New Renewable Fuel Standard, Which Sets First Heat Trapping Emissions Requirements for Biofuels, Gets Favorable Review From UCS
EPA Analysis Demonstrated That Without Additional Support, Cleanest Biofuels Will Fail to Meet Targets
By Union of Concerned Scientists
February 3, 2010
The Environmental Protection Agency’s (EPA) new rules for the Renewable Fuel Standard, the nation’s primary biofuels program, got a favorable review from the Union of Concerned Scientists (UCS). The science group praised the agency for a transparent process that accurately accounted for biofuels’ lifecycle heat-trapping emissions by including so-called “indirect-land-use emissions.” The new rules reflect the fact that advanced and cellulosic biofuels deliver substantially greater pollution reductions than today’s biofuels, such as corn ethanol.
“We now have a yardstick to measure the global warming pollution from different biofuels,” said Jeremy Martin, a senior scientist in UCS’s Clean Vehicles Program. “EPA should be congratulated for having an open process on this rule that involved scientists, farmers and the ethanol industry.”
Despite intense pressure from the corn ethanol industry to exclude emissions from indirect-land-use change, the EPA found that such emissions are a major source of heat-trapping pollution from corn ethanol and other food-based biofuels. This finding affirms the view of 200 scientists and economists with relevant expertise who sent a letter to the EPA in September 2009 arguing that “grappling with the technical uncertainty and developing a regulation based on the best available science is preferable to ignoring a major source of emissions.” The EPA also issued an analysis examining the scientific uncertainty involved in calculating emissions from indirect-land-use change and plans to ask the National Academy of Sciences to look at the issue.
Indirect-land-use-change emissions also have been the focus of recent analysis by the California Air Resources Board, as well as peer-review scientific articles, which concluded that using food crops to produce fuel increases worldwide demand for those crops, prompting farmers to clear previously untouched land to grow new crops. Clearing land, especially tropical forests, releases massive amounts of heat-trapping gases into the atmosphere.
The Renewable Fuel Standard, enacted in 2005, requires fuel suppliers to blend a higher percentage of renewable fuels, such as ethanol and biodiesel, into motor vehicle fuels over time. In 2007, Congress passed the “Energy Independence and Security Act,” which expanded the standard’s overall volume requirement from 7.5 million gallons by 2012 to 36 billion gallons by 2022, and significantly increased the requirement for low-carbon cellulosic biofuels. It also required the EPA to establish independent volume mandates for different fuel categories. Each category was to be defined by its lifecycle heat-trapping emissions compared with conventional gasoline. The categories include: renewable fuel (20 percent less emissions than gasoline), biomass-based diesel (50 percent less), advanced biofuels (50 percent less), and cellulosic biofuels (60 percent less).
Corn ethanol facilities that were operating or under construction in 2007 are exempt from meeting the emissions-reduction requirements. The EPA projects that new corn ethanol facilities coming on line in 2022 could meet the 20 percent heat-trapping emissions reduction threshold for renewable fuels. However, this analysis is based on projected increases in crop yields and improvements in ethanol production technology and is not an analysis of the performance of today’s corn ethanol facilities.
UCS experts say cellulosic ethanol, derived from grass, wood chips and other waste material, is a better option. According to EPA analysis, ethanol made from corn residue, or stalks and cobs, could reduce emissions by more than 90 percent compared with gasoline, in part because it would not necessarily displace land used to grow food crops and therefore would not trigger significant indirect land use emissions.
Cellulosic fuel production, however, has fallen short of the EPA target. The 2007 energy law required suppliers to produce 100 million gallons of cellulosic fuel in 2010. But current cellulosic ethanol production stands at only 6.5 million gallons. Therefore, the EPA announced today that it is waiving 93.5 million gallons of the 100 million gallon requirement.
“Achieving energy security and tackling climate change will require a big contribution from cellulosic fuels,” said Martin. “Just setting a goal isn’t good enough in this economy. We need investment policies that help this industry get off the ground.”
According to UCS, the most important thing federal legislators could do to meet the Renewable Fuel Standard’s goals would be to support investment in building commercial-scale cellulosic biofuel facilities across the country. An investment in this essential clean energy technology would jumpstart rural economies and expand the economic benefits of biofuels production.Read Full Post | Make a Comment ( None so far )
EPA ruling boosts ethanol after fierce lobbying effort for corn-based fuels
By Ben Geman
February 3, 2010
The Environmental Protection Agency (EPA) handed a victory to ethanol producers Wednesday by issuing final regulations that conclude corn-based fuels will meet greenhouse gas standards imposed under a 2007 energy law.
The release of the final regulations follows a fierce campaign by ethanol companies that alleged 2009 draft rules unfairly found that large volumes of ethanol production would not meet targets in the statute for reducing greenhouse gases.
The new rules state that corn-based ethanol will meet a requirement of the 2007 law that they must emit at least 20 percent less in “lifecycle” greenhouse gas emissions than gasoline.
The statute expanded the national biofuels use mandate to reach 36 billion gallons annually by 2022. If the EPA had ruled that corn-based fuels did not meet their emissions target, the fuels could have been frozen out of the market.
The issue has been vital to the ethanol lobby, which feared that an adverse finding could stymie investment and tarnish the fuel’s image.
However, the nation’s current ethanol production — about 12 billion gallons annually — was exempted from the law’s emissions mandate.
EPA Administrator Lisa Jackson on Monday denied the agency had bent to pressure, instead arguing that EPA employed better modeling when crafting the final regulations.
“We have followed the science,” she told reporters on a conference call. “Our models have become more sophisticated. We have accrued better data.”
The new rules, which implement the expanded fuels mandate, are not a complete victory for ethanol lobbyists, who along with several farm-state lawmakers object to the way EPA measures the carbon footprint of biofuels.
Specifically, they’re upset that EPA didn’t give up on weighing “international indirect land use changes” as part of emissions calculations. The phrase refers to emissions from clearing grasslands and forests in other countries for croplands, in order to compensate for increasing use of U.S. corn and soybeans for making fuels.
“We will always be concerned about indirect land use,” said Gen. Wesley Clark, a former presidential candidate who now leads the ethanol industry trade group Growth Energy.
“Why should American farmers be penalized for the problems in the Brazilian rainforest? That’s the Brazilian government’s issue and maybe the United Nations’,” he said in an interview before EPA’s rules were released. “It is so farfetched. I know it comes out of an academic model, but it is just an academic model, and the model is not even based on current facts.”
The industry alleges the science behind the land-use emissions measurements is immature and inaccurate, while environmentalists say such calculations are vital to ensuring federal support for ethanol doesn’t actually worsen climate change.
Nathanael Greene of the Natural Resources Defense Council also praised the measure because EPA did not back away from considering the land-use emissions, even though it came up with numbers friendlier to the industry with the final rule.
“We finally have a tool that we can use to hold the industry accountable, to reward the people that are doing a better job and keep the folks that are doing a really bad job out,” said Greene, the group’s director of renewable energy policy.
EPA said several factors went into the revised emissions calculations. For instance, the agency said that better satellite data allowed more precise assessments of the types of land converted internationally.
The battle over the land use emissions is hardly over. Two senior House Democrats — Agriculture Committee Chairman Collin Peterson (Minn.) and Armed Services Committee Chairman Ike Skelton (Mo.) — introduced a bill this week that would block EPA from considering the land-use changes.Read Full Post | Make a Comment ( None so far )
U.S. Energy Information Administration
February 1, 2010
What is a cap-and-trade program and how does it work?
A cap-and-trade program is designed to reduce emissions of a pollutant by placing a limit (or cap) on the total amount of emissions. The cap is implemented through a system of allowances that can be traded to minimize costs to affected sources. Cap-and-trade programs for greenhouse gas emissions would increase the costs of using fossil fuels.
A cap-and-trade program is different from an emissions tax. An emissions tax is a fee on each unit of emissions released. A tax sets a price on emissions, which provides an incentive for emissions reduction, but allows the actual amount of reduction that occurs to vary.
A cap-and-trade program sets the quantity of emissions, letting the price of allowances be set in the marketplace. However, both programs ultimately place a value on emissions and provide incentives for emission reductions.
What Is a Cap-and-Trade Program?
A cap-and-trade program is an environmental policy tool designed to reduce emissions of a pollutant by placing a limit (or cap) on the total amount of emissions that can be released by sources covered by the program during a fixed time period.
The overall cap on emissions is implemented through a system of allowances. Each allowance represents the right to emit a specific amount of emissions, and each emissions source covered by the program must submit enough allowances to cover its actual emissions. These allowances, sometimes called permits, are initially allocated to affected sources or auctioned off by the agency implementing the program.
Allowances can be traded, which creates an incentive for those who can reduce emissions most cheaply to sell their allowances to those who face higher emission reduction costs. The incentive to trade allowances persists as long as one or more sources can reduce emissions by an additional unit at a lower cost than some other source faces to achieve its last unit of emissions reduction. Therefore, allowances will be traded until the marginal cost of emission reduction is equal across all covered sources. At this point, the pollution level required by the cap is achieved – theoretically at the lowest possible cost to society – regardless of how the allowances were initially allocated.
How Does a Cap-and-Trade Program Work?
Not all cap-and-trade programs are identical. Below is a list of four characteristics shared by all cap-and-trade programs, with some possible variations shown. These variations could affect how a particular program works.
1. A limit or cap on emissions of a pollutant is established.
Who is required to limit their emissions. Is it all sources of emissions or just some sources of emissions?
What area the cap covers. Is it a region or State, the whole United States, or a group of nations?
When emission limits take effect. Will the cap be in place in the near term or at a later date?
Whether the cap will become tighter, meaning the total allowable level of emissions drops over time. If so, how quickly will this decrease happen?
When the cap is in place. Will it be in effect for a season – such as just for the summer months – or is it applied for the whole year?
2. An allowance must be surrendered for every unit (often a ton) of emissions generated.
Who must submit allowances. While this depends on the specific cap-and-trade program, some examples include producers of the polluting substance, distributors of a product whose production or consumption generates emissions, States, or even nations.
How allowances are initially distributed. Allowances could be auctioned, distributed for free based on current or historical emissions, or given out using some combination of an auction and a free distribution. In an auction, allowances are sold to the highest bidders. Uses of auction revenue depend on the specific cap-and-trade program, and could include the distribution of a portion of the revenue to consumers.
Whether the program allows for the purchase of offsets in lieu of allowances. Offsets are certified reductions in emissions from sources that are not required by the cap-and-trade program to restrict their emissions.
3. Allowances can be traded.
Here’s an example of how the trade could work. Emitter ABC found it really easy and cheap to reduce its emissions below the level covered by its allowances, while Emitter XYZ had a tougher time. ABC was able to make larger reductions in its emissions and offered to sell its extra allowances to XYZ. This transaction was a good deal for XYZ because the cost of allowances it bought was lower than the cost of equipment needed to reduce its own emissions to a level that matched the number of allowances it held before buying more allowances from ABC.
How much an allowance costs. In general, the allowance price depends on the options available to reduce emissions and the demand for allowances. If there are relatively low-cost options to reduce emissions, the price of allowances would be lower.
Whether emitters are allowed to save – or “bank” – allowances, either for their own future use or to sell to someone else later. Some proposals might also allow the current use of a future period’s allowances.
4. Actual emissions are measured and penalties are assessed if targets are missed.
Depending on the program, these tasks could be the responsibility of one or more governmental agencies.
How Do Cap-and-Trade Programs Affect Our Use of Energy?
The burning of fossil fuels, including coal, oil, and natural gas, is the main source of carbon dioxide – the most important greenhouse gas produced by human activity – and a major source of other emissions. A cap-and-trade program for greenhouse gas emissions would increase the cost of using fossil fuels, making them less competitive with non-fossil energy resources and increasing the overall cost of energy to consumers. The cost of using coal, which has the highest carbon dioxide content and the lowest price per unit of energy among the fossil fuels, would be most affected by a cap-and-trade program for greenhouse gases.
Why Might a Cap-and-Trade Program Be Considered?
A cap-and-trade program allows emitters to have flexibility in their approach to reducing emissions. An alternative environmental policy might require each regulated source to use a specific emission control technology. With a cap-and-trade program, the overall cap on emissions is fixed, but the compliance approach by any individual source need not be specified. This flexibility allows parties to choose the least costly option and should reduce the cost of reaching the overall emissions cap.
The implementation of the U.S. cap-and-trade program for sulfur dioxide beginning in 1995 is an example of the benefits of flexibility in reducing environmental compliance costs in the energy sector. Allowances for sulfur dioxide emissions were actively traded as coal-fired electricity generating units covered by the program chose a variety of compliance strategies. These strategies included installing scrubbers, switching to lower sulfur coal, and buying allowances.
Where Has Cap-and-Trade Been Used?
Cap-and-trade programs have been used to limit several different types of emissions in State, U.S., and international contexts.
As noted above, a cap-and-trade program limiting sulfur dioxide emissions has been operating in the United States since 1995. The European Union established its Emissions Trading System for greenhouse gas emissions in 2005. In 2009, the Regional Greenhouse Gas Initiative established an interstate cap-and-trade system for greenhouse gas emissions covering electric power plants in 10 northeastern States. Recently, there has been a lot of discussion about the Federal Government establishing a nationwide cap-and-trade program for greenhouse gas emissions.Read Full Post | Make a Comment ( 2 so far )