EPA finalizes 2019 RFS RVOs, fails to address waiver, eRIN issues

By Erin Voegele | November 30, 2018

On Nov. 30, the U.S. EPA released a final rule to set 2019 renewable volume requirements (RVOs) under the Renewable Fuel Standard. When compared to the proposed rule, the final rule increases the RVOs for cellulosic biofuel, advanced biofuel and total renewable fuel.

The EPA has set the 2019 RVO for cellulosic biofuel at 418 million gallons, up 37 million gallons from the 381 million gallon RVO proposed earlier this year. The RVO for advanced biofuel was finalized at 4.92 billion gallons, up 40 million gallons from the 4.88 billion gallon RVO proposed earlier this year. For total renewable fuel, the RVO was finalized at 19.92 billion gallons, up 40 million gallons when compared to the 19.88 billion RVO proposed last summer. The 2019 RVO for biomass-based diesel was finalized at 2.1 billion gallons last year. The final rule also sets the 2020 RVO for biomass-based diesel at 2.43 billion gallons, which is the same volume included in the proposed rule.

When compared to the 2018 RVOs, the 2019 requirement for cellulosic biofuels is nearly 130 million gallons higher, with the RVO for advanced biofuel up 630 million gallons. Conventional fuel volumes, met primarily by corn ethanol, are maintained at the implied 15 billion gallon statutory target for 2019.

On a percentage basis, the 2019 RVOs will require total renewable fuel to comprise 10.97 percent of U.S. transportation fuel next year, including 2.71 percent advanced biofuel, 1.73 percent biomass-based diesel and 0.23 percent cellulosic biofuel.

While most in the biofuels industry seem pleased with the RVOs set in the final rule, many are expressing disappointment in what the rule does not address. Those in the ethanol industry are criticizing the rule for failing to account for small refinery hardship waivers, while groups representing the bioenergy industry are disappointed the EPA has failed to address the role of biomass-based electricity under the RFS.

The Renewable Fuels Association said it is pleased that the EPA has maintained the 15 billion gallon target for conventional fuel and included modest increases for advanced and cellulosic biofuels. The RFA, however, also points out the rule does not account for any small refiner exemptions the agency expects to issue in 2019. “Hopefully, that means EPA is not intending to issue any small refiner waivers at all in 2019 because it knows there is no rationale or basis for doing so,” said Geoff Cooper, president and CEO of the RFA.

“We urge Acting Administrator Andrew Wheeler to faithfully and strictly enforce the 15-billion-gallon conventional renewable fuel requirement in 2019, rather than allowing the standard to be eroded through the use of clandestine small refiner waivers as former Administrator Pruitt did,” Cooper added. “Mr. Pruitt issued nearly 50 refinery waivers from 2016 and 2017 RFS requirements, including bailouts to companies like Chevron and Andeavor that recorded billions of dollars in net profits in those years. As a direct result of the exemptions, America’s ethanol producers and farm families have experienced demand destruction and are now facing the most challenging economics in years. In examining small refiner exemption petitions for 2018, 2019, and beyond, we implore Acting Administrator Wheeler to exercise the restraint and thoughtfulness that clearly eluded his predecessor.”

Growth Energy also called on the EPA to account for small refinery waivers. "We are pleased to see the 2019 RVO numbers released on time and that they hold strong promise, with a 15 billion gallon commitment to starch ethanol and 418 million gallons of cellulosic biofuels," said Emily Skor, CEO of Growth Energy. "But the latest EPA rule is also a missed opportunity to correctly account for billions of gallons of ethanol lost to refinery exemptions. Until these are addressed properly, we’re still taking two steps back for every step forward."

"The current Acting EPA Administrator, Andrew Wheeler, has a valuable opportunity to chart a new course for biofuels and rural America,” Skor continued. “To reverse the damage done by his predecessor, the EPA must follow the law and reallocate lost gallons, ensuring the ethanol targets set by Congress are actually met. This would plug the leak in America's biofuels targets and give farmers the boost they need to keep the rural economy moving."

The American Coalition for Ethanol urged U.S. senators to address the waiver issue before confirming Wheeler as administrator of the EPA. “On paper, EPA appears to be resisting refiner demands to reduce conventional biofuel blending in 2019 below the statutory 15-billion-gallon level,” said Brian Jennings, CEO of ACE. “However, in reality, as long as EPA fails to reallocate the over 2 billion gallons worth of blending obligations waived for ‘small refineries,’ renewable fuel demand will remain flat causing farmers and rural biofuel producers to continue suffering the consequences.

“While we are fighting this injustice with a challenge of three specific Small Refinery Exemptions (SREs) in the U.S. Court of Appeals for the 10th Circuit and a petition asking EPA to account for the lost volumes resulting from retroactive SREs, Acting EPA Administrator Andrew Wheeler should be fixing this problem,” Jennings continued.

“Economic hardship is real, but not for oil refiners. The truth is farmers and ethanol producers are struggling to make ends meet because of depressed prices caused by man-made limits or waivers on demand,” he said. “Assuming the President formally nominates Acting Administrator Wheeler to lead EPA, we call on U.S. Senators to insist he provides them with tangible evidence EPA will reallocate the blending obligations waived for Small Refiners before voting to confirm him.”

The Biotechnology Innovation Organization expressed disappointment that the EPA failed to reallocate gallons displaced by hard refinery waivers and called on the agency to take steps to ensure small refinery waivers are issued in accordance with law. BIO also stressed the EPA needs to approve new biofuels pathways and facility registrations to allow volumes of advanced and cellulosic biofuels to grow. “Going forward, BIO looks forward to working with EPA as it develops its planned reset of the RFS to ensure a favorable and supportive investment climate for advanced and cellulosic biofuel producers,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section. “Given the uncertainty facing agriculture and rural communities, it is critical EPA put forward a strong policy that will increase production of sustainable, low carbon biofuels, strengthen the biobased economy, create good paying jobs, and help revitalize rural economies across the country.”

The Coalition for Renewable Natural Gas (RNG Coalition) said the increased RVO for cellulosic biofuel will increase RNG project investment and development. “We appreciate that the EPA’s 418 million gallon cellulosic biofuel volume requirement for 2019 reflects continued growth in the renewable natural gas industry,” said Johannes Escudero, CEO of the RNG Coalition. “It provides a policy framework that will lead RNG stakeholders to invest in and build new RNG production facilities just as the Renewable Fuel Standard is designed to do.”

According to the RNG Coalition, the RNG industry currently produces 95 percent of the fuel used to meet cellulosic RVOs. “The growth in production of renewable natural gas and the completion of nearly 50 new production facilities from coast to coast since 2014 is proof positive that the RFS is working as intended for cellulosic and advanced biofuels,” Escudero continued. The RNG Coalition estimates an additional 55 RNG production facilities are currently under construction or development.

The Biomass Power Association, American Biogas Council and Energy Recovery Council have expressed frustration that the EPA failed to include electricity the 2019 RVOs. Despite electricity’s inclusion in the law establishing the current RFS, and a 2014 EPA rulemaking that qualifies renewable electricity as an accepted fuel in the RFS program, the agency has not yet processed a single application from an electricity producer to participate in the program.

“For the fourth year in a row, EPA has turned its back on renewable electricity from biomass in the RFS, despite our members clearly qualifying for the program,” said Bob Cleaves, president and CEO of Biomass Power Association. “Our sector represents almost 50 percent of the available cellulosic transportation fuel in the marketplace, and we support rural American jobs within the forestry industry. If the EPA believes that the RFS is in need of reform, an important first step is to properly implement the law using the tools that Congress gave them in the statute. It’s time for EPA to start doing its job, and immediately include electricity in the RFS.”

“EPA missed an important opportunity to provide critical assistance to resilient municipal infrastructure that is currently challenged by market conditions and policy oversights by failing to establish a program to recognize eRINs,” said Ted Michaels, president of the Energy Recovery Council. “The EPA must act immediately to include electricity.”

"While the ABC is pleased by EPA's continued recognition of biogas' role in cellulosic fuel volume, we remain disappointed that they continue to ignore the eRIN pathway contained in the 2014 Final Rule,” said Patrick Serfass, executive director of American Biogas Council.  “Should biogas-to-renewable-electricity projects be accepted for registration, many more biogas producers could participate in the RFS and in turn lower greenhouse gas emissions. The ABC will continue to advocate for the eRIN pathway to be activated and bring additional biogas volumes to market."

A full copy of the final rule is available on EPA's website