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RFS revisions proposed for 2018

By Staff | Jul 14, 2017

WASHINGTON – Last week, the U.S. Environmental Protection Agency signed a proposed rule setting the minimum amount of renewable fuels that must be supplied to the market in calendar year 2018 under the Renewable Fuel Standards (RFS) program. The action proposes volume requirements and associated percentage standards that maintain renewable fuel volumes at levels comparable to the 2017 standards, recognizing limits to the growth of cellulosic and advanced biofuels.

EPA is committed to successfully administering the RFS consistent with the direction entrusted to the Agency by Congress and is on track to meet the November 30 statutory deadline to make today’s proposed Renewable Volume Obligations (RVOs) final. The proposed volumes are based on requirements under the law and an analysis of current market dynamics, including energy demand, biofuel production, and market constraints. The proposed standards will help stabilize the renewable fuels program and provide certainty for stakeholders.

“Increased fuel security is an important component of the path toward American energy dominance,” said EPA Administrator Scott Pruitt. “We are proposing new volumes consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace. Timely implementation provides certainty to American refiners, the agriculture community and broader fuels industry, all of which play an important role in the RFS program.”

Some key elements of last week’s action:

  • Non-advanced or “conventional” renewable fuel volumes are maintained at the 15-billion gallon target set by Congress.
  • The biomass-based diesel standard for 2019 would be maintained at the 2018 levels of 2.1 billion gallons.
  • EPA is beginning technical analysis that will inform a future rule to reset the statutory volumes for cellulosic, advanced, and total biofuels. The law requires this reset when certain conditions are met.

EPA is also taking comment on addressing concerns that some RFS obligations are increasingly met with imported fuel from Brazil, Argentina and Indonesia. Additionally, the Agency is assessing higher levels of ethanol-free gasoline and bolstering an existing memorandum of understanding with the U.S. Commodity Futures Trading Commission? (CFTC) to analyze and address a host of market concerns, including the need for increased transparency.

“The Clean Air Act requires EPA to reset volume targets when certain conditions are met. We expect those conditions to be met in the near future, so we are conducting technical analysis now, to inform future reset rules,” said Administrator Pruitt.

Tom Brooks, chair of the Iowa Biodiesel Board and general manager of Western Dubuque Biodiesel in Farley, issued the following statement:

“We are disappointed to see biofuels cut overall, and volumes in biodiesel’s main category stay flat under the Renewable Fuel Standard volumes proposal. This would set this important American manufacturing sector back at a time when we stand ready to take a large leap forward.

“I want to be clear that the influx of foreign-produced biodiesel we’ve seen in our market from places like Argentina and Southeast Asia is no indication that the U.S. cannot meet production demand. On the contrary, most biodiesel plants in Iowa and elsewhere are operating below capacity. The imports are pricing us out of our own market due to trade and other federal policies that need correction. This includes a loophole in the federal tax incentive for biodiesel, which allows other countries to claim our incentive, while also claiming their own country’s subsidies. Our industry has worked for years trying to get this adjusted so we can compete fairly in our own country.

“If these volumes stand, the U.S. could restrict one of its most powerful opportunities to support American manufacturing of energy. Iowa, as the nation’s top biodiesel-producing state, has expanded capacity in anticipation of better times ahead – but that is now looking bleaker. Our own plant, Western Dubuque Biodiesel, had hoped to expand significantly, helping energy security and creating more good paying jobs in an area of rural Iowa that needs it. But so much uncertainty makes that less likely for us and other plants – a lost opportunity for Iowa and the nation.

“The RFS is one of the most successful bi-partisan energy policies ever created to facilitate job growth and the diversification of our nation’s energy supply. We hope EPA will reconsider this step backwards before its Nov. 30 deadline to issue a final rule.”

POET CEO Jeff Broin also responded to the EPA’s proposed rule on the 2018 Renewable Volume Obligations under the Renewable Fuel Standard.

“The EPA’s proposal recognizes the enormous success of the Renewable Fuel Standard. Today biofuels lower gas prices, enhance engine performance and improve air quality.

“We have initial concerns that the overall reduction in biofuels gallons will cool advances in cellulosic ethanol technologies. For the biofuels industry to grow, we need to see robust cellulosic ethanol production using multiple feedstocks from across the country, and the annual EPA volumes must keep our industry on that path. The final targets must provide the proper incentives to spur additional growth in production, innovation and the necessary fuel infrastructure. We are reviewing the proposal and will provide any recommendations in our comments to EPA.

“With America’s farmers facing plummeting commodity prices, incomes and land value, there has never been a more important time to reinforce rural America’s role in producing clean energy.

“Biofuels replace harmful chemicals in gasoline and help lower health risks associated with cancer, developmental disorders, as well as heart and lung disease. The benefits don’t stop there. Starch-based biofuels reduce greenhouse gas emissions by 43 percent, and cellulosic biofuels provide an even greater reduction: 85-95 percent. All this while providing lower prices at the pump and a higher-octane fuel for our engines. Policy stability under the RFS will allow the biofuels industry to build on its success and provide even more benefits to America.”

Senator Chuck Grassley believes the EPA’s RFS proposal is a “mixed bag.”

“The EPA’s proposed renewable volume obligations under the RFS program is a mixed bag. While I’m glad the EPA’s proposal holds steady the requirement of 15 billion gallons for conventional ethanol, the lack of any increase for biodiesel is a missed opportunity. The proposal fails to recognize the ability of the domestic biodiesel industry to produce at much higher levels. The proposed cut to advanced and cellulosic fuels will have a chilling effect on the push toward next generation biofuels, and will certainly harm investments in this area. The biofuel industry is good for the economy, good for the environment and good for national security. It supports hundreds of thousands of jobs, is cleaner-burning and reduces U.S. dependence on foreign oil. I am disappointed in the direction of these proposed volumes, and I hope the EPA will consider increasing these levels once stakeholders weigh in,” said Grassley.

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