EPA releases RFS proposals for 2014-2016

By Spencer Chase

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, May 29, 2015 - The Environmental Protection Agency today released proposed Renewable Volume Obligations (RVOs) for biofuels under the Renewable Fuel Standard for 2014, 2015 and 2016 that show an increase in required blending, but still below statutory levels sought by the renewable fuels industry.

EPA's proposal reflects actual usage for 2014, but calls for increases in subsequent years. Janet McCabe, EPA's acting assistant administrator for the Office of Air, said the proposed volume requirements “will provide a strong incentive for continued investment and growth in biofuels.”

The EPA is proposing incremental increases in every biofuel category, including corn ethanol used in E10 and higher blends at gas pumps across the country. In 2015, the agency is proposing 16.3 billion gallons of renewable fuels, with the potential for 13.4 billion of those gallons coming from corn ethanol. In 2016, the agency suggests further increases to 17.4 billion gallons of biofuels - a jump of about 1.5 billion gallons from actual 2014 production - with the potential for corn ethanol to account for 114 billion of the total.

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Cellulosic and advanced biofuels saw the biggest gains under the new proposals with proposed 2016 volumes coming in six times higher - more than 170 million gallons - than actual 2014 volumes. Advanced biofuels jumped about 700 gallons in the same time period, an increase of about 27 percent. Biodiesel blending requirements also predict 1.9 billion gallons of growth in the industry, about 17 percent higher than actual 2014 production.

The biofuels industry offered mixed reactions to the announcement. Joe Jobe, CEO of the National Biodiesel Board, called the proposal “a significant step in the right direction,” adding that the proposed volumes for biodiesel and other advanced biofuels are “not perfect, but it will get the U.S. biodiesel industry growing again.”

Growth Energy CEO Tom Buis agreed that the proposal is an improvement on the uncertainty of the last few years, but that he hoped the final rule will suggest even higher volumes than the plan EPA announced this morning.

“Today's proposals are better than EPA's initial proposed rule for 2014, but they still need significant improvement,” Buis said. “We have sincere concerns that these proposed numbers are not moving forward to the degree that Congress had intended for the RFS.”

Bob Dinneen, president and CEO of the Renewable Fuels Association, said EPA deserves credit “for attempting to get the RFS back on track,” but he thinks the gradual increases suggested in today's announcement fall short of what the renewable fuels industry is capable of producing.

“Today' announcement represents a step backward for the RFS,” Dinneen said in a statement. “EPA successfully enforced a 13.8 billion gallon RVO in 2013. The industry produced 14.3 billion gallons of ethanol last year. There is no reason to promulgate an RVO rule that takes us backward. All it will do is result in an ever-increasing supply of renewable fuel credits (RINs) that will further discourage private sector investment in infrastructure and technology. This doesn't make sense.”

Today's multiyear release was spurred by an April consent decree stemming from a lawsuit against the EPA brought by the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM). In the lawsuit, API and AFPM shared the same grievances as many in the biofuel industry: that uncertainty in requirements for renewable fuel blending was causing confusion in their businesses and that a reliable RFS was necessary to plan production quantities.

The consent decree mandated the release of the 2014 and 2015 RVOs for public comment by June 1 and to be finalized by Nov. 30 of this year. EPA said it would voluntarily release 2016 figures along the same timeline. The agency also pledged to propose and finalize biomass-based diesel requirements for 2017 along the same schedule.

The announcement is the first RFS proposal released since November 15, 2013, when EPA proposed 2014 volumes lower than those required by statute. That proposal received over 15,000 public comments and was hotly contested by the renewable fuels industry, saying it catered to the desires of the oil industry by lowering required blending levels. The EPA never finalized the proposal, opting instead for today's multiyear release using actual production levels for 2014.

The RFS - created under the Energy Policy Act of 2005 and expanded in 2007 - sets mandatory requirements for blending renewable fuels with gasoline. Proponents say it is necessary to create demand for renewable fuels like ethanol and biodiesel, but opponents say it forces the product on the marketplace and artificially inflates commodity prices. The oil and renewable fuels industries have been especially at odds over the “blend wall.” Oil companies contend that the American public has hit the blend wall and cannot use any more renewable fuels, but renewable fuel advocates claim oil companies are creating an artificial blend wall due to their control over the delivery of the fuel supply.

The proposal will now be open for public comment for 60 days after being published in the Federal Register.

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A previous version of this article stated the corn ethanol blending requirement for 2015 was almost 11.6 billion gallons the requirement for 2016 was almost 12 billion gallons. The story was updated at 2:20 p.m. to correct that error. 

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