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POET Submits Comments to EPA on RFS Proposal

By Staff | Jul 30, 2015

SIOUX FALLS, SD POET submitted comments Tuesday, July 28, regarding the EPA’s Renewable Fuel Standard Program proposal for 2014, 2015 and 2016 and Biomass-Based Diesel Volume for 2017.

Executive Summary of Comments on the

Proposed Rule

EPA can set readily-achievable Renewable Volume Obligations (RVOs) in 2014 through 2016 without resorting to the general waiver authority the proposed use of which is contrary to the language, structure and goals of the statute. EPA’s use of the general waiver authority as proposed would be immediately subject to litigation that would throw the Renewable Fuel Standards (RFS) into turmoil, create uncertain national fuel markets, and tarnish the legacy of EPA and this Administration.

EPA’s proposed weakening of the required base renewable fuel (the difference between the RVOs for the total renewable and advanced biofuel volumes) would permanently undermine the purpose and function of the RFS. EPA’s proposed standards are already a proven failure and have been demonstrated to be too weak. The market has responded to the proposal with crashing D6 RIN prices, undermining the very mechanism necessary to push for higher volumes of biofuels. RIN prices particularly for D6 RINs that are the largest category of RIN incentivize the build-out of biofuels distribution infrastructure and reduce biofuels prices. This is exactly what Congress intended, and exactly what a market-based regulatory program does-put a price on certain behavior (here, use of petroleum transportation fuel) and incentivize other desired behavior (biofuels use).

POET one of the world’s largest investors in cellulosic biofuels expects to stop all future U.S. cellulosic investments if EPA’s proposed base renewable fuel requirements are not strengthened. The development of cellulosic and other advanced biofuels is inexorably entwined with continued regulatory predictability based on RFS targets (e.g., the statutory 15 billion gallon base renewable RVO in 2016). EPA lowering the base renewable requirements will effectively undermine the entire RFS program and destroy confidence in its incentive structure for all biofuels.

EPA can avoid this adverse outcome by passing through the projected cellulosic volumetric shortfall under Clean Air Act section 211(o)(7)(D) to the advanced and total renewable targets, e.g., for 2016, the next fully available compliance year. EPA can then set strengthened RVOs that are readily capable of being met in 2014 through 2016. EPA’s authority under 211(o)(7)(D) has already been upheld by the D.C. Circuit. Furthermore, by establishing a methodology where EPA passes through a cellulosic production shortfall to the total and advanced targets without otherwise reducing base renewable volumes, EPA can set the RFS on a path to success through 2022, the last year of statutorily-specified volumes.

EPA has already determined (correctly) that RIN prices don’t increase retail gasoline prices. Incumbent petroleum interests have monopolized the nation’s transportation fuel supply, and lacked a financial incentive to cooperate in diversifying the nation’s transportation fuel because of EPA’s delayed, proposed RVOs and market signals contained therein. Raised RVOs and RIN values are necessary to provide the economic boost to increase biofuels use, as Congress intended, and these values can be raised without harming consumers.

EPA’s reducing the base renewable targets as much as the NOPR proposes would be a grave mistake. In particular, EPA has no basis or need technical or legal for lowering the base renewable target for 2016 from the statutory level. This target must be raised to the full statutory volume for 2016. POET considers EPA raising the proposed base renewable targets for 2014-2016 to be by far the most significant need with respect to conforming EPA’s proposal to the statutory requirements and intent.

About POET

POET, one of the world’s largest ethanol producers, is a leader in biorefining through its efficient, vertically integrated approach to production. The 28-year-old company has a production capacity in excess of 1.7 billion gallons of ethanol and 9 billion pounds of high-protein animal feed annually from its network of 27 production facilities. POET, through its joint venture with DSM, also operates a commercial-scale cellulosic ethanol plant in Emmetsburg, Iowa. For more information, visit www.poet.com.