EPA’s RFS Proposals Would Bring Major Changes to the U.S. Biofuel Mandate

EPA’s RFS proposals would bring major changes to the U.S. biofuel mandate, including a plan to encourage use of renewable natural gas to power electric vehicles.

The proposals could prompt an overhaul that shifts the program's focus away from gasoline, diesel and other liquid fuels to a broader plan aimed at decarbonizing transportation. EPA said it will seek comment "on this new component of the RFS program that would tie electricity generation from renewable biomass into the program for the first time."

EPA's RFS Proposals fro 2023-2025

Following are EPA's proposals for the amount of biofuels oil refiners must blend into their next three years.

Ethanol Projections

EPA is projecting corn ethanol consumption of 14.455 billion gallons in 2023, 14.505 billion gallons in 2024, and 14.534 billion gallons in 2025, with an assumption of 110 million gallons of imported sugarcane ethanol and 25 million gallons of domestic advanced ethanol for each year.

“Since corn ethanol consumption would be about 14.5 billion gallons, there would need to be about 0.75 billion ethanol-equivalent gallons of non-ethanol renewable fuel in order for an effective conventional renewable fuel volume of 15.25 billion gallons to be met,” EPA said.

With proposed volume requirements of 5.1 billion RINs for 2023, 5.2 billion RINs for 2024 and 5.3 billion RINs for 2025, EPA said that would result in excess RIN supplies of 795 million in 2023, 745 million in 2024 and 716 million in 2025.

“This excess non-cellulosic advanced biofuel would make up for the shortfall in corn ethanol, enabling an implied conventional volume of 15.00 billion gallons in 2023 and 15.25 billion gallons in 2024 and 2025 to be met, and also enable the 250-million-gallon supplemental volume to be met,” EPA said.

Renewable Diesel

Regarding renewable diesel, EPA said: “In total over 5 billion gallons of new renewable diesel capacity has been announced, though it is likely that not all these announced projects will be completed, and not all of those that are completed will necessarily produce renewable diesel in the 2023–2025 timeframe addressed by this rule.”

The current renewable diesel production capacity was put at 1.5 billion gallons as of February 2022. Looking forward, EPA said that given high costs for renewable diesel plants, the sourcing of feedstocks will be important.

“It appears more likely that the announced renewable diesel facilities will not be built if sufficient feedstock to operate these facilities at or near their production capacity cannot be secured,” feedstock to operate these facilities at or near their production capacity cannot be secured,” EPA noted.

Electric Vehicle RINs (eRINs)

As for eRINS, the proposal includes RINs from renewable electricity (eRINs) and how they may work under the RFS. The proposal covers several key areas “including which parties can generate eRINs, prevention of double-counting, and data requirements for valid eRIN generation.”

The plans, EPA said, are aimed at providing “clarity on how electricity would be incorporated into the RFS so that the existing RIN-generating pathway can be effectively utilized in a manner that ensures RINs are generated only for qualifying electricity.”

As to who can generate eRINs, EPA is proposing that vehicle original equipment manufacturers are the ones that can generate eRINs “based on the light-duty EVs they sell by establishing contracts with parties that produce electricity from qualifying biogas (renewable electricity generators).”

EPA is proposing that eRINs would represent the “quantity of renewable electricity determined to be used by both new and previously sold (legacy) light-duty electric vehicles for transportation, provided that sufficient renewable electricity has been produced and contracted by the OEM.”

Requirements for biogas generators and electricity producers will be set up, EPA said, “but only an OEM would be allowed to generate the eRIN.” However, the value of the eRIN would be expected to be “distributed after its generation amongst multiple parties.”

EPA assumes there will be 600 million RINs from renewable electricity in 2024 and 1.2 billion RINs from renewable electricity in 2025.

The eRIN requirements would become effective beginning on Jan. 1, 2024. The agency is seeking comment on “all aspects” of their proposal. 

Meanwhile, the Biden administration approved canola oil for use in making renewable diesel and other biofuels, qualifying fuels blended with the oilseed to meet federal standards, the EPA said on Thursday.

Mixed Reaction

Ethanol groups are applauding the EPA announcement while biodiesel and advanced biofuel groups say the numbers don’t reflect the growth in renewable diesel and other products.

The American Soybean Association (ASA) said: “Soybean farmers were heartened by EPA’s 2022 volume target—which included the highest-ever number for total renewable fuels and specifically for biomass-based diesel (BBD) since the renewable fuel standard was created — and were hopeful EPA would stay the course on a rising trajectory. However, the numbers released by EPA show a reversal rather than affirmation of its commitment to BBD."

"Billions of dollars have gone into building and growing the infrastructure needed to support this industry. And our president has made a clear commitment to mitigating climate change and lowering greenhouse gas emissions — the very tenets of the RFS,” said ASA President Brad Doyle in a release following the announcement.

Doyle says this rule "slams the brakes" on progress in biofuels investment and growth, and seems to "ignore" investments in consumer demands.

Now What?

EPA has set Feb. 10 as the comment deadline for the proposed rule. Extensions of comment periods are likely. EPA has set a public hearing on the RFS proposals for Jan. 10, 2023 and has pledged to finalize the rule by June 14, 2023.

More on renewable fuels:

Renewable Fuel's Big Week: EPA's RFS Proposal And Year-Round E15 Legislation
EPA's Small Refinery Exemption Data Under Fire by U.S. Accountability Office