US House bill would roll back federal cellulosic ethanol mandate

03 July 2012 20:25  [Source: ICIS news]

WASHINGTON (ICIS)--A bill to roll back a federal mandate for US consumption of cellulosic ethanol was being circulated in Congress on Tuesday, its sponsor said, and discussions are under way toward a House committee hearing on the matter.

Representative Jeff Flake (Republican-Arizona) introduced and is circulating HR-6047, the “Phantom Fuel Reform Act”, which would require US refiners to purchase and use only those volumes of cellulosic ethanol that are commercially available in any year.

Under current law, the Environmental Protection Agency (EPA) requires that each year refiners use increasing amounts of cellulosic ethanol, including a mandated consumption of 8.65m gal (32.7m litres) for this year.

But as Flake noted in introducing his bill – and as the EPA has acknowledged – there is no commercial-scale production of cellulosic ethanol available in the US.

“The EPA’s solution to this problem is to force US energy producers to buy paper credits for this ‘phantom fuel’ directly from the EPA at a cost of millions,” Flake said. “If US energy producers do not buy these credits, they risk large fines from the EPA.”

Flake said his bill “would simply require the EPA to rely on actual industry production rather than bureaucratic prediction when setting the annual cellulosic biofuel mandate”.

The bill was welcomed by the American Petrochemical & Fuel Manufacturers (AFPM), the American Petroleum Institute (API) and Americans for Tax Reform (ATR), among other groups that oppose the cellulosic mandate.

Flake’s bill comes less than a month after the AFPM and other energy industry groups filed a federal suit challenging the EPA’s cellulosic ethanol mandate and the agency’s refusal to waive the requirement.

The suit contends that the EPA may not lawfully impose what AFPM called “a hidden tax” on fuels producers.

The suit, filed before the US Court of Appeals for the DC Circuit, followed the EPA’s denial of the energy and refinery trade groups’ petition challenging the agency’s mandate for use of cellulosic ethanol in US transportation fuels.

In January this year, the EPA issued its new renewable fuel standard (RFS), including the requirement that US refiners and importers of fuel must use more than 8.6m gal of cellulosic ethanol in their blends.

If refiners or importers fail to use the required volume of cellulosic ethanol, they must pay a $0.78/gal waiver fee to the EPA.

However, the industry lawsuit challenging EPA’s cellulosic ethanol mandate could take years to reach final resolution. 

Flake’s bill to roll back the mandate is expected to get a favourable hearing before the House Energy and Commerce Committee within weeks and could be passed by the House later this year, but it faces an uphill course in the Senate.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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