EPA announces latest renewable fuel standards, plan termed ‘mixed bag’

To strengthen the role of the Renewable Fuel Standard in advancing greater use of low-carbon renewable fuels, the Environmental Protection Agency has proposed a package of actions setting biofuels volumes for years 2022, 2021 and 2020, and introducing regulatory changes intended to enhance the program’s objectives, the agency’s chief announced.

In addition, EPA is seeking public comment on a proposed decision to deny petitions to exempt small refineries from their obligations under the RFS on the grounds that petitioners failed to show that EPA has a basis under the Clean Air Act and recent federal case law to approve them.

“Despite multiple challenging dynamics affecting the RFS program in recent years, EPA remains committed to the growth of biofuels in America as a critical strategy to secure a clean, zero-carbon energy future,” said EPA Administrator Michael S. Regan. “This package of actions will enable us to get the RFS program back in growth mode by setting ambitious levels for 2022, and by reinforcing the foundation of the program so that it’s rooted in science and the law.”

For 2022, EPA is proposing the highest total volumes in history, putting the program on a stable trajectory that provides for significant growth. The proposed volumes for 2022 are over 3.5 billion gallons higher than the volume of renewable fuel used in 2020. The proposed volume of advanced biofuel for 2022 is over 1 billion gallons greater than the volume used in 2020. EPA is also proposing to add a 250-million-gallon “supplemental obligation” to the volumes proposed for 2022 and stating its intent to add another 250 million gallons in 2023. This would address the remand of the 2014-2016 annual rule by the DC Circuit Court of Appeals in Americans for Clean Energy v. EPA. Spreading this obligation over two years would provide the market time to respond to this supplemental obligation.

EPA is proposing 2021 volumes at the level that it projects the market will use by the end of the year. EPA is proposing to revise the 2020 standards to account for challenges the program and the market faced that year, including from the COVID-19 pandemic.

Growth Energy CEO Emily Skor offered a mixed review of the EPA’s proposed rulemaking regarding domestic biofuels blending requirements under the Renewable Fuel Standard. The agency’s proposed Renewable Volume Obligations would undercut blending requirements for renewable, low-carbon biofuel in 2021, and would retroactively waive 2.96 billion gallons from 2020 RVOs set almost two years ago. Under the proposal, 2022 volumes return to statutory levels and the administration pledges to deny all improper small refinery exemptions.

“EPA’s projection of strong biofuel blending requirements in 2022, commitment to halt illegal refinery exemptions, and long-awaited progress toward complying with a 2017 court order on lost gallons represent a welcome step forward,” Skor said in a news release. “These forward-looking plans underscore the critical role biofuels play in mitigating climate change and lowering prices at the pump. However, we are extremely disappointed EPA has proposed rolling back requirements for 2020 and lowering volumes for 2021.

“Retroactive cuts to 2020 blending requirements impact the entire fuel supply chain, including the farmers, producers, blenders, retailers and responsible refiners who based business decisions on final requirements in place for some time.

“This unprecedented move not only exceeds EPA’s legal authority under the RFS, it fails to recognize the law’s built-in mechanism that adjusts requirements when fuel demand differs from original projections. At face value, the EPA’s plan for 2020 gallons serves as a giveaway to petroleum companies at the expense of rural families and future investment in low-carbon energy.”

The agency’s draft rule would lower conventional ethanol volume to 12.5 billion gallons for 2020, advanced biofuel at 4.63 billion, and cellulosic at 510 million. In addition, it would set conventional ethanol at 13.32 billion gallons in 2021 and 15 billion gallons in 2022, while advanced biofuels would be set at 5.2 billion gallons in 2021 and 7.7 billion gallons in 2022, including 620 million gallons of cellulosic biofuel in 2021 and 770 million gallons of cellulosic biofuel in 2022. Biodiesel blending requirements. The proposal also adds a supplemental 250 million gallons in 2022 and 250 million gallons in 2023, deny the 65 pending small refinery exemption requests before the agency, and provide important guidance to limit the abuse of small refinery exemptions in the future.

“Cuts in the ethanol RVO mean cuts in corn demand. EPA’s volume levels for conventional ethanol over those three years destroy demand for over 1.5 billion bushels of corn,” Kansas Corn Growers Association CEO Greg Krissek said in a news release. “We do appreciate EPA meeting the statutory level for ethanol in 2022. But we see a cut in 2021 volumes, and we are alarmed that they would reopen the 2020 RVO, a rule that was already finalized.”

EPA said the retroactive 2020 cut was based on reduced fuel consumption. However, the RFS is already designed to respond to reductions in demand.

KCGA President Brent Rogers, of Hoxie, said the Biden administration should not lower ethanol levels because ethanol plays a major role in meeting climate goals.

“EPA should increase, not decrease ethanol volumes. Ethanol is the fuel that is being used nationwide today that is actually achieving climate goals in a big way,” Rogers said. “When you’re looking at achieving carbon goals, ethanol continues to be the answer. It is already blended in 96% of our nation’s gasoline supply and ethanol continues to have the greatest impact on lowering greenhouse gas emissions. Plus, it’s renewable, domestic and lowers fuel costs for consumers.”

KCGA was pleased EPA agreed to deny the 65 pending small refinery exemption requests, it stated in its release.

Co-Chairs of the House Biofuels Caucus Cindy Axne, of Iowa; Angie Craig, of Minnesota; and Mark Pocan and U.S. Rep. Ron Kind, both of Wisconsin, issued the following statement:

“After months of unnecessary delay, we are glad that the EPA has released the long-overdue Renewable Volume Obligations. The 2022 number sets the biofuels industry on the right path moving forward. And the end of the abuse of Small Refinery Exemptions—which provide relief to oil companies at the expense of family farmers—is welcome news.

“These decisions will help lower prices at the pump for hardworking Americans and accelerate the positive impact that biofuels can and must play in our effort to decarbonize the transportation sector, tackle climate change, and drive economic growth across rural America.

“However, the proposed decision to retroactively lower the 2020 RVO target does not reflect a sufficient commitment to renewable fuels and family farmers. As we have emphasized in repeated conversations with the administration, now is the time to invest in renewable biofuels and the communities they support—not to prioritize the interests of fossil fuel companies that continue to ignore the law of the RFS.”

Simultaneous with EPA’s announcement, the U.S. Department of Agriculture is announcing $800 million to support biofuel producers and infrastructure. This includes up to $700 million to provide economic relief to biofuel producers and restore renewable fuel markets affected by the pandemic. In the coming months, the department will also make an additional $100 million available to increase significantly the sales and use of higher blends of bioethanol and biodiesel by expanding the infrastructure for renewable fuels derived from U.S. agricultural products.

Kansas Corn said it was pleased with the announcement of $100 million toward ethanol infrastructure projects from USDA. Kansas Corn has been a leader in utilizing previous USDA funds for adding infrastructure to help retailers offer higher ethanol blends.

Dave Bergmeier can be reached at 620-227-1822 or [email protected].