November 11, 2009
Likelihood of EPA Punting E15 Decision Past December 1st Grows

News continues to circulate that EPA won't likely meet its Dec. 1 deadline to decide on whether to approve a waiver request for higher ethanol blends up to 15%.
  
On March 6, Growth Energy, in conjunction with 52 ethanol producers and a handful of similar biofuel organizations, filed a waiver with EPA that would allow for ethanol blends up to 15%. For any ethanol blends higher than 10% to be used (not including E85), the EPA must issue a waiver. The public comment period on the waiver request ended July 20. EPA has 270 days, or until Dec. 1, to grant or deny the waiver petition.
  
Earlier this week, EPA Administrator Lisa Jackson told Reuters that the agency may have to work past the Dec. 1 deadline because it still needs to review more test results on how E15 would affect engines "across the board."
  
EPA also has to evaluate the emissions impacts of E12, which has the same legal and technical challenges to E15, Margo Oge, director of EPA's Office of Transportation and Air Quality, explained to attendees at OPIS' recent National Supply Summit in Las Vegas. This question has to be answered not only for new cars, but also the existing fleet of on-road and off-road vehicles, she noted. And the impacts on emissions control systems in the existing fleet need to be calculated over the useful life of the vehicle, e.g. 120,000 miles.
   
"We get that EPA wants the DOE data on catalytic converters," explained Renewable Fuels Association spokesman Bob Dinneen, answering a question posed by OPIS yesterday afternoon during a Twitter chat. "We do believe the data will ultimately support the waiver. We also think EPA can act now to approve E15, based on existing authority and tolerances," he continued.
  
When OPIS asked whether RFA had heard directly from EPA on a delay, Dinneen wrote that RFA officials "talk with EPA all the time. They've been pretty consistent on this point for a while now. No surprise."
  
Other sources following the E15 issue confirmed they were familiar with Jackson's remarks to Reuters, but said they were not directly told by other EPA officials that a decision delay was likely.
  
"We are concerned about any delay in acting on the Growth Energy Green Jobs waiver to raise the blend wall from 10 to 15%," said Growth Energy spokesman Chris Thorne. "Every day that EPA delays the decision is another day of preventing our nation from reducing our dependence on foreign oil, creating jobs here in America and delaying the development of next generation feedstocks like cellulose. The lack of a decision creates uncertainty, and without certainty of a market, investment in cellulose ethanol production is put on hold. Our nation has been held hostage to foreign oil for too long. It is time to move forward," he continued.
  
"We could wait forever for more tests, which will only prove what we have known for a long time -- it is time to raise the blend wall," Thorne added.
  
However, the Alliance of Automobile Manufacturers, which believes EPA needs to delay any decision to approve higher ethanol blends until adequate testing results are available, said it was pleased with the apparent likely delay of a decision. "We are pleased that EPA recognizes the need for this decision to be based on sound science. We share the goal of enhancing energy security, but believe that a final decision should be delayed until adequate testing can be completed," said Alliance spokesman Charles Territo.
  
Similar comments on a likely E15 decision delay were also expressed last month during RFA's annual meeting in Washington, D.C. Ethanol supporters acknowledged both the opposition to higher ethanol blends from automakers, engine manufacturers, environmentalists and petroleum groups, and that EPA "has its hands full," regarding the finalization of the renewable fuels standard(RFS2) regulations, which it may release by the end of the year.

November 5, 2009
House Dems to Strip Out Cellulosic Tax Credit Expansion in Health Care Bill

Advocates of legislation introduced earlier this week that would expand the feedstocks eligible for the $1.01/gal cellulosic ethanol tax credit have been dealt a blow, now that Democratic House leaders plan to pare down language from the bill that was attached to the House health care bill.
  
H.R. 3985, introduced by Rep. Chris Van Hollen (D-Md.) on Monday, would remove the term "cellulosic biofuel" from the definition of the tax credit, and replace it with "second generation biofuel." As such, it would expand the feedstocks eligible for the tax credit to include any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis and any cultivated algae, cyanobacteria or lemna.
  
The bill would also peg the value of the tax credit to the BTU content of the biofuel being produced, exclude fuels co-processed with a fuel derived from a nonqualified feedstock from credit eligibility and exclude the paper manufacturing byproduct commonly known as black liquor from credit eligibility.
  
The bill was also added on Tuesday night to the manager's amendment of the House version of the health care bill. However, there were concerns with the bill, with some lawmakers requesting more time to review and understand the language, and specific concerns over whether cellulosic ethanol made from co- processing plants could be considered nonqualified feedstocks and therefore disqualified from receiving this
tax credit.
  
Growth Energy was actively involved in lobbying against the language, spokesman Chris Thorne confirmed. "We don't believe the intent of closing the black liquor loophole for paper mills should have had the unintended consequence of erecting new obstacles to producing low-carbon, renewable fuels like ethanol," he said.
  
Similar comment came from Renewable Fuels Association spokesman Matt Hartwig. "Removing the black liquor loophole is a smart fix and one that needed to be made. Putting the other issues aside at this time is wise policy, allowing for more thorough debate and discussion in the committees of jurisdiction," he said. "We look forward to addressing issues like expanding the basket of feedstocks from which ethanol is made and extending the important tax incentives for the development of renewable fuel technology and infrastructure," he added.
  
According to sources familiar with the legislation, House Democratic leaders plan to strip out much of the bill's language, leaving only the section excluding black liquor from credit eligibility. "From what I know, only the black liquor loophole will be in the final bill, as it does generate revenue to help with the cost of the health care bill," said one source.
  
Excluding black liquor from credit eligibility is estimated to raise approximately $24 billion over 10 years, according to information from Van Hollen's office.
  
The Advanced Biofuels Association (ABA), which supports the bill, said it continues "to be optimistic that the Congress moving forward will look to encourage the development of all advanced biofuels," said President Michael McAdams. "Mr. Van Hollen's amendment would have rewarded more consumer- friendly energy dense advanced biofuels -- a concept we all ought to support.

The last time I checked, people now have phones on their wall at home and cell phones in their pocket. Why can't we aspire to do the same thing for biofuels,"
he added.

November 5, 2009
Senate EPW Passes Climate Change Bill Despite Republican Boycott

Despite a Republican boycott, Democratic members of the Senate Environment and Public Works (EPW) Committee nearly unanimously approved this morning the climate change bill (S. 1733) sponsored by EPW Committee Chairman Barbara Boxer (D-Calif.) and John Kerry (D-Mass.).
  
According to a Republican committee aide, the committee passed the bill 10- 1, with committee member Tom Carper (D-Del.) not in attendance and Max Baucus (D-Mont.) voting no. Republican EPW members had been boycotting the bill markup this week, since they believed a thorough analysis by EPA had not been completed.
  
Democratic members of the committee had been waiting out the boycott, hoping continued discussions with their Republican counterparts, and an EPA meeting on Tuesday afternoon to discuss its analysis, would assuage Republican minds. But the boycott continued into this morning, causing Boxer to report the bill out of committee with a simple majority. That effort didn't require the presence of at least two members of the minority party, normally needed to pass a bill out of committee.
  
According to the same committee aide, EPW Ranking Member James Inhofe
(R-Okla.) was present at the start of this morning's committee hearing, but he left
after stating his objection. A copy of his remarks was not immediately available.
  
In a press release issued following the vote, Boxer explained that the "Committee and Senate rules that have been in place during Republican and Democratic majorities are there to be used when the majority feels it is in the best interest of their states and of the nation to act. A majority of the committee believes that S. 1733, and the efforts that will be built upon it, will move us away from foreign oil imports that cost Americans one billion dollars a day, it will protect our children from pollution, create millions of clean energy jobs and stimulate billions of dollars of private investment. We are pleased that despite the Republican boycott, we have been able to move the bill," she added.
  
It was unclear when the full Senate would debate the legislation, as the focus continues to be on health care efforts. The House passed its version of the climate change bill in June.
  
Boxer and Kerry introduced their long-awaited climate legislation on Sept. 30. The bill seeks to cut U.S. greenhouse gas emissions by 20% of 2005 levels by 2020. S. 1733 contains a cap-and-trade system for reducing carbon dioxide, and includes ethanol plants as "covered entities," which are subject to the 25,000 metric ton carbon dioxide emissions threshold. The same language on the ethanol plants was included in the House-passed bill, which aimed to cut greenhouse gas emissions by 17% of 2005 levels by 2020. A revised version of the bill included language replacing the definition of the cellulosic biofuel carve-out under the expanded renewable fuels standard to that of "advanced green biofuel," derived from renewable biomass and having lifecycle greenhouse gas emissions of at least 60% less than the baseline emissions.

October 28, 2009
Senate EPW Committee Hears Push-Back on Climate Change Bill

Acknowledging the limited timeframe and contentious provisions surrounding the recently introduced Senate climate change bill, several Senate Environment and Public Works (EPW) committee members expressed skepticism on Tuesday that the legislation could be enacted into law.
  
The hearing was the first of three scheduled by the committee this week on climate change. Senate EPW Chairman Barbara Boxer (D-Calif.) and Sen. John Kerry (D-Mass.) introduced their long-awaited climate legislation (S. 1733) on Sept. 30. The bill seeks to cut U.S. greenhouse gas emissions by 20% of 2005 levels by 2020. It contains a cap-and-trade system for reducing carbon dioxide, and includes ethanol plants as "covered entities," which are subject to the 25,000 metric ton carbon dioxide emissions threshold. The same language on the ethanol plants was included in the House-passed bill, which aimed to cut greenhouse gas emissions by 17% of 2005 levels by 2020.
  
A revised version of the bill was introduced late last week, and included language replacing the definition of the cellulosic biofuel carve-out under the expanded renewable fuels standard to that of "advanced green biofuel," derived from renewable biomass and having lifecycle greenhouse gas emissions of at least 60% less than the baseline emissions.
  
"I have some concerns about the overall direction of the bill before us today, and whether it will lead us closer to or further away from passing climate change legislation," said Senate Finance Committee Chairman Max Baucus (D-Mont.), who is also a member of the EPW committee. "For example, I have serious reservations with the depth of the mid-term reduction target [the 20% reduction by 2020] in the bill and the lack of preemption of the Clean Air Act's authority to regulate greenhouse gas emissions," he explained.
  
"We cannot afford a first step that takes us further away from an achievable consensus on common-sense climate change. We could build that consensus here in that committee. If we don't, we risk wasting another month, another year another Congress, without taking a step forward into our future," Baucus concluded.
  
Sen. George Voinovich (R-Ohio) took issue with such a truncated schedule on the bill. "This may be the most single significant piece of legislation that's come before this committee, touching every sector of the economy and having an immense energy, economic, environmental and national security consequence. Yet, despite our requests of earlier this year, the committee plans no legislative hearings on specific bill text. Rather, we will proceed with conceptual hearings only, and now I am told we will proceed to a mark-up and final vote on November the 3rd," he said. For example, when the Senate Energy and Natural Resources Committee was considering its energy bill earlier this year, the committee held 19 formal hearings and 11 open business meetings over a five-and-a-half month period, he explained.
  
"Following a similar process during consideration of this legislation is important because we cannot afford to get it wrong," Voinovich continued. "So, Madam Chairwoman, the question I have for you and Senator Kerry and the other members of this committee: Why are we trying to jam down this legislation now? Wouldn't it be smarter -- wouldn't it be smarter to take our time and do it right?" he asked.
  
Most observers agree that Congress is not likely to finish work on climate change legislation this year, in time for the Copenhagen climate change conference in early December.
  
Voinovich also criticized EPA's analysis of the bill that was released late Friday evening -- which found that the bill would cost the average household 22-30cts/day -- but didn't include any new modeling calculations from its analysis of the House version of the climate change bill.
  
"The fact is that you have not done a complete analysis. Is that correct?"
Voinovich asked EPA Administrator Lisa Jackson, who was among several Obama administration officials testifying in support of the legislation.
  
"We have not run the full economic modeling, sir," Jackson responded. She explained that it would take approximately four to five weeks for a full analysis to be completed.
  
"[T]hat's exactly what I've asked the chairwoman, that we would have before we mark up this bill from this committee," Voinovich noted. "[A] credible legislative process on Kerry-Boxer cannot be supported by a piecemeal analysis based upon estimates from the House bill," he added.
  
Boxer continued to be a staunch defender of the bill and its analysis. "No climate bill has ever had this level of review, and the Obama administration stands behind this analysis. EPA spent five weeks analyzing the Waxman-Markey bill [the House version], and another two weeks analyzing our version," she added.
  
Other committee Republicans continued to hammer their message that the bill is a jobs killer, and would run up the costs of energy. "We are here today to discuss a 923-page bill to fundamentally redesign our $14 trillion economy. The bill is no doubt ambitious, but it's also extremely costly and ineffective. It is a massive new tax on consumers that will have virtually no affect on climate," said EPW Committee Ranking Member James Inhofe (R-Okla.).
  
"[A]s we move to a new, strong, robust energy policy in our country, we should do so in a way that does not devastate the economy. And I'm concerned that the provisions of this legislation would have the impact that many of my colleagues have already identified," added Sen. Mike Crapo (R-Idaho).
  
Overall, Boxer said there was an urgent need to address climate change, whether the bill received bipartisan support or not. "I would give anything if I had a John Warner still sitting here," she said, referring to the former Republican senator and former committee member who supported previous climate change bill efforts. "We don't have it. Climate change global warming isn't waiting for who's a Democrat and who's a Republican. Either we're going to deal with this problem or we're not," she added.
  
The EPW Committee continues hearings today and Thursday, with four panels full of witnesses each day. Among witnesses at today's hearings will be representatives from Valero, Environmental Defense Fund and the American Enterprise Institute.

October 26, 2009
Revised Senate Climate Bill Broadens Cellulosic Biofuel Carve-Out

Late Friday evening, Senate Environment and Public Works Committee Chairman Barbara Boxer (D-Calif.) rolled out a revised version of the Democrat climate change bill, giving observers a few days to read through the 925-page proposal before hearings begin on the measure. Among the changes made was a broadening of the definition of those fuels that can meet the cellulosic biofuel carve- out under the renewable fuels standard (RFS2) and provisions promoting algae- based fuels.
  
Boxer and Sen. John Kerry (D-Mass.) introduced their long-awaited climate legislation (S. 1733) on Sept. 30. The bill seeks to cut U.S. greenhouse gas emissions by 20% of 2005 levels by 2020. It contains a cap-and-trade system for reducing carbon dioxide, and includes ethanol plants as "covered entities," which are subject to the 25,000 metric ton carbon dioxide emissions threshold. The same language on the ethanol plants was included in the House- passed bill, which aimed to cut greenhouse gas emissions by 17% of 2005 levels by 2020.
  
The initial bill left out specific language in several sections, and so this revised bill seeks to complete those blanks.
  
Included in the newly revised bill is language replacing the definition of the cellulosic biofuel carve-out under RFS2 to that of "advanced green biofuel" which is derived from renewable biomass and has lifecycle greenhouse gas emissions of at least 60% less than the baseline emissions. "It's essentially a backdoor way to broaden the cellulosic ethanol carve-out," one source familiar with the language explained. RFS2 calls for 16 billion gallons of cellulosic biofuel by 2022, with 1 million of those gallons next year, however no companies are currently producing commercial-scale cellulosic biofuel.
  
There are a handful of advanced biofuel companies that are ready to produce commercial-scale quantities of their fuel, however they don't qualify under the current cellulosic biofuel definition because of the feedstocks involved, sources say.

"This is huge," said Mike McAdams of the Advanced Biofuels Association. "This is an extremely important change that recognizes that advanced biofuels" will help meet the 16 billion gal requirement under RFS2. "This is far more technology neutral language than the original provision had as passed by the House," he added.
  
McAdams didn't expect any lawmaker opposition to expanding the cellulosic biofuel definition, although the provision could be changed assuming the bill is debated on the Senate floor.
  
Among other biofuel changes to the bill:

--Makes algae-based biofuels part of the "covered entities" that are subject to the 25,000 metric ton carbon dioxide threshold. Essentially, if algae is used to sequester carbon from a covered entity, then either those emissions must be counted or the tailpipe emissions of the algae biofuels must be counted, but not both;
  
--Expands the definition of renewable biomass to include algae. The Biotechnology Industry Organization (BIO) is pleased with the move, but would like "that this be extended to include additional microorganisms that capture CO2. We have asked that the bill recognize algae conversion of captured CO2 as a sequestration technology. The bill should also recognize that other photosynthetic microorganisms can play an identical role to algae in beneficial reuse of CO2," explained BIO spokesman Paul Winters
  
--Establishes a 1 billion gallon challenge grant program for advanced green biofuels. During each year from FY2010-2014, EPA shall solicit grant applicants from projects that have the potential to collectively produce up to 500 million gallons of advanced green biofuels. There would be four types of grants (R&D, planning, translational and construction) available, with $500 million available from FY2010-2014
  
--Establishes emission allowances under the Pollution Reduction and Investment program, with electric utilities receiving 35% of distributed allowances and oil refiners will receive 2.25% of allowances from 2014-2026.
  
Other biofuel groups were said to still be reading the massive bill, and were not ready to comment. Growth Energy spokesman Chris Thorne said the Senate climate change bill "is still a work in progress, and we look forward to working with the Senate to refine the legislation further, as a means of promoting clean, sustainable fuels like ethanol." Among specific provisions the group would like addressed are elimination of the international indirect land use provision "until a full scientific and economic review can be completed and inclusion of language to give consumers greater fuel choice by mandating flex fuel vehicles and blender pumps, he explained.
  
The EPW Committee will begin the first of three hearings tomorrow on the climate change provisions, with a committee vote scheduled the next few weeks thereafter.

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