The People of America's Oil and Natural Gas Indusry

Judging the Cellulosic Mandate

Bob Greco

Bob Greco
Posted December 10, 2012

With the U.S. Court of Appeals for the D.C. Circuit hearing oral arguments today in a lawsuit over the cellulosic biofuels mandate contained in the Renewable Fuel Standard (RFS), here are some points to bear in mind.

First, the Energy Independence and Security Act of 2007 expanded the RFS, significantly increasing required volumes of biofuels (including cellulosic) over earlier levels set out in 2005.

Under the law EPA is to establish an annual mandate for cellulosic production based on U.S. Energy Information Administration (EIA) data. Yet, for 2011, EIA recommended 3.94 million gallons and EPA, ostensibly to drive production, set the mandate at 6.6 million gallons. For 2012, EIA recommended 6.9 million gallons, and EPA set the mandate at 8.65 million gallons.

Meanwhile, there has been no actual commercial cellulosic production – not in 2010 or 2011 (see chart below). This year 20,000 gallons were produced, but they were exported to Brazil and didn’t count toward RFS compliance.

Even so, petroleum refiners and importers must buy cellulosic waiver credits from the EPA to comply with the law – essentially, paying for not using a product that doesn’t exist. Neither consumers nor the environment benefit from this kind of government-imposed fee.

API continues to support the appropriate use of biofuels.  However, the questions raised in today’s oral arguments underscore the fundamental flaws with the Renewable Fuel Standard.  Ultimately, Congress will need to reconsider and repeal this unworkable statute.