The US Environmental Protection Agency (EPA) issued a multipart proposal for required volumes of biofuel under the Renewable FUel Standard (RFS) for the next one to three years and on a series of modifications to the program. The agency is seeking public input on the proposal to help shape the RFS program in the years ahead.

This proposal includes steady growth of biofuels for use in the nation’s fuel supply for 2023, 2024, and 2025. Because the Energy Independence and Security Act of 2007 (EISA) does not include volumes after 2022, this is the first time that EPA is setting these proposed biofuel volume targets without using those outlined in statute.

Proposed Volume Targets (billion RINs)

When setting biofuel volumes for years after 2022, EPA must consider a variety of factors specified in the statute, including costs, air quality, climate change, implementation of the program to date, energy security, infrastructure issues, commodity prices, and water quality and supply.

The agency is seeking comment on the proposed volumes and how to balance these factors appropriately so that the program works for renewable fuel growers and producers, refiners and the union workers who operate these facilities, and fuel consumers.

Because this rule is an opportunity to take a fresh look at many aspects of the program, EPA is also seeking comment on how this rule can intersect with continued viability of domestic oil refining assets, including merchant refineries; how best to support novel fuels such as sustainable aviation fuels and clean hydrogen; and how to account for the new and updated incentives in the “Inflation Reduction Act”.

EPA is also proposing new regulations governing the generation of qualifying renewable electricity made from renewable biomass that is used for transportation fuel in electric vehicles. The agency is seeking comment on this new component of the RFS program that would tie electricity generation from renewable biomass into the program for the first time.

This proposed rule would reduce US oil imports by roughly 160,000 to 180,000 barrels of oil per year over the time frame of the proposed rule, 2023 to 2025. The anticipated value of the energy security benefits over the time frame of the proposed rule ranges from $200-$223 million per year.

While ethanol organizations were largely supportive of the proposed rule, Clean Fuels Alliance America criticized the proposal for undercutting investments in biodiesel and renewable diesel capacity. The minor increases for biomass-based diesel volumes in 2023, 2024 and 2025 are below the industry’s existing production and ignore the clean fuels industry’s significant investments in new capacity, the association said.

EPA’s data from the RFS program show that the US market reached 3.1 billion gallons of biomass-based diesel in 2021 and already hit 2.9 billion gallons through October 2022, with two months still to go. The Energy Information Administration’s Short Term Energy Outlook, which informs EPA’s decisions on annual RFS volumes, currently projects a 500-million-gallon increase in biodiesel and renewable diesel consumption for 2023. EIA has also projected 2.4. billion gallons of added renewable diesel capacity coming online by 2024 and calculated another 1.8 billion gallons in announced planned capacity.

Clean Fuels said that it appreciates EPA’s final rule creating a pathway to produce renewable diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas (LPG) from canola oil, which will generate even more biomass-based diesel and advanced biofuel gallons for the program. The approval enables a more diverse feedstock supply for the clean fuels industry. However, the potential growth is not accounted for in the proposed volumes.

The Iowa Soybean Association and Iowa Biodiesel Board also voiced concerns over the lackluster biodiesel growth proposed.

EPA will be soliciting public comment on the proposed rule and holding a public hearing in January.