EPA finalizes 2018 RFS RVOs, 2019 RVO for biomass-based diesel

By Erin Voegele | November 30, 2017

The U.S. EPA has released final 2018 renewable volume obligations (RVOs) under the Renewable Fuel Standard, setting the RVO for total renewable fuel at 19.29 billion gallons, including 288 million gallons of cellulosic biofuel, 2.1 billion gallons of biomass-based diesel, and 4.29 billion gallons of advanced biofuel. In addition, the agency has set the 2019 RVO for biomass-based diesel at 2.1 billion gallons.

In its proposed rule released in July, the EPA proposed to set the 2018 RVO for cellulosic biofuel at 238 million gallons. In the final rule, the agency has increased the RVO slightly to 288 million gallons. The EPA also slightly increased the RVO for advanced biofuel, from 4.24 billion gallons to 4.29 billion gallons. The overall RVO has been increased from a proposed 19.24 billion gallons to a final 19.29 billion gallons. The 2019 RVO for biomass-based diesel, however, has been maintained at the originally proposed volume of 2.1 billion gallons.

When compared to the final RVOs for 2017, the cellulosic RVO has been reduced from 311 million gallons to 288 million gallons. The advanced biofuel RVO, however, has been increased slightly, from 4.28 billion gallons in 2017 to 4.29 billion gallons in 2018. The total RVO has increased by approximately 10 million gallons, from 19.28 billion gallons in 2017 to 19.29 billion gallons in 2018.

"Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the agency by upholding the rule of law," said EPA Administrator Scott Pruitt.

The Renewable Fuels Association pointed out that the final RVOs allow for 15 billion gallons of conventional biofuels, such as corn ethanol, which is consistent with the levels envisioned by congress in the 2007 Energy Independence and Security Act. “We are pleased that the final rule maintains the statutory 15-billion-gallon requirement for conventional renewable fuels like corn ethanol. Under the RFS, ethanol has helped to lower prices at the pump, reduce greenhouse emissions, displace harmful toxic gasoline compounds, reduce crude oil imports, and boost local economies,” said Bob Dinneen, president and CEO of the RFA. “Maintaining the 15-billion-gallon conventional biofuel requirement will accelerate investments in the infrastructure necessary to distribute mid-level ethanol blends like E15 and E30, and flex fuels like E85.

While the final rule is an improvement over the proposed rule, Dinneen said the RFA would encourage the EPA to closely monitor the commercialization of new cellulosic technologies because it believes greater cellulosic production is likely. “The RFS needs to remain a forward-looking program, driving investment in these new technologies,” he said. Dinneen also expressed disappointment that the final rule is not more aggressive with regard to advanced biofuels, such as biodiesel.

Growth Energy applauded the administration for standing up against efforts to destabilize the RFS. “The EPA’s on-time announcement upholds the statutory targets for conventional biofuels, which will provide much-needed certainty for hard-pressed rural communities,” said Emily Skor, CEO of Growth Energy. “We would like to have seen a boost to the target blending levels for cellulosic biofuels, and we will continue to work with the administration to advance the RFS goal of further stimulating growth and showing U.S. leadership in 21st century fuels.”

“The RFS remains America’s single most successful energy policy and continually works to save consumers money, protect the environment, drive rural growth, and secure U.S. energy independence,” Skor continued. “To keep this momentum strong, the EPA must take bold steps toward growth, as outlined by President Trump. We urge the agency to act quickly on the administrator’s promise of a long-overdue fix to Reid vapor pressure rules that needlessly limit sales of E15 during summer months.”

The American Coalition for Ethanol said called the rule a step in the right direction. “ACE members are very pleased that the statutory 15-billion-gallon volume for conventional biofuel will be maintained in 2018 and that EPA is increasing the advanced biofuel volume to 4.29 billion gallons,” said Brian Jennings, CEO of ACE. “This represents a modest step in the right direction for the RFS in 2018.  Beyond sending a generally positive signal to the rural economy, increased blending targets also reassure retailers that it makes sense to offer E15 and flex fuels to their customers.”

“While the 288 million gallons of cellulosic biofuel EPA is calling for in 2018 is a small increase from the volume proposed earlier this year, it is disappointing the 2018 volume represents a decrease from the 2017 cellulosic biofuel level of 311 million gallons,” Jennings continued. “We firmly believe the technology exists to increase cellulosic biofuel targets.

“Finally, more can and should be done to overcome regulatory hurdles which prevent market access to higher ethanol blends and ACE remains committed to working with EPA to address those hurdles,” Jennings said.

The Urban Air Initiative called the final RVOs good news, but said “the true challenge for the ethanol industry is to move beyond the limits of the RFS and create genuine, sustainable demand.”

“The record corn crop has set the stage for increased ethanol production—if we can get the fuel into the market,” the UAI continued in its statement. “The regulatory barriers Urban Air has been working to remove are the key to that market. Lifting vapor pressure restrictions and caps on the volume of ethanol that can be used in vehicles is the first step in this process. Urban Air has challenged the Environmental Protection Agency to revise its policies on these and many other regulations.”

“And we cannot lose sight of the fact that this remains a public health issue—ethanol is a clean octane alternative to the toxic aromatics in gasoline that are responsible for a range of pollutants and the resulting health risks,” the UAI continued. “We are redoubling our efforts to have ethanol play a larger role in cleaning up our gasoline. Much like the announcement this week that tobacco companies are under court order to tell the public about the inherent risks of smoking, we think the time has come to take similar steps as it relates to toxic compounds in gasoline.”

Sen. Chuck Grassley, R-Iowa, said the RVOs fall short of industry potential. “The EPA’s announced renewable volume obligations fall short of the full potential of the U.S. biofuels industry,” he said. “That is disappointing, particularly the lack of increase for biodiesel levels and the cut in cellulosic level requirements. Increases in the volume requirements are justified and would be good public policy. Congress intended for the RFS to drive growth in biofuels across all categories. Contrary to that goal, this final rule does little to encourage investment and growth in advanced biofuels. While I hoped for higher levels, they aren’t unexpected and are unfortunately in line with EPA’s original proposal. I’m glad that EPA backed off a later proposal, which would have represented an abandonment of President Trump’s stated commitment to biofuels and the integrity of the RFS. Iowa, rural America and the entire country are made stronger by the many jobs, increased energy independence and cleaner air that biofuels provide. The grassroots energy of this growing industry will continue to be a good news story for the nation. I plan to continue working to impress upon the Administration the capability to grow domestic energy production by unlocking the full potential of biofuels.”

The Biotechnology Innovation Organization also said it was disappointed in the advanced and cellulosic RVOs. “We are disappointed that EPA did not significantly raise the advanced biofuel volumes in line with the industry’s ability to produce them,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section. “The agency is arbitrarily limiting growth for low carbon biofuels in 2018 and into the future by looking backward, rather than forward.”

“The cellulosic biofuel industry is positioned for continued growth in 2018,” Erickson continued. “EPA has begun to make progress in approving new cellulosic biofuel technologies and production facilities, such as those that use corn kernel fiber as a feedstock. Unfortunately, EPA did not adequately account for the potential of new technologies as it set the 2018 cellulosic volumes.”

“To support investment in the industry and help us bring additional gallons of advanced and cellulosic biofuels to market in 2018, EPA should speed up pathway and biorefinery approvals and adjust its treatment of cellulosic carryover RINs,” Erickson said.

The Advanced Biofuels Business Council also criticized the EPA’s failure to further increase advanced RVOs. “The Trump Administration deserves credit for rejecting political pressure to destabilize the RFS, but EPA’s failure to appreciably increase advanced biofuel levels brushes aside a huge opportunity to promote rural jobs and energy innovation,” said Brook Coleman, executive director of the ABBC. “Unwarranted cuts to cellulosic biofuel targets send the wrong signal to global investors in this emerging industry. The cellulosic biofuels industry is growing and stands ready to drive the next great wave of manufacturing jobs across the heartland. There are things EPA can do quickly to unleash the full potential of cellulosic biofuels. We are not there yet with this rule, but we look forward to working with the administration to get there.”

The Iowa Renewable Fuels Association has expressed disappointment in the RVOs for biomass-based diesel and advanced biofuel. “Virtually every ethanol plant in Iowa produces distillers corn oil that is used to produce biodiesel,” said Monte Shaw, executive director of the IRFA. “Ethanol plants had every right to expect a growing market for biodiesel, but today’s rule cuts the expectation for 2018 and signals no growth for 2019. And with roughly a dozen Iowa ethanol plants poised to produce cellulosic ethanol from corn kernel fiber, they had every right to expect an increase in the cellulosic level, not a 7 percent cut.”

“We do thank President Trump for keeping his promise to uphold the RFS for ethanol,” Shaw continued. “By rejecting structural changes to the RFS and finalizing a 15-billion-gallon conventional biofuels level, there is some certainty for rural America as it struggles with commodity surpluses. We continue to urge the Administration to provide regulatory equity for E15 fuel blends so we can grow ethanol use beyond the 15-billion-gallon RFS cap. Moving forward, IRFA will continue to work with EPA and the White House to press the point that with tight margins every single market—like distillers corn oil and corn kernel fiber—is just as important to traditional ethanol producers as it is to biodiesel and advanced ethanol producers.”

The National Biodiesel Board called the EPA’s announcement a miss opportunity to grow American-made energy and jobs. “EPA Administrator Pruitt has disappointed the biodiesel industry for failing to respond to our repeated calls for growth,” said Doug Whitehead, chief operating officer of the NBB. “These flat volumes will harm Americans across several job-creating sectors—be they farmers, grease collectors, crushers, biodiesel producers or truckers—as well as consumers. Nevertheless, we can’t thank our members and our biodiesel champions at the state and federal levels enough for their tireless advocacy and education efforts. We’ll continue to work with the administration to right this wrong for future volumes.”

Poet applauded the EPA’s decision to maintain the 15 billion target for conventional biofuels, but criticized the agency’s inaction to increase the target for cellulosic biofuels. “Biofuels are a critical component of the US fuel supply, and today President Trump and the EPA confirmed that fact,” said Jeff Broin, CEO of Poet. “With starch-based biofuels remaining at full volumes, Americans will continue to benefit from cleaner air by replacing harmful cancer causing chemicals in gasoline, and stronger energy security by offering homegrown fuels that cost less. Unfortunately, this final rule fails to recognize the enormous opportunity before us to harness our nation’s vast cellulosic resources for higher performing and lower cost fuels.”

Novozymes also criticized the rule for its treatment of cellulosic fuels. “The EPA’s final 2018 RVO ruling acknowledges the benefits of today’s biofuels, but fails to look to the future and the coming development of advanced manufacturing facilities for cellulosic biofuels, which have the potential to radically improve our nation’s domestic fuel supply,” said Adam Monroe, president of Novozymes Americas. “We thank the Trump administration for maintaining the targets for starch-based ethanol, but the EPA must do more to realize President Trump’s vision of a revitalized RFS that creates more jobs across America and strengthens U.S. energy security.”

The Coalition for Renewable Natural Gas expressed support for the EPA’s decision to increase the cellulosic RVO over the proposed level.  "The final 2018 RVO represents an increase from the proposed RVO that will allow the RNG industry to continue delivering America's cellulosic biofuel—renewable natural gas—and make a difference in our communities, improving air quality, public health and local economies across North America," said Johannes Escudero, executive director and CEO of the Coalition for Renewable Natural Gas (RNG Coalition). "The RNG Coalition and industry are investing hundreds of millions of dollars in renewable natural gas production facilities while creating thousands of jobs that work to reduce greenhouse gas emissions, mitigate methane and sequester carbon across the country."

The Advanced Biofuels Association applauded the EPA for releasing the RVOs on time and for adjusting the proposed volumes for cellulosic and advanced biofuel. “The announcement demonstrates strong, continued support for the Renewable Fuels Standard (RFS). It will also signal to industry that investment in this space is recognized and rewarded with increasing RFS mandates. Given all of the challenges of this year, ABFA is delighted that we were able to hold the line for the biomass-based diesel pool,” said Mike McAdams of the ABFA. “We look forward to working with EPA further to finalize the biointermediates section of the pending Renewable Enhancement and Growth Support (REGS) Rule, a much-needed regulatory fix that will expand the success of the advanced industry. ABFA appreciates EPA’s continued support of the RFS as our members bring new advanced biofuels production to America and deliver increasing volumes of low-carbon fuels to American consumers.”

The Biomass Power Association has also spoken out following release of the 2018 RFS rule, noting that its members can help meet the program’s goals. “Members of the Biomass Power Association are well positioned to supply the ever growing need for biomass-based electricity for electric vehicles. We appreciate the EPA’s support for biomass-based transportation fuel and look forward to discussions with the agency on how the program can be expanded to the electric generation sector as required by Congress and EPA rules,” said Bob Cleaves, president and CEO of the BPA.

“Powering electric vehicles with biomass power reduces atmospheric carbon released by combustion engines and power generated by fossil fuels," Cleaves continued. "Supporting the biomass industry can help keep forests healthy and rural Americans employed by providing an outlet for flammable, low value wood collected from fire-prone forests and other types of wood waste.”