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AFPM petitions EPA to waive portion of 2016 cellulosic RVO

By Erin Voegele | January 04, 2017

On Dec. 28, the American Fuel & Petrochemical Manufacturers filed a petition with the U.S. EPA asking the agency to waive the 2016 renewable fuel standard (RFS) cellulosic volume obligation, citing a shortfall in 2016 cellulosic production.

Within the waiver, AFPM notes that the EPA set the 2016 renewable volume obligation (RFO) for cellulosic biofuel at 230 million ethanol-equivalent gallons. Data published by the U.S. EPA currently shows approximately 159.83 million cellulosic renewable identification numbers (RINs) were generated under the RFS program on a net basis during the first 11 months of 2016. Data for December is not yet available. From January through November 2016, 3.3 million D3 cellulosic RINs were generated for ethanol, along with 96.53 D3 RINs for renewable compressed natural gas, 61.36 million RINs for renewable liquefied natural gas, and 534,429 D7 cellulosic diesel RINs for cellulosic heating oil.

Within its petition, AFPM predicts total 2016 cellulosic biofuel production will fall 40-60 million gallons short of the 2016 RVO. On behalf of its refining members, the AFPM said it is petitioning the EPA to grant a partial supplemental waiver of the 2016 cellulosic biofuel standard in an amount equal to the shortfall of cellulosic RINs available for compliance. According to the petition, the justification for the AFPM’s request is “an inadequate domestic supply.”

The petition also discusses cellulosic waiver credits (CWCs), noting the EPA has set the 2016 CWC price at $1.33. The petition explains that unless the EPA grants the AFPM’s waiver request, obligated parties would be required to purchase CWCs to cover the shortfall in production compared to the 230 million gallon RVO. Assuming a cellulosic production shortfall of 40-60 million gallons, the AFPM claims the total cost of CWCs to obligated parties would be $50-$75 million.

Under the Clean Air Act, the EPA has 90 days to act on the petition. The AFPM, however, has requested an expeditious decision because the deadline for 2016 RFS compliance is March 30. The AFPM also asked the EPA to defer the requirement to purchase 2016 CWCs until the agency can formally act on its petition.

A full copy of the petition can be downloaded from the AFPM website.