EPA issues RFS volumetric requirements, producers displeased

The Environmental Protection Agency today issued a proposed rule under the Renewable Fuel Standards (RFS) program that would set the minimum amount of renewable fuels that must be supplied to the market in calendar year 2020, as well as the biomass-based diesel volume standard for calendar year 2021.

EPA Administrator Andrew Wheeler stressed that the announcement puts EPA on target to publish the final RFS Renewable Volume Obligations (RVOs) on time for the third consecutive year.

“Unlike the previous administration, we have consistently issued the annual renewable volume obligations rule on time, which is critically important to America’s farmers and all stakeholders impacted by the Renewable Fuel Standard program,” Wheeler said.

“We are on track to meet the deadline on time for the third year in a row and continue to provide greater regulatory certainty to farmers and refiners across the country.”

EPA said the key elements of today’s action are:

▪ “Conventional” renewable fuel volumes, primarily met by corn ethanol, would be maintained at the implied 15-billion gallon target set by Congress.

▪ A proposed advanced biofuel volume requirement for 2020 of 5.04 billion gallons, which is 0.12 billion gallons higher than the advanced biofuel volume requirement for 2019.

▪ The cellulosic biofuel volume requirement of 0.54 billion ethanol-equivalent gallons for 2020 is based on EPA’s production projection, which is 0.12 billion ethanol-equivalent gallons higher than the cellulosic biofuel volume finalized for 2019.

▪ Proposed maintenance of the biomass-based diesel (BBD) volume for 2021 at 2.43 billion gallons.

EPA added, “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 also noted it implements the RFS program in consultation with the Agriculture and Energy departments.

The National BiodieselBoard said the proposed advanced biofuel volume of 5.04 billion gallons “provides no additional market growth for biomass-based diesel” and “undermines market growth for biodiesel and renewable diesel.”

“Similarly, the proposal to set the 2021 biomass-based diesel volume at 2.43 billion gallons — the same as the 2020 volume — flatlines growth for the industry. EPA’s proposal could actually reduce market space for biodiesel and renewable diesel compared to this year, because it does not account for small refinery exemptions.”

“The proposal sends a chilling signal to Americas biodiesel and renewable diesel producers of EPA’s intent to limit market growth for cleaner fuels. EPA appears to have simply repeated the previous biomass-based diesel volume of 2.43 billion gallons for 2021 without analyzing our industry’s ability to achieve higher volumes,” Kurt Kovarik, NBB’s vice president of federal affairs, said in a news release.

“Worse, EPA refuses to reconcile its RFS rules with its small refinery exemption handout spree,” Kovarik added. “Even one small refinery exemption has the potential to put a biodiesel plant out of business, impacting hundreds of jobs in the surrounding community.”

“Consider a so-called small refinery such as Exxon’s in Billings, Mont., which reportedly received an RFS hardship exemption. It can process more than 60,000 barrels of oil each day — producing 1.9 million gallons of gasoline and diesel every day and 712 million gallons every year. The annual RFS obligations for that fuel would provide a market for more than 17 million gallons of biodiesel and renewable diesel for the year. There are dozens of biodiesel producers who produce less than that on an annual basis and who could be put out of business.”

“As long as EPA continues to dole out compliance exemptions to oil refiners without reallocating the lost volume, the agency may as well start referring to the annual RFS levels as ‘renewable volume suggestions’ rather than ‘renewable volume obligations,’” Renewable Fuels Association President and CEO Geoff Cooper said.

“It is a complete misnomer to call these blending volumes ‘obligations’ when EPA’s small refinery bailouts have essentially transformed the RFS into a voluntary program for nearly one-third of the nation’s oil refineries.”

American Coalition for Ethanol (ACE) CEO Brian Jennings said, that “While EPA says it is proposing to maintain the 15-billion-gallon conventional biofuel blending target for 2020, refinery exemptions without reallocation of waived volumes have effectively reduced the RFS by more than 2 billion gallons below statutory volumes.

“President Trump asked EPA to remedy this issue following his trip to Iowa a few weeks ago and this proposal is a missed opportunity to reallocate the 2.61 billion gallons waived through Small Refinery Exemptions (SREs).

“It’s also a missed opportunity to restore the 500-million-gallon shortfall the D.C. Circuit Court ordered EPA to handle following the Americans for Clean Energy et al v. EPA lawsuit, which recently resigned EPA Assistant Administrator for Air and Radiation William Wehrum told ACE members EPA intended to address in the 2020 proposed rule at our D.C. fly-in in April.

“EPA continues to disregard President Trump’s campaign promise that ‘the EPA should ensure that biofuel blend levels match the statutory level set by Congress under the RFS.’

“Like the 2019 blending targets, the 2020 proposed RVOs reinforce our challenge to certain SREs in Court and petition for EPA to account for lost volumes of renewable fuel resulting from the unprecedented number of retroactive SREs that continue to be granted by the agency.”

“It’s unconscionable that EPA continues to undermine the president’s commitment to a strong rural America,” said Growth Energy CEO Emily Skor.

“The 2020 RVOs are a drop in the bucket compared to the demand lost due to a flood of refinery exemptions. Unless EPA restores demand destroyed through secret handouts to oil giants like Exxon and Chevron, these targets offer nothing but another year of lost opportunity and rural hardship.

“Making matters worse, EPA chose to flout the 2017 court ruling requiring the agency to revisit 500 million gallons of biofuel that were inappropriately waived. Today’s proposal is a slap in the face to the farmers dealing with the toughest years on record.”

–The Hagstrom Report