Biofuels in a Post COVID-19 Economic and Environmental Reset

April 2, 2020

The failure of the Trump administration to provide a sure pathway for transitioning to high-octane, low-carbon transportation fuels (HOLCs) leaves the final regulations the EPA released this week for 2021-2026 vehicle fuel economy and emission standards a huge disappointment to renewable fuel advocates. It also endangers the progress made to date in the development and implementation of low-carbon fuels critical to achieving reductions in greenhouse gases (GHGs) that are dangerously altering our climate.

While the regulations represent the final outcome after nearly 18 months of input received by the EPA and the National Highway Traffic Safety Administration (NHTSA) on updating federal Corporate Average Fuel Economy (CAFE) and greenhouse gas emissions standards for model years 2021 through 2026, legal challenges lie ahead.

Unfortunately, the final SAFE regulations demonstrate that administration officials ignored the input of biofuel producers, farmers who grow the feedstocks for these fuels, environmental groups, retailers and others – including even automakers, which the rules are ostensibly meant to benefit. All stakeholders called for a pathway in the rule for transitioning to HOLCs that can serve as a tool to help automakers meet more stringent fuel economy and emissions requirements.

A recent capstone report from the Co-Optima consortium jointly sponsored by DOE offices overseeing bioenergy and vehicle technologies, reaffirms the findings coming out of the project’s four years of research: ethanol is among the top candidate fuels that can increase octane in future vehicles, while maximizing efficiency and performance and mitigating emissions. In fact, the data supporting these results show that only ethanol is both available and capable of being immediately deployed to improve fuel economy, reduce harmful emissions, and reduce cost of driving for citizens of this country while providing economic support for the nation’s farmers.

EPA’s rule does acknowledge the issue of enhanced biofuel-blended fuel to boost miles per gallon, but only to say that “establishing a higher minimum octane for gasoline is a complex undertaking” and claim that “the present rulemaking is not the appropriate vehicle to set octane levels.” The agency also rejected new incentives for ethanol-friendly flex-fuel vehicles, which are capable of running on an 85-percent-ethanol, 15-percent-gasoline mixture, claiming the incentives are “outside the scope” of the rule.

In another setback for the biofuel industry, EPA says it will not yet reverse small refinery exemptions (SREs) to the Renewable Fuel Standard granted to oil refineries, despite a 10th Circuit Court of Appeals ruling holding that the agency “vastly exceeded its authority” in approving SREs for three refineries. The Trump administration decided not to appeal, but EPA says it will await the outcome of appeals filed by the three refineries to take action on the SREs, despite the extreme likelihood those appeals will be denied. Biofuel industry leaders say the exemptions are costing the industry millions of gallons in lost market and have forced plant closures.

The adoption of a $2.2-trillion coronavirus aid package approved by Congress and signed into law last Friday offers some good news in a time of uncertainty. The measure – the largest economic stimulus package in U.S. history – lays out provisions that should be of help to some in the biofuels sector, including small business relief, loans and grants, loan forgiveness, and tax relief provisions for those who qualify. Still, the sector, which is suffering mightily from multiple virus-related plant shutdowns that jeopardize the wages and benefits of hundreds of highly-skilled, highly-trained specialized workers, is looking ahead at another massive aid package called for by Trump and House Speaker Nancy Pelosi (D-CA) aimed at infrastructure and which the biofuel industry says is necessary if it is ever to recover.

But Senate Majority Leader Mitch McConnell has tamped down expectations that another aid bill was imminent, ignoring the damages that are being incurred by the biofuels industry and others in the renewable energy sector.

SfL urges policy makers to recognize that economic damages extend beyond biofuel production facilities, but also include major supply chain disruptions. The cumulative damage to the biofuel sector – resulting from both unavoidable circumstances and, unfortunately, misguided policy – must be stemmed. Biofuels represent critical solutions to the mega challenges facing a nation whose revised focus and attention is on the public health, economic and environmental interests of all citizens. This must include the ability to transition to an improved liquid fuel that helps everyone and not just those that can afford new cars.

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