Biodiesel industry comments at EPA hearing

By Susanne Retka Schill | June 09, 2009
Posted June 10, 2009

The biofuels industry was out in force June 9 to testify at the U.S. EPA hearing on its proposed rule to implement the Renewable Fuels Standard passed in the 2007 Energy Bill. Nearly 60 people were on the docket for five minute oral testimonies, including several from the biodiesel industry, along with ethanol and advanced biofuels advocates, environmentalists and others. The hearing was followed by a two-day workshop dealing with the most contentious facet of the proposed rule-the use of indirect land use greenhouse gas (GHG) emissions in life cycle analyses.

Manning Feraci, vice president of federal affairs for the National Biodiesel Board, had strong words about how the EPA proposes to meet the Energy Bill's requirement to consider direct and substantial indirect emissions in calculating a biofuel's GHG emissions profile. "This does not require the EPA to rely on faulty data and to fabricate unrealistic scenarios that punish the U.S. biodiesel industry for wholly unrelated land use decisions in South America," he said. "Biodiesel produced from domestically produced vegetable oils are disqualified from the biomass-based diesel program, making it all but impossible to meet the volume goals." If the international indirect land use assumptions were true, he pointed out, Brazilian soybean acreage should have increased from 2004 through 2008 when U.S. biodiesel production increased from 25 MMgy to 690 MMgy. Instead, Brazilian soybean acres actually decreased in that time period.

Feraci also testified that EPA's GHG calculations contain a huge error in nitrogen emissions. Even the Nobel-prize winning Intergovernmental Panel on Climate Change decided nitrogen fixed in the soil by soybeans should not be considered greenhouse gas emissions, he said. "This error alone reduces the greenhouse gas emission score for soy-based biodiesel by more than 20 points."

Speaking for the American Soybean Association, Ray Gaesser, an Iowa soybean farmer, also criticized the inclusion of indirect land use impacts. "The proposed rule as released contains unprecedented, untested and far-reaching indirect land use assumptions and projections which will adversely impact markets for U.S. farmers and impede our national efforts to reduce dependence on foreign oil and thus impede efforts to improve our environmental footprint," he said. "We are concerned that EPA has attributed an undue degree of land use causation to U.S. biofuels production and that EPA's assumptions do not adequately consider the other market factors (population growth, food and feed demand, timber prices, etc.) that have historically driven international land use decisions."

Gaesser repeated several points made in earlier testimony about the impact of RFS2 on the biodiesel industry at a U.S. House of Representitives Small Business subcommittee hearing on May 21. Gaesser said the ASA is concerned about EPA's proposal to require renewable fuel manufacturers to prove that their feedstocks meet the definition of renewable biomass. Eligible biofuels are essentially limited to those produced from feedstocks grown on existing cropland. "Feedstock certification would be onerous and unworkable," Gaesser said. EPA doesn't provide a clear method to implement feedstock certification, he pointed out, and "they must recognize the challenge it would present." Most soybean processors buy from local elevators who receive and comingle soybeans from multiple farmers. "The local elevator does not know who delivered what soybeans once they go into storage," he said.

Testifying for Archer Daniels Midland Co., Mark Calmes, vice president, environmental office of compliance and ethics, echoed the ASA's concerns on the requirement that producers be responsible for verifying the renewable biomass used for biofuel production. "Better approaches exist today to ensure that only existing agricultural land be used to generate renewable biomass. We believe it would be more appropriate for EPA to use the USDA's existing data infrastructure to manage these acreage issues."

Calmes also addressed the indirect land use issue. "The modeling is at odds with what is observed with regard to indirect land use and should not be used to undermine the commitment to today's biofuels, as well as undermine tomorrow's cellulosic solutions," he said. "We are not saying the EPA should abandon the idea of developing the science, but no model today adequately captures the indirect impact of any fuel." He recommended the grandfathering provision for existing biofuels facilities in the 15 billion mandated volume for conventional biofuels allow a 20 percent tolerance on baseline values for permitted capacities, and allow some flexibility for plants that slowed or stopped construction due to the difficult economic climate. Calmes also recommended EPA provide a mechanism for biofuels producers to request a site specific GHG assessment. "Flexibility in this manner will ensure America produces the maximum amount of biofuels with the most desirable GHG emission profile."

In addition to echoing the comments of other industry spokesmen on indirect land use and feedstock certification, Renewable Energy Group President and Chief Operating Officer Daniel Oh recommended in his testimony that the EPA continue to value biodiesel at 1.5 RINs (renewable identification numbers). He also encouraged allowing renewable fuel producers to be able to separate the RIN at production to allow small jobbers in the marketplace to continue to handle biodiesel, without the expense involved in complying with reporting requirements. "If the EPA requires absolute compliance with the RFS standard as written, this group will remove themselves from the biodiesel marketplace," he said. Oh described the current RFS regulations as a blow to the biodiesel industry, coming at a time when the industry is facing an economic crisis. "If done successfully, the implementation of RFS-2 will help create the market demand that will allow the industry to survive," he said.

As a developer of a new, second generation feedstock, Scott Johnson, president and general manager of Sustainable Oils LLC, said the proposed rule will prohibit innovations in the development of new feedstocks such as camelina. "For those of us in small business, this regulatory uncertainty creates a very real hurdle to attract the substantial investment that is required to commercialize second generation dedicated feedstocks," he said. "We propose that the final rule should make a distinction between feedstocks that are currently in large scale cultivation and those that have limited or pre-commercial status. Pre-commercial dedicated energy crops should not be subject to a lifecycle analysis until they reach a threshold of 1 million acres of domestic cultivation. This will allow new crops such as camelina to gain a commercial foothold and develop data at an appropriate scale that will allow for a more accurate analysis of that crop's lifecycle GHG emissions from production.

EPA and other agency officials at the hearing heard other points of view as well. Nathaniel Greene, director of renewable energy policy at the Natural Resource Defense Council, commended EPA for its cutting edge work in moving the science forward in quantifying indirect land use impacts. He also added that spreading those impacts across 100 years is too long, and shorter time frames are necessary to adequately meet the need to reduce GHG emissions. The amount of biomass required to meet the goals for 36 billion gallons of renewable fuels would equal the amount harvested annually from forests today, he added. "I can't image that new demand will not have an effect. Emissions from land use change can be significant, and counting them as zero would be wrong." He pointed out the RFS creates a huge demand for biofuels, and a change in focus towards waste-based feedstocks can minimize emissions. He also encouraged the EPA to commit to a process that would allow developers of new technologies with better emission profiles to get their fuel pathways certified, as the California Air Resources Board has done with its Low Carbon Fuel Standard.
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