EPA proposes slight ease in 2018 renewable fuel volumes compared to 2017; gearing up for future reset
The U.S. Environmental Protection Agency (EPA) issued a proposed rule setting the minimum amount of renewable fuels that must be supplied to the market in calendar year 2018 under the Renewable Fuel Standards (RFS) program. EPA will issue the final rule in the fall.
Relative to the levels finalized in 2017, the proposed 2018 volume requirements for advanced biofuel and total renewable fuel are lower by 40 million gallons. For the first time, EPA is proposing to reduce the advanced biofuel and total renewable fuel volumes for 2018 by the same amount as it would reduce the required volume of cellulosic biofuel. In the proposal, EPA said that these reductions effectively preserve the implied statutory volumes for conventional renewable fuel and non-cellulosic advanced biofuels, rather than requiring additional volumes of non-cellulosic advanced biofuels to backfill for some of the shortfall in cellulosic biofuel, as EPA has done in previous years.
Further, EPA is proposing no increase, relative to the finalized 2018 levels, in the volume requirement for biomass-based diesel for 2019.
Increased fuel security is an important component of the path toward American energy dominance. We are proposing new volumes consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace. Timely implementation provides certainty to American refiners, the agriculture community and broader fuels industry, all of which play an important role in the RFS program.—EPA Administrator Scott Pruitt
Key elements of the proposal include:
Non-advanced or “conventional” renewable fuel volumes are maintained at the 15-billion gallon target set by Congress.
The biomass-based diesel standard for 2019 would be maintained at the 2018 levels of 2.1 billion gallons.
EPA is beginning technical analysis that will inform a future rule to reset the statutory volumes for cellulosic, advanced, and total biofuels.
EPA is also taking comment on addressing concerns that some RFS obligations are increasingly met with imported fuel from Brazil, Argentina and Indonesia. Additionally, EPA is assessing higher levels of ethanol-free gasoline and bolstering an existing memorandum of understanding with the US Commodity Futures Trading Commission (CFTC) to analyze and address a host of market concerns, including the need for increased transparency.
The Clean Air Act requires EPA to reset volume targets when certain conditions are met. We expect those conditions to be met in the near future, so we are conducting technical analysis now, to inform future reset rules.—Administrator Pruitt
|Renewable Fuel Volume Requirements|
|Final 2017||Proposed 2018||Proposed 2019|
|Cellulosic biofuel (million gallons)||311||238||n/a|
|Biomass-based diesel (billion gallons)||2.0||2.1*||2.1|
|Advanced biofuel (billion gallons)||4.28||4.24||n/a|
|Renewable fuel (billion gallons)||19.28||19.24||n/a|
|*Biomass-based diesel standard is final for 2018.|
Initial reaction from industry has been varied. The Iowa Corn Growers Association called the proposed conventional biofuels requirement of 15 billion gallons “good news.”
On the other hand, Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, said that BIO and its members believed that:
We believe the rule should do more to grow advanced and cellulosic biofuel production in the next year and to provide certainty for companies investing in new technologies and production capacity.
BIO believes the agency is wrong to waive more than half of the RFS program’s required advanced biofuel volumes and more than 20 percent of the required overall volume while failing to enable advanced biofuel producers to reach the market.
Further, BIO continues to strongly disagree with EPA’s prior interpretation of its general waiver authority under the RFS statute and with EPA’s ongoing stockpiling of carryover RIN credits. The RFS statute does not allow EPA to rely on demand-side factors under the oil industry’s control as a basis for decreasing the fundamental requirement to use as much renewable fuel as the biofuel industry can produce. And the statute does not grant the agency leeway to create a permanent carryover RIN bank.