The Environmental Protection Agency is moving ahead with a plan to reallocate waived biofuel volumes that infuriated industry groups when it was first proposed.

 EPA will account for biofuel gallons waived from Renewable Fuel Standard compliance by using a three-year rolling average of the Energy Department's recommended small refinery exemptions. The exemptions are given to refineries with less than 75,000 barrels per day in production who say complying with the RFS will cause them undue economic harm.

Biofuel groups argue that the exemptions should be based on the higher volumes actually waived by EPA, not the DOE recommendations.  

“Integrity is restored to the RFS only if the agency accurately accounts for exemptions it will grant,” said Emily Skor, CEO of Growth Energy, an ethanol industry group. EPA has a “poor track record of following” DOE’s recommendations for waived volumes, she said. 

“All eyes will now be on EPA’s next round of refinery exemptions and future targets, which will signal whether Administrator Wheeler is truly committed to ending demand destruction,” she said. 

Geoff Cooper., president and CEO of the Renewable Fuels Association, said, “After EPA’s overwrought abuse of the SRE program in recent years, agency officials had a chance to finally make things right with this final rule—but they blew it."

The reallocation plan was included in a final rule that also establishes the biofuel blending requirements, or Renewable Volume Obligations, for the RFS. As expected, the agency maintained a 15 billion gallon carveout for corn-based ethanol. The agency also is requiring usage of 5.09 billion gallons of advanced biofuels, including biomass-based diesel or cellulosic biofuels, a 50 million-gallon increase from this summer’s proposed volumes.

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EPA Administrator Andrew Wheeler said the Trump administration is "ensuring a net of 15 billion gallons of conventional biofuel are blended into the nation’s fuel supply," something the biofuels community says will be difficult to accomplish if small refinery exemptions are not accurately considered. 

EPA also fixed the separate biodiesel RVO at 2.43 billion gallons for 2021, the same amount the agency set last year for 2020. The biodiesel RVO is set a year in advance. 

The total RVO for all biofuels for 2020 is 20.09 billion gallons, slightly more than the 20.04 billion gallons proposed in July.

By law, the EPA is supposed to publish the RVOs by the end of November every year. The Trump administration had routinely met that deadline, something both the biofuel and oil industries appreciated after it was missed several times during the Obama administration. This year’s release, however, was delayed as EPA reviewed comments on the supplemental rulemaking and determined how it would handle accounting for the SRE volumes.

Sources told Agri-Pulse the news was delivered Tuesday to a handful of Iowa biofuel stakeholders by Larry Kudlow, director of the White House National Economic Council.

The decision represents a political risk for Trump, who will be seeking the support of rural voters as he runs for reelection in 2020.

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