Processing Magazine

Energy market changes lead to questions about renewable fuels

June 24, 2013
Coal conveyor
The American Petroleum Institute says the federal renewable fuel standard is inefficient and beyond repair, causing serious damage to consumers and the economy, while wind energy and solar have also struggled to be economically competitive. (iStockphoto/Thinkstock) 

A hearing on the federal renewable fuel standard (RFS) was held earlier this month and included representatives of the U.S. Environmental Protection Agency (EPA), the American Petroleum Institute, the Energy Policy Research Foundation, the National Turkey Federation and the Union of Concerned Scientists.

The hearing was led by the House Committee on Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements. It aimed to establish what all interested parties thought of the RFS, as evidence has been mounting that the standard was not effectively meeting its goal to increase energy independence and to boost production of renewable fuels, commented Committee Chairman James Lankford.

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He also pointed out that market conditions have changed since 2005, when the RFS initially came into effect, and since 2007, when it was expanded. At that time, lawmakers had reason to believe that gas demand would continue to rise but the situation has turned out quite the opposite. The global financial crisis and the increase in CAFE standards actually resulted in a lower gasoline demand, he explained. Meanwhile, the shale gas boom in the United States has led to greater energy independence, which adds to the list of reasons why RFS may be in need of review.

The hearing also aimed to come up with methods to lift the burden off consumers and changing the law was certainly one of the possibilities to look at, Lankford said.

EPA representative Christopher Grundler, director of the Office of Transportation and Air Quality and Office of Air and Radiation at the agency, talked about the blend wall. He stated that as volume requirements of the RFS program increased, it was possible that at a certain point in time the volume of ethanol projected to meet those requirements would be larger than the volume that can be consumed in an E10 blend. This means that additional volumes would have to be used in higher blend levels, such as E15 or E85. Grundler also explained that the importance of cellulosic and advanced biofuels would grow for meeting RFS requirements in the future.

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Grundler added that the EPA would continue to investigate the potential impacts of the E10 blend wall in the short and long term. At present, the agency was looking at comments filed in response to its proposed regulation for the 2013 RFS volume standards, he concluded.

The EPA's position on the matter was attacked by Jack Gerard, president and chief executive officer of the American Petroleum Institute, who claimed that RFS was inefficient and beyond repair, causing serious damage to consumers and the economy. The effect of the mandate has been aggravated by the EPA's unwillingness to take into account scientific evidence, court decisions and common sense in its RFS policy, he argued. Gerard also criticized the agency's decision to press ahead with E15 implementation and stated that the agency had set unrealistic cellulosic standards.

Whatever the opinion of the interested parties, it seems obvious that RFS needs to be updated to reflect the new market conditions, Biomass magazine noted.