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Obama Delay on Biofuel Rule Puts Intended Beneficiaries in Bind

August 4, 2014
biodiesel plant

In the arid Imperial Valley of California, Tim Brummels is trying to turn an agricultural cousin of sugarcane into low-carbon ethanol.

It’s the kind of climate-friendly project supporters have pined for since Congress in 2005 ordered refiners to use more renewable fuel. Even so, Brummels’ company -- Canergy LLC -- is being stymied by an unlikely culprit: the Obama administration.

The Environmental Protection Agency is eight months past the deadline for issuing its mandate of how much ethanol, biodiesel and other petroleum alternatives must be blended into motor fuels this year, leaving investors wary about the government’s commitment to the program. At the same time, cuts EPA proposed last year, and a surprise regulatory rewrite last month, may undercut demand for Canergy’s ethanol.

"Right now the technology works. It’s the regulatory barriers that are holding it back," Brummels, the chief executive officer, said in an interview after a meeting with the administration to discuss his complaints.

The EPA is preparing to send its mandate to the Office of Management and Budget for final review as soon as this week. That will kick off the last-ditch lobbying campaign on the 2014 requirements, which were due by the end of November 2013.

Signed by President George W. Bush, the law was designed to boost gasoline alternatives by forcing refiners to add specified amounts of biofuels each year to motor fuels. It requires increasing amounts each year and gives the EPA authority to make adjustments in the event of supply shortfalls.


Eight Months

The agency has missed the deadline for issuing the requirements in each of the past three years. Refiners such as Valero Energy Corp. and Tesoro Corp. have had to guess what will be required for 2014 -- and may have to make rapid adjustments in the final months of the year if they guessed wrong.

"The EPA shares the goal of getting back on the statutory timeline," said Ben Hengst, associate director of the EPA’s transportation and air office. "But doing this on an annual basis is a big challenge."

President Barack Obama’s administration also faces conflicting pressures, with oil lobbyists jockeying with makers of alternative fuels to bend the guidelines in their favor. Production of cellulosic fuels such as those derived from cornstalks and switchgrass have also failed to live up to the promise.


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RELATED TOPICS: Corn, Biofuels, Ethanol, Biodiesel

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