By MATTHEW L. WALD, NY Times
WASHINGTON — A federal appeals court threw out a federal rule on renewable fuels on Friday, saying that a quota set by the Environmental Protection Agency for incorporating liquids made from woody crops and wastes into car and truck fuels was based on wishful thinking rather than realistic estimates of what could be achieved.
The ruling by the United States Court of Appeals for the District of Columbia involved a case brought by the American Petroleum Institute, whose members were bound by the 2012 cellulosic biofuels quota being challenged.
Production of advanced biofuels for use in gasoline is a cherished goal of the Obama administration and a major long-term hope for reducing emissions of greenhouse gases.
But production of the “cellulosic” fuel, made from woody material, has been slow to start up, making it virtually impossible to come by. That has presented the refiners, the ones required to buy the cellulosic fuel, with a quandary.
From 2010 through 2012, the E.P.A. has required gradually higher levels of cellulosic fuel to be incorporated into motor fuel each year, for a total of 20 million gallons to date.
The Environmental Protection Agency has been demanding the impossible of refiners and then penalizing them when they fail to comply. A new ruling from a federal appeals court stops this shakedown.
For the past few years, the EPA has required refiners to purchase vast quantities of cellulosic biofuel, which is made from non-edible plant parts such as wood, grass, and cornstalks, and to use it in the gasoline they produce. The problem? The EPA wants refiners to buy more of this fuel than is available on the market — or has ever been available, for that matter. When those refiners have understandably failed to comply, the EPA has forced them to pay for an exemption.
The problem is that the raw inputs to cellulosic biofuel simply aren’t grown on a commercial scale. And there’s reason to doubt anyone would want to grow them. The cost of farming the plant waste, and then transporting large quantities for processing, is already astronomic. The Institute for Energy Research estimates that the raw inputs alone cost $1.30 to $1.48 per gallon — and that’s before the conversion to fuel even begins. For such biofuel to compete with petroleum, the cost of oil would have to rise to $191 a barrel, about double what it is now. Furthermore, the United States also lacks the cellulosic-biofuel plants equipped to process the substance on the scale the EPA has demanded.
Nevertheless, in 2011, the EPA made refiners cough up $6.8 million in fines for insufficient purchase of cellulosic biofuel, even though sufficient quantities never materialized. And if the court hadn’t intervened last week, refiners would have had to pay around $8 million for 2012.
But it’s taxpayers who got the worst shakedown. Already, tax dollars prop up the biofuels industry. The added expenses for refiners mean higher energy prices passed on to consumers, and drivers get fewer miles per gallon using the required ethanol-blended fuel.
The EPA’s overshot standards were no accident. The U.S. currently lacks the technology and infrastructure to make cellulosic ethanol on the scale the federal government demands. So the EPA tried to give the energy industry an incentive (more of a stick than a carrot, really) to pursue cellulosic-biofuel technology.