By Zack Colman - 01/26/13 02:25 PM EST
Biofuels groups are downplaying a Friday federal court decision that some believe could cut off investments in advanced green fuels.
The Court of Appeals for the District of Columbia Circuit ruled that the Environmental Protection Agency (EPA) must use more realistic projections as part of its biofuel-blending mandate designed to create a domestic biofuel industry.
The biofuels industry initiated a lobbying campaign last fall to protect the mandate, and has warned that changing the forward-looking targets set by EPA could spook investment in next generation biofuels.
But the court said EPA acted in “excess of the agency’s statutory authority” in projecting refiners could blend 10.45 million gallons of cellulosic biofuel in 2012, as only 22,000 gallons were produced.
The court upheld the agency’s practice of allowing advanced biofuels to supplement the lack of cellulosic production. The biofuels industry said that allows EPA flexibility for meeting the mandate’s requirements.
“[A]lthough we disagree with the court’s decision vacating the 2012 cellulosic volumes, today’s decision once again rejects broad-brushed attempts to effectively roll back the federal Renewable Fuel Standard,” biofuel trade groups said Friday in a joint statement.
But industry sources acknowledged the decision could dam the tide of capital.
They said they were unsure whether EPA would determine advanced biofuels could fill the cellulosic biofuel shortfall. In that case, EPA might be forced to cut projections for the 21 billion gallons of next generation biofuels set for blending between 2015 and 2022.
That uncertainty could keep money on the sidelines, the sources said. Still, industry sources told The Hill that they remained hopeful investment in advanced and cellulosic biofuels would continue.
They noted several cellulosic biofuel facilities came online at the end of last year, and more are continuing to do so.
And they said the mandate is doing what Congress intended — reducing dependence on foreign oil, curbing greenhouse gas emissions and sparking economic development.
In its lawsuit against the EPA, the American Petroleum Institute (API) argued refiners were forced to buy credits to fill the gap in the agency’s projections and actual production levels.
The court sided with API on that point, giving the oil-and-gas lobby its first victory in its full-court press to repeal the biofuel mandate.
API is pushing Congress to tear down the rule and is fighting the rule through the courts. It also has a lawsuit on file challenging EPA’s projections for 2011.
“We are glad the court has put a stop to EPA’s pattern of setting impossible mandates for a biofuel that does not even exist. This absurd mandate acts as a stealth tax on gasoline with no environmental benefit that could have ultimately burdened consumers,” API Group Downstream Director Bob Greco said in a Friday statement.