Biodiesel

White House Sets Record Biofuel Volumes for 2026 and 2027

Fri, 27 Mar 2026 18:27:37 GMT

In the 20th year of the Renewable Fuel Standard (RFS) program, the White House has established the renewable fuel volume requirements for 2026 and 2027 at the highest levels in program history. The Set 2 final rule, announced at the White House Great American Agriculture Celebration in front of 650 invited attendees, realigns the program with Congress’ intent to increase the use of homegrown American biofuels.

“Today’s announcement is truly historic for our nation’s farmers and energy producers. These numbers represent the highest levels of biofuels ever required to be blended into our fuel supply,” says Brooke Rollins, Secretary of Agriculture. “With President Trump and Administrator Zeldin’s leadership, these historically high volumes are expected to create a $3 to $4 billion increase in net farm income. The Renewable Fuel Standard Set 2 Rule will create a $31 billion dollar value for American corn and soybean oil for biofuel production in 2026, which is $2 billion more than in 2025. Our farmers are stepping up to grow American energy dominance.”

Just this week, EPA renewed emergency waivers for E15 gasoline sales during the summer driving season.

What Does the Set 2 Final Rule Mean for Farmers

To meet the 2026 and 2027 volume levels, EPA estimates biodiesel and renewable diesel production and use will need to increase by more than 60% versus 2025 volumes. The increase was above the initial proposal.

“The proposal that we saw nine months ago was extremely robust,” explained Kurt Kovarik of the Clean Fuels Alliance America. “In fact, our industry, along with the petroleum sector and the soybean growers, asked for a volume requirement for 2026 of 5.25 billion gallons. They proposed 5.61 billion gallons. And today’s proposal is right in that neighborhood between 5.5 to perhaps as high as 5.6 or 5.7. There’s a little bit of math yet that needs to be done.”

He said that in 2025, biodiesel and renewable diesel facilities were forced to shut down or run far below prior-year production levels due to market uncertainty. U.S. biodiesel production declined by one-third in 2025, compared to 2024.

“Biodiesel and renewable diesel represent 10% of the value of every bushel of U.S.-grown soybeans, contributing to President Trump’s desire for American energy dominance and domestic market demand for agriculture commodities,” said Kovarik. “American farmers and other feedstock providers are eager for the growing domestic clean fuel market to drive value in agriculture, along with economic growth and job creation in rural communities. American consumers are desperate for secure, affordable domestic energy. Today’s rule is a clear win for the nation’s energy security.”

With the benefits Set 2 will bring to America’s farmers, EPA estimates the rule will generate more than $10 billion for rural economies and create more than 100,000 new jobs in the agricultural and manufacturing sectors. To provide continued certainty for American corn growers and ethanol producers, EPA will maintain the 15 billion conventional biofuel level for 2026 and 2027.

Based on EPA’s latest release on March 27

(EPA)

What are Renewable Volume Obligations?

RVOs are targets set by EPA to determine how much renewable fuel must be blended into the U.S. transportation fuel supply. EPA determines the total volume of different categories of biofuels that should be used in the country for multi-year periods. Once decided, EPA converts the total volumes into percentage standards, which represent the ratio of renewable fuel to the total amount of gasoline and diesel expected to be consumed in the U.S. that year.

Each “obligated party,” typically refiners and importers of gasoline and diesel, calculates its RVO by multiplying EPA’s percentage standards by the total volume of non-renewable gasoline and diesel they produce or import. To prove they have met their RVO, obligated parties must use a serial number attached to each gallon of biofuel, known as Renewable Identification Numbers (RINs). When the biofuel is blended into the fuel supply, the RIN is “separated” from the physical fuel.

At the end of the compliance year, obligated parties must submit to EPA enough RINs to cover their specific RVO. If a refiner blends more biofuel than required, they can sell their excess RINs to other refiners who have not met their obligations.

Adjusted Small Refinery Exemptions

The EPA also finalized the reallocation of the volumes from Small Refinery Exemptions from 2023 through 2025. Those are now set at 70%.

“Adding it to the top line volume for 2026 and 2027, the volumes that were waived over those three years will be made up in 2026 and 2027,” Kovarik. “For our industry, that’s somewhere between an additional 200 to 250 million gallons a year.”

He says that is on top of the already robust minimum volume that EPA set. The agency claims the RFS rule will create $31 billion in value for American corn and soybean oil.

Renewable Fuels Association (RFA) President and CEO Geoff Cooper noted that while they advocated for full reallocation of the 2023-2025 SREs, the 70 percent reallocation included in today’s rule is better than other options that were under consideration. EPA had proposed 50 percent reallocation as an option and also solicited public feedback on no reallocation at all.

“We continue to believe small refinery exemptions are completely unjustified, and the SRE petition process—including EPA’s reliance on the Department of Energy’s ‘scoring matrix'—is fundamentally flawed,” Cooper said. “SREs distort the market, undermine fair competition, and destabilize the RFS program. And while RFA appreciates EPA’s efforts to minimize market disruptions by reallocating most of the renewable volume lost to SREs, we believe the Agency has a duty to fully restore all exempted volumes.”

RVO Reaction Pours In

The Renewable Fuels Association (RFA) and other farm groups applaud the RVO announcement from EPA.

“Today’s RFS rule supports continued growth in American-made renewable fuels like ethanol and brings much-needed certainty and stability to the marketplace,” said RFA on X.com .

Today’s RFS rule supports continued growth in American-made renewable fuels like #ethanol and brings much-needed certainty and stability to the marketplace. We are grateful to @POTUS and @epaleezeldin.https://t.co/FdovzBqLUr
— Renewable Fuels Association (@EthanolRFA) March 27, 2026

“Congress intended year-to-year renewable fuel blending to increase under the RFS and today’s announcement with the highest-ever volume obligations helps fulfill their intention,” said Brian Jennings, CEO for American Coalition for Ethanol. “We’ve consistently advocated for strong final blending obligations for 2026 and 2027, reflecting the full potential of the RFS and ensuring small refinery exemptions (SREs) do not erode demand for renewable fuels.”

Jennings says the integrity of the RFS depends on ensuring volume obligations translate into real-world demand. Any gap between required volumes and actual blending undermines the program and creates uncertainty for ethanol producers, farmers, and rural communities.

“We appreciate President Trump, Administrator Zeldin and Secretary Rollins for delivering strong RVO volumes and doing so in a way that recognizes the importance of American farmers,” said NSP Chair Amy France, a farmer from Scott City, Kan. “These volumes provide critical certainty for sorghum producers and help strengthen demand across the biofuels sector.”

NSP also highlighted EPA’s decision to reallocate 70 percent of previously exempted volumes, helping ensure that promised demand is realized.

“Maintaining the integrity of the Renewable Fuel Standard is essential,” France said. “Reallocating those gallons helps protect the market opportunities farmers depend on. We need to build on this momentum and get year-round E15 across the finish line.”

Ohio farmer and National Corn Growers Association President Jed Bower, who was present at the White House for the announcement, also weighed in on the latest volumes.

“Our deep thanks go to President Trump and Administrator Zeldin for releasing these robust RVO numbers in an exceptionally timely manner and, appropriately, during an event honoring America’s farmers. This action provides certainty to corn farmers across the country who rely on a stable biofuels industry. Today’s announcement, coupled with the Trump administration’s E15 summertime waiver earlier this week, is a positive move for the nation’s corn growers who are navigating an exceptionally difficult economic environment. There is still more to be done to help our growers, and we look forward to working side-by-side with the president and our allies in Congress to get permanent year-round E15 legislation over the finish line.”

Fuel and Fertilizer Costs Surge

While there’s hope that embracing biofuels can help bolster the farm economy and lower prices at the pump, farmers are feeling the fallout of higher oil prices. According to AAA on Friday, the national average for a gallon of diesel fuel was $5.38. That’s nearly $2 per gallon higher than it was just a year ago, and it’s happening right as farmers gear up for the spring planting season.

“To help lower gasoline prices for farmers and consumers, this week, I issued an emergency order to allow immediate sales of E-15 — and just as I promised in the campaign, I’m seeking Congressional action to allow E-15 all-year-round,” said President Trump.

Fertilizer prices are also significantly higher in the last few weeks. While some farmers pre-applied acres last fall and others bought earlier in 2026, there are still a number of acres left to cover.

Biofuels Groups Urge President Trump to Expedite Biofuels Policy

Wed, 28 Jan 2026 00:58:50 GMT

Biofuels groups representing both ethanol and biomass-based diesel wrote letters to President Donald Trump — and also took out newspaper ads — ahead of his visit to Clive, Iowa. They are asking the administration to make biofuels policy a priority, expedite rules on the 45Z Clean Fuels Production tax credit and Renewable Fuels Standard Renewable Volume Obligations (RVOs) and support E15 passage that would give certainty to farmers.

Biomass-Based Diesel Production Down With Policy Uncertainty

U.S. biomass-based diesel production was down substantially in 2025, with many plants shuttered or throttling back production due to biofuels policy delays. In Iowa alone, last year’s volume was down about 30%.

That’s at the heart of the letter Clean Fuels Alliance America sent to President Trump, says Kurt Kovarik, vice president of federal affairs.

“The letter was really to tell the president: ‘Use the tools that you have available to you on the RVOs, and also on 45Z as well, to move those regulations along and provide certainty to the industry’,” Kovarik says.

CFAA Asks President Trump for Robust RVOs...Soon

While the fate of the half RIN proposal is uncertain, as part of the RVOs, Clean Fuels wants 100% of the Small Refinery Exemption (SRE) volumes reallocated and adoption of EPA’s proposed 5.61 billion gallon volumes on biomass-based diesel.

Kovarik says: “The proposal that we received from EPA back in the summer is incredibly robust and would send a great signal. So, all we’ve asked the president to do is finalize that volume obligation near what was proposed, and that would go a long way to turning plants on.”

Finalization of the 45Z Clean Fuels Tax Credit Also Needed

In addition, Kovarik says the Office of Management and Budget (OMB) indicates the proposed rules for 45Z are complete. The guidance now goes back to the Treasury, but they’ve also asked for that proposal to be expedited.

“It’s a proposal. So, this will include a notice and comment period for the public before it becomes final,” Kovarik says. “But I think just seeing the proposal for a lot of our producer-members and feed stock providers will go a long way to addressing a lot of the uncertainty that has existed with this credit.”

Kovarik thinks it’s realistic both of these biofuels policies can be completed within the next 60 days, meaning the end of February or early March.

Iowa Groups Take Out Ad Urging the President to Support E15

Farm groups including the Iowa Renewable Fuels Association and the Iowa Corn Growers Association also took out ads prior to President Trump’s visit to ask for help on year-round E15 passage.

Emily Skor, CEO of Growth Energy, says the hope is the President will turn up the heat on Congress to get the legislation over the finish line.

“We all know that what we need right now is an act of Congress,” Skor says. “And so really the conversation has to be: ‘Congress do your job. Okay? We need this.’”

This comes after Congress failed to include an amendment on nationwide year-round E15 in the government spending bills. Speaking on “AgriTalk”, Skor stated the administration and President Trump have been supportive of E15 since he campaigned for the job in Iowa.

“I think the White House wants to see Congress get something done so they can bring a bill to his desk, so he can sign it and we can be done with this once and for all,” she says.

Biofuels policy is critical for corn and soybean farmers as it adds value to homegrown corn and soybeans.

How EPA's Proposal to Exempt Refineries From Blending Biofuels Impacts Farmers

Mon, 22 Sep 2025 22:30:02 GMT

The EPA’s latest proposal on how they plan to deal with the backlog of Small Refinery Exemptions (SREs) could have a major impact on farmers.

With a big crop this year, they need biofuels demand to help use those extra bushels.

However, even as recent as last week, small refiners continued to file for exemptions from the biofuels volumes they are mandated to blend under the Renewable Fuels Standard (RFS).

If EPA allows these waivers and the backlog of SREs from 2023 to 2025, without increasing the volumes in 2026 and 2027, it will mean lower biofuels production.

EPA’s SRE Proposal Includes Something Old
EPA’s latest proposal to deal with the backlog of Smaller Refinery Exemptions contains something old and something new.

The good news is EPA is using current methodology to calculate SREs, according to Paul Winters, director of public affairs, Clean Fuels Alliance America.

“They’re looking to protect the market space and preserve the volumes they set for the RFS standard — and that’s a good thing. That’s something we fought for back in 2020 and we’re glad to see that continuing.”

He says EPA’s proposal recognizes the SREs handed out in August have the potential to flood the RIN markets.

“They’re looking to reallocate those volumes and protect future RIN markets to make sure there isn’t a signal sent to the industry to undercut production in future years,” he adds.

A New Twist
However, to accomplish that, Winters says EPA has also offered a new proposal — with a twist.

He explains: “They are proposing to either reallocate 100% of the exemptions that have been handed out to date or 50%.”

The final decision will be based on the volumes of biofuels that will be produced in the future and ensure the volumes EPA is setting for 2026 and 2027 are actually met.

Winters says 100% reallocation is the best option for the biofuels industry, as EPA’s updated dashboard on SREs shows, since August 22, they’ve received 10 new exemption petitions for 2021 through 2024.

“We expect they’re going to continue filing more and more of these exemption petitions. So, EPA needs to adopt the 100% estimate based on what’s been filed so far. Because at the end of the day, that’s not going to represent 100% of all the exemptions that are eventually granted,” he further explains.

This is especially important for farmers because if the exemptions were granted without increased production, it would cut into biofuels volumes for 2026 and 2027.

45 Day Comment Period Underway
Winters says it’s key for farmers to be engaged in the process. EPA is holding a hearing on the rule within 15 days as part of a short 45-day comment period.

Can Biofuels Make Up for Lost China Soybean Export Demand?

Fri, 05 Sep 2025 19:04:31 GMT

China has still not bought one bushel of new crop soybean exports from the U.S. and they may not with U.S. product facing up to a 23% tariff.

Last year at this time China had bought 250 million bu. of U.S. soybeans but this year is buying from South America and without a China deal the U.S. could miss its prime export window which will further pressure soybean prices.

Can BioFuels Make Up for Lost China Export Business?

Due to the expected increase in demand for biofuels like renewable diesel and SAF the soybean processing industry was planning a 30% increase in crush capacity with the use of soybean oil as a feedstock.

With recent biofuels policy wins that finally looks more promising but experts says the biofuels ramp up won’t come soon enough to make up for lost exports to China.

Trifecta of Biofuels Policy Wins

The U.S. biofuels industry has had a trifecta of policy wins the last few months including EPA’s higher than expected proposed blending mandates for biomass based diesel according to Dr. Scott Irwin, Agricultural Economist, University of Illinois.

He says, “It started with the June Renewable Volume Obligations (RVOS’s) which were very healthy and included a what is called a half RIN proposal for imported biofuels or domestically produced biofuels made with imported feed stocks.”

A second positive was, as part of the One Big Beautiful Bill, the industry saw some much needed changes to the 45 tax credit program.

Steve Censky, Chief Executive Officer, American Soybean Association says the bill delivered many of the components they had asked for.

“Number one was to extend it because it was going to be expiring in 2028. And so it’s been extended for a couple of years. And then second thing is that we push to make the 45Z tax credit only available to fuels made with U.S. feed stocks,” he ssays.

Irwin says the third part of the hat trick was EPA’s decision on the backlog of Small Refinery Exemptions.

Irwin says, “We got an SRE refinery exemption u decision uh that stretches back going all the way back to 2016 that uh I believe is quite favorable as well.”

Biofuels Industry Awaiting Guidance on RVOs and 45Z

However, the biofuels industry has been waiting nearly two years for Treasury guidance on 45Z to get certainty for investment.

Irwin says, “We still have to wait to see what that guidance looks like. But the important point is that historically historically when those tax credits are awarded either to the uh blender or the producer they bid most of that into their feed stock prices.”

Censky says they also need finalized RVO levels from EPA, which are expected by October 31.

Censky, “f we can finalize the volumes that have been proposed by the EPA, and they propose to expand biomass-based diesel volumes by 67% from 2025 levels. So really historic announcements about the volumes. That really gives potential here for the biomass-based diesel industry.”

But that demand won’t kick in until January of 2026, so can biofuels make up for the loss of China?

Biofuels Ramp Up Too Late to Offset Lost China Exports

Irwin says, “The big thing of course is no matter how bullish you want to get on biofuels it doesn’t replace China on the soybean export side.”

Censky says that’s because while the U.S. soybean industry diversified its export portfolio since the 2018 trade war with China, it still buys over 25% of the soybean crop annually.

“I mean they import more soybeans than the rest of the world combined and so you can’t make up the loss of the China market by gaining a little bit here or there,” he explains.

And with up to 23% tariffs on U.S. soybeans, Censky says China is out of the new crop export market.

“So you’re talking 200 to 400 million bushels of soybeans that they would have purchased already that would be on the books and right now we have zero and what we’re hearing is that they’ve taken care of their needs for October, they’re taking care of their needs for November.” he says.

And without a deal, China could stay out of the U.S. export arena waiting for Brazil’s new crop soybeans to come to market.

EPA Decision on Small Refinery Exemptions Good News For Biofuels

Mon, 25 Aug 2025 17:18:47 GMT

The Environmental Protection Agency had a big announcement on Small Refinery Exemptions (SREs) on Friday.

The agency is acting on a backlog of more than 175-petitions from 38-small refineries dating all the way back to 2016.

EPA officials says the goal is to get the Renewable Fuel Standard (RFS) program back on track but biofuels industry officials are unclear about how that will work.

SRE Decision a Mixed Bag

EPA granted full SREs on 63 petitions to the Renewable Fuel Standard, and partial exemptions on 77. The agency also denied 28 petitions and deemed 7 ineligible.

Paul Winters, Director of Public Affairs, Clean Fuels Alliance America says the result was a good news, bad news story for the industry.

“The exemptions apply to more than 7 billion RIN gallons from prior years. However, EPA is indicating that it’s only returning RINs for 2023 and 2024, which is about 1 .4 billion RINs. Those RINs would still be valid to meet the 2024 RFS volume requirements.”

Will the 2023 to 2025 SREs be Reallocated?

The biofuels industry exoects multiple refiners to object to the decision. So the question remains: how or if the SREs from 2023 to 25 will be reallocated.

Winters says, “1.4 billion RINs returned to the market is a substantial number, especially for 2024 and 2025 where the Biden administration set volumes for biomass based diesel way below where they should have.”

EPA Proposes New Formula for Reallocating SREs

In addition, EPA has proposed a new formula to reallocate gallons exempted from 2023 and later years.

This means EPA still has 57 total exemption requests pending that will be used in finalizing blending levels for 2026 and 2027.

“So what EPA has indicated is that they are going to propose a rule, a supplement to the 2026 and 2027 volumes and they will reallocate the these small refinery exemptions to other refiners,” he says.

So, while the administration is trying to support the biofuels industry, it’s still negative according to Winters.

“They exempted far more small refineries than anyone thought would have,” he explains.

Timeline Unclear

Winters says EPA will send a proposal to the White House next week for a 30 day review, followed by a comment period and hearing on the new proposal.

Eventually the plan is to add this proposal to, for the new framework or small refinery exemption decisions and add it to the 2026 and 2027 RFS rule.

Winters says CFAA will work with EPA on the re-allocations but his will delay the final 2027 RFS rule past the November 1 deadline — adding more uncertainty.

Is There An Easy Fix To Corn And Soybean Demand?

Mon, 04 Aug 2025 17:51:10 GMT

In spite of promises of tariffs improving our agriculture lot in life, details have been scarce in frameworks. The only model we have to gauge future results was signed in President Donald Trump’s first term. In the Phase 1 document, item five of chapter six (page 55) reads:

“The Parties acknowledge that purchases will be made at market prices based on commercial considerations and that market conditions, particularly in the case of agricultural goods, may dictate the timing of purchases within any given year.”

Basically, China said they’d buy our goods if we were competitive, if they needed it and they would not throw their new trading friends (Brazil) under the bus. This made me skeptical then and concerned now. It would have been better to say they “shall” buy a defined amount of bushels per year. In legalese, the word “shall” is binding whereas “may, opportunity, or intent” have no teeth.

Tariff Deals. So far, only Vietnam’s framework deal has bushels referenced. India says it needs to protect its own agricultural base. Signed deals need to reference hard numbers (quantity or dollars) rather than vague terms.
Value-Added Focus. For years, I have mentioned the pitfalls of relying on one entity (China) to buy significant portions of our production. Finally, it appears we have a value-added focus under the new proposed EPA Renewable Fuel Standard mandate for biomass-based fuels. The mandate, which includes renewable diesel and biodiesel, is 5.61 billion gallons for 2026. That’s compared to the 2025 biomass-based diesel mandate of 3.35 billion gallons. To meet the proposed 2026 biofuel mandate, it would take about 1.38 billion bushels of soybeans, assuming current feedstock proportions remain constant. It is unrealistic to expect that kind of increase in acres, making alternative feedstock imports and biofuels themselves necessary.
Import Breakdown. In 2024, the U.S. imported about 441 million gallons of biodiesel from Canada, Germany, Spain and China. It would take about 62 million bushels of soybeans to replace 300,000 tons of tallow from Brazil, 633 million bushels to replace Canada’s 3.3 mmt of canola oil (which produces about 945 million gallons of biodiesel), and 244 million bushels to replace China’s 2.8 billion pounds of used cooking oil.
In 2026, the Blenders Tax Credit has been replaced by the Clean Fuel Production Credit (45Z). The 45Z credit structure is designed to favor domestic biodiesel production and make it more economically advantageous to use U.S.-sourced feedstocks. Canadian products will be eligible for the 45Z tax credits.

These stats suggest an easy fix to the oversupply of soybeans and corn. If tariffs prove inefficient, a positive EPA result — or even an executive order — will do. The final version of the EPA proposal is up for vote in November after the U.S. soybean harvest. Trump should know time is of the essence.

Any Good News?
The June 30 stocks report revealed the huge increase in on-farm relative to off-farm stocks we saw last year did not repeat. Producers took advantage of old crop premiums and sold in earnest. This suggests the capitulation we saw Aug 30, 2024 might not occur this year. A crop yield of 184 corn and 53.5 soybeans might be what price action is telling us, however. The market, through low prices, could force political action to stop the bleeding. That is what managing risk is all about.

(Chart Source: CME/Gulke Group)

Price Speaks Volumes
The continuous weekly price chart for corn using September as the lead contract reveals while the media concentrated on not only the two important points I mentioned, but on likely hundreds more fundamentals on a weekly basis to analyze market outlook, ultimate price discovery told a different picture.

Post-Sept. 2024 rally ended Feb. 21. Corn, wheat and soybeans have trended down since.
Meteorologists blame new corn lows on favorable global weather.
Markets ignored weather and tariff talk, as no positive signals emerge.
The large speculator shows long positions maxed out near Feb. 21 and was net short April 16, increasing their short position thereafter for a $1-per-bushel gain.
Biomass feedstocks are trending up. December corn’s reversal higher is holding. The six-month price discovery may have got prices low enough.

5 Things Farmers Should Know Now 45Z Is A Real Thing

Mon, 07 Jul 2025 22:09:52 GMT

The One Big Beautiful Bill (OBBB) delivered additional surety for the 45Z biofuel blender tax credit.

After almost three years of talking about what could be spelled out by 45Z, Mitchell Hora says farmers can now get “locked in” to capitalize on the program.

“This 45z deal could be absolutely game changing for my family’s farm, and I think it will be game changing for other family farmers across the country,” Hora says. “It’s going to have a ripple effect that could change global agriculture. So that’s why I’m just so adamant that we have got to get this right, and we’ve got to hit the ground running.”

Hora, an Iowa farmer and founder of Continuum Ag, says there are five things every farmer should know about what the OBBB has laid out. He also says there are unanswered questions.

1. It’s happening.

“They [lawmakers] cut almost all of the other green funding programs within the Inflation Reduction Act. They cut a bunch of that old stuff, but they kept the 45Z program,” Hora says. “It’s alive, it’s locked in, it’s going to happen.”

What sets 45Z apart from previous biofuels tax provisions is how it measures the grain—the program uses a scorecard to assess every bushel (not acre) with a carbon intensity (CI). Any score under 50 points receives a tax credit to the biofuels producer.

“This program shows how you can score a farmer’s carbon footprint, how you can audit it, verify it, track it through the supply chain, and how to monetize it,” Hora says.

2. OBBB gave 45Z an extension

The 45Z program now has additional momentum behind it as the OBBB outlined an extension now into 2029.

“Now biofuels producers have more time to really capitalize on this,” Hora says.

The program is currently active for the 2025 tax year. This means farmers could be selling 2024 grain into the 2025 biofuels production year. And the program is available through 2029.

3. Only North American feedstocks are eligible.

Imported used cooking oil has become a focus for may who have critiqued previous blend credits as feedstocks from other countries were not limited.

Now, only feedstocks from North American sources can be used as part of this program. This includes corn, soybeans, used cooking oil, beef tallow, and canola.

“Without foreign feedstocks being included this drives more demand and more value for U.S. farmers,” Hora says.

4. Current language ignores indirect land use change.

“This single thing lowers everyone’s CI score across the board. It definitely helps corn and corn based ethanol and the soybean side as well,” Hora says.

5. Tax credits are transferrable.

Biofuels producers can take their tax credits and sell them to another buyer if they aren’t going to use them themselves.

Additionally, this makes it easier for farmer-owned co-op ethanol plants to process their taxes.

Additional considerations and unanswered questions.

Farmer data is key to unlock the potential.

“The overall 45Z impact is ag data is extremely valuable. It’s setting a precedent as to the value for data,” Hora says. “Iin order for the ethanol plant to generate 45Z credit using your low carbon farming practices, they have to prove it in an audit, and likely an audit at every point of aggregation, so that farmer data is really the key to unlock value here.”

As for the monetary value of the CI score, Hora says after talking to hundreds of ethanol plants, the range of sharing the value of the credit varies between 30% to 50% of the value.

This 45Z program update does effect sustainable aviation fuel—particularly alcohol to jet.

“Under the current version of 45z the alcohol to jet pathway not going to happen at any type of real pace, not at any type of accelerated rate of innovation. The math just doesn’t work out,” Hora says. “You’d be much better off under the current 45Z rules to just sell it as ethanol.”

The Final IRS Guidance Matters

Forthcoming final rules from the IRS will set which of the two calculators will be used: GREET FD-CIC or USDA FD-CIC

Also, the IRS sets if the credits will be tracked with mass balance or book and claim method.

“Here’s the takeaway for farmers. You can continue to wait. But you’re money ahead to get your data organized,” he says.

The money is flowing—yet.

“There may be small amounts, pennies on the dollar to get things started and get farmers enrolled. This didn’t unlock the flood gates. But it locked it in. It’s here to stay. They are going to get these rules out. We’ve got to get some movement on the work ahead to get the data and the people ready,” Hora says.

You may want to pump the brakes on signing up for a new private carbon program, Hora says. Because all previous guidance has not allowed for signing up an acre for one program and selling a bushel under 45Z from the same land.

There will be ripple effects (and opportunities) for animal agriculture.

Hora says, “If you are in animal ag, talk to people in your supply chain. And talk about how to capitalize on this precedent setting program.”

Brazil Increases Ethanol, Biodiesel Blending Levels

Wed, 25 Jun 2025 20:57:32 GMT

Brazil’s National Energy Policy Council (CNPE) approved increasing the percentage of ethanol mixed in gasoline to 30% from 27%, and the amount of biodiesel in diesel to 15% from 14%. The changes take effect Aug. 1.

The 11.1% increase in the ethanol mandate will require more domestic corn use for fuel production. Despite a record corn crop this year, Brazil expects exports to fall 4.5 MMT (11.7%) from last year to 34 MMT.

The 7.1% increase for the biodiesel mandate will also require more domestic soybean use, though exports are still expected to be record-large this year.
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Biofuels in Flux: What 3 Key Policy Decisions Will Shape the Future of the Industry?

Thu, 12 Jun 2025 00:33:40 GMT

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.

Biofuels Groups Optimistic About EPA's RFS Proposal: Refute Talk of Lower Volumes

Wed, 28 May 2025 15:20:54 GMT

EPA Administrator Lee Zeldin informed lawmakers the proposal for setting the Renewable Fuel Standard (RFS) volumes for 2026 and beyond is nearing release. The proposed rule is currently under review by the Office of Management and Budget (OMB).

EPA Listening to Biofuels Industry This Time?

Geoff Cooper, president and CEO, Renewable Fuels Association, says the administration has been listening to their recommendations on setting volumes that encourage growth and demand.

“We recommended at least 15 billion gallon for conventional and 5.25 billion for biomass based diesel, and then when you layer on top a little bit of growth for advanced and cellulosic, you can easily see where EPA could be setting the total RFS volume at around 24 or 25 billion RINs.”

EPA Says Rumors on Biomass-Based Diesel Aren’t True

Recent rumors put volumes for biomass based diesel at 4.65 billion gallons, but Paul Winters, director of public affairs, Clean Fuel Alliance America, says EPA has assured them that number is false.

“They certainly have indicated the rumor circulated last week was incorrect — the volumes would not be that low. They do seem to understand and have definitely heard the message from our industry and the unified position on that 5.25 billion gallon volume,” he explains.

Still, Clean Fuels and 48 of its members sent a letter to EPA advocating for the 5.25 billion and reminding the agency that level was agreed upon with the American Petroleum Institute.

Cooper says that agreement is unprecedented: “We have alignment with the oil refiners. That’s not something we’ve ever had before when we go the discussions around renewable volume obligations and the RFS. That makes everyone’s job easier.”

OMB Holding Stakeholder Meetings

Stakeholders also have scheduled meetings with OMB through June 9 to provide comments, but EPA could fast track the process by canceling meetings to finalize the rule more quickly.

“Clean Fuels would be very happy to have the rule out in public and simply forego a formal meeting with OMB,” Winters says.

Either way, after OMB’s review EPA will publish the proposed rule, start a formal comment period and then take that input to craft the final rule.

“Administrator Zeldin has said many times, including on Capitol Hill just this week, he intends to have a final rule in place by the end of October this year, which would help, I think, restore and kind of get things back on the right timeline when it comes to the RFS,” Cooper says.

Zeldin also indicated EPA will be addressing a longstanding backlog of 160 plus small refinery exemption petitions.

Biofuels and Petroleum Groups Reach Rare RFS Deal

Wed, 09 Apr 2025 21:32:03 GMT

It’s rare, but U.S. biofuels and petroleum industry groups have been working together with EPA to broker higher mandated blending levels for biomass based diesel.

The groups have finalized a deal to raise the renewable volume obligations (RVOs) in the Renewable Fuels Standard for biomass-based diesel and advanced biofuels to 5.25 billion gallons for 2026.

Kurt Kovarik, vice president of federal affairs, Clean Fuels Alliance America says it is a historic agreement.

“If you consider where our volume is that EPA set for this year is at 3.35 billion gallons, so 5.25 is an increase of 1.9 billion gallons,” he explains. “That’s probably five-fold larger than any increase that EPA has ever granted, but the reality is that’s where our market is at.,”

He points out that when the Biden administration’s EPA, set a three-year RVO in 2023 and set the volume at 3.35 billion gallons for this year, the industry knew it was likely to be 2 billion gallons under where it should have been,

“And we were exactly right,” he says.

That’s why a coalition of farm and biofuels groups had been asking EPA for more robust volumes even then.

This week a bipartisan coalition of lawmakers also urged EPA Administrator Lee Zeldin to finalize these blending levels as they are consistent with production and availability.

He says: “A letter went just this earlier this week from Senators Grassley from Iowa and Senator Klobuchar, Democrat of Minnesota. A bipartisan letter, I think it had 16 ultimate signatures on there endorsing robust volumes under the Renewable Fuel Standard, pointing to these the RVOs as an opportunity to strengthen value added agriculture, which is better for our economy.”

Kovarik says they expect EPA to release the final volumes for 2026, and perhaps 2027, in April or more likely May.

But how likely is the agency to adhere to the agreed volumes?

According to Kovarik, “So do I think that we’re guaranteed to get 5.25 in 2026? There’s no guarantee whatsoever. However, as I stated, I think it makes a decision a lot easier for the policymakers when they can be presented with a unified position where conflict will be reduced.”

He adds that an RVO level of 5.25 billion gallons alone will solve 80% of the market uncertainty the industry’s been facing, allowing the nation’s biodiesel plants to get back online.

Many slowed production due to the biofuels policy uncertainty and flat-lined mandates in the last RVOs.

Missouri Farmer Calls Ford Out for Abandoning Ethanol Flex Fuel in New F-150 Trucks

Mon, 31 Mar 2025 18:08:36 GMT

Missouri Corn Growers Association CEO Bradley Schad, who still helps out around the family farm in his spare time, is calling on Ford Motor Company to reconsider a recent decision he believes will cause long-term harm to U.S. farmers.

“They stopped selling new flex fuel vehicles, so now they don’t have a single new engine platform option for growers to purchase,” Schad says. “The F-Series truck is one of the most important vehicles that we have on the farm today. They’re trying to change that (series) to an electric fleet, and we don’t like that.”

Farm Journal reached out to Ford for comment via a contact form for media on its website. We will update this post if we hear back from anyone at Ford Motor Company.

According to Schad, Ford’s F-150 is not only the top-selling truck in the U.S., but also the top-selling used vehicle in the top five corn-producing states: Iowa, Illinois, Nebraska, Minnesota and Indiana. It is also No. 1 in a handful of ag-friendly states like Missouri, Kansas, Kentucky, Mississippi, the Dakotas and the Carolinas.

Model Year 2023 was the last iteration of the F-150 that Ford offered with the V8 5.0-liter Flex Fuel option. Schad, who is a longtime F-150 owner, says he’s not interested in criticizing Ford for the change. After all, recent regulations removed many of the manufacturer incentives that used to exist for flex fuel and E-85 vehicles.

Bradley Schad, Missouri Corn Growers Association

(Photo courtesy Missouri Corn Growers Association )

“We’re just trying to bring some awareness and work with Ford to change the legislation and regulations and help bring that (option) back,” Schad says. “We realize it’s not entirely their own fault necessarily, but work with us to pass some beneficial legislation that helps farmers and rural consumers purchase a more economical fuel and reduce our dependence on foreign oil.”

Schad says Ford is still supporting its higher-ethanol compatible engines in South America. Brazil, for example, has a minimum ethanol blend in its fuel of 27.5%.

The company’s chief truck-building rivals at GM still offer flex fuel as an engine option on new base models of the Chevy Silverado and the GMC Sierra. Ford, it would seem, is stepping away from the same farmers that helped catapult its trucks to the top of the auto industry, he argues.

(Photo courtesy Missouri Corn Growers Association)

“We need Ford to stand strong with farmers – the No. 1 customer base of F Series trucks in the nation. I don’t think there’s any business sector that buys more F Series trucks than the agriculture sector,” he says. “We need Ford to give us the option to use our own product and help build demand for corn-based ethanol.”

RELATED - Grassley: Farmers Can Feed And Fuel The World At The Same Time. It’s Not Either/Or

Schad is optimistic a long-awaited-but-yet-to-be-passed new Farm Bill will include some type of carve out supporting ethanol-based fuels. Republican Iowa Senator Chuck Grassley has also been advocating for year-round E-15 fuel availability for years. Grassley and Nebraska Senator Deb Fischer (R) reintroduced the Nationwide Consumer and Fuel Retailer Choice Act of 2025 in February. If passed, that bill would enable year-round, nationwide sales of ethanol fuel blends up to 15%.

“We need permanency and predictability with ethanol and biodiesel,” Grassley recently told AgriTalk host Chip Flory.

And while Schad admits he has heard all the critiques of ethanol-based fuels - subpar performance, increased engine problems, etc. - his experience is that higher ethanol fuels are clean burning, high performing and safe.

“There’s nothing more helpful to a farmer than having a strong truck with a strong fuel providing more horsepower and torque in these engines,” Schad says. “Octane is key, and we want to make sure to partner with everyone we can. Hopefully Ford is willing to help us pass some beneficial legislation that brings ethanol the ability to be produced and consumed across the nation.”

Today, U.S. Secretary of Agriculture Brooke Rollins announced USDA will release funding under the Higher Blends Infrastructure Incentive Program (HBIIP) for 543 projects totaling $537 million in 29 states. Established at USDA Rural Development during President Trump’s first term, HBIIP helps expand the production of domestic biofuels by helping fueling stations install the pumps, storage containers and other necessary infrastructure needed to offer biofuel options at the pump.

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Grassley: Farmers Can Feed And Fuel The World At The Same Time. It’s Not Either/Or

Mon, 24 Mar 2025 21:12:38 GMT

A still-agitated Sen. Chuck Grassley spoke to AgriTalk Host Chip Flory on Monday, detailing a list of frustrations from the town hall meeting Grassley hosted last Friday night at the Franklin County Courthouse in Hampton, Iowa.

The event marked the kickoff for Grassley’s 45th annual tour to each of Iowa’s 99 counties, done so he could hear directly from Iowans.

He heard from them all right.

About 150 Iowans worried and upset about funding cuts and mass firings of federal employees, led by Elon Musk and the Department of Government Efficiency, showed up and volleyed questions at the senior senator from Iowa.

In the overflow crowd were also a number of corn and soybean growers and county-based Republican party leaders Grassley and team had personally invited.

“A lot of them showed up. I’d have assumed I’d got a friendly question… And do you know that for a whole hour, not a single farmer or a single Republican leader asked me a single question,” the senator told Flory.

Instead, Grassley said he had to listen to “an hour of people complaining about President Donald Trump, Musk and Congress,” claiming the latter is not doing enough to provide a check on the president’s authority.

“Why wouldn’t they take an opportunity to ask Grassley something about international trade, or about the five-year farm bill or stuff like that?” Grassley asked Flory.

“I’ll ask you right now,” Flory responded. “Let’s talk about E15 and year-around availability. There’s a big push for it right now. Is that going to happen?”

“I think so, but I don’t know exactly when, because you’ve got to be bipartisan,” noted Grassley, who has long-championed year-round E15.

E15 Decision Requires Bipartisan Support

In mid-February, Grassley and Deb Fischer (R-Neb.), both members of the Senate Agriculture Committee, had reintroduced the Nationwide Consumer and Fuel Retailer Choice Act of 2025. The legislation is currently the only permanent, nationwide solution they said that will unleash the power of E15. The legislation would enable the year-round, nationwide sale of ethanol blends higher than 10 percent, helping to lower fuel prices and provide certainty in fuel markets for farmers and consumers.

“We’re hoping all those things get done, but we need permanency and predictability with ethanol and biodiesel,” Grassley told Flory. “And we need certainty, and this administration ought to give us that certainty.”

On his first day in office of his second term, President Trump directed the Environmental Protection Agency to explore the benefits of making E15 available year-round through his Executive Order Declaring a National Energy Emergency.

“We got plenty of leadership here in the Midwest, and all the president would have to do is say, ‘Well, why doesn’t Congress get off of its butt and get something passed to help and bring certainty to this very important industry, because we have the capability of feeding the world, and we have the capability of fueling the world,” Grassley said.

Trump Tariffs Are Concerning

Grassley has been very consistent over the years in his messages to American farmers and the public at large that he is not a proponent of using tariffs to negotiate trade decisions.

Flory asked Grassley what his take is on what’s currently happening on the trade front, and whether he anticipates any long-term gains resulting from implementing tariffs.

“I’m a free and fair trader. I want to negotiate tariffs down,” Grassley replied. “If the president’s plan works, I’m going to say, ‘Praise the Lord.’ And if it doesn’t work, I’m going to say, ‘I told you so.’ But I’m not telling him that yet.”

Grassley said while he’s been in the Senate, he has spent 40 years trying to eliminate or reduce tariffs. “If he (Trump) can do it in a better way, I’m going to honor him for doing it.”

Another trade-related issue Grassley brought up is the decision by the Trump administration to impose fees of up to $1.5 million on Chinese-built vessels entering U.S. ports as part of the administration’s efforts to revive the U.S. shipbuilding industry.

“I don’t know that the president understands what he’s doing,” Grassley said. “The president is just creating a problem every time a ship docks in the United States, putting up to a million-dollar-plus cost on it. It is going to make it much more difficult for us from a competitive standpoint. I don’t know if they really think this stuff through or not.”

Augusto Bassanini, president of the United Grain Corporation, said as much in a March 21 letter to U.S. Trade Representative Jamieson Greer. Bassanini, quoted in an online article by the South China Morning Post, said the “unintended consequences” of the proposed actions “are already beginning to surface, with global shipping markets reacting by reducing bookings to U.S. ports, increasing shipping rates, and modifying contractual terms.”

Are More Tough Economic Times Ahead?

Flory asked Grassley if the various issues are signaling a prolonged period of tough economic times for agriculture. “Should we be anticipating some payments to farmers like, you know, the market facilitation program payments under the first Trump administration?” Flory asked.

“Well, already we got the $29 for soybeans and $42 for corn going out now to farmers. That was the $10 billion appropriation of the previous bill, but that deals with the Biden economics,” Grassley replied.

“The only thing I’ve got to tell you is when (Trump’s) tariffs screwed up our sale of soybeans to China, then he put $28 billion out through the CCC (USDA’s Commodity Credit Corporation), which I think is too liberal of a delegation of authority to the president of the United States. But anyway, farmers want their money from the marketplace, not from the federal treasury,” Grassley added.

Flory’s final question to Grassley was regarding the timeline on tax cuts and budget reconciliation in the Senate.

Grassley said, “I hope today the chairman of the committee tells me he’s put together a bill. If he does that today, that will give us an opportunity to get something moving. Because until now, we’ve had 10 weeks of nothing but talk, talk, talk, going over the same thing week after week, and we got to move.”

The full discussion between Sen. Grassley and Flory on AgriTalk is available here.

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Farmers Watch As Next-Generation Biofuels Chase Market Growth In 2025

Fri, 28 Feb 2025 16:39:44 GMT

Optimism remains high that growth in the biofuels industry will continue under the new Trump administration. In late February, EPA Administrator Lee Zeldin announced year-round E15 sales in eight Midwest states.

“Today’s decision underscores EPA’s commitment to consumer access to E15 while ensuring a smooth transition for fuel suppliers and refiners,” said EPA Administrator Zeldin in a press release .

In Congress, permanent E15 bills with broad bi-partisan support have been reintroduced in both chambers. A permanent E15 rule would increase ethanol demand by 5 to 7 billion gallons a year.

“The President has been, I believe, fairly unequivocal in stating his support for the importance of biofuels in the larger energy independence picture, and he also understands how important it is to our farmers and our ranchers who produce it,” said U.S. agriculture secretary Brooke Rollins during Top Producer Summit.

While the industry is watching the administration closely, green fuel mandates around the globe and those implemented during the Biden administration helped spark a flurry of investment in the renewable diesel and sustainable aviation fuel (SAF) markets.

Farmdoc Daily at the University of Illinois counted 23 renewable diesel plants in operation by the end of 2026 with a total capacity of 5.261 billion gallons.

“I do believe U.S. agriculture’s future is in green diesel and green fuels, including sustainable aviation fuel. That’s where our demand growth is going forward,” says Dan Basse, president and CEO of AgResource. “It takes policy and it takes someone at the helm with a budget to make sure that it happens.”

As those investments mature and as a compliment to renewable diesel, manufacturers are also looking to grow the SAF market. In 2021, the Biden Administration set a goal of 3 billion gallons of SAF by the year 2030. Farmdoc Daily estimates that in 2025, there will be six plants online with a capacity to produce 834 million gallons.

(U.S. Energy Information Administration)

“Just in the U.S. alone, there’s about 30 billion gallons of conventional jet fuel used every year,” says Jeff Davidman, the vice president of state and local government affairs at Delta Airlines. “The U.S. airline industry has made a commitment as an industry to replace 10% of their conventional jet fuel with SAF by 2030. That’s 3 billion gallons. In 2022, there were 25 million gallons made.”

This means the industry can scale quickly to meet those targets as long as the demand for these fuels continues. Delta isn’t alone - other airlines like Southwest touted SAF usage in 2024. The airline is reportedly cutting staff, and looking to pull back on sustainable targets.

However, investments in these “green” fuels continue to be announced. On Feb. 3, 2025, Gevo, Inc. announced the acquisition of Red Tail Energy’s ethanol production plant in Richardton, N.D., where it will focus on SAF.

“We’re primarily focused on sustainable aviation fuel and commercializing essentially a brand new industry,” says Kent Hartwig, director of state government affairs at Gevo. “We’ve been able to utilize ag products for renewable fuels for four decades now. As we see changes in fuel usage, that’s going to mean potential changes in ethanol production. How do we continue to sustain this industry? It’s through new markets. Having a new outlet, like sustainable aviation fuel, is an important market driver to keep farm profitability high.”

Even as a new administration takes over in Washington, Hartwig remains bullish despite the vocal calls to increase domestic oil production.

“The president has been crystal clear on his administration’s desire to see domestic energy dominance,” Hartwig says. “We’ve seen multiple executive orders that have laid out his plan for how we continue to be dominant in that area and in both he specifically calls out biofuels. So, while ‘drill, baby, drill’ is what the President has been saying, I also think he means ‘grow, baby, grow’.”

Ag secretary Rollins echoed those same sentiments during a fireside chat at Top Producer Summit in February.

“Remember during his first primary election, President Trump was the first major candidate to support biofuels, and I think that carried him through Iowa in many ways,” Rollins says. “He hasn’t forgotten that.”

“I think what you see in the policy space is the need to have these fuels available in the future,” says Cory-Ann Wind, director of state regulatory affairs for Clean Fuels Alliance America .

Her organization focuses on advancing biodiesel, renewable diesel and SAF policies.

“I think as long as the regulations or the policies evolve, you’re going to see more and more innovation in this industry,” Wind says.

Wind says regardless of what happens in Washington, state mandates and private industry goals are helping keep the momentum going.

“We’re looking at any mode of transportation that uses diesel,” Wind says. “We’re talking about trucks, ag equipment, construction equipment, long-haul semis and even marine.”

As global demand for these new-era biofuels continues to rise, it’s building a domestic market with the potential to improve prices on the farm.

“In 1979, the U.S. accounted for 62% of world agricultural trade and today that number’s down to 12%,” Basse says. “We now need to find another demand driver for U.S. agriculture.”

In 2024, the U.S. exported a record 1.9 million gallons of ethanol around the globe. CoBank put out a report that says those exports are the key to that industry’s growth. It says exports could top 2 billion gallons in 2025 and 2026.

“This is a real opportunity for the Midwest and Midwest farmer to lead in this space,” Davidman says. “This isn’t just U.S. or Delta demand. This is global demand.”

Bewildering Assessment of Soyoil Impacts From Year-Round E15

Wed, 18 Dec 2024 21:19:36 GMT

Concerns expressed by traders center on a potential shift in demand from biodiesel to ethanol due to year-round E15 sales. That is a questionable conclusion. Consider:

Separate products with different applications. Ethanol and biodiesel are distinct biofuels with different uses and markets: Ethanol is primarily blended with gasoline for use in standard gasoline engines. Biodiesel is typically blended with petroleum diesel for use in diesel engines. This fundamental difference makes a direct substitution between the two unlikely in most applications.
Potential market impacts. While the products aren’t directly interchangeable, there are some potential indirect effects to consider:
Fuel blending choices: Refiners and fuel blenders might adjust their overall biofuel strategy, potentially favoring increased ethanol blending if E15 becomes more widely available year-round.
Feedstock competition: Both ethanol (from corn) and biodiesel (often from soybean oil) compete for agricultural resources. Increased demand for corn-based ethanol could impact crop planting decisions and prices.
Policy uncertainty: The combination of year-round E15 approval and the upcoming change in administration adds complexity to the biofuels policy landscape, which could affect investment decisions in both ethanol and biodiesel sectors.
Market reaction may be premature. The sharp drop in soyoil prices likely reflects short-term market uncertainty rather than a definitive shift in demand. Several factors suggest this reaction may be overblown:
Infrastructure limitations: Widespread adoption of E15 will take time due to the need for compatible fuel pumps and consumer education.
Separate mandates: The RFS has separate volume requirements for different biofuel categories, including biodiesel.
Diesel market stability: Demand for biodiesel is also driven by the diesel fuel market, which has different dynamics than the gasoline market.

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Sort Out The Biofuels Provisions Of The Inflation Reduction Act

Sun, 01 Dec 2024 14:00:00 GMT

Enacted in August 2022, the Inflation Reduction Act (IRA) restructured biofuels tax credits in three ways: extend the Biodiesel Blenders Tax Credit (40A), create a sustainable aviation fuel (SAF) tax credit (40B) and transition future biofuel tax credits to a carbon intensity (CI) (45Z).

“Both 40A and 40B become part of 45Z, transitioning blending to a production credit,” says Susan Stroud with No Bull Ag. “As the end of 2024 draws near, which is the end of 40B providing a $1 per gallon subsidy in the form of a blender tax credit for every gallon of biodiesel and renewable diesel blended into U.S. fuel supplies, oil share has somewhat been buoyed, as mandates are increasing at the same time we are disincentivizing fuel imports. This should spell more demand for soybean oil.”

As the hand off to 45Z nears, there’s a lack of clarity for the opportunity for farmers.

“USDA is trying to put guidance together to help the Department of Treasury with the 45Z rules,” explains Mitchell Hora, founder of Continuum Ag. “But climate smart commodities and low carbon feed stocks for biofuels are not the same thing.”

Whereas bundles were used with 40B and other previous programs are an all or nothing approach, Hora contends 45Z needs to use the Department of Energy’s GREET model.

“If bundles are used, it stifles farmer innovation — it waters down the impact,” he says. “We have to get this done right. The weight of this decision is massive. The ripple effect 45Z could have is tremendous.”

Legislation has been introduced to extend the biofuels tax credit through 2025 as we are still waiting on the Treasury to issue 45Z guidance.

Gulke: A Look At How Tariffs Could Change Demand

Fri, 22 Nov 2024 18:28:21 GMT

A successful farmer once told me to listen to politicians with skepticism but watch what they do with interest. The election was a prime example of impacting our economic well-being and future agricultural policies.

The fundamental headwinds in price outlook remain. The ending stocks for corn, soybeans and wheat have been increasing since the Ukrainian invasion peaked grain prices. Prices have since retreated 100% of the gains back to ground zero ahead of a new administration.

The problem with increasing ending stocks (surpluses) is they are carried into a new marketing year. Corn carryover on Aug. 30 carried 1.76 billion bushels into our new marketing year — 400 million more than the previous year. Coupled with a record corn crop, ending stocks will grow another 200 million bushels by Aug. 30, 2025. That carry-in to the crop two years out suggests stocks building and further pressure on prices without a major production shortfall. USDA said in early November carryout for 2025/26 would rise 330 million bushels.

Jerry Gulke Supply Demand Chart November Top Producer 2024

(USDA)

Good and Bad News Behind Us
The most obvious impact of ever-increasing excess stocks can be seen by the five-year U.S. supply and demand table. The ending stocks in 2021/22 corresponds to prices of soybeans in the $16 to $17 range, helped also by questions of the South American production keeping those lofty levels in place until more was known about the U.S. crop. Prices retreated as crops stabilized and ending stocks rose to the current outlook of 470 million bushels.

The USDA came out with their early 25/26 projections with soybean acres at 85 million with production at 4.42 mil-bu and ending stocks at 515 mil-bu.–a level not seen since 2019/20. Prices hadn’t reached $10 prior, and it took a war event, weather in the Southern Hemisphere and fear of supply shortage to accelerate beans to $17. Quite the opposite is in place today with a change in the eco-political landscape. We were also looking forward to the prospects of an accelerated demand for soybean oil. Remember the impossible task to meet demand in three to four years?

The “three-to-four year” outlook has arrived but with additional headwinds for bio-feed stocks having to deal with local used cooking oil (UCO) as an alternative and the increasing imports of UCO including China. Prices of canola and soybean oil have new life after retreating to pre-veggie diesel hype. In fact, soybeans reached lows in August near $9.50.

Outlook
The question becomes whether threats of import tariffs include barring UCO imports outright or merely tariffing the product, especially from China. How much tariff is sufficient for it to become unprofitable to use?

The long-term answer is for our U.S. domestic demand to increase. Biofuels usage, if allowed to increase, helps soybean prices. The same goes for corn excess. The results on the price of feedstocks due to increased biofuels in Brazil and Indonesia is a testament of such a policy, and it severs the dependence on the Big Gorilla in the room: China.

Policy Changes in Brazil Could Curb Controversial Used Cooking Shipments Into the U.S.

Fri, 22 Nov 2024 17:36:09 GMT

Brazil is currently facing significant domestic pressures that could impact its sales of used cooking oil (UCO), particularly in the context of its growing biodiesel industry.

As the country ramps up its biodiesel blending mandates, the demand for soybean oil — of which UCO is a crucial component — has surged. This shift in focus towards meeting domestic biodiesel needs may lead to a reduction in the availability of UCO for export.

Factors influencing Brazil’s UCO sales include biodiesel demand and blending mandates.

Brazil’s biodiesel blending mandate is set to reach 14% (B14) in 2024, with projections to increase to 15% by 2025. This represents the highest blending requirement in the country’s history.
The growing domestic consumption of soybean oil for biodiesel production is expected to significantly reduce the volume available for export. In fact, soybean oil accounted for 72% of raw materials used for biodiesel in 2024, up from 69% in 2023

Impact on exports

The increased domestic demand has already begun to affect export levels. In the 2023-2024 period, Brazilian soybean oil exports fell by 22.2% compared to previous years, despite an overall increase in production.
Analysts suggest that if Brazil does not enhance its soybean crushing capacity or diversify its feedstock sources, it may stop exporting soybean oil altogether within a few years.

The U.S. ag attaché in Brazil projected 5.6 million metric tons of soybean oil would be used to make biodiesel in 2024 with 630,000 MT from tallow, 165,000 MT palm oil, 100,000 MT UCO and 820,000 MT of other feedstocks ( link ).

Cumulative biodiesel production from January through June 2024 reached 4.2 billion liters, a 27% increase over the same period in 2023 (3.3 billion liters). Soybean oil accounted for 73% of the total. Tallow accounted for 6% of biodiesel production and palm oil for 1%. The remaining 15% came from fats and 5% from various feedstocks, including chicken fat, pork fat, cottonseed oil, rapeseed/canola oil, used cooking oil, and corn oil.

Economic Considerations:

The Brazilian government has also introduced measures that could further complicate the export landscape. For instance, recent tax changes aimed at restricting tax credits for certain exports could raise costs for grain and oilseed exporters, adding pressure to the already strained market.

Additionally, with U.S. imports of used cooking oil from Brazil now authorized and increasing due to favorable biofuel policies in the U.S., Brazil’s domestic market dynamics may shift further towards prioritizing local biodiesel production over exports.

Bottom line: Brazil’s amendments to its domestic policies and increasing biodiesel mandates are likely to reduce the availability of used cooking oil for export, potentially reshaping its role in the global biofuel market.

Legislation Offered to Extend 45Z Tax Credits, Restrict to Domestic Feedstocks

Thu, 26 Sep 2024 16:37:09 GMT

There’s a new push in Congress to boost renewable fuels production in the U.S.

The 45Z tax credit is set to begin January 1, 2025 under the Inflation Reduction Act and run until the end of 2027. But this week, a bipartisan group of lawmakers has proposed extending the credit through 2034 and restricting the credit to domestic feed stocks.

The Farmer First Fuel Incentives Act was introduced in the Senate by Sens. Roger Marshall (R-Kan.) and Sherrod Brown (D-Ohio), and in the House by Reps. Tracey Mann (R-Kan.) and Marcy Kaptur (D-Ohio).

Donnell Rehagen, chief executive officer for the Clean Fuels Alliance America, says, “This tax credit 45Z will be effective January 1, 2025, but it’s really only good for a couple of years. Because it’s a critical element to our industry and the ability for industry to grow, getting that tax credit extended now creates that certainty our producers need in order to make that investment to continue to grow their production capacity.”

The tax credit ranges from $1.25 to $1.75 per gallon depending on the carbon intensity score of the feed stock used, but currently allows foreign feed stocks. The proposed bill would target the credit to only domestic feed stocks, which is drawing mixed response as some biofuels producers currently rely on imported feed stocks like used cooking oil from countries such as China.

Rehagen says their members support free trade, but more importantly, they need the Treasury Department to provide 45Z guidance as soon as possible so biofuels producers can acquire feedstocks for the program.

“We want to be able to export our finished fuels to countries that would use them and maybe pay production incentives for that. So, we don’t want to really be doing anything that could cause harm for our ability to access international markets. Some of that starts with trying to then disincentivize the importing of other products,” he explains. “We’re concerned it’s going to result in a pullback of some of the production that’s going on today as those producers have to wait for a little more certainty.”

Farmers also need this guidance as they make cropping plans for the 2025 growing season as feed stocks will need to be produced with climate smart agricultural practices to lower their carbon intensity score and qualify for the program.

U.S. EPA Says It is Auditing Biofuel Producers' Used Cooking Oil Supply

Wed, 07 Aug 2024 13:56:28 GMT

The U.S. Environmental Protection Agency has launched investigations into the supply chains of at least two renewable fuel producers amid industry concerns that some may be using fraudulent feedstocks for biodiesel to secure lucrative government subsidies.

EPA spokesperson Jeffrey Landis told Reuters that the agency has launched audits over the past year, but declined to identify the companies targeted because the investigations are ongoing.

The production of biodiesel from sustainable ingredients, like used cooking oil, can earn refiners a slew of state and federal environmental and climate subsidies, including tradable credits under a program administered by the EPA called the Renewable Fuel Standard. But fears have been mounting that some supplies labeled as used cooking oil are actually cheaper and less sustainable virgin palm oil, a product that is associated with deforestation and other environmental damage.

The issue came into focus following a surge in used cooking oil exports from Asia in recent years that analysts have said involves unrealistically high volumes relative to the amount of cooking oil used and recovered in the region. The European Union is also investigating feedstocks over the fraud concerns.

The EPA audits began after the agency updated domestic supply-chain accounting requirements in July 2023 for renewable fuel producers seeking to earn credits under the RFS, he said.

“EPA has conducted audits of renewable fuel producers since July 2023 which includes, among other things, an evaluation of the locations that used cooking oil used in renewable fuel production was collected,” he said. “These investigations, however, are ongoing and we are not able to discuss ongoing enforcement investigations.”

U.S. senators from farm states have called for more oversight of biofuel feedstocks, saying federal agencies should be as rigorous in verifying imports as they are auditing domestic supply chains.

“The Biden administration has created vigorous standards to verify, not just trust, American producers, and it is imperative that the same scrutiny is applied to imported feedstocks,” six U.S. senators, led by Roger Marshall and Sherrod Brown, wrote in a June 20 letter to federal agencies.

Another letter from 15 senators to the Treasury Department on July 30 urged the administration to exclude imported feedstocks like UCO from an additional clean fuel tax credit program passed in the Inflation Reduction Act.

(Reporting by Leah Douglas in Washington; Editing by Richard Valdmanis and Matthew Lewis)

The ABCs of 45Z: Take Time Now to Prepare for Low-Carbon Market Opportunities

Thu, 01 Aug 2024 18:25:43 GMT

By Heather Gieseke

The U.S. Treasury’s recent tax-credit guidance for the biofuels industry has sparked many questions about farmer impacts and ability to participate.

While there’s still a lot to figure out, it’s clear farmers who produce low-carbon fuels will benefit from greater opportunities ahead — including financial incentives and higher demand for crops with a smaller carbon footprint. To be able to take advantage of those opportunities when they arise, take time now to prepare.

What to Know Now
Each biofuels plant will manage this low-carbon market opportunity differently. There are a lot of factors in play for both facilities and farmers. But if you have implemented, or are considering, regenerative practices and you have the ability to deliver your crops to a biofuels plant, you should:

1. Document your practices.
Ideally, you’ll use data straight from your farm machinery software systems. If you haven’t done this before, start now. Even if not for 45Z, this certainly will benefit you in other ways in the future.

2. Reach out to the processing destinations local to you.
Do they have any programs already? If not, do they expect to have them in the future? What sort of data will be required to participate? How can you keep up with new information as it becomes available?

3. Hire a firm to help you calculate your current carbon intensity (CI) score.
If you have a fierce curiosity or desire to participate, consider expert help. This is likely just the beginning of a big future that will result from propelling your verified low CI score into additional revenue or demand opportunities for your farm.

New Terms In the World of Carbon Markets:

Carbon Intensity Score
A CI score is a measurement of greenhouse gas emissions divided by the amount of energy needed to produce something. A CI score is critical to determine the value of low-carbon products such as ethanol, soy biodiesel or sustainable aviation fuel (SAF). The lower the CI score, the fewer the emissions. Carbon neutral means zero emissions occurred during the product’s production. CI scores can also be negative. Crops with a lower CI are generally grown with practices such as reduced tillage, cover crops and nitrogen management strategies.

45Z
This provision in the Inflation Reduction Act provides a tax-credit incentive for producing low-emission biofuels. It only runs from 2025 to 2027 but could potentially be extended. This credit will likely be passed on as a premium to farmers for low-carbon grains and oilseeds to compensate for sustainable practices with verifiable data.

GREET
The Greenhouse Gases, Regulated Emissions and Energy Use in Transportation (GREET) model standardizes the measurement of carbon emissions across transportation supply chains. We are waiting for an updated version of the GREET model to support 45Z CI calculations.

USDA Says Trade Efforts Are Working to Build Markets Abroad

Tue, 21 Nov 2023 20:26:40 GMT

USDA announced last week it is introducing the Regional Agricultural Promotion Program (RAPP) to support continued growth of U.S. agricultural exports and to also introduce U.S. agricultural products to new markets.

The agency will invest $1.3 billion to support that market diversification effort within a public-private partnership with the agricultural sector, according to Alexis Taylor, USDA Trade and Foreign Agricultural Affairs Under Secretary.

Specifically, Taylor told AgriTalk Host, Chip Flory, that RAPP will provide assistance to eligible organizations that conduct market promotion activities, including ones to address existing or potential non-tariff barriers to trade.

Headway In India

Taylor told Flory the Biden administration has tallied numerous trade policy wins in 2023. Some of the key recent wins, she referenced, have been in India, which has been difficult to access with U.S. agricultural goods.

“They have what they would say are 800 million small-holder farmers. Imagine that – more than twice our population in the whole United States,” she said. “They increasingly are looking to develop an industrialized (society) and determine how they move away from subsistence farming to a better economic model. As they’re trying to wrap their arms around how to make that move, using tariffs has been one of the ways they’ve protected their farmers.”

Taylor said USDA has worked closely with India to reduce tariffs and has secured nine tariff reductions in 2023. To date, the agency reports India has dropped retaliatory tariffs on apples, chickpeas, lentils, almonds and walnuts. The Indian government also has reduced tariffs for turkey, duck, blueberries and cranberries.

Steady Progress Cited

Four additional export market successes Taylor and USDA cite as having achieved this year include:
1. Canada approving legislative recognition of U.S. biofuels, maintaining the largest and most dependable export market for U.S. ethanol and biodiesel;
2. Japan renegotiating beef safeguard levels under the U.S.-Japan Trade Agreement, reducing tariffs and generating growth opportunities for $150 million in beef exports;
3. Brazil agreeing not to change import certification requirements, ensuring continued exports of U.S. milk, beef, and seafood; and
4. Mexico granting market access to U.S. potatoes following more than 20 years of engagement.

Looking ahead, Taylor told Flory one of USDA’s key objectives will be increasing the export of U.S. agricultural foods and products to countries in Africa.

“By 2051, one in four people on the planet will live on the African continent, and we cannot ignore this any longer,” she said. “We’re really hopeful that the (RAPP) program will provide some resources for our food and ag sector to be able to invest in some of these areas of the world.”

Taylor’s conversation with Flory, which took place during the annual National Association of Farm Broadcasters Trade Talk program in Kansas City, is available to listen to here:

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Majority of U.S. Renewable Diesel is Consumed by California

Tue, 01 Aug 2023 13:22:05 GMT

Renewable diesel consumption in the U.S. hit 28 million barrels in 2021, according to the Energy Information Administration (EIA) . However, the only states to consume the renewable fuel were California and Oregon, with California burning up 99% of the consumption rate.

California’s staggering diesel uptake could be due to the state’s Low Carbon Fuel Standard (LCFS) .

In 2011, the state of California enacted the LCFS to encourage cleaner fuel consumption through rebates to paying customers. At the time of the legislation’s passage, California consumed 1 million barrels of renewable diesel. From 2011 to 2021, that volume increased from 1 million barrels to 28 million barrels.

While California is capable of producing roughly 3 million gallons of renewable diesel in-state, as was produced in 2021, it has a track record of importing—out-of-state and from Singapore, especially—to meet demand.

Renewable diesel is chemically equal to petroleum diesel and similar to biodiesel but is made, transported and used differently than biodiesel, according to EIA. Renewable diesel can be moved via pipelines and sold without blending with petroleum diesel, unlike biodiesel.

Few U.S. states, including North Dakota, Louisiana, California, Wyoming, Washington and Kansas, produce all U.S. renewable diesel, with Louisiana leading the production race at 46% of the total. These states each have contracts with California to push fuel to the state’s pumps.

These U.S. consumption and capacity rates are projected to continually increase, based on EIA’s estimates.

Keeping up with California’s demand, EIA forecasts U.S. renewable diesel capacity could more than double by 2025 , adding a boost to domestic production. The administration also anticipates the same trajectory for renewable diesel consumption.

EPA Moves to Deny 26 Small Refinery Exemption Requests

Thu, 20 Jul 2023 17:41:33 GMT

Each year, EPA sets a renewable fuel standard (RFS) that requires gas and diesel be blended with a minimum volume of renewable fuels. Small fuel refiners can petition the EPA to be exempt from fulfilling the RFS obligations due to “disproportionate economic hardship,” according to EPA.

EPA announced Friday that the agency has moved to deny exemption petitions from 26 small refineries for compliance years 2016 to 2023.

Here’s what ethanol stakeholders had to say about EPA’s decision:

“We appreciate the EPA standing by its commitment to protect the integrity of the RFS. Nearly two decades of data prove that the supposed ‘cost’ to refiners is an accounting fiction, and EPA’s decision reflects those facts,” said Emily Skor , Growth Energy CEO.

“The RFS is finally working as intended to drive increased production and use of low-carbon renewable fuels. Today’s action is consistent with the Tenth Circuit Court’s landmark decision and honors the RFS in a way that is fair, transparent, and focused on growth,” said Geoff Cooper , Renewable Fuels Association president and CEO.

EPA’s Small Refinery Exemption Track Record

The decision follows a study from the U.S. Government Accountability Office (GAO) released in November 2022, which found small refineries experience the economic hardship necessary to meet the exemption, and that EPA’s continued decision to deny all exemption petitions is inaccurate.

GAO then recommended EPA take up a new exemption assessment process that includes:

1. Reassess its conclusion that all small refineries recover the cost to meet each year’s blending obligations.
2. Develop new policies and procedures for making exemption decisions.
3. Construct a new approach to better meet its annual March deadline.

However, the GAO said EPA made it clear, after reading the study results, that “it does not intend to revisit its 2022 exemption decision.” This looks to be the case as it denied all requests again this year.

EPA Details its Reason for Denying 26 Small Refinery Exemption Requests

Thu, 20 Jul 2023 16:53:35 GMT

EPA issued a notice detailing the reasons for rejecting 26 small refinery exemptions . These exemptions relate to the obligations these refineries have to blend biofuels with conventional fuel under the Renewable Fuel Standard (RFS). The exemption requires small refineries to prove that adhering to the standard would lead to ‘disproportionate economic hardship’.

The rationale for the July rejections follows the precedent set by similar decisions made in April and June 2022.

Related story: EPA Moves to Deny 26 Small Refinery Exemption Requests

In their investigation, the EPA found that all refineries faced equivalent costs when obtaining Renewable Identification Numbers (RINs)—which serve as proof of complying with the RFS—irrespective of whether they procure them by blending renewable fuels or buying them on the open market.

The market price for fuels rises to accommodate the RIN cost, much like it would due to higher crude prices. The end effect is that these obligated parties can recoup their expenditure on RINs through the market price of the fuel they produce.

This process is universal, and the EPA clarifies there is no disproportionate cost for any party, including small refineries, as the costs are recovered in the market price.

Related story: The Countdown is on for EPA to Revise WOTUS

Under the Clean Air Act, those affected by this decision have the right to request a judicial review with the US Court of Appeals for the District of Columbia Circuit within 60 days of the notice’s Federal Register publication. Several of the small refiners involved have declared their intention to lodge such petitions.

Renewable Fuel Standard Slammed by Biofuel Industry

Thu, 22 Jun 2023 17:06:09 GMT

On Wednesday, EPA released biofuel blending obligations under the Renewable Fuel Standard (RFS) for 2023, 2024 and 2025. This is the first rule following the Energy Independence and Security Act of 2007, which set blending volumes only through 2022.

According to the agency’s release , the final rule will reduce reliance on oil imports by 130,000 to 140,000 barrels of oil per day.

In December 2022, EPA, by court order, released renewable fuel blending proposals for 2023, 2024 and 2025. EPA received mixed reviews on its projections and heard public comment before it sought changes.

Here’s a breakdown of the changes from December 2022 to June 2023’s finale rule:

Cellulosic Biofuel

EPA says it looks to boost overall biofuel blending levels, but the final volumes include only 15 billion gallons of conventional biofuels in all three years, with 250-million-gallon supplemental amount for 2023.

For 2023, the agency did increase the cellulosic level from December’s proposal of 0.72 billion gallons to 0.84. However, the agency decreased blending obligations for the years following.

The 2024 blending obligations sit at 1.09 billion gallons (1.42 billion gallons proposed in December) and 1.38 billion gallons (2.13 billion gallons proposed).

These changes did not meet the approval of some biofuel industry leaders, including Growth Energy CEO Emily Skor.

“EPA inexplicably failed to extend that recognition to conventional biofuels. The bioethanol industry has more than adequate supply to meet the higher volumes that were originally proposed in December 2022,” Skor said in a press release . “We should be expanding market opportunities for higher blends like E15, not leaving carbon reductions on the table.”

Biomass-Based Diesel (BBD)

In 2023, EPA will require use of 2.82 billion gallons of BBD, generally made from soybean and canola oil — just a 2.2% increase over the 2.76 billion gallons mandated last year, but no increase from the level proposed in December.

For 2024, the agency will increase the level to 3.04 billion gallons (2.89 billion gallons proposed in December) and 3.35 billion gallons in 2025 (2.95 billion gallons proposed).

Kurt Kovarik, president of federal affairs at Clean Fuels Alliance America, mirrored Skor’s comments. He says EPA’s final rule on diesel is a shame, given the data that showcases the fuel’s upward trajectory. He slammed the agency for its undercut numbers and delayed rulings.

“EPA ignores the hundreds of millions of gallons of biodiesel, renewable diesel and sustainable aviation fuel generated in the first half of 2023,” Kovarik continues. “In past years when EPA set RFS volumes after the statutory deadline and after the compliance year is nearly half over, the agency properly accounted for available gallons and RINs.”

Advanced Biofuels

This year, advanced biofuels will account for 5.94 billion gallons (5.82 billion proposed). That level increases to 6.54 billion gallons in 2024 (5.82 billion proposed) and 7.33 billion gallons (7.43 billion proposed) in 2025.

Electric Vehicles are Off the Table

In December 2022, EPA added renewable electricity to the RFS proposal for the first time. The agency said the plans were aimed at providing “clarity on how electricity would be incorporated into the RFS.

EPA chose to remove electricity from the RFS lineup, at least for now.

Geoff Cooper, Renewable Fuels Association president and CEO, says he and his members feel the agency made the right move to put a hold on electricity in the RFS until they “get it right.”

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

Wed, 21 Jun 2023 18:18:04 GMT

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.

	2022 bil. gal.	2023 bil. gal.	2024 bil. gal.	2025 bil. gal.
Conventional renewable fuel	15.25	15.25	15.25	15.25
Cellulosic	0.63	0.72	1.42	2.13
Biodiesel	2.75	2.82	2.89	2.95
Advanced biofuel	5.63	5.82	6.62	7.43
Total renewable fuel	20.63	20.82	21.87	22.68
Supplemental standard	0.250	0.250	N/A	N/A

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