EPA issues proposed RVO requirements

The Environmental Protection Agency June 26 issued proposed volume requirements under the Renewable Fuel Standard program for cellulosic biofuel, advanced biofuel and total renewable fuel for calendar year 2019.

EPA also proposed biomass-based diesel volume standards for calendar year 2020.

The total renewable fuel volume is proposed to be 19.88 billion gallons versus 19.29 billion for 2018, while the proposed conventional biofuel amount of 15 billion gallons maintains the level set in the final RVOs for 2018. The proposal also calls for 4.88 billion gallons of advanced biofuel versus 4.29 for 2018, including 381 million gallons of cellulosic biofuel and 2.43 billion gallons of biodiesel for 2020.

Response to the EPA proposals was mixed. Growth Energy CEO Emily Skor said, “The EPA proposed 15 billion gallons for conventional biofuels, but that still isn’t a real number we can count on. This plan fails to ensure those gallons will, in fact, be blended. By neglecting to reallocate gallons lost to waivers, the EPA is doubling down on another year of an estimated 1.5 billion gallons in demand destruction.

“The same holds true for advanced and cellulosic biofuels, which are rapidly delivering new economic opportunities for rural communities and driving America’s leadership in clean energy. The targets proposed today promise growth, but those investments can’t move ahead unless the EPA makes it clear that goals set by Congress will be enforced.

“The proposed RVOs also fail to restore the volumes lost to waivers for 2016, despite a court ruling last July that requires EPA to restore 500 million gallons of biofuel demand. The EPA cannot continue to enrich the largest oil companies and refiners at the expense of struggling U.S. farmers.”

National Farmers Union Senior Vice President of Public Policy and Communications Rob Larew said, ”It is promising that the EPA is planning to increase the volume of American grown and produced fuels in our transportation sector. However, the proposal does not do enough to account for the demand destruction of over a billion gallons of renewable fuels.

“The EPA should cease granting these waivers to prevent additional harm to the RFS. The agency must also find ways to reallocate gallons lost to the waivers or account for those gallons in the finalized RVOs in order to make up for harm already done.

“Additionally, the administration should look for ways to implement higher level blends of ethanol, such as E30, which expand markets for family farmers, boost rural economies, improve air quality, and lower fuel prices for consumers.”

Advanced Biofuels Business Council Executive Director Brooke Coleman said, “On its face, the EPA proposal is promising. It reverses last year’s roll back of cellulosic biofuels, and it opens growth opportunities for advanced producers who are establishing new revenue streams for rural America. But until there is some check on the EPA’s abuse of waivers, regulatory uncertainty will continue to threaten investments in advanced biofuels.

“The EPA must demonstrate that targets will not be undercut by refinery handouts. At the same time, Administrator (Scott) Pruitt must take concrete action on the president’s pledge to open new markets for advanced biofuels by lifting seasonal regulations on E15.”

Renewable Fuels Association President Bob Dinneen said, “It would seem a hollow and cynical exercise to praise or thank EPA Administrator Scott Pruitt for appearing to follow the statute with this proposed RVO. While we acknowledge that the implied 15 billion-gallon requirement for conventional biofuels like corn ethanol should, in theory, send a positive signal to the market, it comes with the backdrop of 1.6 billion gallons of demand destructed by illegal waivers to small refineries and no commitment that EPA is changing its approach to granting these exemptions.

“Thus, the proposal means nothing until EPA reallocates those lost gallons and sets forth a more transparent and rational process that assures small refinery waivers are not abused or granted unnecessarily.

“Unfortunately, over the past few days, Administrator Pruitt buckled yet again to pressure from the oil industry and removed language from this proposal that would have indicated the agency’s interest in addressing what has clearly become an abused process. That’s not just wrong, it flies in the face of the president’s commitment to farmers and consumers across the country that support the increased use of renewable fuels.

“This RVO proposal is a paean to missed opportunities for the sole purpose of benefiting the oil industry that continues to thwart the development of biofuels at every turn. The agency missed the opportunity to address the flawed and opaque small refinery waiver process. It failed to address the court-ordered remand of 500 million gallons in forfeited demand from the 2016 RVO.

“And it once again missed an opportunity to address the disparate treatment of E10 and E15 with regard to volatility regulation. EPA needs to stop tilting to the whims of the oil industry in implementing the nation’s renewable fuel program, and work to create demand for ethanol, lowering prices at the pump for consumers and creating economic opportunities for farmers across the country.”

National Corn Growers Association President Kevin Skunes, a North Dakota farmer, said, “For corn farmers, what’s not included in EPA’s proposed rule says more than what’s included.

“It is encouraging that EPA is following Congressional intent and proposing some growth in the RFS volumes and continuing to propose an implied 15 billion-gallon volume for conventional ethanol. However, by continuing to allow retroactive exemptions to refineries, EPA will undercut the volumes in this rule, rendering the proposed blending levels meaningless. Furthermore, the proposed rule states that EPA will not consider comments on how small refinery exemptions are accounted for.

“EPA also had an opportunity to propose a remedy for the 1.6 billion gallons the agency has retroactively waived from the 2016 and 2017 volume requirements over the past year. NCGA believes that if EPA is going to grant retroactive waivers to cut volume requirements for certain refineries, then EPA must also reallocate those gallons to others, so the obligation to blend renewable fuels is not lost.

“EPA is also missing an opportunity to propose the removal of the outdated regulatory barrier limiting year-round sales of ethanol blends greater than 10 percent, such as E15.

“America’s farmers are experiencing their lowest net farm incomes since 2006, along with the increasing threat of a trade war. The EPA can provide more certainty to farmers by addressing the gallons already exempted, spelling out how future exemptions will be handled to ensure waived gallons are reallocated and moving forward with a stronger RFS that supports America’s farmers and their rural communities.”

The American Soybean Association said it was pleased with the proposed biodiesel and advanced biofuels volumes announcement.

ASA President John Heisdorffer said, “This increase supports a valuable, growing market for soybean oil. We have an increased capacity on the domestic market to meet the demand for renewable fuels blended into the nation’s fuel supply.”

Yet, Heisdorffer said future proposed unwarranted waivers of RFS volumes might negate increases in BBD volumes that EPA has recently granted some oil refiners.

“The waived volumes need to be reallocated to ensure the RFS remains whole and that proposed future increases are meaningful,” Heisdorffer said. “The biodiesel industry has the potential to support agriculture by creating jobs, diversifying fuel sources, and reducing America’s dependence on foreign oil. We encourage the EPA to continue supporting growth by limiting waivers that water down the benefits of these increased levels.”

The proposal will be open to public comment until Aug.17. A final rule is due by Nov. 30. The EPA proposal specifically rejects any forthcoming comments citing concerns about how “how small refinery exemptions are accounted.” 

Larry Dreiling can be reached at 785-628-1117 or [email protected].