GAO reports detail lag in advanced biofuel development
WASHINGTON, Nov. 30, 2016 - A twin set of reports from the
Government Accountability Office details some potential issues with the
Renewable Fuel Standard, and one report was less surprising than the other.
The first report suggests that advanced biofuels will struggle to achieve the
statutory targets set by Congress in the 2007 law that updated the RFS. In a
summary, GAO says several advanced biofuels “are technologically well
understood and some are being commercially produced.” However, it says some
experts believe there is “limited potential for increased production in the
near term.”
“Given that current advanced biofuel production is far below
Renewable Fuel Standard (RFS) targets and those targets are increasing every
year, it does not appear possible to meet statutory target volumes for advanced
biofuels in the RFS under current market and regulatory conditions,” the report
says.
The GAO notes that some advanced biofuels are already being
produced in “significant volumes,” but those fuels will struggle to reach
statutory levels due to “feedstock limitations.” Cellulosic biofuels and
drop-in biofuels haven’t developed as originally thought when the RFS was
approved, leaving a gap between production capacity and mandated consumption
levels.
While the news certainly won’t be celebrated in renewable
fuel circles, it doesn’t necessarily come as a surprise either. Advocates for
the types of advanced biofuels GAO focused on say their production is lagging
because of uncertainty in the marketplace created by EPA’s management of the
RFS. For several years, the EPA did not release RFS Renewable Volume
Obligations (RVOs) under the congressionally mandated timeline, which advocates
say led to the uncertainty.
“It is difficult to
predict the timing of new technology, and economic, administrative
and congressional uncertainty has helped to delay these advancements,”
Growth Energy CEO Emily Skor said in a statement. She added that commercial
cellulosic ethanol plants are now coming online, so “one of the
most helpful things policymakers can do to spur more progress is to let
the program work as intended, especially with the recent EPA rulemaking
that removed administrative uncertainty.”
GAO said the current low price of fossil fuels, especially
compared to the high production costs for advanced biofuels, was cited by some
experts as a main driver for the lack of advanced biofuel development. However,
uncertainty in RFS governance and the inconsistency in policies like the
biodiesel tax credit mean investors “do not see them as reliable and thus
discount their potential benefits when considering whether to invest.”
Another GAO report
ties the lack of advanced biofuel production to the prediction that the RFS is
unlikely to meet greenhouse gas reduction goals. While the statute didn’t set
specific overall GHG reduction targets, it classifies a conventional biofuel as
one that achieves a 20 percent GHG reduction. The bar is much higher for
advanced (50 percent reduction) and cellulosic (60 percent) biofuels. Given
that the EPA has consistently called for less advanced biofuels in RVOs than
the statutory levels, the GHG reductions have been limited to what can be
achieved through higher amounts of conventional biofuel, most typically viewed
as corn ethanol.
In its most recent RVO
rollout for 2017, EPA called for 19.28 billion gallons of renewable fuels
to be blended with conventional fuels. That’s 4.72 billion gallons lower than
the figure set by Congress (24 billion gallons), with the entire shortfall
coming out of the advanced biofuel carve-out (the 15 billion gallon
conventional statutory RVO was achieved). Biofuel advocates were generally
supportive of the rule after finally hitting the statutory threshold for
conventional biofuels.
Reports were submitted to the Senate Homeland Security and
Governmental Affairs Subcommittee on Regulatory Affairs and Federal Management
chaired by James Lankford, R-Okla.
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