Editor: The U.S. Government Accountability Office (GAO) is not bullish on the future of advanced biofuels to meet prescribed volume and greenhouse gas reduction goals, most specifically efforts to produce cellulosic ethanol. Offered below is the GAO summary.
It is unlikely that the goals of the Renewable Fuel Standard (RFS)—reduce greenhouse gas emissions and expand the nation’s renewable fuels sector—will be met as envisioned because there is limited production of advanced biofuels to be blended into domestic transportation fuels and limited potential for expanded production by 2022. Advanced biofuels achieve greater greenhouse gas reductions than conventional (primarily corn starch ethanol), while the latter accounts for most of the biofuel blended under the RFS.
As a result, the RFS is unlikely to achieve the targeted level of greenhouse gas emissions reductions. For example, the cellulosic biofuel blended into the transportation fuel supply in 2015 was less than 5 percent of the statutory target of 3 billion gallons. In part as a result of low production, EPA has reduced the RFS targets for advanced biofuels through waivers in each of the last 4 years (see figure). According to experts GAO interviewed, the shortfall of advanced biofuels is the result of high production costs, and the investments in further research and development required to make these fuels more cost-competitive with petroleum-based fuels even in the longer run are unlikely in the current investment climate.
Volumes of Advanced Biofuels to be Blended into Domestic Transportation Fuel, as Set by the Renewable Fuel Standard Statute and by EPA, 2010 – 2017
Note: As of September 2016, EPA volumes for 2017 are proposed, except for the biomass-based diesel volume for 2017, which is final.
Experts cited multiple federal actions that they suggested could incrementally improve the investment climate for advanced biofuels. For example, some experts told GAO that maintaining a consistent tax credit for biofuels, rather than allowing it to periodically lapse and be reinstated, could reduce uncertainty and encourage investment in advanced biofuels.
Why GAO Did This Study
The RFS generally mandates that domestic transportation fuels be blended with increasing volumes of biofuels through 2022, with the goals of reducing greenhouse gas emissions and expanding the nation’s renewable fuels sector while reducing reliance on imported oil. Annual targets for the volumes of biofuels to be blended are set by statute. EPA oversees the program and is responsible for adjusting the statutory targets through 2022 to reflect expected U.S. industry production levels, among other factors, and for setting biofuel volume targets after 2022. Biofuels included in the RFS are conventional (primarily corn starch ethanol) as well as various advanced biofuels (including cellulosic ethanol and biomass-based diesel). Advanced biofuels emit fewer greenhouse gases than petroleum and corn starch ethanol.
GAO was asked to review challenges to the RFS and their possible solutions. This report provides information on whether the RFS is expected to meet its goals, as well as expert views on any federal actions that could improve the RFS framework, among other things. GAO worked with the National Academy of Sciences to identify experts on issues related to the RFS. GAO interviewed these experts and analyzed their responses. This report also drew on published studies, and a companion report, GAO-17-108, that examined federal research and development in advanced biofuels and related issues. EPA generally agreed with the report.
Read the full study HERE.
Industry Rebuttal
Brent Erickson, Executive Vice President, Industrial and Environmental at the Biotechnology Innovation Organization (BIO), issued the industry response below. BIO is a trade association representing biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations.
“BIO believes that the EPA’s actions over the last few years delayed the success of the RFS program and shaped the outcomes identified in this GAO report. While the recession and the challenges of developing new technologies have been factors, EPA’s unlawful interpretation of its authority under the program and delays in rulemaking since 2013 have been the primary drivers of a multibillion dollar shortfall in investment for advanced biofuel production, which GAO notes in its report.
“BIO has noted that EPA’s delays and methodology for setting the annual RFS chilled investment in advanced biofuels. Based on BIO’s findings, investment patterns clearly demonstrate that EPA is sending a sustained market signal that disincentivizes advanced biofuels, causing a $22.4 billion shortfall in necessary investment.
“Further, EPA continues to be too slow in making decisions on RFS pathway review and approval process. Petition review and approvals for advanced biofuel companies have averaged more than three years. These lengthy waits for approval of new pathways discourage investment in commercial production of advanced and cellulosic biofuels. Under these conditions, companies have found it difficult to attract the necessary investment to initiate, continue and complete the construction and startup of new facilities; a number have delayed or abandoned their commercialization plans.
“The GAO report also notes that the program is unlikely to meet its targets for reducing greenhouse gas emissions. BIO has repeatedly pointed out that EPA’s delays and reductions in the annual volumes have caused increases in transportation-related greenhouse gas emissions. BIO estimates that emissions increased by 72 million metric tons in 2014 and again by 22.9 million metric tons in 2015 because of EPA reducing biofuel volumes and delays in getting the rule out. However, the report fails to note that over its first 10 years the RFS reduced U.S. transportation-related carbon emissions by 589.33 million metric tons. The total reduction is equivalent to removing more than 124 million cars from the road over the decade. Further, the GAO report fails to point out if EPA had maintained the successful approach to the RFS that it used in 2013, EPA could have considerably limited greenhouse gas emissions from the increase in transportation fuel use.
“While the findings in this report grab headlines, they should not be surprising. Unfortunately, political uncertainty and the actions taken by the EPA have undermined the goals of the RFS statute. With EPA now abandoning its legally flawed reliance on general waiver authority as a basis for departing from statutory biofuels volumes requirements in its final rule for the 2017 RFS, the agency has sent a strong signal that it will support the biofuels industry and grow advanced and cellulosic biofuel production. This will allow the RFS to be successful in driving development of cleaner transportation fuels that measurably reduce carbon emissions.”
