Small business biofuel producers endangered by proposed EPA rule

By | May 11, 2009
Posted May 22, 2009

A proposed rule by the Environmental Protection Agency (EPA) could undercut already struggling small business biofuel producers, lawmakers argued today during a Congressional hearing. Rep. Kathy Dahlkemper (D-PA), the Chairwoman of the House Committee on Small Business' Subcommittee on Regulations and Healthcare, said that the EPA's proposal to include international land use changes in the calculation of the greenhouse gas emissions from biofuels could undermine the fledgling industry, just as it is beginning to take root.

"When it comes to calculating biodiesel's emissions profile, EPA's actions could be devastating," said Dahlkemper. "The biofuels industry holds great promise not only to create new, good paying jobs, but to wean our nation off foreign energy sources. However, we can only benefit if we adopt policies that promote the growth of this industry, rather than hampering it before it gets off the ground."

On May 5, the EPA released its Notice of Proposed Rulemaking to implement the Renewable Fuels Standard. The Renewable Fuels Standard (RFS) is a law that requires fuels in the U.S. to contain a certain percentage of biofuels. The EPA's rule could disqualify many biofuel producers from the RFS program, preventing them from selling their product and staying in business. The EPA plan would attempt to take into account how biofuel production changes the use of land and how those changes affect greenhouse gases emissions. For example, the EPA's analysis would evaluate whether clearing forests to make room for crops used to produce biofuels would result in greater carbon dioxide emissions. However, lawmakers said that the effect of land use changes are currently difficult to measure and that trying to consider them could be harmful to many smaller biofuel producers.

"Currently, measuring land use changes is complex and I am not convinced there is a scientific consensus on the topic," said Dahlkemper. "What we do know for certain is that the EPA's proposed rule, as currently drafted, would have a detrimental effect on the small firms and family farmers that are pioneering the renewable fuels industry."

Until recently, renewable fuels and biofuels were seen by many as a promising solution for promoting energy independence, reducing energy costs for consumers and creating jobs in rural America. However, the combination of volatility in oil and gasoline prices, a tightening credit market and the overall weakening of the economy have badly battered the industry and put many producers in jeopardy. During today's hearing, Dahlkemper called on the EPA to take into account the needs of small firms and family farmers as it moves forward.

"The EPA has the ability to be flexible in drafting emissions profiles, and it is critical that the agency use that flexibility," said Dahlkemper. "To begin, it could accomplish a great deal by drafting a clear, workable framework for small firms to follow. As part of that process, biodiesel entrepreneurs should be consulted."

EPA's publication of its proposed rule starts the clock ticking on the formal comment period, which will last for 60 days. Upon completion of that comment period, EPA is expected to move forward in crafting a final rule.

Small Business Press Office (202) 226-3636

CONTACT: Zac Petkanas (202) 225-5406
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