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EPA proposes volume requirements for Renewable Fuel Standard for 2014-2016

Adhering to a schedule in a proposed consent decree (earlier post), the US Environmental Protection Agency (EPA) announced its long-awaited proposed volume requirements (renewable volume obligations, RVO) (earlier post) under the Renewable Fuel Standard (RFS) program for the years 2014, 2015 and 2016, and also proposed volume requirements for biomass-based diesel for 2017. The period for public input and comment on the proposal will be open until 27 July. EPA says it will finalize the volume standards in this rule by 30 November.

EPA is proposing to establish the 2014 standards at levels that reflect the actual amount of domestic biofuel used in that year; the standards for 2015 and 2016 (and 2017 for biodiesel) increase steadily over time, with the most aggressive growth projected for the problematic area of cellulosic biofuels: from 33 million gallons in 2014 to 206 million gallons in 2016.

Proposed Renewable Fuels Volumes (million gallons)
  2014 2015 2016 2017
Cellulosic biofuel 33 106 206 n/a
Biomass-based diesel 1,630 1,700 1,800 1,900
Advanced biofuel 2,680 2,900 3,400 n/a
Total renewable fuel 15,930 16,300 17,400 n/a
Units for volumes are ethanol-equivalent, except for biomass-based diesel volumes which are expressed as physical gallons.


Proposed percentage standards
  2014 2015 2016
Cellulosic biofuel 0.019% 0.059% 0.114%
Biomass-based diesel 1.42% 1.41% 1.49%
Advanced biofuel 1.52% 1.61% 1.88%
Total renewable fuel 9.02% 9.04% 9.63%


Volumes Originally Specified in the CAA (million gallons)
  2014 2015 2016
Cellulosic biofuel 1,750 3,000 4,250
Biomass-based diesel ≥1,100
Advanced biofuel 3,750 5,500 7,250
Total renewable fuel 18,150 20,500 22,250
Units for volumes are ethanol-equivalent, except for biomass-based diesel volumes which are expressed as physical gallons.

Although well below the CAA targets, the proposed volumes represent growth over historic levels. For example:

  • The proposed 2016 standard for cellulosic biofuel—those fuels with the lowest GHG emissions profile—is six times higher than actual 2014 volumes.

  • The proposed 2016 standard for total renewable fuel is nearly 1.5 billion gallons more, or about 9% higher, than the actual 2014 volumes.

  • The proposed 2016 standard for advanced biofuel is more than 700 million gallons—27%—higher than the actual 2014 volumes.

  • Biodiesel standards grow steadily over the next several years, increasing every year to reach 1.9 billion gallons by 2017—17% higher than the actual 2014 volumes.

Background. Under the Clean Air Act (CAA), the EPA is required to set the annual standards for the Renewable Fuel Standard (RFS) program for each year, given the statutory targets of the legislation. Due to constraints in the fuel market to accommodate increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels, the volume targets originally specified by Congress in the Clean Air Act for 2014, 2015 and 2016 cannot be achieved, EPA acknowledged.

The law establishes annual volume targets, and requires EPA to translate those volume targets (or alternative volume requirements established by EPA in accordance with statutory waiver authorities) into compliance obligations that refiners and importers must meet every year. Over the past few years, we have seen analysis concluding that the ambitious statutory targets in he Clean Air Act exceed real world conditions. Despite significant efforts by the US Departments of Agriculture (USDA) and Energy (DOE) to promote the use of renewable fuels, real-world limitations, such as the slower than expected development of the cellulosic biofuel industry, less growth in gasoline use than was expected when Congress enacted these provisions in 2007, and constraints in supplying certain biofuels to consumers, have made the timeline laid out by Congress extremely difficult to achieve.

These challenges remain, even as we recognize the success of the program over the past decade in boosting renewable fuel use, and the recent significant signs of progress towards development of increasing volumes of advanced, low-emitting GHG fuels, including cellulosic biofuels and “drop-in” biofuels (those that are made from renewable sources but are otherwise essentially indistinguishable from the fossil-based fuels they displace).

—EPA proposal for 2014-2016 RVO

However, the Clean Air Act also provides EPA with the authority to reduce the volume requirements from their statutory targets under certain conditions. There are two different authorities that permit EPA to reduce volumes of advanced biofuel and total renewable fuel below the volumes specified in the statute.

When EPA lowers the applicable volume of cellulosic biofuel below the volume specified in the CAA, it also has the authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or a lesser amount. The Agency can also reduce the applicable volumes of any renewable fuel under the CAA general waiver authority under certain conditions, including where there is “inadequate domestic supply.”

The current proposal uses a combination of these two authorities to reduce volumes of both advanced biofuel and total renewable fuel to address two important constraints:

  • Limitations in the volume of ethanol that can be consumed given practical constraints on the supply of higher ethanol blends to the vehicles that can use them.

  • Limitations in the ability of the industry to produce sufficient volumes of qualifying renewable fuel, particularly non-ethanol fuels.

Based on a number of considerations, including the problematic performance over the past years of the cellulosic biofuels sector, EPA is now proposing volumes which, while below the volumes originally set by Congress, would increase renewable fuel use in the US above historical levels and provide for steady growth over time.

These proposed volumes would allow volumes of conventional (non-advanced) renewable fuel of up to 13.25, 13.40, and 14.00 billion gallons to be used to satisfy the total renewable fuel requirements for years 2014, 2015, and 2016, respectively. In 2016, about 10% of all transportation fuel used would be from renewable sources.

Proposed consent decree. In March, the American Petroleum Institute (API) and American Fuel and Petrochemical Manufacturers (AFPM) filed a lawsuit in March over EPA’s failure to meet mandated RFS deadlines; while the CAA requires EPA to set the annual RFS ethanol mandates by 30 November of the preceding year, EPA issued the 2013 requirements eight months late and had yet to issue the 2014 or 2015 requirements.

Not only is 2014 over, but this proposal is being released well into 2015. We believe that the standards we set should take these facts into account as we make an effort to return to the annual standard-setting schedule in the statute. Therefore, we plan on finalizing the applicable standards for 2014, 2015, and 2016 by November of this year. Moreover, the terms of a proposed consent decree to resolve pending litigation concerning EPA’s failure to establish standards for 2014 and 2015 by the statutory deadline include a requirement for EPA to promulgate final standards for 2014 and 2015 by November 30, 2015.

By re-proposing the 2014 standards along with a proposal for the 2015 and 2016 standards, we are not only able to formulate a proposal for public comment that takes into account the fact that 2014 is over and the specific approach described in the November 2013 Notice of Proposed Rulemaking (NPRM) is no longer applicable, but we can also coordinate the proposed treatment of 2014 with the proposed treatment of 2015 wherein part of the year has likewise already passed. We are therefore withdrawing the November 2013 NPRM; this proposal replaces and supersedes that earlier proposal.

—EPA proposal for 2014-2016 RVO

Comments

SJC

The decision should not be political, base it on protecting the environment then the goals should be clear.

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