NACEPT
Shaping the Nation's Environmental Policy
National Advisory Council for
Environmental Policy and Technology
February 20,2007
The Honorable Stephen L. Johnson
Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Re: NACEPT's Initial Thoughts on EPA's Role in Biofuels
Although we are still in the early stages of our assignment to provide advice on biofuels,
developments in this area are moving so rapidly within and outside of the federal government
that we want to convey our initial impressions and make some recommendations for your
consideration. We have placed a high priority on getting these to you as we learned that the
Department of Energy (DOE) is expected to complete the National Biofuels Action Plan by
March. This plan is being developed through close coordination with all federal partners
including EPA. We are hoping that you will soon have time to review our suggestions as you
meet with your senior staff, so that EPA can provide the important and broad guidance hoped for
by all.
The National Advisory Council for Environmental Policy and Technology is being asked to
provide EPA with its views on how the Agency can best organize and act to encourage the use of
renewable fuels and to help ensure that they are developed in a way that is sustainable over the
long term. NACEPT has created a working group to focus on this charge. Its members have
already met several times with EPA staff, even as the charge is being finalized. At the December
2006 NACEPT meeting, the working group met with senior executives responsible for biomass
programs at EPA, DOE, USDA, DOI and EPA Region 7 to get an overview of current and
planned activities. There was a lively and productive discussion among all those attending
which made clear to us just how fast biofuels developments are moving and how much people in
other parts of government are counting on EPA to play a major role.
We believe that biofuels development is important for our nation and is a critically important
area for EPA involvement. The President has made the development of biofuels a top national
priority in both his energy and climate policy. Most recently, in his 2007 State of the Union
address, the President called for increasing the size and expanding the scope of the current
renewable fuel standard (RFS) to require 35 billion gallons of renewable and alternative fuels in
2017 - nearly five times the 2012 target now in law. The use of biofuels can make possible
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major reductions in greenhouse gas emissions from the transportation sector. Biofuels are the
only alternative liquid transportation fuel currently available to displace gasoline consumption in
a significant way and reduce what President Bush has called the U.S. "addiction to oil." His
.Advanced Energy Initiative (AEI) sets a goal of making cellulosic ethanol technologies cost
competitive in the next 6 years. To support the AEI, the Department of Energy has set the
ambitious goal of replacing 30% of our current gasoline consumption with biofuels by 2030 (the
"30x30" initiative). Such a massive increase in biofuel production could have major beneficial
or deleterious environmental impacts. These impacts will be determined by a number of factors,
including feedstock sources, cultivation practices, technological choices and advances, and the
policies that are put in place to meet this national goal.
As you are well aware, EPA has broad direct statutory authority under the Clean Air Act
Amendments (CAAA) to regulate fuel quality and emissions from refining and production
facilities for all fuels, including biofuels. The Agency has further biofuels-related authority
through the Energy Policy Act of 2005, under which you are preparing to finalize the National
Renewable Fuels Standard (RFS) Program. This legislation also gives EPA a number of other
specific roles related to the biofuels mission, such as biorefmery permitting oversight and
guidance, fuel formulation and vehicle certification. Where the EPA role is clearly specified, the
Office of Air and Radiation (OAR) has the lead responsibility for developing and promulgating
the implementing regulations.
However, our interaction with leaders of biofuel efforts in other Federal agencies made it clear
that they are expecting and need EPA to play a broader role that goes beyond what EPA is
required to do. They see EPA as the critical agent for ensuring that biofuel development avoids
environmental pitfalls and stays on the path of sustainable success. They are looking to EPA for
assistance in dealing with environmental issues related to biofuels that range beyond OAR's
areas of responsibility and expertise. As one example, the water use for biofuel production could
have a large environmental footprint. Researchers at the University of Illinois recently made a
presentation to the Office of Science and Technology Policy in which they estimated that
meeting national biofuel goals would require many millions of acre-feet of new water, or water
diverted from other uses, to operate biorefineries and irrigate crops. They warned that in parts of
the country biofuel production could degrade water quality, accelerate aquifer depletion, and
ultimately be undermined by unsustainable approaches to water use.
A wide range of important questions about the environmental impacts of biofuels need to be
more adequately addressed in order to meet our national biomass goals and which, by their
nature, need the type of stewardship and oversight which only EPA can provide. We recognize
that RFS rulerhaking begins to address some of these issues, such as the impacts of biofuels on
vehicle emission performance and air quality, lifecycle greenhouse gas emissions, and some of
the projected impacts on the agricultural sector. EPA's stewardship, in cooperation with other
federal agencies, also will be vital for addressing many other questions: Which feed stocks and
locations for growing them should be encouraged based on environmental considerations? What
are the best pathways for increasing distribution of biofuels into the market based on emissions
characteristics and feedstock type? What are the optimal locations for growing and distributing
these feedstocks and fuels? What key environmental considerations (such as water availability,
nutrient and pesticide applications, carbon benefits and habitat preservation) should be accounted
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for in the production and distribution of biofuels feedstocks? What harvesting practices are best
for soil quality, soil carbon, water quality, and wildlife populations? How might GMOs for
biomass crops affect long-term ecosystem diversity and disease resistance? How do different
conversion technologies compare in terms of emissions and efficiency? What environmental
characterizations of new, integrated cellulosic conversion technologies will be needed to help
expedite state permits? What could be the impact of using E-85 on states' ability to meet
ambient air quality standards? How can we protect water quality as biofuels production grows in
scale? What proximity between biofuel system components (feed stocks, conversion
technologies, distribution infrastructures) optimizes environmental and economic benefits?
What approaches produce the most net energy (energy content of the fuel minus energy used to
produce the fuel)? How can we encourage innovative, environmentally superior approaches?
How will large-scale biomass production impact EPA's ability to achieve its environmental
strategic goals? What new kinds of environmental indicators and decision support tools could
help keep biofuels on a sustainable development path?
Even as these questions and concerns are being brought to your attention, the biofuels industry
and consumer acceptance of biofuels are expanding rapidly. Federal fleets are moving to
biofuels as a means of meeting the Energy Policy Act and the Executive Order: Strengthening
Federal Environmental, Energy, and Transportation Management requirements; some thirty
states have mandated the use of biofuels in their fleets; and private sector organizations are
embracing biofuels for ethical, operational and financial reasons. In advance of the full
development of certification, permitting or regulatory protocols, small production biorefineries
are coming on line day after day. Although the Agency's research issues are critical and
immediate, the regulatory and program issues are no less critical. Needless to say, these matters
are particularly important as the Agency proceeds to finalize the fiscal 2007 budget, to support
the presentation of the fiscal 2008 budget, and to plan for the development of the fiscal 2009
budget.
Assuring that large-scale biofuels production proceeds in a sustainable way will require cross-
government cooperation and new forms of dialogue and coordination within the EPA itself. To
that end, we offer the following recommendations.
First, act promptly to make the high-level appointment to the Interagency Biomass
R&D Board contemplated by the legislation. The Biomass R&D Act of 2000 requires
that participating agencies have Senate-confirmed Board representatives. A high-level
appointment is justified in practice as well as by law, because the Board is emerging as
the key body for Federal coordination on biofuels. It commissioned the recent activities
aimed at developing a Federal biofuel "Posture Plan."
Second, develop an integrated, collaborative, multi-media biofuel strategy and
create a position of Biofuels Coordinator charged with organizing an Agency-wide
dialogue on EPA's role in the biofuels mission. The Biofuels Coordinator should be
someone who is familiar with the Agency's operations and personnel and who can work
well with people in other parts of government involved in biofuel initiatives. The
biofuels strategy should embrace all the roles that EPA can play including research and
development, policy and regulation, a broad range of voluntary programs and projects at
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the regional, state and local levels, and a leadership/coordinating role on environmental
issues within the Federal family.
Third, give this EPA biofuel initiative strong, highly visible support from the top.
For a cross-media initiative like this to be effective, there needs to be a high level of
commitment and a sense of urgency. Urgency is justified, because developments in this
area are moving very fast, and whether or not biofuel development takes a sustainable
path will be decided by efforts and investments over the next few years but lasting well
into the later part of this century.
Finally, we recommend that this initiative should be viewed, developed and evaluated
as a deliberate experiment in how EPA can take a more coherent approach, to the
acceleration of clean and efficient energy technologies. Lessons learned from this
initiative can be applied in EPA efforts to foster other sustainable energy technologies.
We appreciate this opportunity to provide these initial reflections. We look forward to
submitting a fuller, more detailed report to you during the year ahead that addresses the questions
and concerns we've raised in this letter.
Respectfully submitted,
/Signed/
John L. Howard, Jr.
Chair
cc: Frank Stewart, Working Group Chair
Marcus Peacock, Deputy Administrator
Charles Ingebretson, Chief of Staff
Ray Spears, Deputy Chief of Staff
George Gray, Assistant Administrator, Office of Research and Development
John Askew, Region 7 Administrator
Bill Wehrum, Assistant Administrator, Office of Air and Radiation
Donna Perla, Senior Advisor, ORD
Brenda Groskinsky, ORD Science Liaison for Region 7
Jackie Krieger, Senior Advisor, OAR
Robert Larson, Assistant Director, OTAQ Transportation and Climate Division
Rafael DeLeon, Director, Office of Cooperative Environmental Management
Sonia Altieri, NACEPT Designated Federal Officer
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
SEP 2 6 2007
THE ADMINISTRATOR
Mr. John L. Howard, Jr.
Chair, National Advisory Council for
Environmental Policy and Technology
Vinson & Elkins, LLP
2801 Via Fortune, Suite 100
Austin, Texts 78746
Dear
: the National Advisory Council for Environmental Policy and Technology and its
Energy/Workgroup for the thoughtful and timely letters of February 20,2007, and July 13,2007.
Events related to biofuels are moving rapidly ahead, and NACEPT's approach of submitting
letter reports helps the U.S. Environmental Protection Agency be responsive to the emerging
challenges and opportunities in this area.
NACEPT's letters have already had an impact on EPA's actions. The February 20 letter
urged that EPA act promptly to make a high-level appointment to the federal interagency
Biomass Research and Development Board. As you know, I have appointed Dr. George Gray,
EPA's Science Advisor and Assistant Administrator for Research and Development, to serve on
the Biomass R&D Board. The Board is now meeting monthly, and Dr. Gray is committing
significant time and resources to effectively represent EPA and coordinate with other federal
agencies.
EPA has also taken significant action on several other NACEPT recommendations:
1. Develop an integrated, multi-media biofuel strategy and create the position of
Biofuels Coordinator.
2. Give the EPA biofuel initiative strong, high-level support.
3. Adopt the NACEPT-proposed biofuel supply chain framework for organizing EPA
strategy.
. 4. Produce an inventory of EPA activities under the proposed framework and use the
results to develop a comprehensive EPA strategic plan and program.
I have asked Dr Gray, in coordination with the Office of Air and Radiation's Principal
Deputy Assistant Administrator Bob Meyers, my Agricultural Advisor Jon Scholl, and Region 7
Administrator John Askew, to convene an Agency-wide meeting to develop an internal biofuel
strategy. I look to this team to provide coordination across EPA on these critical issues. The
Internet Address (URL) • http:Mwmv.epe.gov
Recyeled/Reeyeleble • Printed with Vegetable OD Based Inks on 100% Postconsumer. Process Chlorine Free Recycled Paper
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development of the EPA biofuel strategy will be closely coordinated with the work of the
interagency Biomass R&D Board as it revises the overall national biofuels action plan. EPA is
also adopting the biofuel supply chain framework recommended in NACEPT's July 13 letter.
As it proposed, an inventory of EPA-related activities across the biofuel supply chain will be
conducted prior to the Agency-wide meeting.
The sustainable production of biofuels is an important element of EPA's overall efforts to
improve energy efficiency and reduce emissions of greenhouse gases. On April 10,2007, EPA
established the Renewable Fuels Standard that requires an increase in the use of renewable fuels
in motor vehicles to 7.5 billion gallons per year by 2012. Earlier this year, in his State of the
Union address, President Bush set an even more ambitious goal of reducing gasoline
consumption by 20 percent in 10 years ('Twenty in Ten"), with a IS percent contribution from
renewable and alternative fuels and a S percent contribution from new fuel efficiency standards
for passenger vehicles. In May, President Bush signed an Executive Order directing EPA and
other federal agencies to develop regulations using his 'Twenty in Ten" plan as a starting point.
As part of this effort, EPA will issue proposed regulations later this year to require the use of up
to 35 billion gallons of renewable and alternative fuels.
Our regional offices are keenly aware of the increased number of ethanol plants,
especially in the Midwestern states. EPA regions and programs are increasingly being called on
to give technical assistance to permit writers; to assess environmental impacts on water, soil, air,
land, and ecosystems; and to assess the environmental performance of emerging technologies.
Environmental policies concerning air, water, waste, and toxic substances will apply in many
scenarios in the biofuels sector, and it is essential that the rapid development of this new agro-
industrial sector take place in the most cost-effective and sustainable manner consistent with
implementation of the relevant policies and statutes.
I understand that NACEPT will meet in November in Washington, D.C., and I look
forward to receiving any further NACEPT guidance and recommendations, particularly related to
EPA's role in ensuring sustainable development of the biofuels sector in meeting our national
energy needs and protecting the environment.
Again, I thank NACEPT for its attention and guidance on this critical national issue and
for helping EPA to meet its mission.
Sine
cc: Marcus Peacock
George Gray
Rafael DeLeon
Jon Scholl
John Askew
Bob Meyers
Charles Ingebretson
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