Tuesday, December 1, 2015

Final EPA Renewable Fuel Standards Concern Agricultural Community

Written by M. Sean High - Staff Attorney

On November 30, 2015, the Environmental Protection Agency (EPA) announced the final renewable fuel standards for the years 2014, 2015, and 2016.  According to EPA, the new standards are “an important part of the Obama Administration’s strategy to take action on climate change by propelling the U.S. toward a clean energy future.”

The Renewable Fuel Standard (RFS) program was created under the Energy Policy Act of 2005, and according to EPA,is a national policy that requires a certain volume of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel.”  Importantly, through the passage of the Energy Independence and Security (EIS) Act of 2007, Congress expanded RFS and established annual volume targets for renewable fuel production. 

Under EIS, in 2007, Congress established a renewable fuel volume target of 22.25 billion gallons for 2016.  In June 2015, however, EPA concluded that Congress’ projections were too ambitious and instead proposed a renewable fuel volume level of 17.4 billion gallons for 2016.  According to a reported interview with Janet McCabe, the acting assistant administrator for the EPA's Office of Air and Radiation, the “slower-than-expected growth in the nascent cellulosic [grass, corn stalk, wood chip, etc.] ethanol industry meant that the mandate would not be able to realistically meet the levels Congress approved in 2007.” On November 30, 2015, EPA revised its June projections and set the 2016 renewable fuel volume level at 18.11 billion gallons.

For differing reasons, EPA’s final renewable fuel standards have been met with a largely negative response from within the agricultural community.  Many corn producers have been disappointed that EPA’s final renewable fuel standards are lower than the targeted volume levels established by Congress in 2007.  Expressing the opinion of many in his corn producing state, Iowa Governor Terry Branstad asserted, “[u]nfortunately, today’s decision shows the lack of interest in providing consumers choice at the pump, creating jobs and increasing incomes in rural America, and reducing our dependence on foreign oil.” Conversely, NationalChicken Council President Mike Brown opined that EPA’s final renewable fuel standards, which are higher than EPA’s June projections, will lead to higher feed corn prices and ultimately “will cost consumers at the pump and on the plate by effectively raising fuel and food prices.” 

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