Brent Erickson \<berickson@bio.org\> Sent by: Brent Erickson

\<berickson@bio.org\>

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11/12/2006 04:34 PM

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11/12/2006 04:34:20 PM

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Jocelyne Modine \<jmodine@bio.org\>

Subject

Docket ID No. EPA-OAR-2005-0161

Attached are the BIO IES comments for Docket ID No. EPA-OAR-2005-0161

Brent Erickson

Executive Vice President

Biotechnology Industry

Organization (BIO)

1225 Eye St. N.W. S. 400

Washington, D.C. 20005

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

November 11, 2006-11-07

U.S. Environmental Protection Agency

EPA West (Air Docket)

1200 Pennsylvania Avenue, NW

Room B108 Mail Code 6102 T

Washington, DC 20460

Docket ID No. EPA-OAR-2005-0161

Dear Sir/Madam:

The Biotechnology Industry Organization (BIO) Industrial and
Environmental Section (IES) appreciates the opportunity to comment on
EPA's Notice of Proposed Rulemaking "Regulation of Fuels and Fuel
Additives: Renewable Fuel Standard Program" \[Federal Register, Volume
71, Number 184, Friday, September 22, 2006\]. BIO is the world's largest
biotechnology trade association of companies and laboratories that use
biological systems and methods for the production of medical,
agricultural and industrial products. BIO represents more than 1,100
members in all 50 states and 31 foreign nations, and has taken an active
role in assisting in the development of regulations and policies that
affect the biotechnology industry both internationally and in the US.
Its membership is global and represents a majority of the US
biotechnology industry.

BIO's IES member companies are leaders in the field of industrial
biotechnology, ethanol and biodiesel production, novel enzyme
biocatalysts, novel processes to make renewable fuels, biobased products
and chemicals from renewable feedstocks, and they are revolutionizing
the manufacturing of pharmaceuticals, food additives, flavorings, and
personal care products.

BIO IES companies are involved in making conventional ethanol as well as
ethanol from DDGs and Cellulosic feedstocks. Cellulosic biomass ethanol
(CBE) from agricultural residues and dedicated energy crops represents a
highly promising option to greatly expand current biofuels production.
In fact, a [recent
report[^1]](http://feedstockreview.ornl.gov/pdf/billion_ton_vision.pdf)
found the land resources in the U.S. are capable of producing a
sustainable supply of 1.3 billion tons per year of biomass, and that 1
billion tons of biomass would be sufficient to displace 30 percent or
more of the country\'s present petroleum consumption.

BIO believes biofuels will significantly address U.S. energy problems,
and that biotechnology holds the key to driving down the costs of
biofuel production throughout the value chain, including the development
of new feedstocks, novel enzymes, and fermentation technology.  The
biotechnology industry supports increased ethanol production from all
sources. Biotech can help with ethanol production --- from
biotech-improved ag feedstocks with improved yield or starch
composition, to biotech enzymes that will make current ethanol processes
more efficient.  Biofuels production ultimately will vary by geography,
what a region can produce, and by market opportunities and technology.

The BIO IES generally supports EPA's proposed regulation to implement
the renewable fuels standard (RFS) program authorized in Section 1501 of
the Energy Policy Act of 2005, but there are some concerns as outlined
in our comments and recommendations below:

The EPACT definition of CBE is as follows:

> "The term 'cellulosic biomass ethanol' means ethanol derived from any
> lignocellulosic or hemicellulosic matter that is available on a
> renewable or recurring basis, including-

i.  dedicated energy crops and trees;

ii. wood and wood residues;

iii. plants;

iv. grasses;

v.  agricultural residues;

vi. fibers;

vii. animal wastes and other waste materials;

> and
>
> viii.municipal solid waste.
>
> The term also includes any ethanol produced in facilities where animal
> wastes or other waste materials are digested or otherwise used to
> displace 90 percent or more of the fossil fuel normally used in the
> production of ethanol."

In this proposed regulation (71 FR 55568), EPA interprets the statutory
language as follows:

> "The definition of cellulosic biomass ethanol in the Act also provides
> that ethanol made at any facility-regardless of whether cellulosic
> feedstock is used or not-may be defined as cellulosic if at such
> facility "animal wastes or other waste materials are digested or
> otherwise used to displace 90 percent or more of the fossil fuel
> normally used in the production of ethanol." The statutory language
> suggests that there are two methods through which "animal and other
> waste materials" may be considered for displacing fossil fuel. The
> first method is the digestion of animal wastes or other waste
> materials. EPA proposes to interpret the term "digestion" to mean the
> conversion of animal or other wastes into methane, which can then be
> combusted as fuel. We base our interpretation on the practice in
> industry of using anaerobic digesters to break down waste products
> such as manure into methane. Anaerobic digestion refers to the
> breakdown of organic matter by bacteria in the absence of oxygen, and
> is used to treat waste to produce renewable fuels. We note also that
> the digestion of animal wastes or other waste materials to produce the
> fuel used at the ethanol plant does not have to occur at the plant
> itself. Methane made from animal or other wastes offsite and then
> purchased and used at the ethanol plant would also qualify. The second
> method is suggested by the term ''otherwise used'' which we propose to
> interpret as meaning (1) the direct combustion of the waste materials
> as fuel at an ethanol plant, or (2) the use of thermal energy that
> itself is a waste product; e.g., waste heat that is obtained from an
> off-site combustion process such as a neighboring plant that has a
> furnace or boiler from which the waste heat is captured. With respect
> to the first meaning, waste materials from tree farms (tops, branches,
> limbs, etc), or waste materials from saw mills (sawdust, shavings and
> bark) as well as other vegetative waste materials such as corn stover,
> or sugar cane bagasse, could be used as fuel for gasifier/boiler units
> at ethanol plants, since they are waste materials and would not be
> used as a feedstock to carbohydrate-based ethanol plants. Although
> such waste materials conceivably could be feedstocks to a cellulosic
> ethanol plant, its use as a fuel at a carbohydrate based ethanol plant
> does not subvert the intent of the definition."

We strongly oppose EPA's interpretation of the EPACT definition of CBE.
This is not the current industry consensus of the currently accepted
definition of CBE, which is ethanol produced using lignocellulosic
biomass as direct feedstock and enzymatic or acid hydrolysis as a means
of producing sugars for fermentation to ethanol. EPA has interpreted the
statute overly broadly and there is no legislative history to support
such an interpretation.

After a through review of the legislative history, we urge EPA to
interpret CBE definition in its strictest possible sense. At a minimum,
ethanol produced using waste heat from combustion captured from offsite
facilities should be excluded from the definition of CBE. Using waste
heat to power starch ethanol production is not technically CBE, since
this process does not use lignocellulosic biomass as direct feedstock.
We have reviewed the legislative history of the statute and find nothing
to support the use of waste heat produced as a result of combustion at
offsite facilities. The intent of the statutory language was to
facilitate the construction of ethanol plants that can use manure to
produce biogas to fuel the boilers at conventional ethanol or CBE
plants, or the use of crop residues (such as corn stover) and other
cellulosic wastes (such as waste paper) to fire a boiler. A facility
that uses ag cellulosic crop residues such as corn stover to fire a
boiler and generate energy for existing ethanol units and future CBE
production units on the same site is, however, logically included in the
statutory definition.

EPA states in the proposed rule, "(2) the use of thermal energy that
itself is a waste product; e.g., waste heat that is obtained from an
off-site combustion process such as a neighboring plant that has a
furnace or boiler from which the waste heat is captured. This
interpretation does subvert the intent of the statute. Waste heart from
combustion could conceivably come from a coal fired boiler that uses no
cellulosic material to generate heat. This interpretation would
undermine the intended incentive to foster and promote CBE
infrastructure construction and production.

Additionally, EPA mentions in this proposed regulation (71 FR 55565)
that prior to 2013, EPACT specifies that ethanol from cellulose will be
considered equivalent to 2.5 gallons of renewable fuel when determining
compliance with the renewable volume obligation. Beginning in 2013, the
2.5 to 1 ratio will no longer apply for cellulosic biomass ethanol, and
in its place, EPACT requires that the volume of required renewable fuel
from 2013 and beyond will include a minimum of 250 million gallons that
are derived from cellulosic biomass. EPA then concludes that "an
obligated party would be subject to two standards in 2013, a
non-cellulosic standard and a cellulosic standard".

According to both this proposed regulation (71 FR 55565) and in EPACT,
the cellulosic standard for 2013 and beyond refers to renewable fuels
"derived from cellulosic biomass", not CBE. This standard should
therefore apply only to renewable fuels specifically derived from
cellulosic biomass feedstocks. Lignocellulosic feedstocks are defined
under section 932(a)(2) of EPACT, and are clearly restricted to the
commonly accepted definition of "any portion of a plant or coproduct
from conversion, including crops, trees, forest residues, and
agricultural residues not specifically grown for food, including from
barley grain, grapeseed, rice bran, rice hulls, rice straw, soybean
matter, and sugarcane bagasse." In this proposed rulemaking, EPA
explicitly did not use the phrase cellulosic biomass ethanol to apply to
the cellulosic RFS. The phrase "cellulosic biomass ethanol" is used to
establish a 2.5 to 1 equivalence value of renewable fuel when
determining the compliance with the non-cellulosic RFS standard prior to
2013.

We believe the legislative intent was that solely ethanol directly
derived from cellulosic agricultural or forest feedstocks as defined in
EPACT Section 932(a) (2) can qualify towards the cellulosic standard.

-   The RFS stipulates that cellulosic biomass ethanol will be
    considered equivalent to 2.5 gallons of renewable fuel when
    determining compliance with renewable fuel obligation. This credit
    will apply until 2013, and in its place, there will be a minimum
    production requirement of 250 million gallons of renewable fuel
    derived from cellulosic biomass. The RFS program is centered on
    credit trading provisions, which will comprise a critical element of
    compliance. Many obligated parties do not have easy access to
    renewable fuels, or the ability to blend them, and will rely on the
    use of credits to comply. Additionally, the refiners, importers, and
    blenders of gasoline that are liable for meeting this standard are
    not generally the parties who will be making renewable fuels such as
    cellulosic biomass ethanol, which creates the need for trading
    mechanisms that will ensure compliance. Unused credits, as proposed
    in this regulation, would be valid for 12 months as of the date of
    generation, and an obligated party can use them to demonstrate
    compliance, bank them, or transfer them to another party. We believe
    the unused credits should be valid for 36 months to allow for
    greater flexibility in the market place.

-   As proposed in this regulation, each gallon of cellulosic biomass
    ethanol would receive 2.5 "credits", as compared to one gallon of
    other renewable fuels. In 2013, if the total amount of ethanol
    produced from cellulosic feedstocks exceeds the 250 million gallon
    requirement, there is a potential source of additional credits that
    should be accounted for and utilized in the credit trading program.
    This would incentivize the production of ethanol derived from
    cellulosic feedstocks and encourage maximal production under the
    RFS.

In conclusion, BIO generally supports EPA's efforts in this proposed
regulation to implement the Renewable Fuels Standard and to help the
United States produce more renewable fuels in the future.

Sincerely,

![](media/image1.png){width="2.245833333333333in" height="0.5625in"}

Brent Erickson

Vice President, BIO IES

[^1]: DOE/USDA Billion ton report