The boost in required renewable fuel blending looks good on its face, but biofuel groups worry the numbers set in today’s Renewable Volume Obligations could simply be numbers on a page without a reallocation plan for gallons waived through exemptions for small refiners.
As expected, and reported by Agri-Pulse, the Environmental Protection Agency announced today an increase in advanced biofuels to be blended into the nation's fuel supply in 2019. In total, 4.92 billion gallons of advanced biofuels are to be blended, with 418 million gallons of that coming from cellulosic biofuels. EPA also left room for 15 billion gallons of conventional biofuel, typically viewed as corn ethanol.
In total, EPA calls for 19.92 billion gallons of renewable fuels to be blended in 2019.
But the final rule released this morning did not contain any language for EPA to reallocate gallons waived through small refinery exemptions (SREs), something biofuel groups were hoping to see. Sen. Chuck Grassley, R-Iowa, said he met with EPA Acting Administrator Andrew Wheeler yesterday, and he’s “optimistic about the potential for a revisiting of this practice.”
“It would be long overdue and show that the Trump administration and Acting Administrator Wheeler care about righting the ship at EPA after the prior administrator’s mismanagement and poor leadership,” Grassley said. "The handling of these applications is ripe for review. There’s no good reason oil companies making billions of dollars in profits should be exempted from following the law as passed and intended by Congress.”
Emily Skor, CEO of biofuel trade group Growth Energy, said the rollout was a “missed opportunity” because it fails to “correctly account for billions of gallons of ethanol lost to refinery exemptions.
“Until these are addressed properly, we’re still taking two steps back for every step forward,” she added.
Skor’s sentiments were echoed throughout the biofuels community. American Coalition for Ethanol CEO Brian Jennings said the lack of reallocation language makes the announcement fall short of what was hoped.
“On paper, EPA appears to be resisting refiner demands to reduce conventional biofuel blending in 2019 below the statutory 15-billion-gallon level,” he said. “In reality, as long as EPA fails to reallocate the over 2 billion gallons worth of blending obligations waived for ‘Small Refineries,’ renewable fuel demand will remain flat causing farmers and rural biofuel producers to continue suffering the consequences.”
Geoff Cooper, president and CEO of the Renewable Fuels Association, noted the group was pleased with the 15-billion-gallon conventional RVO, but was disappointed EPA didn’t account for the SREs in its final rule.
“Hopefully, that means EPA is not intending to issue any small refiner waivers at all in 2019 because it knows there is no rationale or basis for doing so,” Cooper said.
EPA also set the 2020 biomass-based diesel RVO at 2.43 billion gallons. Donnell Rehagen, CEO of the National Biodiesel Board, criticized EPA for using waivers to set numbers in a way preventing the biodiesel industry from being able to take full advantage of the program.
“The agency continues to use its maximum waiver authority to set advanced biofuel requirements below attainable levels,” he said. “The method is inconsistent with the RFS program’s purpose, which is to drive growth in production and use of advanced biofuels such as biodiesel.”
The renewable fuels side of the argument expressed its disappointment, but oil refiners weren’t thrilled with the rollout either. In a statement, the Fueling American Jobs Coalition, a coalition of small and large independent refiners, said the increases would cause issues for their businesses.
“Implementation of the renewable fuel standard is deeply flawed, needlessly penalizing independent refiners, small gasoline retailers and others,” the group said. “This basic problem is acknowledged by most everyone who does not profit directly from the RFS. Congress and EPA should subject the program to wholesale repair.”
Frank Macchiarola, vice president of downstream and industry operations for the American Petroleum Institute, said new market dynamics also reflect a needed change in the program.
“The reality is that outdated assumptions made at the inception of the program, market forces, and technological innovations in the oil and natural gas industry have combined to necessitate a new policy framework,” he said.
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