EPA boosts renewable fuel requirements for 2017

By Spencer Chase and Phil Brasher

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Nov. 23, 2016 - The Environmental Protection Agency gave a lift to the renewable fuels industry by finalizing biofuel usage mandates for 2017 higher than originally proposed. 

The agency is requiring19.28 billion gallons of total renewable fuel to be blended with conventional fuel under the renewable volume obligation (RVO). That includes 15 billion gallons of conventional corn ethanol, a 200-million gallon increase from EPA's May proposal and the same level set as the annual target in the 2007 energy law. The May proposal called for total usage of 18.8 billion gallons with the potential for 14.8 billion gallons of corn ethanol. 

EPA's final rule, released today, also requires usage of 2 billion gallons of biodiesel, up from 1.9 billion this year, and 311 million gallons of cellulosic biofuels. There is a total requirement for 4.28 billion gallons in advanced biofuels, which includes biodiesel, cellulosic biofuels and other biofuels that have 50-percent lower carbon emissions than conventional fuels, including sugarcane ethanol produced in Brazil.

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The final RVO for advanced biofuel is 280 million gallons higher than what the agency proposed in May. 

In addition, the EPA also set an RVO for biodiesel in 2018 of 2.1 billion gallons. The other mandates for 2018 will be determined later. 

The mandated levels are “significantly higher than have been achieved in the past and will drive significant growth in renewable fuel use beyond what would occur in the absence of the requirements,” the agency said in the final rule. “The final volume requirements for both advanced biofuel and total renewable fuel recognize the ability of the market to respond to the standards we set, thereby accomplishing the goals of the statute to increase renewable fuel use.”

The higher mandates are based in part on the agency's expectation that motorists will increase their use of higher ethanol blends. EPA estimates that the E85 supply, fuel that contains about 85 percent ethanol, will increase by 40 percent in 2017 to 275 million gallons. The agency says use of E15 could reach 728 million gallons in 2017. 

Bob Dinneen, president and CEO of the Renewable Fuels Association, praised EPA's final decision.

“We can all be thankful EPA has raised the conventional biofuel requirement to the 15 billion gallon level required by the statute,” he said. “The move will send a positive signal to investors, rippling throughout our economy and environment. 

“By signaling its commitment to a growing biofuels market, the agency will stimulate new interest in cellulosic ethanol and other advanced biofuels, drive investment in infrastructure to accommodate E15 and higher ethanol blends, and make a further dent in reducing greenhouse gas emissions.”

RFA and other groups representing corn growers and the ethanol industry filed a lawsuit against EPA's use of so-calle waiver authority in the 2016 RVOs to set the usage targets below the levels set by Congress in the 2007 energy law.

EPA had argued that inadequate infrastructure was preventing the expansion of higher blends of ethanol. However, in the final rule for 2017, the agency said it believed all of the congressional targets could be reached with the exception of cellulosic biofuels.

Under the Energy Independence and Security Act of 2007, which created the Renewable Fuel Standard and the corresponding annual RVOs, the administration was to mandate usage of 24 billion gallons in biofuels in 2017 with the potential for at least 15 billion gallons of corn ethanol. However, gasoline consumption declined after the law was passed, and usage of ethanol blends higher than E10 has lagged.

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This announcement is the final RVO determination under the Obama administration, but it could spark a new debate about the RFS as Donald Trump moves into the White House next year. 

The president-elect signaled support for the RFS during the presidential campaign, but the adviser leading the transition at EPA, Myron Ebell, has been critical of the mandates.

The chairman of the House Science, Space and Technology Committee, Lamar Smith of Texas, today called on Trump to work with Congress to reform the RFS, which is under the jurisdiction of the Energy and Commerce Committee.

“More unrealistic mandates won't benefit the environment or lead to innovation in biofuels technology,” Smith said.

The American Petroleum Institute criticized EPA's final rule as a “step backward.”

“We are disappointed that EPA has taken a step backwards with this final rule,” said Frank Macchiarola, API's downstream group director. “The RFS mandate is a bad deal for the American consumer. Today's announcement only serves to reinforce the need for Congress to repeal or significantly reform the RFS. Democrats and Republicans agree this program is a failure.”

Mike Brown, president of the National Chicken Council, called the RFS a “runaway train.” He said the 15-billion-gallon level target for conventional ethanol in the 2007 law was cap intended to prevent grain from being diverted from feed and food needs. 

“American chicken producers are only one drought, flood or freeze away from another crisis. The RFS has cost our industry $59 billion more in feed costs since it was implemented.”

But Wesley Spurlock, president of the National Corn Growers Association, said that EPA's move would be welcomed by grain producers. 

“This is critical for farmers facing difficult economic times, as well as for consumers who care about clean air, affordable fuel choices, and lowering our dependence on foreign oil,” he said.

(Updated at 2 p.m.) 


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