The US Environmental Protection Agency (EPA) finalized a rule that establishes the required renewable fuel volumes under the Renewable Fuel Standard (RFS) program for 2019, and biomass-based diesel for 2020.
The key elements of the action are:
“Conventional” renewable fuel volumes, primarily met by corn ethanol, will be maintained at the implied 15-billion gallon target set by Congress for 2019.
Advanced biofuel volumes for 2019 will increase by 630 million gallons over the 2018 standard.
Cellulosic biofuel volumes for 2019 will increase by almost 130 million gallons over the 2018 standard.
Biomass-based diesel volumes for 2020 will increase by 330 million gallons over the standard for 2019.
The Clean Air Act requires EPA to set annual RFS volumes of biofuels that must be used for transportation fuel for four categories of biofuels: total, advanced, cellulosic, and biomass-based diesel. EPA is using the tools provided by Congress to adjust the standards below the statutory targets based on current market realities. EPA implements the RFS program in consultation with the US Department of Agriculture and the US Department of Energy.
Reaction from the various stakeholders was mixed, with concerns generally expressed about small refinery waivers. Under the RFS program, a small refinery may be granted a temporary exemption from its annual Renewable Volume Obligations (RVOs) if it can demonstrate that compliance with the RVOs would cause the refinery to suffer disproportionate economic hardship.
The RFS regulations define a small refinery as one with an average crude oil input no greater than 75,000 barrels per day (bpd) crude in 2006. Additionally, the small refinery may not have an average aggregate daily crude oil throughput greater than 75,000 bpd in the most recent full calendar year prior to submitting a petition, and cannot be projected to exceed the 75,000 bpd threshold in the year or years for which it is seeking an exemption.
Brent Erickson, Executive Vice President of the Biotechnology Innovation Organization’s (BIO) Industrial and Environmental Section, said:
We congratulate EPA for finalizing the rule for the Renewable Fuel Standard’s 2019 volumes and Biomass-Based Diesel Volumes for 2020 on time and applaud the agency for increasing advanced and cellulosic biofuel volumes from 2018.
BIO is disappointed, however, that EPA missed this opportunity to reallocate gallons displaced from small refinery waivers, issued at the behest of the petroleum industry. From now on, EPA must take steps to ensure small refinery waivers are issued in accordance with the law, which states only in cases of disproportionate economic hardship. EPA also needs to approve new biofuel pathways and facility registrations to allow volumes of advanced and cellulosic biofuels to grow.
Iowa Corn Growers Association President Curt Mether said:
“While we’re pleased to see the EPA finalize numbers at the statutory target for corn-based ethanol, Iowa’s corn farmers want the EPA to stop granting unnecessary waivers to obligated parties and not to include those waivers in its formula for determining annual volumes as required under the RFS. This intentional omission effectively cuts ethanol demand and works against the goals of the RFS program to the detriment of motorists, our environment, and Iowa’s corn farmers.
Emily Skor, CEO of Growth Energy, said:
We are pleased to see the 2019 RVO numbers released on time and that they hold strong promise, with a 15-billion-gallon commitment to starch ethanol and 418 million gallons of cellulosic biofuels. But the latest EPA rule is also a missed opportunity to correctly account for billions of gallons of ethanol lost to refinery exemptions. Until these are addressed properly, we’re still taking two steps back for every step forward. The current Acting EPA Administrator, Andrew Wheeler, has a valuable opportunity to chart a new course for biofuels and rural America. To reverse the damage done by his predecessor, the EPA must follow the law and reallocate lost gallons, ensuring the ethanol targets set by Congress are actually met.
The National Biodiesel Board (NBB) criticized the ruling, saying that EPA is setting the advanced biofuel and biomass-based diesel volumes lower than what the agency acknowledges will be produced. Moreover, NBB said, the rule leaves open a backdoor to retroactively reduce required volumes through hardship exemptions.
EPA recognizes that the biodiesel and renewable diesel industry is producing fuel well above the annual volumes. The industry regularly fills 90 percent of the annual advanced biofuel requirement. Nevertheless, the agency continues to use its maximum waiver authority to set advanced biofuel requirements below attainable levels. The method is inconsistent with the RFS program’s purpose, which is to drive growth in production and use of advanced biofuels such as biodiesel.—NBB CEO Donnell Rehagen
In the final rule, EPA states that it has not received small refinery exemption petitions for 2019 and therefore estimates zero gallons of exempted fuel in its RVO formula. The agency has estimated zero gallons every year since 2015, even though it retroactively exempted more than 24.5 billion gallons of fuel between 2015 and 2017. The agency’s own data shows that the retroactive small refinery exemptions reduced demand for biodiesel by more than 300 million gallons in 2018.