(Growth Energy) Today (December 7, 2021), Growth Energy CEO Emily Skor offered a mixed review of the U.S. Environmental Protection Agency’s (EPA) proposed rulemaking regarding domestic biofuels blending requirements under the Renewable Fuel Standard (RFS). The agency’s proposed Renewable Volume Obligations (RVOs) would undercut blending requirements for renewable, low-carbon biofuel in 2021, and would retroactively waive 2.96 billion gallons from 2020 RVOs set almost two years ago. Under the proposal, 2022 volumes return to statutory levels and the administration pledges to deny all improper small refinery exemptions (SREs).
“EPA’s projection of strong biofuel blending requirements in 2022, commitment to halt illegal refinery exemptions, and long-awaited progress toward complying with a 2017 court order on lost gallons represent a welcome step forward. These forward-looking plans underscore the critical role biofuels play in mitigating climate change and lowering prices at the pump. However, we are extremely disappointed EPA has proposed rolling back requirements for 2020 and lowering volumes for 2021.
“Retroactive cuts to 2020 blending requirements impact the entire fuel supply chain, including the farmers, producers, blenders, retailers, and responsible refiners who based business decisions on final requirements in place for some time.
“This unprecedented move not only exceeds EPA’s legal authority under the RFS, it fails to recognize the law’s built-in mechanism that adjusts requirements when fuel demand differs from original projections. At face value, the EPA’s plan for 2020 gallons serves as a giveaway to petroleum companies at the expense of rural families and future investment in low-carbon energy.
“The Biden Administration simply cannot meet its climate goals while retroactively rolling back low-carbon biofuel blending requirements to help oil refiners. On the campaign trail, President Biden committed to strengthening the rural economy and addressing climate change with a strong RFS and we hope to see the president’s promises fully reflected in the final rule. We look forward to engaging with the EPA during the comment period to get the RFS fully back on track.”
The agency’s draft rule would lower conventional ethanol volume to 12.5 billion gallons for 2020, advanced biofuel at 4.63 billion, and cellulosic at 510 million. In addition, it would set conventional ethanol at 13.32 billion gallons in 2021 and 15 billion gallons in 2022, while advanced biofuels would be set at 5.2 billion gallons in 2021 and 5.7 billion gallons in 2022, including 620 million gallons of cellulosic biofuel in 2021 and 770 million gallons of cellulosic biofuel in 2022. The proposal also adds a supplemental 250 million gallons in 2022 and 250 million gallons in 2023, deny the 65 pending small refinery exemption requests before the agency, and provide important guidance to limit the abuse of small refinery exemptions in the future. For more information and background on RVOs, please click here. READ MORE
EPA lowers ethanol requirements, citing reduced demand (Associated Press)
Feather on the pedal: EPA proposes renewable fuels slash for 2020, cuts for 2021, slow growth in 2022 (Biofuels Digest)
EPA Releases Proposed RVOs and More; Industry Reaction Inside (American Ag Network)
U.S. EPA Proposes Biofuel Mandate Cuts, a Boost to Pandemic-Hit Refiners (Reuters)
House Agriculture Chairman David Scott Statement on Biofuels Announcements (U.S. House Agriculture Committee)
EPA Announces Long-Awaited RVOs, Ethanol Groups Have Mixed Reviews (Hoosier Ag Today)
EPA Proposes Comprehensive Set of Biofuels Program Updates and Improvements (Waste 360)
RFA: Today’s SRE Denials and RFS Proposals a “Modest Step in the Right Direction” (Renewable Fuels Association)
ACE REACTION TO LONG-AWAITED RFS ANNOUNCEMENTS (American Coalition for Ethanol)
The biofuels breakthrough (Politico’s Morning Energy)
EPA proposes lowering past blending requirements for gasoline, rejecting waivers (The Hill)
Why All This Breast-Beating about Faltering Petroleum Refineries? Wouldn’t It Be Better if They Stop Producing Fossil Fuels and Move to Renewables? (Advanced Biofuels USA)
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 80 and 1090 [EPA-HQ-OAR-2021-0324; FRL-8521-02-OAR] RIN 2060-AV11 Renewable Fuel Standard (RFS) Program: RFS Annual Rules ACTION: Proposed rule. (Environmental Protection Agency)
EPA Proposes Comprehensive Set of Biofuels Program Updates and Improvements: Proposals aim to reinforce the foundation of the program, provide for future growth (Environmental Protection Agency)
Proposed Volume Standards for 2020, 2021, and 2022 (Environmental Protection Agency)
Biden eases biofuel quota blow to farmers with future growth (Bloomberg)
US EPA proposes cuts to 2020 biofuel mandate, with plans to raise blending in 2022 (S&P Global Platts)
BIOFUELS GROUPS GIVE EPA RFS PROPOSAL MIXED REVIEWS (Brownfield Ag News; includes AUDIO)
EPA Proposes Corn-Ethanol Cuts to RFS: Biden Administration Tries to Soften RFS Cuts Blow With $800M Aid, Refinery Exemption Rejections (DTN Progressive Farmer)
EPA issues RFS RVO proposed rule, proposes to deny SRE petitions (Ethanol Producer Magazine)
Mixed reaction in biofuels industry to EPA ethanol blending announcement (Radio Iowa)
EPA Proposes Volume Standards and Waiver Rejections (Energy.AgWired.com)
Gov. Ricketts: EPA’s Actions Undercut Ethanol Producers and Farm Families (Office of Nebraska Governor Pete Ricketts)
Excerpt from American Coalition for Ethanol: American Coalition for Ethanol (ACE) Senior Vice President Ron Lamberty issued the following reaction to EPA’s package of proposals:
“Despite being one of the most important tools available to replace petroleum with low carbon alternatives such as ethanol, today’s proposed rule misses an important opportunity to meet the Biden Administration’s decarbonization goals for the transportation sector. Instead of insisting on renewable fuel volumes required under the law, EPA’s novel approach to its authority results in the foot being taken off the decarbonization accelerator to let petroleum companies determine how much ethanol they wanted to blend in 2020 and 2021. This is not the way to drive low carbon transportation fuel alternatives quickly.
“Further, while we appreciate that EPA is proposing to return corn ethanol blending levels to 15 billion gallons in 2022 as well as proposing a path forward to restore the 500 million gallons of remanded volume as ordered by the DC Circuit Court in 2017, and rein-in the abusive use of SRE waivers pioneered under the last Administration, the proposal falls short of deploying the RFS in a manner that fully takes advantage of expanding the use of low carbon ethanol, which according to the latest lifecycle science reduces greenhouse gas emissions on average by approximately 50 percent compared to gasoline.
“The RFS is an exceptionally well-written law with provisions written into it to deal with even the devastating volume loss experienced in 2020 and 2021. Each year’s volume is converted to a percentage, so renewable fuel volumes automatically rise or fall based on actual fuel sales. By reducing the 2020 percentage and 2021 volumes EPA is essentially shifting more of the pandemic burden from refiners to ethanol producers and farmers, and allowing gallons already sold to be counted against 2022 volumes, extending the pain into another year. EPA is missing the mark on using the RFS to the fullest extent.
“Our comments on this rule will reflect on EPA’s novel interpretations of its waiver authority and will encourage EPA to take a second look at this proposal to better support low carbon biofuels and take actions to help grow demand for biofuels that benefit rural America as well as the Administration’s decarbonization goals.” READ MORE
Excerpt from Associated Press: Sen. Chuck Grassley, R-Iowa, a staunch ethanol advocate, slammed the move to adjust the 2020 targets in the last month of 2021. He called it “a boon for Big Oil″ and asked: “What’s to stop the administration from slashing 2022 obligations down the line? It’s a disgrace and an outrage to Iowa producers and anyone who cares about our environment.″
EPA’s action also contradicts Biden’s campaign promise to “promote and advance” ethanol and other biofuels, Grassley said.
“I don’t want to hear another word about President Biden’s so-called climate priorities until he puts his money where his mouth is and delivers cleaner, cheaper biofuels for Americans, just as he promised Iowans on the campaign trail,” he said.
Even so, ethanol groups applauded EPA’s move to deny all pending small refinery exemption petitions, following a court ruling earlier this year. READ MORE
Excerpt from Reuters: “This decision is an about-face by President Joe Biden who campaigned on his supposed support for renewable fuels,” said Republican Senator Joni Ernst of Iowa, a major corn and ethanol producing state.
…
The American Petroleum Institute, which represents the U.S. oil industry, said the administration “would best serve the public interest by keeping compliance volumes feasible” and said it was studying the proposals.
…
In a concession to the biofuel industry, the U.S. Department of Agriculture, in tandem with the EPA’s announcement, announced $700 million in grants to biofuel producers as COVID-19 relief and another $100 million in support for biofuel infrastructure.
Scott Irwin, an agriculture economist, said the move to lower mandates for 2020 and 2021 would likely trigger lawsuits from angry biofuel producers.
…
The White House had since come under intense pressure from merchant refiners – including a plant in Biden’s home state of Delaware – to take actions that lower the costs of the credits and help stave off threatened plant closures in the wake of the coronavirus pandemic that slashed gasoline demand.
Reuters, citing sources, previously reported that the Biden administration was considering big cuts to the blending requirements. read more
The price of RINs traded at 80 cents each Tuesday, the lowest in nearly a year, before recovering to 95 cents in the afternoon. RINs had set a record at $2 in May on concerns the refining industry would fail to generate enough of the credits to meet the regulatory mandates.
Earlier this year, merchant refiners such as PBF Energy Inc (PBF.N) and CVR Energy Inc (CVI.N) began building up massive outstanding liabilities in the credits, taking bets that Biden would ultimately side with refiners and roll back RFS mandates, Reuters previously reported. read more READ MORE
Excerpt from Biofuels Digest: a retroactive action on 2020 volumes that has the ethanol industry up in arms. Advanced biofuels producers were cautiously optimistic, biogas producers took a more positive view, noting that cellulosic volumes would increase 51% between 2020 and 2022. Ethanol producers didn’t like the 2021 volumes but were generally positive about 2022 volumes, and action on small refinery waivers.
…
Even in the content of biomass-based diesel, which fared much better than ethanol, the EPA action can be seen as placing a feather on the renewable fuels pedal, precisely when the Administration is making huge long-term commitments for the country.
A lot of voices pointed to “a step in the right direction” toewards getting “RFS back on track”. Most commentators were polite enough. The National Biodiesel Board was positive enough about their 2.43 billion gallon biomass-based diesel mandate. But they pointed out that in 2020, the U.S. biodiesel and renewable diesel market grew to 3 billion gallons — its highest volume ever — and generated more than 4.5 billion advanced biofuel credits (Renewable Identification Numbers or RINs). Through the first ten months of 2021, the industry maintained a sustainable production rate comparable to 2020. The numbers are trending in the right direction, but are lagging where producers already are, and do not match the Administration rhetoric on renewable fuels.
…
US Senator Chuck Grassley of Iowa said, “At a time when gas prices are through the roof and the administration is myopically focused on climate policy, it makes absolutely zero sense for President Biden to turn his back on cleaner, cheaper biofuels. The administration’s unprecedented plan to retroactively cut blending levels for previous years is a boon for Big Oil. What’s to stop the administration from slashing 2022 obligations down the line? No matter how rosy future outlooks might be, this precedent makes clear the administration is not committed to renewable fuels. It’s a disgrace and an outrage to Iowa producers and anyone who cares about our environment.
“This administration has spent much of its first year crowing about its climate priorities while simultaneously begging OPEC to reduce skyrocketing oil costs. Domestically-produced biofuels help to solve both of these problems, but the Biden Administration opted not to take yes for an answer. I don’t want to hear another word about President Biden’s so-called climate priorities until he puts his money where his mouth is and delivers cleaner, cheaper biofuels for Americans, just as he promised Iowans on the campaign trail.”
U.S. Senator Deb Fischer of Nebraska said: “The Biden administration claims to care about addressing climate change but is giving big oil a huge break at the expense of the farmers in the Heartland who produce cleaner fuel. That doesn’t add up. Retroactively lowering the 2020 RVOs and setting low 2021 RVOs is a betrayal of the hardworking men and women of rural America. To pile on, the administration is trying to conceal this bad news by taking credit for biofuels COVID-19 assistance I fought for that Congress passed and President Trump approved in 2020. The administration held this assistance back for three extra months and is releasing it now to distract Americans from its actions. Further, it appears the administration has intentionally delayed denying 65 small refinery exemptions until today, instead of letting the biofuel industry know sooner and providing certainty. The administration has broken its promises. I will continue to work with my colleagues on both sides of the aisle to fight for fairness and certainty for our ethanol producers.”
…
Action on small refinery waivers sinks 2020 levels, further
Monte Shaw of the IRFA noted:
“The reopened 2020 rule was not only reduced, but a hard-fought victory for biofuels supporters was removed, further destroying demand. After years of abusing the RFS refinery exemption process, former President Trump, under pressure from Congress and Governors, agreed to account for refinery exemptions when setting the RFS levels. Today’s proposal would remove the three-year rolling average of past exemptions that was finalized as part of the 2020 rule.
“This industry endured four years of illegal demand destruction through the abuse of refinery waivers during the previous administration,” stated Shaw. “Even former President Trump finally agreed it was necessary to repair this harm. After criticizing the Trump era refinery exemptions, it’s hard to understand why the Biden EPA would seek to reverse time and remove the very provision designed to undo the damage. It feels like an unnecessary gut punch that will destroy 770 million gallons of future biofuel blending.”
Reaction from the stakeholders
Michael McAdams, president, Advanced Biofuels Association
“On behalf of the members of ABFA we are pleased with the release of the RVO mandate prior to the end of the year. In society’s collective goal to reduce carbon in our future, ABFA members stand ready to increase the number of gallons of advanced biofuels products that exceed the minimum 50% carbon reduction requirement. With a particular focus on heavy duty diesel, marine fuels, heating oil, as well as aviation, we are on a mission to reduce carbon in the future.
“Releasing the RVO today, will help us plan for the coming year and sends some clear signals of support for our industry. We are supportive and grateful for the manner in which the EPA addressed the issue of small refinery exemptions going forward by deny the pending exemptions. As ABFA argued going back to 2018, the manner in which these were doled out in 2018, 2019, and 2020 was unprecedented and undercut the purpose of the RFS program.”
Monte Shaw, executive director, Iowa Renewable Fuels Association
“The Biden EPA’s proposal to reopen the finalized 2020 rule is ill conceived, illogical, and, we believe, illegal,” “The EPA has long maintained it does not have the authority to reopen a final RVO rule and we agree. Further, the self-correction mechanisms in the RFS have already adjusted the biofuels requirement for 2020 down to account for COVID-related reduced gasoline use. Adjusting the 2020 levels down further is biofuel demand destruction pure and simple. Further, the 2021 number was reduced well below actual blending. That’s unfathomable and, if allowed to stand, would blow apart the many commitments President Biden made to Iowa voters when running for president. We have not forgotten that Biden said the RFS ‘marks our bond with our farmers and our commitment to a thriving rural economy.’ We urge President Biden to ensure the final rule lives up to his promise.” READ MORE
Excerpt from Environmental Protection Agency: Proposed Volume Requirements for 2020-2022 (billion gallons)
| Category |
2020 |
2021 |
2022 |
| Cellulosic Biofuel |
0.51 |
0.62 |
0.77 |
| Biomass-Based Diesel |
2.43 |
2.43 |
2.76 |
| Advanced Biofuel |
4.63 |
5.20 |
5.77 |
| Total Renewable Fuel |
17.13 |
18.52 |
20.77 |
| Supplemental Standard |
n/a |
n/a |
0.25 |
*All values are ethanol-equivalent on an energy consult basis, except for BBD which is biodiesel-equivalent READ MORE
Excerpt from Renewable Fuels Association: Today’s announcement should finally put an end to the rampant abuse of the exemption program that we experienced under the last administration.”
RFA was also pleased to see EPA’s proposal to bring more transparency to the SRE process by requiring public disclosure of certain information that has previously been treated as confidential business information—something for which the association has been advocating for many years. READ MORE
Excerpt from Hoosier Ag Today: POET Senior VP of Government Affairs and Communications Joshua Shields added, “EPA’s draft rule would reduce access to the single most affordable and abundant source of low-carbon liquid fuel on the planet right at the moment when consumers are facing high gas prices, and political leaders are grasping for climate solutions that are within reach. The Biden Administration should fulfill the President’s campaign promises to support the Renewable Fuel Standard, which will continue to affordably decarbonize the nation’s existing vehicle fleet, create clean energy jobs and support American farmers. We urge the EPA to consider the consequences of reducing biofuel volumes, reinstate robust blending targets and, as the President said, ‘Get the RFS back on track’ before the rule is finalized.” READ MORE
Excerpt from Politico’s Morning Energy: Farm state Democrats were happy the administration finally released its blending requirements after months of delay, but still offered some reserved criticism for lowering 2020 targets. Sens. Amy Klobuchar (Minn.), Tammy Duckworth (Ill.), Debbie Stabenow (Mich.), Dick Durbin (Ill.), Tina Smith (D-Minn.), and Tammy Baldwin (D-Wis.) issued a joint statement saying the new plan would “delay progress to achieving our climate goals” and that there “is clearly much room for improvement.”
But Republican Sen. Joni Ernst (R-Iowa) offered a sharp rebuke for the administration’s cutting the 2020 mandate, saying it was “absolutely a broken promise” by Biden.
The administration acknowledged the challenges for farmers and announced Tuesday the Agriculture Department will offer $700 million to financially assist producers and $100 million for renewable fuels infrastructure. But Ernst said flatly that the USDA funds “will not make up for it.”
The House Biofuels Caucus also knocked the 2020 reduction even as it offered tempered praise for the new proposals Tuesday, saying in a statement that “the 2022 number sets the biofuels industry on the right path moving forward. And the end of the abuse of Small Refinery Exemptions – which provide relief to oil companies at the expense of family farmers – is welcome news.” Pro’s Kelsey Tamborrino breaks down the proposals here. READ MORE
Excerpt from The Hill: “The Biden administration claims to care about addressing climate change but is giving big oil a huge break at the expense of the farmers in the Heartland who produce cleaner fuel. That doesn’t add up,” read a statement from Sen. Deb Fischer (R-Neb.), who represents a large agricultural constituency.
Fischer also accused the administration of “delaying” the waiver denial. READ MORE
Excerpt from Waste 360: To promote efficiency and opportunity in producing biofuels, this action also proposes a regulatory framework to allow biointermediates to be included in the RFS program, while ensuring environmental and programmatic safeguards are in place. Biointermediates are feedstocks that have been partially converted at one facility but are then sent to a separate facility for final processing into an RFS-qualified biofuel. Providing a way for producers to utilize biointermediates could reduce biofuel production costs in some cases, and potentially expand opportunities for more cost-effective biomass-based diesel, and advanced, and cellulosic biofuels. READ MORE
Excerpt from Environmental Protection Agency Proposed Rule: G. Biointermediates
Since the RFS2 program was finalized in 2010, we have been made increasingly aware of renewable fuel producers that would like to process fuel at more than one facility. Specifically, renewable fuel producers would like to first have a facility process renewable biomass into a proto-renewable fuel (or “biointermediate”) and then have a second, separate facility process that biointermediate into renewable fuel.
In some cases, it may be preferable for economic or practical reasons for renewable biomass to be subjected to substantial pre-processing at one facility before being sent to a different facility where it is converted into renewable fuel. For example, renewable biomass may be converted into a biointermediate (such as a biocrude) at one facility that requires some additional processing at a different facility before it can be used as transportation fuel. These production methodologies have the potential to lower the cost of using cellulosic and other feedstocks for the production of renewable fuels by reducing capital costs for new facilities and/or the storage and transportation costs associated with feedstock handling— especially for cellulosic biomass. Thus, we believe that such technologies provide an opportunity for the future growth in production of the cellulosic biofuels required under the RFS program. Based on this potential for future growth, in 2016 we included in the proposed the Renewables Enhancement and Growth Support (REGS) rule provisions to allow for the production, transfer, and use of biointermediates to generate qualifying renewable fuel under the RFS program.12
Due to the elapsed time since the proposed REGS rule and our continued consideration of how to most effectively allow biointermediates into the program, we are proposing anew provisions to allow for the use of biointermediates to produce qualifying renewable fuels. Consistent with what we previously proposed in the REGS rule, these provisions specify requirements that apply when renewable fuel is produced through sequential operations at more than one facility. These provisions center around the production, transfer, and use of biointermediates and the creation of new regulatory requirements related to registration, recordkeeping, and reporting for facilities producing or using a biointermediate for renewable fuel production. We are reproposing many of the proposed biointermediate provisions from the REGS rule without significant changes, making significant changes to some of the previously proposed provisions, and proposing some provisions for the first time here. We further discuss biointermediates in Section VII.
12 See 81 FR 80828 (November 16, 2016).
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DOE Seeks Information on Deployment-Ready Carbon Reduction and Removal Technologies DEADLINE: January 24, 2021
(U.S. Department of Energy) Request for Information Will Guide the Selection and Management of Critical Climate Investments of the Bipartisan