Following a heated public hearing on U.S. EPA's proposed renewable volume obligations for 2014-2016, how open to change is the agency as it crafts its final numbers? During today's OnPoint, Margo Oge, former director of EPA's Office of Transportation and Air Quality, discusses the challenges facing the agency in determining volume obligations under the current RFS. She also talks about the dynamic that exists among the Department of Energy, the Department of Agriculture and EPA on advancing biofuels.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Margo Oge, former director of EPA's Office of Transportation and Air Quality. Margo, thank you for joining me.
Margo Oge: Thank you.
Monica Trauzzi: Margo, EPA recently heard an earful from a wide range of stakeholders at its first public hearing on its proposed renewable volume obligations for 2014 through 2016. What did the agency get right in its proposal and where did it go wrong?
Margo Oge: So first of all, let me say that EPA's dealing with a very challenging issue. I was in charge of that office for 18 years, and clearly there was nothing simple that we did implementing the Clean Air Act. But I think the renewable fuel standard, especially the RFS 2 that we're calling the 2007 law, is very complicated, and I would call it not a perfect statute. Not that there are perfect statutes, but this is a more imperfect law than other things that I had dealt with implementing when I was at EPA. So I think EPA has done a pretty good job dealing with what Congress has given them, the legislation that they have to implement. The unfortunate part is that EPA delayed the proposal for two years, and that has created the uncertainty in the marketplace. But now the proposal is out, so I think what they got right, in my mind, is that they put certainty in the marketplace for a type of biofuel that I personally, and I know many in the community that are concerned about climate change do care a lot, which is the advanced, or what I call the second generation of biofuels that have ... that is not competing with food. So I think EPA got that right.
Monica Trauzzi: Is that certainty, though? Because they only give the numbers to 2016, and the industry says that, in terms of investments, that that's not enough.
Margo Oge: Well, they're still -- they are still there. Obviously the law calls for 16 billion gallons of cellulose by 2022. I don't believe anybody believes that the 2022 congressional mandate of 16 billion gallons will take place. Personally, I think maybe 2030 that we're going to see this type of volume, but the statutory levels are still there, so EPA should continue to set levels beyond 2016, and this would, you know, thereafter pretty soon look at 2017 and 2018 time frame. But at least the cellulosic industry and advanced biofuels have a target now, although significantly less than what Congress had anticipated, it's still a target, hopefully, with the certainty in the marketplace of ... continued investments.
Monica Trauzzi: So the RFS has been described as disastrous and in need of a complete revamp by many stakeholders, by some lawmakers, and some would argue that EPA not hitting the mark on their proposal from a couple of weeks ago is just a signal of an underlying issue. Do you think that this is a sign that the agency needs to go back and look at the rule as a whole?
Margo Oge: Well, I think, again, you know, Monica, the agency is dealing with what I call an imperfect law. So they did the best that they could. Now, some have called, like the oil industry, I think the marine manufacturers, motorcycle manufacturers, a group of what I call an odd coalition got together, they're calling for revising the renewable fuel standard, the law. If I believe that Congress was able to do that and to put forward a performance-based standard that is based on the greenhouse gas performance of the various biofuels, it is similar to what we have done in other parts of the Clean Air Act where we have, you know, technology forcing performance-based standard. I would be the first to say let's go back and work with Congress to revise RFS. I don't think it's going to happen, and as a result, if we seek for Congress to take another look at RFS, I think what's going to happen, you're going to have more uncertainty. The two sides -- the oil industry's going to argue for less renewable fuels. They want to cap it at 10 percent, and definitely industry's going to argue we can do more. You know, we can do 15 billion gallons, we can do 16 billion gallons, and we're going to be in the same place where we are now, even worse, because then you're going to have ... uncertainty for cellulosic biofuels that are finally making some commercial level in the marketplace.
Monica Trauzzi: I recently interviewed an executive from Abengoa Bioenergy on this show, and he said that EPA is out of step with DOE and USDA on the role of biofuels as part of the U.S.'s fuel strategy. Would you agree that there's sort of this lack of cohesion between the various agencies on the direction of biofuels?
Margo Oge: Well, clearly each agency has its own law that they're implementing. The Department of Energy has resources that they put forward. Actually most of the resources are going for the second-generation biofuels. USDA obviously has a mission to promote, domestic crops. And the Environmental Protection Agency has to implement a law under the Clean Air Act that basically was introduced for the purpose of diversity of fuels but also to address low-carbon fuels in the marketplace. So when the agencies get together, my experience when we were getting together, you know, when I was writing this program, we always found common areas and respect each other's authority, each other's law. So I don't necessarily think that the agencies are arguing and fighting. Each one of them looks at their statutory requirements. EPA's responsibility is not to promote corn ethanol. You know, EPA's responsibility is to implement the 2007 law and read into the statute the best way that they can legally to implement that requirement.
Monica Trauzzi: You are the author of a great book that came out earlier this year, "Driving the Future: Combating Climate Change With Cleaner, Smarter Cars." The Department of Energy recently announced an initiative that would combine engine research with fuel research, with the goal of finding sort of this perfect fuel-engine combination. Is that something that should have been done a long time ago, getting all these minds together on finding this perfect solution?
Margo Oge: Well, you know, Monica, we have done -- we have looked at the engine and the fuel as a system. When we regulate it, the traditional air polluters from the tailpipe of a vehicle. When we regulate it, for example, the Tier 2 and the Tier 3 program, the most recent program ... use the nitrogen oxygen from the tailpipe emissions, but also we looked at the fuel component of gasoline and reduced the sulfur levels because we know that sulfur in gasoline poisons and impacts in a negative way the catalytic converters to do their job. So we looked -- you know, we did the same thing with diesel, you know, when we regulated the diesel trucks. These days probably you're not going to find many diesel buses and trucks that have this black smoke when you drive and you want to shut your windows because of the program that we put in place to reduce the emissions from diesel engines. At the same time, we reduced the sulfur in the diesel fuel. So clearly there is a big role to look at the engine and fuel as a system. When it comes to greenhouse gas emissions and we set the standard for 2025, the law that existed under the ESA requirements was actually give credits to the car industry as part of the CAFE requirements. If they introduce more cars in the marketplace that were, you know, flex, you know, E85 vehicles, and we know what happened as a result of that is that there are millions of those vehicles in the marketplace, but they're not using the fuel. So what we did when I was at EPA, we said this provision goes away in 2016, but car companies, if you can demonstrate to EPA that indeed, you know, your vehicles -- X percent of your E85 flex fuel vehicles are using the fuel, we will give you credits. So we have done it, but I think what DOE's doing right now is probably figure out better ways to help the ... and there -- when you use renewable fuels, to lose less of its energy because we know that renewable fuels don't have the energy density that gasoline has. But there are many things that can be done to improve that energy density, you know, incorporating some research analysis, I think, with ... could help.
Monica Trauzzi: Do you think there's enough communication happening between businesses and the government when it comes to how best to move forward with technology advancement and development and also the regulations that are in place to get there?
Margo Oge: So if you bought a new car recently, the bets are very high that your car is cleaner, more fuel-efficient and less -- and you spend less at the pump, regardless how low the gasoline prices are than five years ago. And it is a result of a program that we put under President Obama to improve the carbon footprint of cars by 2025, reduce the carbon footprint by 50 percent, and at the same time, improve the fuel efficiency by 50 percent. Ten years ago, you could find a couple of models that were advanced powertrains, couple of, you know, hybrids. You know, one from Toyota, the other one from Honda. Today, as a result of this program, not only the industry's doing extraordinary work, but they're investing heavily. All the OEMs are investing in more advanced transportation technologies to improve the fuel economy of the vehicles. We have 76 alternative powertrains in the U.S. from hybrids, for the hybrid models, like in electrics, electric vehicles, even fuel cells in California. And all of this is because we put together a smart policy, a smart regulation that recognized what companies can do. We give them the lead time to get there, 2025, and they're only investing if they are very competitive in the marketplace. So to answer your question, in a long-winded way, yes, there is a big role of government to have smart regulations in place, working with the private sector, and I think there is a very big role of the government working with the private sector in the area of research and development, like what Department of Energy's doing today. Recently we saw the Freightliner going out with a supertruck. Cummins did the same. They doubled the fuel efficiency of those trucks. This is a joint effort between the Department of Energy resources and the private sector, and the result I think's a win-win situation for everybody because everybody wins. If we can save money at the pump, the consumer wins. The business wins. We have a cleaner environment, and that makes the country more competitive in the marketplace.
Monica Trauzzi: Margo, thank you for your time. We'll end it there. I appreciate it.
Margo Oge: Thank you, Monica. Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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