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Proposed CAFE standards could pose deadly threat to biofuels

By Kris Bevill | June 29, 2012

A coalition of agriculture and bioenergy groups, led by the 25x’25 organization, filed late comments with the U.S. EPA and National Highway Traffic Safety Administration on June 28 to draw attention to an aspect of the agencies’ proposed fuel economy standards that they believe could trigger a series of consequences that will ultimately cripple the biofuels industry.

While they agree with the overall concept of the rule, the corporate average fuel economy standards (CAFE) and greenhouse gas emissions standards proposed to begin in 2017 unfairly favor electric and natural gas vehicles over flexible fuel vehicles (FFVs) by effectively eliminating incentives for FFV production and diminishing the positive environmental benefits of using higher ethanol blends, the groups said. According to the groups, the agencies were forward-thinking in the proposed CO2 compliance values for “advanced vehicle technologies” such as electric and natural gas vehicles, suggesting that compliance values be based on estimated alternative fuel use after the vehicle has been purchased. The same future use estimation was not applied to FFVs, however. Instead, the proposed rule suggests basing CO2 compliance values for FFVs on historical E85 usage data, which wouldn't take into account projected increases in coming years as greater volumes of renewable fuels are required to be used as part of the renewable fuel standard (RFS). The difference in determining compliance values puts FFVs at a disadvantage, the groups said, and phases down the alternative fuel credit available for manufacturers of FFVs to the point that automakers will be unlikely to continue producing the slightly more expensive vehicles. Considering the rising biofuels volume demands of the RFS, FFVs will be essential to meeting those goals.

"Given the considerable influence the final CAFE-GHG rule will have on the synergistic relationship between fuels and vehicles between 2017 and 2025, and likely beyond, it is imperative the agencies give thoughtful consideration to how future fuels and vehicles can seamlessly and cost-effectively comply with the objectives of this rulemaking,” the groups said in their comments. “With respect to biofuels, the use of E10 and E15 in legacy and newer vehicles between 2017 and 2025 will prove to be an inadequate substitute for the role FFVs can and should play. If FFVs are adequately incentivized in the final rule, use of E85 and other blends of ethanol in these vehicles will ensure compliance with the 2017-2025 rulemaking and fulfillment of the RFS by 2022 in a way that avoids the infrastructure costs, implementation hang-ups, and legal challenges that have surrounded the E15 waiver."

Without adequate supply of vehicles able to use higher ethanol blends, the RFS will become unattainable, a failure which will have a devastating impact on the nation’s biofuels industry, the groups said. “In short, the proposed rule sets up a cascade of negative effects that will deprive biofuels of their opportunity to make a critical contribution to national policy only they can make, and it does so simply by embodying an implicit assumption that biofuels will not make that contribution because they have not already done so,” the groups said.

The agencies could remedy this situation by maintaining CAFE incentives for biofuels, which would level the playing field between FFVs and other alternative vehicle technologies, and recognizing the full lifecycle CO2 reductions of ethanol, the groups said.

Signers of the letter included the Biotechnology Industry Organization, the Association of Equipment Manufacturers, the American Council on Renewable Energy and five agriculture industry groups. Representatives from groups responsible for the letter will meet with EPA and NHTSA officials soon to present their case, according to 25x’25. The agencies are expected to finalize the rule within the next two weeks.