A key political compromise addressing the concerns of farm-state Democrats facilitated passage in the House of Representative passage of the American Clean Energy and Security Act, H.R. 2454 (ACES).  The so-called Peterson Amendment would make substantial revisions impacting the Environmental Protection Agency’s (EPA’s) Renewable Fuels Standard (RFS) program. The Energy Policy Act of 2005 established the RFS and the Energy Independence and Security Act of 2007 (EISA) expanded the program.  EISA established new renewable fuel categories and eligibility requirements, including mandatory greenhouse gas reduction thresholds for the various categories of renewable fuels.  EPA issued a notice of proposed rulemaking in May 2009 to implement the legislative changes required by EISA (RFS-2), and is currently soliciting comments on such issues as specifying the volumes of cellulosic biofuel, biomass-based diesel, advanced biofuel and total renewable fuel that must be used in transportation fuel each year.

If enacted into law, ACES would impact the RFS-2 proceeding in two major ways, (1) delaying and potentially eliminating the calculation of emissions related to indirect land use changes resulting from renewable fuels and occurring outside the feedstock’s country of origin (generally, these emissions are considered indirect international land use changes); and (2) exempting certain biomass-based biodiesel plants from compliance with the RFS-2 lifecycle greenhouse gas (GHG) requirement. 

EISA directed the EPA to calculate, for renewable fuel pathway, GHG emissions over the full lifecycle of the renewable fuel, including indirect international land use changes.  Examples of these lifecycle emissions include, for example, the clearing of international forest land to grow crops for food to compensate for the conversion of US-acreage toward the production of renewable fuels.  EPA would then compare the renewable fuel GHG emissions to the lifecycle emissions of 2005 petroleum baseline fuels displaced by the renewable fuel, such as gasoline or diesel. The lifecycle GHG emissions performance reduction thresholds established by EISA range from 20 to 60 percent reduction, compared to the baseline fuel, which varies upon the renewable fuel category.  GHG emissions from international indirect land use changes is a hotly contested issue between the renewable fuels industry and environmentalists and, as even EPA notes in its Notice of Proposed Rulemaking, there is considerable uncertainty in the estimation of emissions resulting from land use changes.

ACES would temporarily prohibit consideration of indirect international land use emissions, defined as land use changes outside of the feedstock’s country of origin. The legislation would establish a period of up to six years to study whether there are valid economic and environmental models to calculate indirect land use changes that are related to production outside of the country of origin in which feedstocks are grown.   The provision directs National Academies of Science to review and report on the issue within three years of enactment.  Based on this report, EPA and USDA would have a three-year period to promulgate a final determination of how to calculate indirect land use changes attributable to the production of renewable fuels.  If EPA and USDA were to conclude that indirect land use changes should not be considered, they would be required to include a statement of the basis for that determination.

EISA exempted a category of “renewable fuels,” largely defined as corn ethanol, from lifecycle GHG emission performance standards if facilities manufacturing the fuel commenced construction before December 17, 2007, the date of EISA’s enactment.  The length and scope of the exemption is among various issues under examination by EPA in the proposed RFS-2 rulemaking. ACES would provide a further exemption from the lifecycle GHG emission performance standards of up to 1 billion gallons of renewable fuel from biomass-based diesel plants that commenced construction before the date of enactment of EISA from the lifecycle greenhouse gas performance standards at issue in RFS-2.

The Senate Energy Bill, S. 1462, the American Clean Energy Leadership Act of 2009, reported to the floor by the Committee on Energy and Natural Resources did not include similar revisions to the RFS.  It appears likely, however, that revisions to the RFS will be a part of comprehensive energy and climate legislation.  In a recent op-ed, Senator Bingaman addressed support for revision of the RFS, as the Senate refines its energy bill, highlighting the definition of renewable biomass, the study of international land use change and the re-evaluation of technology- and feedstock-specific mandates within the program as areas for improvement.  A separate House Proposal, HR 3460, would expand the RFS to specifically include algae-based biofuels.  The Committee on Environment and Public Works Chair, Senator Boxer, has not indicated support of ACES’ revisions to the program, but recently noted that all options are on the table with respect to RFS revisions as her Committee takes up climate legislation.

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