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US EPA auditor to review environmental claims of federal biofuels mandate

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US EPA auditor to review environmental claims of federal biofuels mandate

Washington — The US Environmental Protection Agency's internal auditor said Friday it will review the agency's controversial carbon intensity calculations for transportation fuels, potentially upending the federal Renewable Fuel Standard.

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The EPA's inspector general will begin "preliminary research on the lifecycle impacts" of the biofuels mandate, which requires annually increasing amounts of alternative fuels, mostly ethanol, to be blended in with the US transportation fuel pool.

"The anticipated benefits of this project are to ensure public health and the environment are protected by verifying the EPA is complying with reporting requirements, and is considering statutorily mandated studies when promulgating the RFS," the IG said in a letter to top agency officials.

The oil industry and some environmental groups opposed to the RFS have questioned whether corn-based ethanol is as less polluting as the EPA has determined, when its lifecycle and land use impacts are fully accounted for.


The University of Tennessee, for example, released a report earlier this week finding that the RFS has propped up the corn ethanol industry at the expense of advanced biofuels.

"Corn ethanol, along with decreased demand of transportation fuels, has restricted the growth and maturation of the advanced biofuel industry, resulting in fewer environmental and economic benefits," study co-author Burton English said.

The EPA, which administers the RFS, earlier this year proposed a three-year RFS that would set biofuels blending levels for 2014, 2015 and 2016. For 2016, the proposal calls for 17.4 billion gallons of biofuels, of which 14 billion could be met by corn-based ethanol.

That proposal is due to be finalized by the end of November.

According to the EPA, corn-based ethanol qualifies as a renewable fuel for purposes of the RFS, which requires that a biofuel must reduce lifecycle GHG emissions by at least 20% relative to conventional fossil fuels.

Ethanol advocates have dismissed criticism of their industry, saying that lifecycle analyses performed by the US Department of Energy have found that corn-based ethanol reduces GHGs emissions by 30% compared to fossil fuels.

Renewable Fuels Association President and CEO Bob Dinneen welcomed the IG audit, as he said "it will give the public a clearer picture of the climate benefits that ethanol is producing today."

CONGRESSIONAL SCRUTINY

But if the audit finds that the greenhouse-gas impact of ethanol falls short of that 20% reduction requirement, the statutory basis for including corn ethanol in the RFS could be exposed to challenges in court or by Congress.

Already, some members of Congress, notably Senators Diane Feinstein, a California Democrat, and Pat Toomey, a Pennsylvania Republican, have introduced bipartisan legislation to repeal the corn ethanol component of the RFS.

Those efforts have failed so far, as Corn Belt lawmakers have sought to protect the industry, on environmental and economic grounds, saying ethanol can help wean the country off of fossil fuel dependence.

US ethanol production stood at 949,000 b/d last week, according to EPA data released Thursday. The four-week rolling average of the ethanol blending rate was at 9.69% of US gasoline demand.

The oil industry has urged the EPA not to set the RFS mandates at above 10% of gasoline demand, warning of the so-called E10 blend wall, as many automobiles are not warrantied for ethanol blends of above 10% and many service stations have been reluctant to install infrastructure for higher blends.

The 2016 RFS proposal is projected to breach the blend wall.

The ethanol industry, however, says the blend wall is an invention by oil companies seeking to protect their market share against biofuels and that the original intent of the RFS was to go beyond 10% ethanol blends.

It has urged the EPA to set the biofuels blending mandate even higher, protesting that the agency has unlawfully set them below the levels outlined in the RFS statute.

The Energy Independence and Security Act of 2007 calls for a 2016 blending mandate of 22.25 billion gallons, though the EPA cited its authority within the law to reduce the mandate based on its interpretation that there is insufficient blending infrastructure to support higher volumes of ethanol.

In its letter to EPA officials, the IG said its investigation aims to determine whether the agency complied with RFS reporting requirements and whether it has updated its lifecycle analysis supporting the RFS with findings from various statutorily mandated scientific studies.

--Herman Wang, herman.wang@platts.com
--Edited by Derek Sands, derek.sands@platts.com