News

November 5, 2008
Ag Professors Urge EPA to delay indirect land use GHG regs under RFS
Rachel Gantz
EPA is poised in the near future, possibly as soon as Friday, to issue its
long-anticipated proposed rule for the expanded renewable fuels standard (RFS).
But in the second such warning this month, a group of agricultural academic
professors and technology developers is urging EPA to delay the indirect land
use requirement that is likely to be included in the proposed rule, saying the
provision is "premature."

The Energy Independence and Security Act of 2007 (EISA) included an expanded
RFS, requiring 36 billion gallons of biofuels by 2022, and contained four carve-
outs. Under the bill, conventional biofuels (i.e., corn-based ethanol) would be
required to emit 20% fewer lifecycle greenhouse gas emissions compared to
gasoline, while "advanced biofuels" (i.e., cellulosic ethanol) would be
required to emit 50% fewer lifecycle greenhouse gas emissions.

EPA officials have not publicly stated how they will tackle the lifecycle
greenhouse gas reduction component, but various sources familiar with the
process have previously confirmed the agency will likely compile a greenhouse
gas reduction scorecard for each type of biofuel -- including how the plant is
powered -- as guidelines for biofuel producers. Ethanol plants that "commenced
construction" prior to Dec. 19, 2007 -- when President George W. Bush signed
the energy bill into law -- are grandfathered into the lifecycle greenhouse gas
program and automatically will meet the 20% reduction threshold. However, EPA
still has to define what "commenced construction" means.

But what has most concerned biofuel groups, OPIS previously reported, is how
EPA will address emissions from indirect land use changes. Most lifecycle
greenhouse gas reduction (GHG) analyses show that ethanol reduces greenhouse
gases compared to gasoline -- anywhere from 28%-40% -- "but if you apply the
indirect land use impacts, that number can be cut in half or more," said one
source following the issue. There are "big swings involved," depending on what
model and data is used, the source added.

"We strongly believe that a requirement to account for ILUC [indirect land
use changes] in the legislation was premature, as there are no generally
accepted methods for determining indirect land use change, or for that matter,
any indirect (market-driven) change, and there is no way to apply even current
methods in any meaningful way to the choices a farmer makes," the group wrote
in an Oct. 23 letter to EPA Administrator Stephen Johnson. "We are not aware of
a single published paper in the lifecycle literature using indirect effects,
and the International Standards Organization has published no standards for
analyzing indirect (market-driven) effects. In short, what the legislation
requires is currently impossible," the letter continued.

The letter was sent by agriculture-related professors from Michigan State
University, Iowa State University and Auburn University, as well as the
president and CEOs of technology developers Mendel and Ceres.

"We believe that the GHG lifecycle benefits of 2nd generation biofuels, in
particular, are very positive. However, if flawed assumptions and methods are
used to determine GHG lifecycle emissions reduction, then the GHG emissions
benefits of biofuels produced from perennial grasses, such as switchgrass and
Miscanthus, may be underestimated substantially," the letter warned.
"In summary, the science and appropriate methodologies for ILUC analysis are
just beginning to be done. EPA should delay rulemaking until the science is
ready," the letter concluded.

The National Corn Growers Association (NCGA) issued a statement agreeing
with the points in the letter. "These distinguished academics recognize that
the science is just not quite there yet," said NCGA President Bob
Dickey. "Given what is at stake in our weakened global economy, it is important
that the EPA allow more time for new, more realistic land use models to be
developed so we can truly get an honest picture of the impacts of biofuels
production," he added.

Similar concerns were expressed earlier this month at a meeting hosted by
the White House's Office of Management and Budget. Among those at the meeting
were representatives from DuPont Danisco, GM, Biotechnology Industry
Organization, Archer Daniels Midland, the Advanced Biofuels Coalition (ABC),
EPA and DOE. "We want to make certain that the science is defensible, clear and
has been peer reviewed," ABC's Executive Director Michael McAdams, who was in
attendance at the hour-long OMB meeting, said earlier this month. "We don't
want to have unintended consequences of regulating a nascent industry right out
of the box," he said, noting there are concerns that emissions
calculations "are not ready for prime time."

EPA did not return requests for comment by presstime, so it's unclear how
the increased attention on ILUC will be addressed in the proposed rule for the
expanded RFS. However, one source following the issue said he is assuming "EPA
will move forward [with ILUC] and allow the comment process to work." Once the
proposed rule has been published in the Federal Register, EPA will likely have
a 60- or 90-day comment period. If enough adverse comment to the ILUC is
received, it's possible EPA could then hold off on the provision.

Concerns surrounding indirect land use changes aren't just limited to EPA.
The California Air Resources Board (CARB) is also adopting lifecycle GHG
emission regs and could account for indirect land use changes in their
provision. "There is no model today that comes close to capturing the interplay
of economic, institutional, technological, cultural and demographic variables
inherent with quantifying the indirect impact of any fuel," said a letter, sent
Oct. 23 to CARB from 30 biofuel and agriculture representatives.

The letter was spearheaded by the New Fuels Alliance. The proposed CARB low
carbon fuel standard (LCFS) regulation "would be the first in history to
enforce indirect, market-mediated effects against any product in the world, and
that to date, the regulation only applies indirect effects against biofuels,"
the Alliance noted.

"The biofuels industry is firm in its commitment to produce sustainable
fuels," said New Fuels Alliance Executive Director Brooke Coleman. "But we are
equally adamant that renewable fuels be subjected to the same regulatory
standard as other fuels participating in the LCFS. As it stands today, biofuels
are held to a higher standard than all other fuels, including oil," he added.

"We have a very difficult situation emerging here in which the author of the
GREET model on which the LCFS is based -- Dr. Michael Wang -- says that today's
biofuels are not causing indirect land use change in other countries, while [C]
ARB staff is proposing to penalize today's and tomorrow's biofuels for indirect
land use change in other countries. And while we debate who's right, we are
nowhere with regard to analyzing and discussing the indirect effect of other
fuel pathways," he added.

Among signatories to the CARB letter included representatives from Pacific
Ethanol, Verenuim, Mascoma, BlueFire Ethanol, Range Fuels, VeraSun, Iogen and
Renewable Energy Group. Dr. Bruce Dale of Michigan State University was the
only official to sign both the CARB and EPA letters.

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