EPA releases proposed 2018 RFS volume requirements

On July 5, the U.S. released its proposed rule to set 2018 renewable volume standards (RVOs) under the RFS, along with the 2019 RVO for biomass-based diesel. Overall, the proposed RVOs require approximately 19.24 billion gallons of renewable fuels in 2018.

The proposal calls for 19.24 billion gallons of total renewable fuel, including 238 million gallons of cellulosic biofuel, 2.1 billion gallons of biomass-based diesel and 4.24 billion gallons of advanced biofuel. The 2.1 billion gallon biomass-based diesel requirement for 2018 was finalized last year. For 2019, the new proposal calls for the biomass-based diesel RVO to be maintained at 2.1 billion gallons.

When compared to the final RVO for 2017, the requirement for total renewable fuel drops slightly from 19.28 billion gallons to the proposed 19.24 billion gallons. The cellulosic RVO has also been lowered, from 311 million gallons in 2017 to a proposed 238 million gallons in 2018, with the advanced biofuel requirement dropping from 4.28 billion gallons in 2017 to a proposed 4.24 billion gallons in 2018. The final RVO for biomass-based diesel in 2017 was set at 2 billion gallons.

In its proposed rule, the EPA indicates that it is proposing to reduce the required volume of all the fuel categories except biomass-based diesel due to an anticipated shortfall cellulosic biofuel production. The agency also noted the proposed biomass-based diesel volume exceeds the statutory minimum “and the proposed volumes of total renewable fuel, advanced biofuel and cellulosic biofuel would achieve the implied statutory volumes for conventional biofuel and non-cellulosic advanced biofuel.”

According to the EPA, the proposed 2018 volume requirements for 2018 are 40 million gallons lower when compared to the volumes required in 2017. “For the first time EPA is proposing in 2018 to reduce the advanced biofuel and total renewable fuel volumes by the same amount as we would reduce the required volume of cellulosic biofuel,” said the agency in the proposed rule. “These reductions effectively preserve the implied statutory volumes for conventional and renewable fuel and non-cellulosic advanced biofuels, rather than requiring additional volumes of non-cellulosic advanced biofuels to backfill for some of the shortfall in cellulosic biofuel, as EPA has done in previous years.”

The Renewable Fuels Association said the proposal stays the course by maintaining the conventional biofuel requirement at the statutory level. “We are pleased EPA is proposing to maintain the conventional biofuel requirement at the 15 billion gallon level required by the statute, just as EPA finalized in its 2017 RVO,” said Bob Dinneen, president and CEO of the RFA. “Consumers only see the full benefits of the RFS when EPA implements the policy as intended by Congress. By staying the course and maintaining a strong RFS, consumers will continue to benefit from the policy, including a greater choice at the pump, while breathing cleaner air and seeing a boost to local economies.

“By maintaining the 15 billion gallon level for corn ethanol, the rule will also help to drive more investment in infrastructure to accommodate higher ethanol blends,” Dinneen continued. “The RFS is a vital policy and we encourage EPA to finalize this rule as quickly as possible and certainly in time to meet the statutory deadline of Nov. 30.”

Growth Energy said the proposed RVOs signal the administration is holding to its promise to support the RFS, but added that more certainty is needed. “The release of the proposed RVOs is the first real test of the current administration’s pledged support for renewable fuels, and we are encouraged to see the EPA demonstrate President Trump’s continued commitment to the Renewable Fuel Standard,” said Emily Skor, CEO of Growth Energy.

“Information from the Department of Energy, as well as from the numerous retailers across the country selling higher biofuel blends, confirm what we’ve known for years—there is no ‘blend wall.’ More and more of America’s drivers are choosing higher biofuel blends, like E15, and fulfilling the promise of the RFS,” Skor continued. “While we are pleased with the EPA and Administration’s commitment to a 15-billion-gallon target for conventional biofuels, we would like to see final levels for cellulosic and advanced biofuels continue to give producers and stakeholders certainty in their investment in second generation technology.

The American Coalition for Ethanol said it was grateful the EPA is proposing to maintain the 15-billion-gallon conventional biofuel RVO. “This issue is of paramount importance to America’s farmers—who are reeling from oversupplies and low prices—and the rural communities that depend upon a strong farm economy,” said Brian Jennings, vice president of ACE. “Given the delay in issuing the proposal, it is imperative that Administrator Pruitt ensures the process moves forward in a timely manner to meet the final rule publishing date of Nov. 30. We are grateful EPA will hold a public hearing on the proposal and urge the Agency to expedite the process of finalizing strong blending targets to help restore confidence to the rural economy and reassure retailers that it makes sense to offer E15 and flex fuels like E30 and E85 to their customers.”

“The RFS is meant to drive increasing levels of domestic biofuel production and use and we are encouraged EPA is taking a hard look at whether Brazilian sugarcane ethanol should continue to be preferentially treated under the RFS in a manner that displaces lower carbon, domestically produced corn ethanol in the marketplace,” Jennings continued. “We urge the agency to take advantage of the comment period to fine tune the cellulosic and advanced blending targets so further investment can be made in domestic cellulosic and advanced biofuel facilities.”

The Advanced Biofuels Association applauded the EPA for the timely release of the proposed RVOs. “EPA’s commitment to timely release of the 2018 RVOs is a strong signal of the administration’s support of and commitment to the RFS,” said Michael McAdams, president of ABFA. “The single most important policy driver for the advanced and cellulosic biofuels industries is the Renewable Fuels Standard (RFS), and today’s release puts us on track for the 2018 RVOs to be completed by the statutory deadline of November 30.”

“While we are disappointed to see a reduction for advanced biofuels, ABFA has long supported EPA’s efforts to match the RVO standards with actual production, especially in the cellulosic pool,” McAdams said. “However, we are frustrated that some in the industry are hoping to use the RFS to eliminate international competition. Whether supplied domestically or internationally, the increased blending of these advanced biofuels remains critical for U.S. emissions reductions. Only advanced biofuels reduce greenhouse gas emissions by at least 50 percent compared to today’s gasoline and diesel fuels,” continued McAdams. “We look forward to submitting comments to EPA as these RVOs are finalized.”

The Biotechnology Innovation Organization called for the RVOs to be improved in order to support investment and capacity building for advanced and cellulosic biofuels. “BIO and its members are concerned with EPA’s delays in issuing this proposal. We will work with the agency and the administration to finalize annual rules in a timely manner and carefully consider the program’s impact on investment in advanced biofuels,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section. “We believe the rule should do more to grow advanced and cellulosic biofuel production in the next year and to provide certainty for companies investing in new technologies and production capacity.”

“EPA’s proposed advanced and cellulosic biofuel volume obligations do not reflect the full potential for these innovative fuels over the next year,” Erickson continued. “The agency continues to rely on a flawed methodology formulated by the prior administration that fails to ensure sufficient space in the U.S. transportation fuels market for all available advanced biofuels. BIO and its members look forward to working with EPA to identify and account for all qualifying volumes of advanced biofuel.”

The Iowa Renewable Fuels Association called the proposal good for ethanol, but concerning for biodiesel. “IRFA applauds President Trump for keeping his campaign promise with this proposal to uphold the Renewable Fuel Standard for ethanol,” said Monte Shaw, executive director of the IRFA. “Maintaining the 15-billion-gallon conventional biofuels level is good news for E15, motorists and farmers. This proposal would keep the RFS on track and provide regulatory stability for ethanol producers, retailers, and obligated parties alike. Unfortunately, a change in administrations did not change the EPA’s underappreciation for the potential of U.S. biodiesel production. Keeping biodiesel levels frozen at 2.1 billion falls short of U.S. industry capabilities, even before imports are considered.  With plants in Iowa running under capacity, IRFA will be urging the EPA during the public comment period to increase the final biodiesel level. The best thing the Trump Administration can do to impact biodiesel imports is to throw its full support behind Sen. Grassley’s bill to reinstate and revise the biodiesel tax credit into a producer’s credit, thereby ending the U.S. incentive for foreign biodiesel.”

The EPA is expected to open a 45-day public comment period on the proposed rule following its publication in the Federal Register. A prepublication version of the rule can be downloaded from the EPA website.