EPA's Proposed new National Renewable Fuel Standard (RFS-2) - the end of corn-based ethanol?
*Co-authored with Amy Garber.
The Obama Administration proposed new standards for biofuels this week, triggering a searing debate between ethanol supporters and the Environmental Protection Agency (EPA) over the scientific assumptions on how to consider the effect of indirect land use changes when evaluating greenhouse gas (GHG) reductions from biofuels. If finalized, the rule could cost the grain ethanol industry billions and ultimately give advanced biofuels a clear economic lead over biofuels produced from corn and other grain.
On May 4, EPA released its proposed revision to the National Renewable Fuel Standard (RFS-2) that establishes new volume requirements for biofuels which must be used in transportation fuels each year to meet the requirements of the 2007 Energy Independence and Security Act (EISA). Included for the first time in an RFS rulemaking is EPA’s required estimate of the “life-cycle greenhouse gas emissions” that various classes of biofuels (renewable fuel, advanced biofuel, biomass-based biofuel and cellulosic biofuel) emit from production through end use. These lifecycle estimates are economically vital to biofuel producers because the RFS-2 volume mandates can be met only through the use of those renewable fuels that meet lifecycle GHG reduction thresholds when compared to the baseline lifecycle emission of petroleum fuels. At controversy is the particular impact that EPA’s proposal will have on the production of grain-based ethanol. The RFS-2 proposes that because of international indirect land use changes corn and other grain ethanol produce weak GHG emission reductions, particularly when compared with second-generation biofuels.
The dispute arises over whether using corn-based ethanol will have a deleterious effect on carbon emissions. In estimating emissions EPA has calculated indirect emissions from international “land-use” changes due to the impact of domestic corn based ethanol production on US food production. According to EPA, these impacts will cause increased GHG impacts due to the destruction of forests and savannahs in countries like Brazil for crop production. Thus, EPA’s concept of indirect land-use analysis foresees higher domestic food prices, destruction of rainforests to create more food, and consequently, more carbon dioxide released. EPA is not the only governmental entity to rely on indirect land-use analysis to regulate GHG emissions. California has taken the lead in implementing a new low carbon fuel standard, based on the indirect land-use analysis, which the ethanol industry says already makes it difficult to sell grain-based ethanol in the state.
Ethanol supporters are fighting back. During hearings yesterday in the House Subcommittee on Conservation, Credit, Energy and Research lawmakers from both parties lashed out at the proposed rule saying it would hinder development of a biofuel industry. Notably, Rep. Collin Petersen (D-Minn), Chairman of the House Agriculture Committee, commenting on the EPA action declared that he would no longer support climate legislation “because I don’t trust anybody anymore.” Gen. Wesley Clark (Ret), Co-Chairman of Growth Energy, an ethanol trade group, said “We don’t think the theory of indirect land use will hold up” – “It’s unfairly applied only to ethanol.”
Meanwhile, other scientific studies counter EPA’s analysis. One large study suggests that these indirect effects are not as large as the EPA and California are making them out to be. A recent study by AIR, Inc. demonstrates that the indirect land-use affects of corn-based ethanol are negligible. The Renewable Fuels Association (RFA) estimates that without using the “unproven assumptions” of international land use changes, corn ethanol provides a 61% reduction of GHG emissions when compared with petroleum fuels.
The Obama Administration appears to be playing “good cop/bad cop” with corn ethanol. On the one hand, President Obama formally announced Tuesday the formation of a “Biofuels Interagency Working Group” within the Administration “in order to shepherd our Nation’s development of this important industry…” On the other hand, EPA has provided the proverbial slap in the face to the grain ethanol industry through its international land use change approach to assessing indirect GHG emissions. The Administration’s position is probably best inferred from Administrator Lisa Jackson’s statement in announcing the RFS-2 proposed rule when she referred to corn ethanol as only a “bridge to the next generation of biofuels.” In making this statement, she may be merely echoing the sentiment of financial analysts. The Washington Post reported on Wednesday that the global chief of asset management for Deutsch Bank referring to corn ethanol stated that “converting photosynthesis into transport fuel is very inefficient…the world has moved on.”
EPA has provided a 60-day comment – period from the date of Federal Register publication on the RFS-2 rulemaking proposal.
