EPA Proposes New Rules on RFS, Finalizes Biofuel Blending Requirements
In April, Michael Regan, EPA administrator, told AgriTalk Host Chip Flory that his team had a goal to provide certainty around the Renewable Fuel Standard (RFS) and offer one of the aggressive blending obligation agendas in the agency’s RFS announcement on June 3.
On Friday, June 3, EPA delivered their long-awaited RFS announcement, along with two other RFS-related rulings.
1. RFS Small Refinery Exemption (SRE) denial
In December 2021, EPA moved to deny 69 pending SRE petitions under the RFS program due to the refineries showing no “disproportionate economic hardship,” which is required to be granted an exemption in the RFS program.
EPA moved on Friday to officially deny all 69 SREs upon the review of market data and public comment.
To supplement these small refineries, EPA is granting three small refineries the opportunity to instead meet the blending obligations outlined in the 2016, 2017 and/or 2018 RFS. This move will release these small refineries from the burden of purchasing additional RFS credits.
EPA says they chose this alternative route due to “extenuating circumstances” specific to this set of petitions, which include the fact these SRE petitions were previously granted.
Senator Deb Fischer (R-Neb.) says these actions demonstrate the Biden administration's lack of commitment to rural America.
"The administration has decided to postpone small refineries’ compliance with the RFS, which hurts the integrity of the whole system," she says. "Cushioning these bad announcements with the release of long-overdue COVID assistance for producers that was available over a year and a half ago doesn’t change the facts."
2. Proposed RIN retirement schedule for small refineries
When a gallon of biofuel is created, it is given a RIN. The RIN is a type of credit or “currency” that stays with the gallon of fuel until it’s separated by any blender, gas station, trade shop or refiner.
Blenders, gas stations, trade shops or refiners have a Renewable Volume Obligation (RVO) to offset their gasoline or distillate, or blend components with a percentage of biofuels. They have the choice of purchasing the biofuel to blend themselves, or they can buy a credit – a RIN.
EPA feels there were “extenuating circumstances” in the 2020 compliance year that limited the availability of RINS and tied the hands of the agency when it came to issuing SRE petitions.
To alleviate pressure, EPA has proposed a hearing on June 28, 2022, to consider a new schedule for small refineries that would offer more time to buy RINs and a broader range of RINs to comply with 2020 RFS obligations.
3. RFS Biofuel Blending Levels
EPA finalized its RVO ruling on Friday, which shows the total renewable fuel level for 2022 is set at 20.63 billion gallons, down from the 20.77 billion gallons originally proposed.
The reduction ultimately occurred in cellulosic and advanced biofuels and left the conventional ethanol component at 15 billion gallons, as was proposed in December.
Regan says the jump in 2022 obligations demonstrates EPA's "certainty and stability" in the RFS program.
“At EPA, we are laser-focused on providing more options for consumers at the pump, and today we are taking steps to increase the availability of homegrown biofuels,” said Regan. “Today’s actions will help to reduce our reliance on oil and put the RFS program back on track after years of challenges and mismanagement."
|
Final Volume Requirements for 2020-2022 (billion gallons)* |
||||||
|
|
2020 Proposed |
2020 Final |
2021 Proposed |
2021 Final |
2022 Proposed |
2022 Final |
|
Cellulosic Biofuel |
0.59 |
0.51 |
0.62 |
0.56 |
0.77 |
0.69 |
|
Biomass-Based Diesel |
2.43 |
2.43** |
2.43** |
2.43** |
2.76 |
2.76 |
|
Advanced Biofuel |
5.09 |
4.63 |
5.20 |
5.05 |
5.77 |
5.63 |
|
Total Renewable Fuel |
20.09 |
17.13 |
18.52 |
18.84 |
20.77 |
20.63 |
|
Supplemental Standard |
N/A |
N/A |
N/A |
N/A |
0.25 |
0.25 |
|
N/A = Not available. *All values are ethanol-equivalent on an energy consult basis, except for biomass-based diesel (BBD), which is biodiesel-equivalent. **The 2020 and 2021 BBD volumes were established in previous RFS annual rulemakings. |
||||||
As for 2021, EPA increased their proposed rate of 18.52 billion gallons to 18.84 billion gallons. According to Jim Wiesemeyer, ProFarmer policy analyst, the uptick resulted primarily from conventional biofuel, which transitioned from a proposed level of 13.32 billion gallons to 13.79.
Wiesemeyer says 2020 looks a bit different, as it was the “catch-up year” that Reagan hinted at with Flory.
“The 2020 levels are being finalized at the proposed marks,” Wiesemeyer says. “Meaning, there are 12.5 billion gallons of conventional biofuel.”
More on the RFS:
4 Things to Know About the Renewable Fuel Standard
DOD Invests in Critical Minerals Ahead of RFS Ruling
EPA's RFS Announcement This Week Unleashed a Mix of Support and Questions; Here's What to Watch Next
