EPA Pledges to 'Reconsider' Unrealistic Biofuel Mandate

The Environmental Protection Agency (EPA) has announced it will “reconsider” last year’s unrealistic cellulosic biofuel mandate in light of the industry’s inability to meet production targets. In a letter to the American Fuel & Petrochemical Manufacturers (AFPM), EPA Administrator Gina McCarthy admitted that expected production at a crucial cellulosic facility did not match reality:

We believe that KiOR’s August 8, 2013, announcement of reduced anticipated production in 2013, which your petition noted, justifies reconsideration of the 2013 cellulosic biofuel standard.

Therefore, we are granting your petition for reconsideration with regard to the 2013 cellulosic biofuel standard and will initiate a notice and comment rulemaking to reconsider this aspect of the rule.

KiOR, one of the two companies on which EPA based its 2013 cellulosic mandate, missed its second quarter production goal by a whopping 75 percent. This prompted an investor to file a lawsuit accusing the company of making “false and misleading statements regarding the timing of projected production levels of biofuels,” while KiOR “continued to reassure investors that the company remained on schedule to produce commercially meaningful levels of biofuel.”

KiOR’s problems have only deepened since. Just this month, KiOR CEO Fred Cannon announced that the company will let its Columbus facility sit idle in the first quarter of this year: “We do not believe it is prudent to fund the production of our cellulosic fuels out of Columbus at a significant loss relative to the prices we would expect to receive from our customers.”

EPA’s change of heart comes less than a week before the deadline for submitting public comments on the proposed ethanol mandates for 2014. In November 2013, EPA proposed nearly tripling the cellulosic mandate from 6 million gallons last year to 17 million gallons this year. To date, just over 422,000 cellulosic biofuel credits were generated in 2013, according to EPA data. This will mark the fourth consecutive year in which EPA has grossly overestimated cellulosic biofuel production.

IER Policy Associate Alex Fitzsimmons authored this post.