It was just 6 weeks ago I last posted on how Pruitt’s EPA Undermines Cellulosic Biofuels and Transparency in Government, and I hoped to shift my attention to other topics. But in late September, the EPA Administrator Pruitt stunned the biofuels world by releasing a rulemaking document (called a Notice of Data Availability or NODA) suggesting he planned to cut more deeply into the Renewable Fuel Standard (RFS) 2018 targets for advanced biofuels and biodiesel than had been previously indicated.
The NODA linked the changes to tariffs recently imposed on imports on soy-based biodiesel from Argentina and palm oil biodiesel from Indonesia, but citations in the NODA make it plain that this request comes directly from the oil refiners.
There are also rumors that EPA may count ethanol that is already being exported toward compliance with the standard, which would also reduce the obligations for refineries to blend ethanol or other biofuels into the fuel they sell. Overall, these changes upend the basic understanding of the goals and requirements of the RFS and seem intended primarily to reduce costs for refineries.
UCS does not support the approach the NODA suggests. This might seem odd, since we have been arguing against the increased use of both corn ethanol and vegetable oil based biodiesel for many years. But while there are plenty of problems with food-based biofuels, ignoring the law and considering only how to reduce costs for oil refiners is not the way to fix them.
UCS has opposed discretionary enlargement of biodiesel mandates beyond statutory levels
Some parts of the RFS offer more benefits than others. Cellulosic biofuels can expand biofuel production with greater climate benefits and lower environmental costs than food-based biofuels like corn ethanol and vegetable oil biodiesel. But cellulosic biofuels have not scaled up nearly as fast as the RFS envisioned, which left the EPA to decide whether to backfill the shortfall of cellulosic biofuels with other biofuels, especially biodiesel.
Since 2012 we have argued that the EPA should not make discretionary enlargements to the advanced biofuel mandate to replace the shortfall of cellulosic fuels without careful consideration of potential unintended consequences.
Even without a discretionary enlargement, the minimum statutory levels of advanced biofuels that Congress specified in the RFS are ambitious, and are drawing heavily on available sources of vegetable oil and waste oils (called feedstocks) to make biodiesel and renewable diesel, which, as Scott Irwin and Darrel Good at FarmDocDaily have explained, have for several years been provided the marginal gallon of biofuel to meet the mandates for conventional and advanced biofuel under the RFS.
Analysis we commissioned in 2015 and more recent analysis from the International Council on Clean Transportation suggest there are not sufficient feedstocks to support higher levels of production. As I have explained in previous posts and a technical paper, the indirect effect of large expansion of biodiesel is to expand demand for palm oil, which has environmental harms that outweigh the benefits of offsetting diesel use in the U.S.
But we don’t support Pruitt’s effort to cut mandates below statutory levels
It might seem logical that if expanding mandates is a bad idea, then cutting them must be a good idea. One can certainly make a logical argument that cutting the RFS advanced biofuel mandate will reduce demand for vegetable oil which could result in lower overall demand for palm oil and hence reduce deforestation in Southeast Asia. But there are two big problems with this approach.
First, what Pruitt is proposing is clearly inconsistent with the law. Despite repeated claims that he will follow the law, the administrator’s actions are subverting the basic goal of the Renewable Fuel Standard, which is to expand the market for biofuels.
Until Congress updates it, the Renewable Fuel Standard is the law, and UCS’ input to the EPA has always focused on how EPA can maximize climate benefits consistent with the law. We explained why exceeding the minimum statutory levels for food-based biofuels would have unintended consequences, but have not argued that EPA should go below these levels because this is clearly inconsistent with the law.
When corn prices spiked back in 2012, we supported a temporary RFS waiver, which was both consistent with the waiver provisions of the law and supported by the circumstances. But today we are not facing a crisis in grain, vegetable oil or fuel markets. Jonathan Coppess and Scott Irwin at FarmDocDaily have evaluated legal and economic grounds to waive the standard, and found no compelling case. Rather, we have a crisis in leadership – in the White House and at the EPA, where Administrator Pruitt is hostile to the basic goals of the agency he leads. In that context, Pruitt’s proposed actions seem less like an opportunity to reduce the harms of food-based biofuels than a clear subversion of the basic goals of the law in the service of oil industry profits.
Second, political games are risky, and in the present context, climate advocates have a lot more to lose than to gain. President Trump made repeated promises to protect ethanol, which stands in stark contrast to his position on protecting the United States from climate change.
Pruitt has been not very subtly hinting at a deal whereby the Trump administration promotes ethanol exports and treats ethanol favorably in upcoming fuel economy standards in exchange for their acquiescence to weakening the RFS. Trading the RFS for loopholes in fuel economy standards would be a bad deal for the future of the biofuels industry and a terrible deal for the environment.
A previous loophole added to fuel economy regulations to promote ethanol sales was a failure, which ultimately did much more to increase gasoline use by making cars less efficient than to expand ethanol use. A long-term future for the biofuels industry depends on avoiding counterproductive outcomes and helping to cut oil use, and Pruitt is clearly not headed in this direction. While there is some similarity between UCS’s specific guidance on biodiesel targets and Pruitt’s latest pivot on the RFS, we strongly object to his approach to cellulosic biofuels, his narrow vision for the RFS that focuses solely on current fuel prices, and the direction Pruitt is taking the EPA.
Blowing up current biofuels policy is not much of a plan
Some who support climate policy espouse the idea that the RFS is a failed policy, and that it is mostly just a giveaway to agricultural interests, so letting it collapse it not much of a loss. I disagree. The RFS is certainly shaped by the political power struggle between the oil industry and the biofuels industry/agriculture, but it also includes important environmental protections. For example, the RFS requires that future biofuel expansion comes from advanced fuels that cut emissions at least 50% compared to gasoline. But with the environmental goals of the policy sidelined by the hostile takeover of the EPA by Administrator Pruitt, the current battle comes down to a stark choice between working with the oil industry to undermine the basic structure of the RFS, or keeping that framework intact until we have an opportunity to meaningfully improve it
New laws generally build upon existing legal frameworks, and, if it survives, the RFS is likely to be the foundation on which future fuels policies are built. If the RFS dies under the knife of the Pruitt EPA, the concessions the Trump administration offers the ethanol industry will not include the environmental protections in the RFS, however imperfect. Moreover, the RFS and state fuel policies support one another, and if the RFS is weakened it will make the California and Oregon clean fuel policies more challenging and expensive.
UCS is not lending our support to Pruitt’s lawless approach to rewriting our vehicle and fuel policies. Instead we will defend existing laws and build upon them once we have an administrator who understands that the core mission of the Environmental Protection Agency is to protect the environment rather than doing the bidding of the oil industry and other polluters.
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