For years, efforts to regulate greenhouse gas emissions (GHG) from fossil fuels has helped support the growth of the biofuels industry. However, EPA has released a proposal to void it’s 2009 endangerment finding that declares GHG emissions, including carbon dioxide, no longer be a threat to the environment.
EPA’s proposal to reverse the Endangerment Finding returns the Clean Air Act to its original purpose, overturning the previous administration’s attempt at climate control via regulation. Under the Trump administration, the move signals EPA is going to de-emphasize carbon in energy and environmental policies.
Is Voiding the Endangerment Finding a Danger to the Biofuels Industry?
Jordan Fife, president of trading, BioUrja says depending on what the final proposal looks like it could be a game changer.
“If you were to classify carbon as a non-greenhouse gas, and therefore, you would not be able to sequester it and monetize it. So it would be a very big deal.”
Fife says it could also negatively impact carbon pipelines and the carbon markets tied to biofuels.
“It’s not just the pipeline — it’s the actual downstream sequestration. You look at One Earth Energy that’s in Gibson City, Ill., or Indicator, Ill., where ADM is the largest sequester of carbon currently in the country. All of that becomes pretty null and void if carbon is no longer classified as a greenhouse gas,” Fife explains.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, agrees the ruling could mean farmers will have a harder time getting paid for carbon reducing practices as part of 45Z.
“I don’t think you’re going to see voluntary actions by the EPA, by the USDA that are tied to carbon metrics for farming. I could be surprised, but I don’t personally anticipate that happening with or without this finding,” Shaw says.
In fact, he stresses there was no assurance of a payment for farmers for carbon sequestration under 45Z.
“The 45Z calculation today, under the current guidance, does not include a way for the farm practices to be accounted for,” he says.
What is the Potential Impact on Biofuels Policy?
However, when it comes to biofuels policy itself, Shaw says 45Z and the Renewable Fuels Standard will see little to no impact: “The first thing people need to know is it doesn’t affect those at all. Those are laws passed by Congress. The RFS was passed by Congress. 45Z was recently passed by Congress. Those are not EPA regulations that are dependent upon this finding. To change 45Z or to change the RFS, you would actually have to change the law.”
Shaw says EPA’s proposal does send a chilling signal to the marketplace but it won’t halt the Sustainable Aviation Fuel market.
States such as California with their Low Carbon Fuel Standard will also be exempt from this finding.
“We have states that are requiring certain things, both on the transportation side, vehicles, as well as increasingly on airlines as well,” Shaw says. “We have huge markets for ultra low -carbon ethanol both domestically and internationally that are not tied to EPA regulations.”
Ruling Could Unleash Lawsuits
He thinks this proposal will spark a rash of climate lawsuits but that those legal challenges will fail due to the Chevron ruling.
“Basically what the courts have said recently is if Congress wants an agency to do something that’s big, they need to tell that agency, and I think regulating CO2 qualifications qualifies as big, right? I actually think this will hold up to the judicial challenges,” Shaw says.
