EPA Proposes New Renewable Fuel Mandates

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The U.S. Environmental Protection Agency (EPA) has issued a proposed rule under the Renewable Fuel Standards (RFS) program that would set the minimum amount of renewable fuel that must be supplied to the market in calendar year 2019, as well as the biomass-based diesel volume standard for calendar year 2020.

​The Clean Air Act requires the 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. The agency says it is using the tools provided by Congress to adjust the standards below the statutory targets based on current market realities. The EPA implements the RFS program in consultation with the U.S. Department of Agriculture and the U.S. Department of Energy.

Some key elements of today’s action are as follows:

  • “Conventional” renewable fuel volumes, primarily met by corn ethanol, would be maintained at the implied 15-billion-gallon target set by Congress for 2019;
  • The advanced biofuel standard for 2019 would be increased by almost 600 million gallons over the 2018 standard;
  • The cellulosic biofuel standard for 2019 would be increased by almost 100 million gallons over the 2018 standard; and
  • The biomass-based diesel standard for 2020 would be increased by 330 million gallons as compared to the standard for 2019.
epa
Source: EPA

The agency notes that the biomass-based diesel standard for 2019 was set at 2.1 billion gallons this year and cannot be changed.

The EPA is also taking comments on ways to improve market transparency, including by limiting who can participate in the Renewable Identification Number (RIN) market and the length of time a RIN can be held.

Applauding the proposed renewable fuel volume obligations (RVOs) is the Coalition for Renewable Natural Gas:

“The EPA’s proposed 2019 cellulosic biofuel RVO of 381 million gallons represents a 32 percent increase over the 2018 level,” states Johannes Escudero, CEO of the coalition. “We are pleased that the proposal recognizes that the RNG industry is continuing to grow under the RFS program. A 381-million-gallon cellulosic biofuel RVO will provide a policy framework that should allow renewable natural gas (RNG) stakeholders to continue developing and access the capital necessary to invest in, build and service new RNG production facilities.”

According to the group, the RNG industry produces more than 95% of the fuel that is used to meet the RFS program’s cellulosic biofuel requirement. Since 2011, the RNG industry has developed over 45 facilities capable of producing cellulosic biofuel, and there are currently an additional 50 projects under construction or development. The industry’s cellulosic biofuel production has increased from approximately 33 million gallons in 2014 to over 240 million gallons in 2017, the coalition says.

“We appreciate the fact that the EPA’s proposed cellulosic biofuel RVO reflects continued growth in the RNG industry,” Escudero continues. “We look forward to working constructively with the administration to ensure that the methodology used to set the final cellulosic biofuel requirement accurately reflects the RNG industry’s investments and that the program is administered in a way that allows for these gallons to be used in the marketplace.”

NATSO, a national association representing truckstops and travel plazas, is also praising the announcement:

“We thank EPA and the entire administration for hearing and responding to the retail fuel industry’s concerns and proposing ambitious yet achievable renewable fuel obligations,” says Lisa Mullings, president and CEO of NATSO. “If the United States can continue down this path, while fostering an environment of certainty and transparency, the RFS will continue to function as Congress intended by incentivizing renewable fuel blending while lowering fuel prices for consumers.”

NATSO recently testified before Congress that the RFS has largely succeeded because it allows fuel retailers to offer biofuel blends to consumers at a price that is less expensive than purely petroleum-based products. The RFS is designed to enable fuel marketers to lower consumer prices at the pump by blending more renewable fuels into their fuel supply, the association explains.

According to NATSO, annual renewable fuel volume obligations can create market certainty and encourage fuel retailers to invest in the infrastructure necessary to incorporate and sell biofuels.

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