS2.

Some of the current problems include unregistered users generating invalid numbers, duplicates RINs and even some fraud out there. And once a bad RIN is out there, it affects everyone down the line. But for the most part, those issues seem to be honest mistakes. Pickell says the EPA has been more forgiving with those who have self-reported their problems, but tighter controls will have to rein these issues in the future, especially with the new RFS2.

Weihrach says it comes down to the three Rs: registration, record-keeping and reporting.

It’s an important conversation, and you can here more of it here:

You can also subscribe to the DomesticFuel Cast here.

RFS2 Confusion Clouds Mass. Biodiesel Mandate

MassMap1A 2 percent biodiesel mandate beginning next year and increasing to 5 percent in 2013 in Massachusetts has hit some glitches … thanks to confusion over what the next Renewable Fuels Standard (RFS2) might bring …. but it could now be moving forward.

Biodiesel Magazine reports
the measure has come under fire because it only allows waste-derived biodiesel, a provision put into the mandate thanks to what lawmakers thought the EPA would allow under RFS2. But despite a pronouncement by the Massachusetts Oilheat Council (MOC) in its Nov. 13 newsletter that the requirement has had a “spell of relative silence,” some progress could be at hand:

On Sept. 30, MOC president Michael Ferrante sent an email to Dwayne Bregger, director of renewable and alternative energy development in the Massachusetts Department of Energy Resources, asking specifics regarding the mandate, to which Bregger replied, “Do know that we are moving forward with the Early Action Year beginning July 2010. We anticipate the EPA RFS2 protocol for greenhouse gas reductions to be available by the end of this year and that we will find it acceptable for adoption for [the Massachusetts] program. At that time, DOER will be able to qualify all biofuels (regardless of feedstock) that can demonstrate the 50 percent GHG reduction.”

The state’s exclusion of soy and other virgin oil biodiesel in its mandate was based on EPA’s proposed RFS2 rule, which was flawed in methodology used to calculate GHG emissions from crop-based biodiesels. In Bregger’s response to Ferrante, he wrote, “The eligibility of biofuels from agricultural feedstocks will depend on whether they meet the 50 percent GHG reduction criterion as per the Protocol, which we will adopt (most likely EPA RFS2 protocol).”

Bregger also said, “Tracking the biofuels (and differentiating “advanced”/qualified biofuels from others) into [Massachusetts] and then through the [Massachusetts] market is an area that we are much engaged in now. We will need to complete those procedures and then move into draft regulations.”

It’s another example of how the flawed thinking the EPA put into RFS2 is causing some anxiety in the green fuels sector. Let’s hope someone can get this mess straightened out before it starts to hit more mandates across the country.

Biodiesel Board Asks Congress to Extend Tax Incentive

NBB-logoAn important tax incentive on biodiesel is about to expire, and the National Biodiesel Board is scrambling to get it renewed.

Biodiesel Magazine reports that the NBB is lobbying lawmakers to renew the $1-per-gallon biodiesel tax incentive, which encourages biodiesel use by making it competitive with petroleum diesel fuel. NBB argues that if the incentive is allowed to expire on December 31, 2009, biodiesel will become cost prohibitive, and domestic production and use of the green fuel will end:

“The biodiesel tax incentive is working. Since its enactment in 2004, U.S. biodiesel production has reached commercial scale, and the nation has realized the job creation, environmental and energy security benefits that come with the expanded production and use of biodiesel,” stated Manning Feraci, NBB’s vice president of federal affairs. “These benefits will simply be lost if the credit lapses.”

During visits with lawmakers, biodiesel industry leaders expressed strong support for S. 1589, the Biodiesel Tax Incentive Reform and Extension of Act, introduced by Senators Maria Cantwell (D-WA) and Charles Grassley (R-IA), and H.R. 4070, companion legislation introduced yesterday by Representatives Earl Pomeroy (D-ND) and John Shimkus (R-IL). This legislation would reform the biodiesel tax incentive by changing the current blenders excise tax credit to a production excise tax credit. This will improve administration of the incentive, eliminate potential abuses and improve tax compliance. The proposals would also extend the biodiesel tax incentive for five years, providing the certainty entrepreneurs need to create jobs and expand the use of biodiesel.

The NBB also points out that biodiesel fits with the Obama Administration’s policy of creating green jobs, while cutting carbon emissions.

BlueFire Ethanol Awaits Feds $56 Mil Loan Decision

bluefireCellulosic ethanol producer BlueFire Ethanol Fuels, Inc. has cleared the first hurdle in its quest to get a $56 million government loan guarantee for its Lancaster, California ethanol plant.

As you might remember from my Domestic Fuel Cast earlier this month, BlueFire uses a process called Concentrated Acid Hydrolysis Technology that can turn many feedstocks into ethanol, including garbage. I had the chance to talk to Arnold Klann, CEO of BlueFire Ethanol about this latest bid to get some federal loans and the operation he hopes that money will start.

“Lancaster is a prototype. Our business model is to be able to take the waste that’s generated by society … and divert the cellulosic fraction of that waste treatment and convert it into ethanol.”

He says the Lancaster facility is designed for communities of about 100,000-150,000 people. This opens up the possibility that this type of plant could be exported to some developing countries that have agricultural residues and garbage that could be turned into fuels for those local communities. In fact, BlueFire is working with a couple of economic develpment groups in Africa to see if this technology could be used there.

You can hear my entire conversation with Klann here:

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