EPA Proposes Changes To Biofuel Regulations

By Steven Mufson and Juliet Eilperin
Washington Post Staff Writers
Wednesday, May 6, 2009

The Obama administration waded deeper into climate regulation yesterday, proposing new standards for alternative motor fuels and setting off a debate among ethanol producers and environmentalists about scientific assumptions that could be worth billions of dollars to industry.

The Environmental Protection Agency's proposed regulations are designed to curtail greenhouse gas emissions blamed for climate change and to make sure that alternative fuels, such as ethanol or biodiesel, do not have indirect effects, such as deforestation in other countries, that could inadvertently increase levels of greenhouse gases in the atmosphere.

But the administration did not take a position on key regulatory issues, instead inviting comment from scientific experts and businesses on how to measure carbon emissions from the full lifecycle of biofuels, from land use to fertilizer to manufacturing process to delivery. EPA Administrator Lisa P. Jackson also said that existing corn ethanol distilleries or ones under construction would probably be "grandfathered," or exempt from the new regulations.

Jackson's statement blunted criticism, especially from corn-based ethanol producers that have been targeted for competing with food crops and for using substantial amounts of fertilizer in fields and fossil fuels in distilleries.

In a telephone call with reporters yesterday, Jackson said the administration wanted to make sure that its final rule on renewable fuels is "informed by the best science."

Bob Dinneen, president of the Renewable Fuels Association, said his group would "participate aggressively" to shape the final regulations. "There's a great deal of uncertainty about this," he said.

Dinneen said the EPA had failed to count the indirect costs of petroleum production, had underestimated improvements in productivity of corn growers, and had overstated the impact of corn ethanol on U.S. food production and thus exaggerated the expansion of new crop planting in forests and savannahs of places such as Brazil.

"We don't think the theory of indirect land use change will hold up," said Wesley Clark, co-chairman of Growth Energy, an ethanol industry group. "It's unfairly applied only to ethanol."

Some environmentalists were also concerned about the EPA proposals. The EPA raised the possibility of computing greenhouse gas costs over a 100-year period instead of a 30-year period. The longer time frame would make the benefits of corn-based ethanol seem greater while discounting the initial costs, such as the loss of untilled land, over time. For example, the EPA said corn-based ethanol is 16 percent better than regular gasoline if its costs are calculated over 100 years, but 5 percent worse over 30 years.

"EPA has left open the option that an exception to good science could be made in the case of a favored special interest," said Frank O'Donnell, who heads Clean Air Watch.

But even as politicians and lobbyists sought to protect traditional biofuels, business experts said the recent corn ethanol boom and subsequent crash had soured many investors on such ventures.

"Since then, the focus has basically been on second-generation biofuels. It's given people time to think about alternatives," said Kevin Parker, global head of asset management for Deutsche Bank Group. "It's become clear to us, in the work that we've done, that converting photosynthesis into transport fuel is very inefficient. There's no sense of rolling back the clock on that one. The world has moved on."

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