Friday, September 19, 2014

House Vote Offers Benefits For Gas Sector Despite Bill's Focus On Coal

Posted: September 19, 2012 at 4:08 pm E-mail Print PDF       

House Republican leaders are bringing a package of measures to the floor this week that they are billing as a remedy for EPA rules and other Obama administration coal regulations but which some in the natural gas sector, which is out-competing coal as a low cost fuel source, say could provide broader benefits for the entire fossil fuel sector.

While some gas industry sources say they are not taking the legislative package seriously because it is unlikely to make it through the Senate anytime soon, the overlapping benefits the two sectors stand to gain suggests opportunities for cooperation between the two industries despite their long-running competition.

"[The bill] includes very specific coal issues but also has a number of broader provisions that would address some of the challenges" facing oil and natural gas development, says one source close to natural gas producers. The source predicts few if any calls of support for the measure from the gas sector, but no real opposition either and says there is much for the natural gas sector to like in the package.

The measure is a compilation of five bills including H.R. 2401, which requires analysis of "cumulative impacts" of several EPA rules affecting the energy sector and H.R. 910, which would largely strip EPA's authority to regulate greenhouse gases (GHGs). Those two bills have been combined with coal-centric language, including H.R 3409, which bars a Department of Interior rewrite of stream buffer zone rules affecting the coal mining sector, and a revised version of H.R. 2273 that reflects draft Senate compromise language limiting EPA's ability to regulate coal ash. The compilation also includes H.R. 2018 which would explicitly limit EPA's ability to independently reject state water quality standards as being inadequate.

Many of the proposals have already been approved on the House floor as stand-alone measures, several of which have also been subject to veto threats from the White House.

The natural gas sector source says the legislation, being dubbed the "Stop the War on Coal Act," includes provisions that have the potential to lower costs for fossil fuel producers as a whole, not just the coal sector.

For example, provisions requiring additional scrutiny of EPA's national ambient air quality standards (NAAQS) could benefit fossil fuel interests broadly, despite the rhetorical emphasis on coal.

Specifically, H.R. 2401 includes a requirement that any modifications of any NAAQS be included in a suite of regulations to be analyzed for their cumulative economic impacts. That same group of regulations also includes any new source performance standards issued by EPA to GHGs for new industrial sources -- not just coal-fired plants.

The dual benefits the legislation provides highlights the common interests among the two sectors despite their long-running competition. In addition, the natural gas boom is bringing the sectors into closer geographic proximity that holds potential for both cooperation and conflict.

Some congressional districts that have long been dominated by the coal industry are now finding many gas producers are major employers. For example, Virginia's 9th District – which is represented by Rep. Morgan Griffith (R) – includes thousands of gas sector jobs, a gas industry source has said.

It is the coal theme, however, that GOP leaders are highlighting. In a Sept. 18 press statement on the legislation from House Speaker John Boehner (R-OH), he referenced an announcement earlier this week by Alpha Natural Resources that it plans to close eight coal mines in Virginia, West Virginia and Pennsylvania.

"House Republicans are taking action on the Stop the War on Coal Act this week to protect American jobs by blocking some of the Obama administration's most damaging new regulations and holding the administration accountable for the economic impact of several others," Boehner said.

While Boehner blamed environmental regulations for the closures, his statement was silent on the economic impact of low natural gas prices on the coal sector.

Tough Road

Given the legislation's limited prospects, many gas industry officials say they are sitting out discussion of the package. Several of the provisions face a tough road in Congress even after the November election, but could influence debates over deregulatory agendas in a lame duck congressional session and in 2013, sources say.

Another natural gas industry source declined comment on the particulars of the measure, saying "we really aren't following this issue closely, as it's more of a 'statement' by the House, and unlikely to move anywhere."

While one source close to the coal sector holds out some hope for action on the coal ash portion in a lame duck session, industry sources generally concede the broader legislative package stands little chance of enactment anytime soon. The source calls the measure a campaign event that "just happens to be occurring on the floor of the House of Representatives," and which provides a platform for efforts by the Romney campaign to galvanize concerns over the Obama administration's regulatory policies.

Despite the current campaign atmosphere, the coal industry source adds that the House bill provisions could wind up as a roadmap for a House GOP agenda in 2013 that could be newly empowered if Mitt Romney wins the election. If President Obama wins a second term -- and if Republicans prevail in their efforts to take the Senate -- those provisions also could create new headaches for the Obama White House as conservatives redouble their efforts to move the language as part of the appropriations process, the source adds.

But the first natural gas sector source notes that it will remain difficult in the Senate to pass legislative proposals -- deregulatory or otherwise -- unless there are 60 votes in favor of a measure -- a hurdle the source predicts will continue to pose tough obstacles for energy related legislative proposals next year.

Amendments submitted Sept. 19 to the rules panel for possible inclusion in the legislation underscore the extent of the election messaging, with both parties offering up several amendments that stand little chance of enactment in the current Congress. Rep. Rick Berg (R-ND) and others offered language that would allow states to revoke federal implementation plans from EPA for addressing regional haze. On the Democratic side, Rep. Ed Markey (D-MA) offered an amendment to create a renewable electricity standard, and another proposed amendment by Rep. Paul Tonko (D-NY) would bar the Secretary of Interior from granting a coal lease to a bidder who fails to disclose information on their campaign and superpac contributions to federal elections.

The conservative group Freedom Works is sending word out that it will count a vote on the pending legislation on its scorecard for members that "support economic freedom," and the group is urging proponents of the measure to contact lawmakers and urge their support. But the liberal learning Center for American Progress is seeking to turn the pending language -- and particularly the portions attacking clean air and greenhouse gas rules -- into a political liability for Republicans and Republican Presidential candidate Mitt Romney. In a Sept. 18 analysis the group says "putting poison in the air means more money for the Romney-Ryan campaign," and cites numerous analyses of campaign donations by energy interests. -- Doug Obey

Editor's Note: Congress Watch will not be published during the congressional recess which begins Sept. 21.

Last Updated on Thursday, 20 September 2012 10:51  

Canada's New Power Plant GHG Rule May Hinder House Push To Stall EPA's

Posted: September 12, 2012 at 12:52 pm E-mail Print PDF       

Canadian officials' just-unveiled rule setting greenhouse gas (GHG) performance standards for new and existing power plants, which provides a pathway for existing units to install carbon capture and sequestration (CCS), could undermine a House effort to block similar efforts at EPA "unless and until" CCS is found to be feasible.

Environmentalists opposed to the bill, H.R. 6172, are planning to cite the Canadian measure at a hearing next week in the House Energy & Commerce Committee's energy and power panel to show the legislation is unnecessary.

A source with the Clean Air Task Force (CATF) says the final Canadian rule "demonstrates that CCS is available as a [carbon dioxide (CO2)] control option for coal plants. We at CATF in our comments to EPA said it was the best system of emissions reductions, and I think the Canadian regulations support that point of view."

A power industry source acknowledges that the Canadian rule could undermine the nascent political effort to block EPA's rules, though the source notes that coal is not a significant part of Canadian electricity generation. "Perhaps the fact that Canada did this may be more politically important as a driver of future U.S. policy than actually affecting North American energy here and now," the source says.

But an industry supporter of the House bill says EPA's rules are not comparable to the Canadian measure, calling attempts to use Canada's plan to drive EPA's "spurious" because Canadian plants are not subject to other control requirements, including EPA's stringent maximum achievable control technology standard. "So our utilities are caught in a box. Coal can't go forward, thanks to EPA."

Canada's rule, issued Sept. 5 and first proposed last August, sets a stringent performance standard for new units equivalent to an advanced natural gas plant and requires existing coal plants to phase out after 50 years or install CCS to meet the limit in 25 years.

By contrast, EPA's proposed new source performance standards (NSPS), issued last April, applies only to new coal plants, requiring them to install CCS to meet emissions achieved without CCS from an advanced gas plant. The agency's proposal allows new plant developers 10 years to install CCS.

The agency is required under the Clean Air Act to also issue an NSPS for existing facilities but agency officials say they have "no plans" to do so.

EPA is not expected to finalize the rule governing new plants until after the November elections.

While Canadian officials provide longer lead times than EPA proposed, their rule is generally stricter than EPA's -- setting a limit of 926 pounds per megawatt hour, compared to EPA's proposal of 1,000 pounds per megawatt hour. EPA's proposal has met strong opposition from the coal sector and its supporters in Congress, who charge that the administration is seeking to eliminate coal, and the jobs the industry provides, as a fuel source.

They are pushing the House bill, sponsored by Rep. David McKinley (R-WV), that would prohibit EPA from finalizing its NSPS proposal or issuing a rule governing existing plants until four officials -- the administrator of the Energy Information Administration, the comptroller general of the United States, the director of the National Energy Technology Laboratory, and the Under Secretary of Commerce for Standards and Technology -- submit a formal finding to Congress "that carbon capture and storage is technologically and economically feasible for fossil fuel-fired electric utility generating units."

The energy and power panel was slated to hold a hearing on the bill Sept. 14 but it is being rescheduled for next week, according to a committee source.

Rule Flexibility

The CATF source says that the decision by Environment Canada to set its performance standard at roughly the level of a new natural gas combined-cycle unit also backs EPA's decision to do the same in its proposal. And most importantly, the source says, "What these regulations show is that these emissions limits, roughly a 50 percent reduction from uncontrolled units, can be applied to existing coal plants if it is, as Canada has done, implemented flexibly."

However, Canadian environmentalists complain that the rule is so flexible -- and implemented over such a long time period -- that it is virtually unenforceable.

Still, U.S. power industry sources are concerned that the Canadian rule will help drive assumptions that CCS is a viable technology despite the fact that it is only now being demonstrated at a few plants at scale. However, they also note that the Canadian and U.S. power mix vary greatly, and that the rules are not easily comparable. Canada gets 75 percent of its power from hydro and other non-GHG-generating sources while coal utilities comprise close to 50 percent of the U.S. energy mix.

A utility industry lawyer says that the Canadian rule should not have much influence on EPA's NSPS because of differing approaches. For example, the Canadian rule allows companies to combine facilities to meet the standard -- over-controlling at some while under-controlling at others. This is not something EPA's proposal contemplates, with the agency instead requiring unit-by-unit compliance, the source explains.

The Canadian rule also allows utilities to achieve the standard by incorporating hydropower, biomass and other renewable fuels, meaning compliance can be achieved under a portfolio basis, the source notes.

The utility source adds that EPA generally does not look at foreign rules except to justify strengthening its own regulations.

But a second environmentalist says the Canadian rule does help justify a stricter rule given its stricter performance standard. "That is consistent with a number of [environmentalists'] comments which said that the record supports a tighter standard than what EPA proposed," the source says. "If Canada has determined it is feasible to build new power plants that emit less than 926 pounds per megawatt hour, it's not going to be the case that south of the border plants have to emit 1,000 pounds to be feasible. This gives a strong indication that EPA can tighten its standard."

The source also calls it "significant" that Canada has "jumped ahead of the U.S. They usually tend to follow." And the source expects to Canadian rule to play a role in pressuring EPA to move on a plan for existing sources. The phased-in plan "may not be the approach that EPA will use" but it shows that limits can be set.

The source does downplay the significance of the rule on CCS viability in general, noting that installing CCS is only one pathway to meeting the limit. Plants can also re-power with other fuels or take other steps to meet the performance standard, just as EPA took a "neutral approach" allowing use of any technology that can meet the performance level.

But the CATF source notes that many large-scale CCS projects are being built in Canada, especially for use in enhanced oil recovery (EOR) in Alberta, and stresses the need for "carbon capture utilization and storage" (CCUS).

"I don't know how America can achieve energy purity without EOR and that requires CCS from industrial sources and power plants. So CCUS needs to be the focus of energy policy and environmental policy in North America. . . . I think it's imperative, whoever is president and in Congress, that they adopt national policies that drive EOR through CCUS."

Canadian Concerns

However, Canadian environmentalists are calling the rule one that has no teeth because the deadlines are so far into the future. A Sierra Club Canada source says, "We don't have 40 years to slowly shut down our power plants. . . . We don't need to have a system to prolong their life for 40 years. . . . I don't think the government has the ability to enforce that."

This source calls the CCS piece of the rule "nonsense. It is not technically feasible so it is not going to happen. . . . The only reason it's there is" to help depleted fields in Alberta to recover additional oil "and pretend it's a climate change effort." The source adds that the Natural Resources Canada agency Sept. 4 announced $1 billion to support development of CCS in Alberta. "Subsidizing depleted oil well recovery, in Canada at least, is not about sequestering CO2. The [emissions from the] oil they get out doesn't count."

The source adds that Environment Canada received more than 5,000 comments on the rule -- an unheard of number -- and that most urged the government to strengthen the proposal. "Clearly the minority opinion carried the day," the source says.

Canada does not routinely make public comments available and citizens are not allowed to challenge rules in court, the source notes. Canadian officials could not be reached for comment.

The Canadian rule requires new units that come online as of July 1, 2015, to meet the performance standard. In documents released with the regulation, Environment Canada did not say when it expects CCS to be installed but is targeting 2020 as the date for the first coal units to close. The agency said the rule "complements the normal replacement of aging units" and has flexibilities to ensure reliability is not compromised. The rule will reduce GHG emissions by 214 megatons in the first 21 years, and it will have a net benefit of $7.3 billion due to avoided costs associated with climate change and electricity generation, avoided health problems and through use of CCS for EOR.

Environment Canada Minister Peter Kent touted the new rule in a Sept. 5 statement while noting, "We have consulted extensively with both the provinces and industry and they have contributed to strengthening our approach. . . . These new regulations can only strengthen our position as a global leader in electricity production." He also referenced EPA's NSPS development, saying, "The United States is also moving towards lower or non-emitting types of generation -- from high-efficiency natural gas and renewable energy to coal with carbon capture and storage." -- Dawn Reeves (This e-mail address is being protected from spambots. You need JavaScript enabled to view it )


Whitfield Opens Door To Air Act Reforms Targeting EPA's State Scrutiny

Posted: July 25, 2012 at 11:23 am E-mail Print PDF       

Rep. Ed Whitfield (R-KY) is floating questions for an upcoming Clean Air Act reform "forum" with state and local air regulators about whether the air law gives states adequate autonomy, suggesting the forum could give EPA's critics an opening to push for amendments to the law to target alleged agency overreach.

Whitfield, chair of the Energy & Commerce Committee's power panel, sent the list of six questions ahead of July 31 and Aug. 2 forums on the air law that will serve as initial discussions over changes to the law that Whitfield, some states and others have said are long overdue. Observers suggest the November elections will be key to determining the fate of those efforts, given that they will determine gains or losses by EPA defenders in Congress and the White House.

While one source familiar with the efforts says the questions appear "neutral," they suggest to some extent that the forums will highlight complaints that current EPA implementation of the law is overly burdensome -- a narrative that meshes with ongoing Republican attacks on the agency echoed by some states, including Texas.

"In your agency's experience implementing the Clean Air Act, what is working well? What is not working well?" Whitfield asks. "Do state and local governments have sufficient autonomy and flexibility to address local conditions and needs? Does the current system balance federal, state, and tribal roles to provide timely, accurate permitting for business activities, balancing environment protection and economic growth?" the lawmaker asks.

The three other questions also touch on EPA oversight of states, with Whitfield asking whether the air law supports a "reasonable and effective mechanism" for federal, state, tribal and local cooperation through state implementation plans (SIPs) -- state-written air quality blueprints for complying with federal air rules.

Whitfield also asks, "Are cross-state air pollution issues coordinated well under the existing framework?" and "Are there other issues, ideas or concerns relating to the role of federalism under the [Clean Air Act] that you would like to discuss?" The lawmaker asks state and local officials to provide answers by July 27.

Some of the participants in the discussion include state environment commissioners or deputy commissioners from Texas, Florida, South Carolina and Indiana -- several of the states that challenged EPA's greenhouse gas rules. Whether Democrats will even participate in the informal proceeding is anything but clear.

House Energy & Commerce Committee ranking member Henry Waxman (D-CA) has said he objects to the apparent failure of the forums to tackle the issue of climate change, which is not addressed in the questions.

Environmentalists fear that the list of state and local participants is geared toward states and others hostile to the Obama EPA's agenda. "Will Chairman Whitfield and the committee promise publicly that all they want to do is make things better and not worse by cleaning the air sooner and more efficiently?" one environmentalist asks, alleging that the forums set up "ideological grandstanding" amid little prospect for moving serious legislation. Some activists downplay the forums by noting that the events are not formal Hill hearings to consider a bill.

Several states and local participants queried for this article declined comment, saying they were still considering issues they wanted to raise with Whitfield's panel. But one source says that the list of participants reflects an effort to get state commissioners, not just air regulators, on the list to reflect broader state interests.

States' Concerns

States that did respond say they are likely to question possible overstepping by the agency in its review of SIPs, and concerns about how EPA provides guidance to states on implementation of regulations.

A source familiar with Arizona's concerns says possible issues the state could raise include concerns over EPA's policy on "exceptional events" such as dust storms that degrade air quality. Critics say the policy -- which allows states to discount air pollution from such events from counting toward compliance with federal pollution standards -- is overly complicated, and that the agency has a major backlog of exceptional events applications.

The source adds that Arizona is also likely to criticize EPA's recent proposed partial rejection of the state's plan for complying with the agency's regional haze program that aims to improve visibility in parks.

An Arkansas source says the state is concerned about issues including possible EPA imposition of a regional haze federal implementation plan in lieu of a federally approved haze SIP; is also interested in a "multi-pollutant" strategy for developing state implementation plans, and has concern about EPA implementation of guidelines "as if they were rules" -- guidelines that are often not timed to coincide with the rules themselves.

Another state source hopes the forum will ultimately spawn discussion of state rights under the law -- including right to go beyond some federal rules -- as well as the cost that EPA rules impose on state governments and possible reforms to the SIP process, which critics say is highly complicated and time and resource intensive.

The source says there appears to be some talk of additional forums led by Whitfield in September but that this does not appear to have been nailed down. The source adds that the broader implications of the Whitfield effort depends on the November elections which could render reform either viable or "dead in the water."

One industry source suggests talk of a skewed participant list for the two upcoming forums is overblown and that the list includes states like Texas -- which has had fierce battles with EPA over new source review and greenhouse gas controls -- but also states like New Hampshire more likely to back the agency on issues like its mercury rules. The source argues that the focus on state and local concerns at the initial forums appears to serve the reform discussion well by launching it in a way that is "not very threatening" compared to if the committee had instead convened formal hearings featuring a battle between industry and environmental groups over the air law. -- Doug Obey (This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

Last Updated on Wednesday, 25 July 2012 11:59  

Key Lawmaker Says Clean Air Act Reforms Hinge On EPA-State Consensus

Posted: August 1, 2012 at 2:19 pm E-mail Print PDF       

Rep. Ed Whitfield (R-KY), organizer of ongoing "forums" on Clean Air Act reform, says legislative changes to overhaul the air law are unlikely without a consensus between EPA and states on statutory changes -- an apparent effort to temper expectations Congress will act on the politically contentious issue of amending the decades-old law.

Whitfield, chair of the House Energy & Commerce Committee's power panel, noted the need for state-EPA agreement in remarks to reporters July 31, following the first of the forums that are highlighting the political and substantive challenges to air law reform. The forums -- a second is slated for Aug. 2 -- are also showcasing long-running concerns from some states about cumbersome planning mandates, costs and tight deadlines in the law.

For reform to be politically viable, "states that are affected by this Clean Air Act and federal EPA would have to come to some agreement on changes in the process. If that happens, I think some in Congress will try to be responsive," Whitfield said, adding that the forums are a "starting point" for discussions that will evolve over time.

Those discussions will involve groups such as the Environmental Council of the States, which represents many state environmental agencies. Whitfield thanked ECOS at the start of the July 31 forum for helping to corral state and local participation, and he told reporters a third forum before the November election is possible.

The forums highlight frequent state and local criticisms of the air law: a burdensome process for writing state implementation plans (SIPs) outlining how states will comply with EPA national ambient air quality standards (NAAQS); burdens of meeting ever-tightening NAAQS under the mandatory five-year standards review cycle; the bar on EPA considering costs in setting NAAQS; and the ability for environmentalists to pursue a "sue and settle" strategy using the air law's regulatory deadlines to force consent decrees setting deadlines for new rules.

The forums also preview regional and partisan divides likely to complicate any reform effort in 2013, with Democrats including House Energy & Commerce Committee ranking member Henry Waxman (CA) citing omission of an explicit climate change discussion as a reason to skip the event, and regulators politely but firmly laying out differing priorities on pollution transport based on regional and state-level differences of priorities.

Those divisions suggest that the EPA-state cooperation Whitfield describes as a prerequisite for legislative revisions to the law is no simple feat, and observers have already noted that what direction air act reform takes could depend on the outcome of the November election and who ends up in charge of EPA and Congress.

Regional Divisions

"We'd like Eastern states to look at their own [pollution] control measures before they come back to the Midwest forcing us to ratchet down further," said Southeast Michigan Council of Governments Executive Director Paul Tait in July 31 forum. His remarks revived the long-running Midwestern state complaint that downwind Eastern states are quick to blame their struggles in complying with the NAAQS on pollution from upwind facilities.

New Hampshire Commissioner Thomas Burack -- coming from a state that has long sought federal and other measures to cut pollution transport -- called the creation of the Ozone Transport Region in the 1990 air act amendments a "good start." The region led to ongoing efforts among Northeast states to target ozone pollution.

But Burack said more is necessary to cut upwind pollution. "Our federal laws must be brought into the 21st century," said Burack, who is also current president of ECOS.

Michigan's Tait was one of several state and local officials who urged changes to the NAAQS process to allow for explicit consideration of costs, a view on which states and local officials have historically been split.

Critics of the existing prohibition say that it can lead to ever-stricter NAAQS if science supports a more stringent standard, even if the costs to states and industry of such a move would have major adverse economic impacts that outweigh the benefit of the standard. Areas that are deemed out of attainment with the NAAQS must craft SIPs imposing strict pollution controls on industry in order to cut pollution and reach attainment, but those controls can drive away industry, critics say.

However, EPA often estimates that the benefits of NAAQS far outweigh the costs. Senate Democrats led by Barbara Boxer (CA) have also repeatedly warned against allowing cost consideration into the process. Defenders of the current approach say the time to address cost concerns is during implementation of a standard, not when the science-based standard is established.

A common theme that emerged early at the forum was the possibility of extending the review cycle for NAAQS beyond the current five year mandatory review timeline, though some regulators expressed reservations about altering that review prematurely. However, state officials in their remarks indicated an apparent lack of consensus on the details of existing the timeline, or how to manage the related SIP process burden on states.

Arkansas' Teresa Marks and Indiana's Thomas Easterly suggested the timeframe between NAAQS reviews could be extended to as long as ten years, and Easterly suggested the law could also be changed to provide for default approval of SIPs if EPA takes too long to review them. Easterly's remarks address concerns from some states that the agency takes too long to approve SIPs, with some final agency decisions on SIPs taking several years.

New Hampshire's Burack acknowledged SIP planning challenges but also called SIPs the "real teeth" of the Clean Air Act and warned against throwing the "baby out with the bathwater." On changing the NAAQS review cycle, he agreed that "perhaps 5 years is not working for us." Burack said arbitrarily setting a new schedule is "not the way to build consensus," and referenced ongoing efforts by a workgroup of ECOS and EPA officials that is looking at options for reforming the SIP process.

Burack suggested that a focus on revising SIP planning and additional federal resources for EPA and state planning efforts is as crucial as altering a NAAQS timeline. Getting more federal resources for EPA and state planning, however, could depend as much on broader budget political fights as discussions over air law reform.

Several participants at the forum also criticized "sue and settle" lawsuits under the Clean Air Act, with Florida's Brian Accardo noted that he only found about a citizen suit settlement affecting his state's regional haze planning when a notice appeared in the Federal Register --despite years of haze related planning efforts.

"I was drinking my coffee and reading the Register and I became aware," Accardo said, in response to a query from Whitfield. Indiana's Easterly noted in response to another Whitfield query on litigation burdens that "most environmental commissioners just expect to be sued routinely."

But Burack of New Hampshire sounded a cautionary note on curtailing litigation, noting that all stakeholders, including states themselves have also relied on the power to press their interests.

Political Challenges

Speaking to reporters after the event, Whitfield sought to downplay complaints by Waxman and other Democrats who declined to attend the event due to the decision not to discuss climate change and the air law. "My position was let's invite these state people and let them tell us what they want to talk about," said Whitfield.

Prior to the forum, Whitfield had submitted an open ended series of questions to state and local participants that did not mention the issue but also left states free to raise it if they wished.

However, a pact on air act changes is unlikely without an effort to explicitly address greenhouse gases -- arguably the most polarizing environmental issue on Capitol Hill but also a potential driver for action, given emerging EPA climate regulations some critics say are not the best solution to the problem.

On non-climate issues, Whitfield noted that the forums highlight states' frustrations over issues such as the planning process for SIPS, "nontransparent" settlement agreements that fail to involve states, and an overly narrow EPA approach to discounting "exceptional events" that result in air quality violations.

But Whitfield himself is managing expectations for a major rewrite, and hedging at least for now on whether there will be legislation. In the short term, Whitfield also acknowledged what observers already assume -- that reform efforts are unlikely in the current Congress.

Environmentalists, meanwhile, say they would fight reforms that weaken the air act. In a July 31 letter to Whitfield, groups including the Center for Biological Diversity, Natural Resources Defense Council and Sierra Club write, "We urge you to make this crucial pledge to the American people, that any policy or legislation emerging from the forums will clean the air more and faster than current law." -- Doug Obey (This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

Last Updated on Wednesday, 01 August 2012 18:26  

Critics Of Renewable Fuel Standard Face Uphill Battle on Capitol Hill

Posted: July 18, 2012 at 2:29 pm E-mail Print PDF       

Critics of EPA's renewable fuels standard (RFS) face significant obstacles on Capitol Hill in their effort to amend current law, despite significant criticisms of the agency's current program, concerns that the upcoming vehicle greenhouse gas (GHG) rule will curtail RFS compliance, as well as broader political concerns over EPA rules and other mandates.

"I don't think there's going to major changes on renewable fuels" anytime soon, Rep. Ed Whitfield (R-KY), chairman of the House Energy and Commerce Committee's energy and power subcommittee, told Clean Energy Report July 17, shortly after his panel heard testimony from EPA and other government witnesses on alternative fuels and vehicles.

Whitfield predicted no legislative action this year on the RFS and added that any efforts to make big changes next year would face difficulty in large part because of support for the current program from agricultural interests. Whitfield also appeared to suggest conservative opponents of government mandates would have difficulty voting for a revised program.

"A lot of us represent agricultural interests and they have a real interest in this," Whitfield said.

He also noted that there are many members who don't think the government should be "dictating much of anything in the way of mandates." While Whitfield did not say so explicitly, that hostility toward mandates by conservative Republicans could make it almost as hard to revise the standard as to repeal it, because opponents of mandates might still have to vote for a revised program to win changes.

The hearing -- billed as the latest in support of the House GOP's American Energy Initiative -- laid bare many of the usual regional and partisan divides on the RFS and vehicle GHG rules.

For example, Rep. Joe Barton (R-TX) spoke for many oil and coal state members, querying witnesses on the purpose of an RFS, and suggesting that "if the goal is to reduce oil imports," perhaps clean coal technology and natural gas should be included in the standard.

But Rep. John Shimkus (R-IL), who chairs the Energy and Commerce environment and economy subcommittee,was more explicit than most in underscoring how members face dueling energy and even political loyalties when it comes to the RFS. Shimkus expressed general support for the RFS and other biofuels measures but said he also strongly backs hydrocarbon measures, such as the stalled Keystone pipeline.

While not explicitly discussed at the hearing, many are also concerned that EPA's pending vehicle GHG rules, which are expected to curtail fuel consumption, will hamper compliance with the volumetric blending requirements in the RFS. They say this drives the need for a significant increase in biofuel concentration levels well above the 15-percent levels (E15) EPA currently allows, which would require costly fuel infrastructure upgrades to account for the fuels' higher corrosivity.

A recent Congressional Budget Office analysis acknowledged the potential linkage between the RFS and the GHG rules, though it suggested that the impacts of the vehicle rules on the RFS could be more modest and take longer than some in the fuels sector are claiming.

EPA's top transportation official, Margo Oge, has also downplayed industry concern over the issue.

Oil industry critics have also faulted the program's requirements to blend volumes of cellulosic ethanol that are largely unavailable, forcing them to purchase costly credits as an alternative. The issue has grown particularly heated after one cellulosic producer sold large volumes of fraudulent credits, resulting in penalties for many refiners.

Works Well

Despite such concerns, the hearing made clear that any efforts to change the RFS to address the various concerns would face resistance. During the hearing, Whitfield in his opening statement stopped short of a full RFS critique, arguing it has worked well in "several respects" -- including helping to ramp up ethanol and biodiesel production. "Some believe there are challenges with the RFS that require Congress' review," Whitfield said.

And Oge, director of EPA's Office of Transportation and Air Quality, defended the RFS and the vehicle GHG rules, and blunted attacks on the RFS by emphasizing that EPA has already used waiver provisions in the law already provided by Congress to ease cellulosic targets.

Oge played up the significance of recent EPA meetings with industry indicating that cellulosic fuels were nearing large-scale commercial production. She said large companies like BP and DuPont are planning to bring commercial-scale cellulosic production online in the 2014 timeframe; referenced efforts by EPA to evaluate and approve new biofuels for use in the RFS; and said EPA is working "as quickly as practicable" to approve numerous pending requests for crediting of new biofuel production processes and feedstock pathways.

In separate testimony, Energy Information Administration (EIA) Deputy Administrator Howard Gruenspecht gave some ammunition to RFS critics, noting that EIA in its recently released Annual Energy Outlook 2012 had again reduced projections for cellulosic biofuels production. Gruenspecht noted uncertain prospects for widespread market acceptance of E-15. and E-85. "Widespread use of E-85 is likely only if its pump price is low enough to make it economically attractive relative to gasoline after taking into account the difference in energy content between the two fuels," Gruenspecht noted in his prepared testimony.

The issues appeared particularly tricky for Shimkus, who supports both renewable fuel programs and efforts to increase supply of higher-emitting hydrocarbons.

"I do believe we are on the verge of getting close to the cellulosic goals," Shimkus said, but also adding that he wanted to make clear "I love fossil fuels" despite his national security related concerns about imports. "For all my crude oil folks and refineries and coal guys. . I am still on board and I am still part of the overall team," Shimkus added, noting his support for the Keystone tar sands pipeline rejected by the Obama administration.

Backers of the RFS, however, are not taking anything for granted, and are also acknowledging that the current RFS has disappointed environmentalists, who have said it falls short on carbon benefits compared to other options like a low carbon fuels standard.

For example, Michael McAdams of the Advanced Biofuels Associations told a July 10 forum on biomass organized by the Energy Department, "The RFS is under significant challenge," and urged its backers to defend it from attack. -- Doug Obey

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Clean Energy Report's Congress Watch is an exclusive weekly analysis of the legislative maneuvers and politics driving the clean-energy debate. Each Wednesday, Congress Watch examines the latest developments on Capitol Hill and offers you exclusive insights at the nexus of energy and environmental policy. Congress Watch is your decoder for understanding action in the legislative branch.