Court deals blow to EPA over cellulosic biofuels

Posted by Pete Danko, EarthTechling

No fuel, no mandate: That was the gist of a U.S. court ruling overturning the Environmental Protection Agency’s 2012 mandate that refiners include 8.65 million gallons of cellulosic biofuel in their blends.

The decision, in a case brought by the petroleum industry, could be a blow to continued development of these “advanced biofuels” – made from nonfood matter like corn stover and switchgrass – but the industry insisted it won’t change much.

The crux of the issue here is that while the EPA has been ratcheting up the cellulosic biofuel mandate since 2010, except for a 20,000-gallon dribble early last year, the stuff hasn’t been produced.

In a sense, the EPA’s mandate has so far been nothing more than a spur to investment in the fuels, encouraging the building of production capacity. Reasonable, in a way, since Congress foresaw the agency requiring 500 million gallons of cellulosic biofuels in the mix by 2012.

As the D.C. court noted in its ruling, the EPA admitted as much when it made its 2012 rule and said, “while any standard we set for cellulosic biofuel standard for 2012 will have some uncertainty in terms of actual attainment, our intention is to balance such uncertainty with the objective of promoting growth in the industry.”

The result has indeed been investment (with further government help), which could soon bear fruit. As the Rocky Mountain Institute noted recently, “there are signs that 2013 will be the year that the advanced, non-food biofuel spigot finally opens, with several plants nearly built or already producing initial product.”

The D.C. court ruling was interesting in that it didn’t broadly strike down the government’s right to adopt what are known as “technology-forcing standards” like the renewable fuel standard; the problem it had here was that the EPA mandate was putting the screws to the wrong party.

“Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry,” the court wrote [PDF]. “‘Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.’ Given this asymmetry in incentives, EPA’s projection is not ‘technology-forcing’ in the same sense as other innovation-minded regulations that we have upheld.”

The American Petroleum Institute, which brought the suit against the EPA, said the court’s decision “relieves refiners of complying with the unachievable 2012 mandate and forces EPA to adopt a more realistic approach for setting future cellulosic biofuel mandates,” and went on to say “the court has provided yet another confirmation that EPA’s renewable fuels program is unworkable and must be scrapped.”

Yet as that statement implies, the advanced biofuel standard in a broad sense wasn’t scrapped. The court threw out the 2012 cellulosic biofuel figure, but it left standing the EPA’s total advanced biofuels requirement for the year.

A coalition of biofuels industry said that “although we disagree with the court’s decision vacating the 2012 cellulosic volumes, today’s decision once again rejects broad-brushed attempts to effectively roll back the federal Renewable Fuel Standard.”

* Pete Danko, EarthTechling