Posts tagged “EPA”
A few years ago, I wrote a post about the US Environmental Protection Agency’s (EPA) attempt to mandate a non-existent fuel into existence, and then fine refiners for not buying this fuel. That post was called “Why I Don’t Ride a Unicorn to Work“, and was designed to call attention to federal biofuel mandates that weren’t grounded in reality.
But what if I call a rhinoceros a unicorn? Does that mean unicorns then exist?
This week we have a guest post from Todd “Ike” Kiefer, who argues that this is effectively what the EPA has done. By declaring that the definition of cellulosic biofuels is ambiguous, the EPA has signaled that non-cellulosic feedstocks can qualify for full cellulosic tax treatment. Mr. Kiefer explains.
Previously Mr. Kiefer wrote an article highly critical of the Navy’s efforts promote biofuels in a periodical that is sent to Congress and top military leaders. The article was entitled Energy Insecurity: The False Promise of Liquid Biofuels (discussed here). His biography can be found at the end of the article. CONTINUE»
EPA’s Proposed “Clean Power Plan” Would Require 50 State Plans
Last week the US Environmental Protection Agency released for comment its proposal for regulating the CO2 emissions from existing power plants. It follows EPA’s emissions rule for new power plants published late last year but takes a different, more expansive approach. If implemented, the “Clean Power Plan” would reduce US emissions in the utility sector by around 25% by 2020 and 30% by 2030.
One of its most surprising features is that instead of setting emissions standards for each type of power plant or mandating a single, across-the-board emissions-reduction percentage, it imposes distinct emissions targets on each state. Based on analysis by Bloomberg New Energy Finance, some states could actually increase emissions, while others are required to make deep cuts. The resulting disparities have apparently triggered new interest in state and regional emissions trading as a means of managing the rule’s cost.
Trading Emissions Is Hardly A New Idea
Although emissions trading has become more controversial in recent years, it proved its worth in holding down the cost of implementing previous environmental regulations, such as the effort to reduce sulfur pollution associated with acid rain. It works by enabling facilities or companies with lower-than-average abatement costs to profit from maximizing their reductions and then selling their excess reductions to others with higher costs. The desired overall reductions are thus achieved at a lower cost to the economy than if each company or facility were required to reduce its emissions by the same amount. CONTINUE»
This week, the EPA announced that it was adjusting the Renewable Fuels Standard (RFS) in order to reflect market realities. As originally proposed earlier this year, the rule called for 14 million gallons of cellulosic ethanol, but the final rule sets a requirement for 6 million gallons of cellulosic ethanol this year.
However, as all the news stories focus on how the EPA has “backed down”, what goes overlooked is that there is finally a cellulosic biofuel industry in which commercial production has started.
KiOR’s biorefinery in Columbus, Mississippi started commercial production in March using wood chips to produce cellulosic fuels, and Ineos just announced on July 31 that their Indian River BioEnergy plant in Florida has begun operations to make biofuels from plant waste. Both of these are now operating at full commercial scale. Whether they’re making money yet, we don’t know, but the fact that they’re producing large volumes of cellulosic biofuels may be a historic turning point. These developments are important steps towards developing a real advanced biofuel industry that can help move us toward a point where we have other options for how to fuel our cars and trucks.
In my previous column — Why I Don’t Ride a Unicorn to Work — I used an analogy to describe the US government’s approach to cellulosic ethanol mandates. In brief, they have mandated that something that does not exist — commercial cellulosic ethanol volumes — be blended into the fuel supply in the hopes that they can incentivize the industry into existence. They decided to require gasoline blenders to purchase the fuel, which as it turns out was a bit of a problem since it didn’t exist.
Last week the court sided with the American Petroleum Institute in a lawsuit against the Environmental Protection Agency (EPA) over the mandates. The court ruled that the EPA — which was responsible for determining the mandated volumes each year — based their projections on wishful thinking rather than on sound analysis (See the court decision here).
So how did the EPA respond? Less than a week after the court ruled that the EPA had based their cellulosic ethanol projections on wishful thinking, the EPA set the 2013 cellulosic ethanol mandate at 14 million gallons — up from last year’s mandate of 8.65 million gallons. Given that only around 20,000 gallons of qualifying cellulosic fuel was produced in 2012 — about 0.2% of the final mandated volume — the EPA’s decision to increase the 2012 mandate by over 60% is odd to say the least. It seems like they have doubled down on last year’s wishful thinking with an even larger dose of wishful thinking. CONTINUE»
The Unicorn Analogy
It isn’t because it’s too far to work. Nor is it because it rains here in Hawaii nearly every day and I might get wet. It isn’t because the powerful automobile lobby has convinced me that driving a car to work is a better option for me. No, it’s a bit more fundamental than that.
I don’t ride a unicorn to work because unicorns don’t exist.
But imagine the following scenario. A number of companies claim that they are developing unicorns, and in 3 years they will be commercially available. The government thinks “Hey, this is a great idea. It would be a more environmentally friendly method of transport. Let’s force automakers to start selling these unicorns in 3 years. We will base our projections on how many unicorns these unicorn companies say they will produce. After that we will increase the number the automakers must sell in each subsequent year, and then force the automakers to pay up if they don’t meet these quotas.”
Last Monday saw reports that Patriot Coal will seek bankruptcy protection. This pulled down the share prices of competitors like Peabody Energy, Arch Coal, and Alpha Natural Resources.
As much as the coal producers claim that this is because of an Obama Administration “War on Coal,” it’s more about market realities . As the price of natural gas has fallen to below $3.00 per MMBtu, due to the growth in domestic production of gas from the shale gas boom, it is mostly cheap gas that is undermining coal demand. Therefore, the coal industry should not expect the outcome in this year’s Presidential election to provide much relief.
Note how the brightly colored original warning label with easy to read contrasting text first proposed by the EPA on the left has, under pressure from ethanol lobbyists, evolved into a dull, greasy looking sticker replete with small print that should quickly fade even further into the background as it accumulates gas pump grime. This sticker is the backbone of the EPA’s “misfueling mitigation plan.”
Picture a harried low-income parent in a hurry to pick up a kid at daycare before it closes, who has to first gas up their older model car. Assuming this parent even notices the bland warning sticker, their thought process might go something like this; “Here’s the lowest priced gas. Up to 15% ethanol? Sounds like a good deal to me. Not sure what year this car was made …wonder what the fine print says.”
Another Year, Another Chapter In what is becoming an annual ritual, the EPA is once more scaling back the cellulosic ethanol mandate for 2012. The 2007 Energy Independence and Security Act mandated that we would use 100 million gallons of cellulosic ethanol in 2010, 250 million gallons in 2011, and 500 million gallons in 2012. I said quite explicitly from the start that this was wishful thinking, and that there was practically zero chance of meeting these mandates. In one article, I wrote: The next few years will see a record amount of back-pedaling from most of the companies trying to establish a foothold in this space – and overpromising on their technology to do so. There will be the… Continue»
This week the Environmental Protection Agency (EPA) approved the use of 15% ethanol fuel blends (E15) for 2001-2006 model year cars: EPA Grants E15 Fuel Waiver for Model Years 2001 – 2006 Cars and Light Trucks WASHINGTON – The U.S. Environmental Protection Agency (EPA) today waived a limitation on selling gasoline that contains more than 10 percent ethanol for model year (MY) 2001 through 2006 passenger vehicles, including cars, SUVs, and light pickup trucks. The waiver applies to fuel that contains up to 15 percent ethanol – known as E15. EPA Administrator Lisa P. Jackson made the decision after a review of the Department of Energy’s thorough testing and other available data on E15’s effect on emissions from MY 2001… Continue»
Delusional Mandates It is hard to believe that just a few short years ago, Congress mandated a massive increase in usage of cellulosic ethanol. This was remarkable, because no commercial cellulosic ethanol facilities even existed at the time. But people like Vinod Khosla were busy testifying before Congress that the only thing holding the industry back was more funding, and if they would provide the funding we could replace all of our gasoline consumption with cellulosic ethanol. So Congress mandated in the 2007 Energy Independence and Security Act that we would use 100 million gallons of cellulosic ethanol in 2010, 250 million gallons in 2011, and then rapidly expand to 16 billion gallons per year by 2022. At the time,… Continue»