Biodiesel Group Says EPA Rule Threatens Future Production

This story appears in the Aug. 17 print edition of Transport Topics.

A proposed U.S. Environmental Protection Agency rule designed to expand biofuel use actually has brought the biodiesel market “to a grinding halt,” because it does not allow most blends of soy oil, according to the National Biodiesel Board.

The Renewable Fuel Standard, proposed in May by EPA, for the first time would require biofuels to meet emission-reduction targets. The RFS was aimed at increasing the supply of renewable fuels to 36 billion barrels annually by 2022 (click here for previous story).

EPA’s proposal said that diverting soy crops in the United States to make biodiesel, rather than food, would lead South American countries such as Brazil to convert new land, especially rain forests, to soybean production, negating any cut in pollution emissions.

“The conversion of rain forest results in a much larger increase in [greenhouse gas] emissions than the conversion of grassland,” the EPA document said.

But biodiesel and agricultural representatives in the United States said excluding the direct use of soy oil would cripple biodiesel production, and the EPA is wrong in its estimate of how much tropical rain forest would be cut to expand soybean production.

“In terms of the effects on the biodiesel industry, the EPA proposal has brought everything to a grinding halt, because the people who have to do the blending are unsure what to buy,” Michael Frohlich, spokesman for the National Biodiesel Board, told Transport Topics.

Frohlich said 60% to 65% of all U.S.-produced biodiesel comes from soy oil.

“Under EPA reasoning, for every acre of soybean cultivated in America for biodiesel, one acre of deforestation would occur in South America, particularly in Brazil,” Frohlich said. However, “biodiesel production grew in the United States from 25 million gallons in 2004 to 690 million last year, and if the EPA logic were accurate, soybean acreage would have increased in Brazil, when it has actually fallen.”

EPA declined comment on Frohlich’s statement.

Randy Olson, executive director of the Iowa Biodiesel Board, agreed with Frohlich. Iowa is the largest soybean-producing state.

“Soy-based biodiesel under the proposed rule-making is being treated unfairly and erroneously,” Olson told TT. “We use only the oil from soy beans to make biodiesel, and 80% of the plant goes into making soy meal — the same amount before the biodiesel industry started.”

Frohlich said companies involved in soybean production were working to change the EPA’s proposed rule.

“We’re confident that working with the House and the Senate and the administration, the EPA can fix it and get the biodiesel back on track,” Frohlich said.

Until then, he said, EPA should issue a temporary ruling to allow soybean-based biodiesel to retain its status as an approved alternative fuel. EPA had no comment on this proposal.

Proponents of soy-based biodiesel recently got a boost from a series of reports by scientists EPA asked to review its methodology. The Aug. 7 reports raised some questions, although they were not conclusive.

Rep. Collin Peterson (D-Minn.), chairman of the House Agriculture Committee, immediately praised the reports.

“The EPA peer review panel reaffirmed many of the concerns I have about the EPA’s proposed rule and rule-making process for the Renewable Fuel Standard,” Peterson said in an Aug. 7 statement.

“The panel expressed concern about using these incomplete and unreliable models to measure indirect land use changes and indicated that they didn’t have enough time to review this convoluted and complicated proposal,” Peterson said.

He said that was “exactly why” the House voted “to limit EPA’s ability to implement international indirect land use provisions.”

That limitation was part of the energy bill that was passed by the House June 26 (click here for previous story) but has not been taken up by the Senate.

Currently, biodiesel makes up only a tiny percentage of the estimated 752 million gallons of diesel trucking uses weekly, but more states are passing mandates that require blends, and the biodiesel industry is looking to trucking to expand its use of the fuel.

The proposed EPA rule requires that no less than 1 billion gallons of biodiesel be blended with standard diesel annually by 2012.

Even though the RFS called for the biodiesel mandate of 500,000 million gallons this year, “that mandate was not implemented for 2009, because we were still developing the rule,” EPA spokesman Dave Ryan told TT.

Minnesota requires all diesel sold there to contain 5% biodiesel, while Washington and Oregon have 2% mandates, National Biodiesel Board spokeswoman Jenna Higgins said.

Massachusetts will begin a 2% mandate Jan. 1, and Pennsylvania will require 2% biodiesel next summer, after July 1.

Other states have incentives: Illinois, for example, gives a sales tax exemption to biodiesel blends greater than 10%.

An EPA staff member told TT that, while its rule would not allow blends of soy oil only, soy biodiesel could possibly be blended with biodiesel derived from animal fats or waste grease.

“Biomass strictly by soy does not meet compliance under the proposed ruling,” Paul Argyropoulos, EPA senior policy adviser, said. “This doesn’t necessarily leave soy producers out, because the rule is flexible. Several pathways would be open.”

Senior Reporter Sean McNally contributed to this story.