By Todd Neeley
DTN Staff Reporter
OMAHA (DTN) -- EPA believes it is keeping up with science when it comes to updating corn ethanol's greenhouse gas lifecycle profile in the Renewable Fuel Standard despite the ethanol industry's continued push for a revision, according to a new report from the agency's Office of Inspector General.
In addition, EPA has not updated Congress on the environmental effects of the RFS, which the agency is required to do every three years, according to the OIG report released Thursday.
For years, the ethanol industry has pressed EPA to update corn ethanol's lifecycle profile. The industry contends EPA continues to penalize the biofuel even though advancements in agriculture and ethanol technology have improved its greenhouse gas profile.
Corn ethanol's GHG lifecycle is important because if the fuel is found to be more carbon-friendly than EPA originally believed, then ethanol has the potential to qualify as an advanced biofuel in the RFS. This would mean more corn ethanol could qualify for the RFS above the 15-billion-gallon cap.
EPA's modeling shows corn-based ethanol achieves a 21% GHG reduction compared to gasoline, taking into account indirect land-use change. Without ILUC, corn-based ethanol achieves a 52% GHG reduction, according to EPA. Indirect land-use change is a theory that says expanded corn-ethanol production in the United States is causing farmers in other countries to make land use decisions as a result.
Currently, corn ethanol faces E10 market constraints and a blend wall where total ethanol production exceeds the market.
The OIG's report came about as a result of a Congressional inquiry into the RFS. In addition, the OIG found the EPA has not conducted a so-called "anti-backsliding" analysis of the RFS to determine if the regulation was making other environmental problems worse.
In 2010, EPA completed a lifecycle analysis to determine greenhouse gas reduction thresholds for the RFS. Though the agency was not required to do so, EPA committed to update the analysis as "lifecycle science evolves." The OIG said the agency does not have a process for initiating such an update.
Further, EPA's Office of Air and Radiation said it has no plans to update the 2010 lifecycle analysis.
"However, OAR has no plans to update the original 2010 analysis on primary RFS fuel sources (such as corn ethanol), which make up most of the current RFS volume mandates," the Inspector General said in the report. "According to the EPA, the newer, post-2010 lifecycle analyses do incorporate the latest science and data as much as possible. However, these analyses are for fuel sources (e.g., cottonseed oil) that play a minor role in meeting the current RFS volume mandate.
"The EPA may have no immediate regulatory need to revisit the 2010 lifecycle analysis if its original determinations are still valid. The primary purpose of OAR's lifecycle analysis is to determine whether fuel sources meet GHG reduction thresholds. According to OAR, the state of science has not changed enough with respect to lifecycle GHG emissions to warrant revisiting its prior GHG determinations for the 2010 fuel sources," the OIG report said.
The OIG said because grandfathered ethanol plants are not required to meet GHG thresholds, there was no need for EPA to update the analysis.
"In 2010, grandfathered production that is not subject to any GHG reduction requirements was estimated to be at least 15 billion gallons, or over 80% of today's RFS blending volume. According to EISA, even if the EPA updated the 2010 lifecycle analysis, these grandfathered facilities would not have to adhere to the results of the new analysis."
However, the OIG said EPA should come up with a process to determine whether lifecycle science has advanced enough to warrant revising GHG thresholds.
"While the immediate regulatory utility of updating the 2010 analysis may be minimal, ensuring the GHG lifecycle analysis is current could provide other benefits, such as informing the EPA's decisions on setting RFS volumes after 2022, as well as giving policy makers from other agencies and Congress an accurate picture of the GHG emissions from biofuels," the OIG said.
In response to the OIG report, the EPA Office of Air and Radiation disagreed it needs to update ethanol's GHG emissions profile.
"OAR does not believe that formal criteria are needed to determine whether the lifecycle GHG threshold determinations should be revisited," the office said in a response. "OAR continually monitors the science associated with lifecycle GHG emissions of biofuels, and we would be able to identify whether a significant change in the science would warrant revisiting the GHG threshold determinations."
Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, said in a statement to DTN Thursday that the OIG report basically says what the industry has been saying for years.
"Indeed, the RFA has repeatedly asked EPA to update its carbon scoring of ethanol blended fuels," he said. "We are confident that once EPA conducts these required studies, they will show that biofuels like ethanol are significantly reducing greenhouse gas emissions, even above the threshold reductions."
According to U.S. Department of Energy's GREET model, corn ethanol from an average dry mill plant reduces GHG emissions by about 34% compared to gasoline, even with indirect land-use change. Indirect land-use change largely has been disproven in recent years, meaning corn ethanol's GHG reduction profile may be even larger.
BUDGET ISSUES
According to the OIG, the EPA decided not to prioritize complying with the reporting requirements because of budget concerns.
"As a result, the EPA, Congress and other stakeholders lack key information on impacts needed for making science-based decisions about RFS," the Inspector General said.
The OIG found EPA spent about $1.7 million and the equivalent of four full-time employees in fiscal years 2010 and 2011 to develop the first report. The agency did not request funding for reporting in 2012. EPA had requests for funding denied from 2013 to 2015.
"Regardless, the statutory requirement to complete the report does not hinge on yearly, earmarked funding," the OIG report stated. "Regarding the reporting cycle length, if the EPA finds there have been no relevant scientific advances, it could simply report out on that fact. Lack of scientific advances does not eliminate the EPA's reporting requirement."
Read the full OIG report here: http://bit.ly/…
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @toddneeleyDTN
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