The Environmental Protection Agency released 2018 volume obligations for the Renewable Fuels Standard Thursday morning, giving the program a slight increase in biofuels to be blended with the nation's gasoline supply in the coming year.
The Renewable Volume Obligations (RVOs) leave room for 15 billion gallons of conventional biofuel – typically viewed as corn ethanol – but call for 500 million more gallons of advanced biofuel than EPA suggested in its July proposal. That increase comes as the agency calls for an additional 50 million gallons of cellulosic biofuel, but maintains the 2.1 billion gallon biomass-based diesel requirement in a move sure to upset advocates for both forms of biofuel. In total, the final RVOs call for 4.29 billion gallons of advanced biofuels and 19.29 billion gallons of total renewable fuel.
"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," EPA Administrator Scott Pruitt said in a statement.
In October, Pruitt had suggested in a letter to seven farm state senators that he would set RVOs “at amounts that are equal to or greater than the proposed amounts.” That letter came after concerns mounted in the biofuels community that Pruitt was seeking to lower biodiesel volumes through a Notice of Data Availability. The senators said Pruitt was going back on commitments offered during the confirmation process and asked for written assurances that the RVOs would not be lowered.
That the RVOs were not lowered is a measured victory for biofuels producers and retailers, but Sen. Chuck Grassley, R-Iowa, said the final numbers “fall short of the full potential of the U.S. biofuels industry.”
“Increases in the volume requirements are justified and would be good public policy,” Grassley said. “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.”
The cellulosic mandate is an increase from the July proposal, but represents a cut of 23 billion gallons from the current level finalized last year by the Obama administration. The 2.1 billion gallon biomass-based diesel figure is identical to what last year’s announcement required for 2018 despite industry calls for an increase.
The National Biodiesel Board thought the figure should have been well over 2.5 billion gallons because the industry was able to exceed that volume in 2016. In a statement, Doug Whitehead, NBB's chief operating officer, said Pruitt "disappointed the biodiesel industry" with the 2.1 billion gallon figure.
"These flat volumes will harm Americans across several job-creating sectors," he said. "We'll continue to work with the administration to right this wrong for future volumes."
American Soybean Association President Ron Moore said failing to increase the biodiesel RVO "continues to be a missed opportunity to capitalize on a valuable market for soybean oil," and that EPA should "take another look at biodiesel and the value U.S. soybean farmers bring to the domestic energy discussion."
Oil groups had pushed for changes to the program and lower biofuel requirements, but they appear to have been held off for now. Pruitt also decided against a point of obligation switch sought by some - but not all - oil stakeholders, preventing a significant structural change to the RFS. Chet Thompson, President and CEO of the American Fuel and Petrochemical Manufacturers, said EPA did "exactly what Senator Grassley demanded, bowing the knee to King Corn." Frank Macchiarola, downstream group director for the American Petroleum Institute, said the U.S. is now producing more oil domestically, making the RFS a program "trying to solve a problem that no longer exists."
"Administrator Pruitt, therefore, faces the daunting task of implementing a broken program that was based on incorrect assumptions made over a decade ago," Macchiarola said in a statement.
While the biodiesel sector was hoping to see more from today's news, other renewable fuels groups are happy to see a timely announcement - EPA is required by law to publish the numbers by the end of November - that upholds the 15 billion gallon conventional allowance. Growth Energy CEO Emily Skor said the announcement "will provide much-needed certainty for hard-pressed rural communities." She also noted a desire for a more substantial cellulosic boost and said EPA "must take bold steps toward growth" of the RFS.
Renewable Fuels Association President and CEO Bob Dinneen called the final figures "a marked improvement" and encouraged the EPA to keep an eye out for advancements in cellulosic biofuel production, "because we believe greater cellulosic production is likely."
"We are pleased that the final rule maintains the statutory 15-billion-gallon requirement for conventional renewable fuels like corn ethanol," Dinneen said. "The biofuels industry will rise or fall together, and thus we are disappointed the final rule is not more aggressive with regard to other advanced biofuels such as biodiesel."
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(Story updated at 4:50 to include additional reaction)
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