Our Prepared Remarks for Proposed Renewables Enhancement and Growth Support Rule Hearing

  • Wednesday, 07 December 2016 16:37

On Tuesday, December 6, 2016, the Minnesota Bio-Fuels Association prepared the following remarks to the EPA regarding the latter's proposal for the Renewables Enhancement and Growth Support (REGS) rule during their REGS public hearing.

Here are the prepared remarks in full:

US Environmental Protection Agency
Proposed Rule Hearing:  Renewables Enhancement Growth Strategy
Prepared Remarks
Presenter:  Timothy Rudnicki / Minnesota Bio-Fuels Association, Inc.
December 6, 2016

1.    Introduction
    a.    My name is Timothy Rudnicki

    b.    I serve as the Executive Director for the Minnesota Bio-Fuels Association based in Minneapolis, Minnesota.

    c.    The Renewable Fuel Standard is working.
        i.    The RFS is helping Minnesota and the Nation build the renewable energy pathway and to follow it. 

        ii.    And with the Renewable Volume Obligations recently announced by the EPA, the Renewable Fuel Standard is back on track.

        iii.    We are now on a trajectory to make even more progress in fulfilling both the letter and spirit of the law.

        iv.    Thank you.

    d.    We believe that the proposed Renewables Enhancement Growth Strategy rule holds some potential to build upon current success in the Minnesota ethanol industry and the fuel consumer marketplace.

    e.    While I will offer some preliminary thoughts about the proposed REGS today, we plan to further study the proposed rule and submit detailed written comments by January 17th.

    f.    Before I launch into the particulars regarding some REGS provisions, I’d like to give you the context for my remarks.

2.    Context
    a.    Minnesota Bio-Fuels Association
        i.    A non-profit organization that works closely with industry stakeholders in a collaborative manner to achieve common goals.

        ii.    These goals include a greener future, stronger economy in Minnesota, consumer value at the fuel dispenser and a more energy independent Minnesota and America.

        iii.    My remarks will be limited to those centered around provisions of the proposed Renewables Enhancement and Growth Support rule related to ethanol production, distribution and consumption in Minnesota.

    b.    The ethanol industry in Minnesota
        i.    Based on a 2015 analysis of the ethanol industry in Minnesota, the 20 ethanol plants produced approximately 1.2 billion gallons of renewable ethanol for transportation fuel.

        ii.    This same analysis by ABF Economics found that the Minnesota ethanol producers:
            (1)    supported approximately 18,000 jobs;

            (2)    contributed $2.13 billion to the state’s gross domestic product in 2015;

            (3)    generated $7.37 billion in gross sales;

            (4)    generated $1.6 billion worth of income for Minnesota households; and

            (5)    contributed $93 million to state and local taxes in 2015.

        iii.    And the ethanol industry in Minnesota continues to evolve and introduce new technology and processes to further reduce inputs and increase outputs of ethanol, corn oil and dried distillers grains with solubles.

    c.    At the other end of the fuel supply chain – fuel retailers who offer higher blends of ethanol products:
        i.    52 locations now offer E15

        ii.    35 fuel retailers offer E30

        iii.    300 retailers offer E85

        iv.    Minnesota Bio-Fuels Association has reached out to fuel retailers in major urban centers and other target markets.  We have heard from hundreds of additional fuel retailers who have an interest in offering E15 and higher blends.

    d.    Additionally, at least two major fuel wholesalers now offer pre-blended E15 for those retailers lacking a blender pump but otherwise having compatible storage and dispensing systems.

    e.    Now is the time to continue pushing forward, to keep building upon success and to keep clearing the pathway for E15 and higher blends.

3.    So what provisions of the proposed REGS can remove actual and potential barriers to the production, distribution and consumption of renewable biofuels?
    a.    Federal Register (FR) 80900 - Oil From Corn Oil Extraction
        i.    We agree with the EPA, to limit the extraction of corn oil from one particular location in an ethanol plant or one stage of processing is not meaningful today.  The current approach fails to recognize the rapidly evolving processes and technology used in the 21st century ethanol plant.

        ii.    We support REGS provisions which move beyond linking GHG reductions to be accomplished to the timing and method of corn oil extraction.  The proposed revised definition and three points for pathways F and H seem reasonable and useful.

    b.    FR at 80830.  Treat E16-83 blends as Ethanol Flex Fuels.
        i.    We agree with the EPA that this proposal better aligns EPA’s fuel regulations with the dynamics in the marketplace.

        ii.    E16-83 should be treated as Ethanol Flex Fuels.  We see no benefit in treating E16-50 as gasoline because, at this time, this range of renewable fuel cannot be used in a conventional gasoline vehicle.

    c.    Federal Register (FR) at 80830 – naming convention
        i.    We support treating E0 to E15 as gasoline.

        ii.    On a broader note: It’s been 42 years since the EPA last matched the fuel to the engine.  In 1974 we started the transition from leaded to unleaded fuel.  Today, we have a similar opportunity to treat E15 as the new regular fuel.  And it’s reasonable to do so now so we capture the carbon reduction benefits.

        iii.    In June 2012 the US EPA approved the use of E15 in spark ignition engine powered vehicles starting with those manufactured in 2001.

        iv.    Virtually all the vehicles on the highway can use E15.
            (1)    According to data from the US Department of Transportation, the average age of passenger vehicles in service has leveled off at 11.4 years.

            (2)    Meanwhile E15 is legal for use in vehicles built nearly 16 years ago.

            (3)    Treating E0 to E15 as gasoline seems to more properly align EPA fuel regulations with the dynamics in the marketplace.

            (4)    We suggest, however, a more appropriate alignment would be to treat E15 as E10 is treated.  It’s time to recognize that E15 is the new regular fuel for the early 21st century.

            (5)    Here are the practical implications of making E15 the new regular fuel in Minnesota.

                (a)    Based on fuel consumption data from the Energy Information Administration, the Minnesota Department of Revenue and a detailed analysis by a GHG subject matter expert, E15 could displace 1.07 million metric tons CO2e annually.

                (b)    That’s the same effect as
                    (i)    removing 226,020 vehicles from roadways OR

                    (ii)    installing 270, 1.92 MW wind turbines.

    d.    FR at 80847 - EFF Blender Pump-Refiner Option
        i.    We agree with the EPA, it is not feasible for a fuel retailer to conduct batch testing for each sale of EFF.

        ii.    A fuel retailer should be able to demonstrate compliance by using Product Transfer Documents (PTD) evidencing the use of approved parent blends.

        iii.    We do, however, consider the EFF quality fuel survey to be placing an undue burden on the purveyors of renewable fuel.  Fuel quality is an issue that should not be limited solely to the renewable fuel industry.

        iv.    No additional controls should be added at this time (FR at 80848).

    e.    FR at 80863 - RVP and E15
        i.    EPA seeks to remove actual or potential barriers to the consumption of renewable fuel, yet its differing RVP treatment for E10 and E15 creates one of the biggest barriers to a renewable fuel.

        ii.    Interestingly, E15 could provide the greatest GHG benefits during peak summer fuel consumption as it could displace more carbon intensive petroleum gasoline.

        iii.    We call upon the EPA to exercise its administrative authority to grant the same one pound waiver for E10 to E15.

        iv.    Alternatively, we call upon the EPA to honor its prior determination that E15 could be used in FFV’s.
            (1)    EPA states the emission control systems of a Flex Fuel Vehicle are the same as a conventional gasoline vehicle but for more robust evaporative emission control systems on FFVs.

            (2)    A segment of the FFV market elects to use E15.  That market segment should not be deprived of a product which is otherwise available but for EPA’s treatment of E15 and the one pound waiver.

            (3)    On the other hand, although not part of this rulemaking process, EPA could require automakers to use the same evaporative control systems on all vehicles while granting the one pound waiver for E15 today.

    f.    FR at 80834 - Biointermediates.  While the paper work is not a problem for an ethanol producer exporting undenatured ethanol today it could be an issue in the future.  This could become a challenge if undenatured ethanol is shipped and used in the US.  Either address the issue now or expect petitions to EPA when this appears to be a more ripe issue for producers.

4.    We look forward to working with the EPA to clarify several provisions in the proposed REGS and plan to submit written comments by January 17.  Thank you.