The future of the biofuels industry in the U.S. is uncertain as decisions on three specific policy areas are in flux.
1. Renewable Volume Obligations
The Office of Management and Budget is currently holding stakeholder meetings on EPA’s proposed Renewable Volume Obligations (RVO), or mandated blending levels.
Biofuels group worked with the American Petroleum Institute to submit recommendations to EPA asking for RVO levels of 15 billion gallons for ethanol and 5.25 billion gallons for bio-mass based diesel.
There has been speculation and rumor that the draft EPA sent to the White House had proposed levels that fell below these amounts.
However, biofuels officials have refuted that conjecture and say EPA has assured them the levels may even exceed their recommendations.
2. Small Refinery Exemptions
At the same time, the EPA is also considering the backlog of Small Refinery Exemptions (SREs) carried over from the Biden administration, according to Troy Bredenkamp, senior vice president of government and public affairs for the Renewable Fuels Association.
Some of those date back several years and have expired.
“There are 169 of these pending small refinery exemptions that have been building up from court cases and remands,” he explains. “Our calculation is that’s about 8.5 billion gallons, so it’s a significant number.”
That’s why the industry has asked EPA to make the two policy decisions together so the SREs can be reallocated to other refiners through the blending levels set under the Renewable Fuels Standard (RFS).
“We’ve said whether you have expired RINs you’re issuing or you have active RINs for the current compliance years, make a three-year average and take that number and include it back into this round of RVOs,” Bredenkamp explains.
3. 45Z as Part of the Budget Reconciliation Bill
The future of 45Z also hangs in the balance awaiting Senate action, after the House included an extension of the biofuels tax credit to 2031 in their budget reconciliation bill.
Paul Winters, director of public affairs for Clean Fuel Alliance America, says that was good news for the industry.
“That essentially puts the credit for liquid fuels on par with the credits for other technologies and gives them the same length of time to access this tax credit,” he says.
The House bill also excludes the biofuels tax credit to entities outside North America, such as China.
“There are restrictions to feedstocks solely from Canada, Mexico and the United States. There are other provisions to restrict the involvement of foreign entities of concern,” Winters adds.
The question now is will the Senate adopt the House’s 45Z language in their bill?
Geoff Cooper, president and CEO of the Renewable Fuels Association, says so far there’s been good support in the Senate for the program.
“We do expect 45Z will be maintained, protected as the Senate takes up budget reconciliation, but there very well could be additional changes made to the 45Z program,” he states.
In fact, biofuels groups have asked the Senate to make 45Z more workable, according to Cooper.
“They should specify in the law that agricultural practices need to be part of that emissions rate scoring process. That’s the only way we’re going ensure farmers have the ability to participate in this opportunity,” he says.
And so farmers can share in the revenue stream.
