Appeals court rules against EPA on biofuel estimates

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A federal appeals court ruled that the Environmental Protection Agency is overestimating the amount of fuel that can be produced from grasses, wood and other non-food plants in an effort to promote a fledgling biofuels industry.

There have been high hopes in Washington that the cellulosic industry would take off as farmers, food manufacturers and others blamed the skyrocketing production of corn ethanol fuel for higher food prices, according to the Associated Press. Lawmakers hoped that non-food sources such as switchgrass or corn husks could be used instead, although the industry had not yet gotten off the ground.

The 2007 law mandated that billions of gallons of annual production of corn ethanol be mixed with gasoline, eventually transitioning those annual requirements to include more of the nonfood, cellulosic materials to produce the biofuels. As criticism of ethanol has increased, lawmakers and Presidents George W. Bush and Barack Obama have talked of the cellulosic materials as the future of biofuels.

It’s unclear how the ruling will affect the marine industry’s longstanding opposition to increasing the level of ethanol in gasoline.

The cellulosic industry stalled in the bad economy and still hasn’t produced much. According to final EPA estimates, no cellulosic fuel was produced in 2010 or 2011. Last year’s estimates aren’t yet available.

“What you have in our industry is a technology that is ready to go, but has had a hard time punching through commercially because of a very challenging global financial climate,” Brooke Coleman of the Advanced Ethanol Council, which represents companies trying to produce cellulosic fuel, told the AP. Coleman said there are better hopes for 2013 as several plants are coming online.

The court faulted the EPA for setting last year’s projections at 8.7 million gallons, even though the two previous years had shown no production, and also for writing in the rule that “our intention is to balance such uncertainty with the objective of promoting growth in the industry.”

Judge Stephen Williams on Friday threw out the too-high EPA estimates in response to a challenge filed by the American Petroleum Institute, which represents the oil industry. Williams, an appointee of President Ronald Reagan, said the law was not intended to allow the EPA to “let its aspirations for a self-fulfilling prophecy divert it from a neutral methodology.”

The court rejected the oil industry’s arguments that the EPA also should have lowered the total production requirement for renewable fuels once the cellulosic goals were not met, saying the EPA had authority to decide to maintain those requirements.

An EPA spokeswoman would only say the agency will “determine next steps.” The oil industry praised the decision.

“The courts have reined in a mandate for biofuels that don’t exist,” said Bob Greco of the American Petroleum Institute. “It’s a voice of reason.”

Click here for the full report.

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