In the next few days, the Union of Concerned Scientists (UCS) expects the Environmental Protection Agency to dramatically lower the amount of cellulosic biofuel companies are required to purchase under the federal renewable fuel standard.
This would be the second time the EPA reduced the required amount of cellulosic biofuel, which is derived from perennial grasses, waste and other sources. Cellulosic biofuel is cleaner than corn ethanol and is not made from food crops.
"This is a clear sign that current federal policies don't work, and won't deliver the environmental, economic and energy security benefits cellulosic biofuels could provide," said Jeremy Martin, a senior scientist in UCS's Clean Vehicles Program. "If we're ever going to get the cellulosic biofuel industry off the ground, we're going to have to reform biofuel policies."
When Congress updated the renewable fuel standard in its 2007 energy bill, it set a requirement for fuel providers to purchase 250 million gallons of cellulosic biofuel in 2012. EPA recently signaled it will lower that requirement to between 5 million and 17.1 million gallons, but has not yet announced a specific number. The corn ethanol industry, meanwhile, is on track to meet its goals.
Martin attributes the cellulosic shortfall to the lingering recession, which has made it more difficult for this emerging industry to secure financing, as well as flawed government policies that have not provided effective support to the industry. Meanwhile, the corn ethanol industry is lobbying for an extension of a $6 billion tax credit that reports from the Government Accountability Office and Congressional Budget Office have demonstrated is wasteful and ineffective. This tax credit, called the Volumetric Ethanol Excise Tax Credit, is scheduled to expire this year.
"The corn ethanol industry needs to step back from the feeding trough," Martin said. "Instead of wasting money supporting mature industries, we need policies that deliver real benefits to taxpayers and protect the environment. A better option would be to invest in the next generation of clean cellulosic biofuels, and to support all biofuel producers that act to make their fuels cleaner. If we reformed biofuel policy, we could get the first billion gallons of cellulosic biofuels online quickly and at a quarter of the cost of current tax credits."
UCS supports a performance-based tax credit for biofuel production that would reward companies based on how much gasoline their fuel displaces as well how much it reduces heat-trapping emissions. Such a standard would shift tax support to cleaner biofuels and still allow corn ethanol manufacturers to qualify for tax credits if they make their operations more efficient and less polluting.