EPA Plans Biofuel 'Reset' as Program Misses Congress' Targets

November 21, 2018

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by Jarrett Renshaw (Reuters) The U.S. Environmental Protection Agency will propose new targets for the final three years of the nation’s renewable fuel program in January, replacing ambitious decade-old goals set by Congress with volumes closer to the industry’s current output, two people familiar with the matter said.

The planned reset of the U.S. Renewable Fuel Standard is likely to set up a fresh battle between two industries, with corn growers wanting the highest possible targets to spur investment, and oil companies eyeing the smallest to reduce costs.

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An EPA official confirmed the agency is working with stakeholders on a reset proposal, and aimed to finalize its plan by November 2019.

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The Trump administration has tried to reduce compliance costs for refiners, drawing the ire of biofuel producers and their legislative backers.

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“We are going to ask and we expect to see lower volumes across the board,” Derrick Morgan, a lobbyist for the American Fuel and Petrochemical Manufacturers, said in a phone interview.

He said the ethanol targets, currently at 15 billion gallons a year, should be more fluid and based on expected gasoline demand. The 2019 ethanol target should be closer to 14 billion gallons, he said, which is 9.7 percent of the U.S. government’s gasoline demand projection.

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Biofuel backers say the program should retain loftier targets in its final years to encourage companies to keep investing in new plants and technology. READ MORE

RFS MANDATES EXPECTED NEXT WEEK: (Politico's Morning Energy)

EPA Should Protect Consumers From Ethanol Mandate (Energy Tomorrow Blog/Breaking Energy)

Grassley weighs in on EPA’s expected RFS ‘reset’ rulemaking (Biomass Magazine)

RFS final volumes 2019: Frank Macchiarola, API Vice President, Downstream (American Petroleum Institute)

API: Election Makes RFS Reform Unlikely: Biofuel, Petroleum Interests Posture Ahead of EPA's Biofuels Volumes Release (DTN The Progressive Farmer)

EPA COULD RESET CELLULOSIC AND ADVANCED BIOFUEL TARGETS IN RFS (Brownfield Ag News)

Excerpt from Politico's Morning Energy: Word on the street is that EPA will release the final rule setting biofuel blending requirements next week. Expect the numbers to be pretty close to what it proposed in June — 19.88 billion total gallons, including 15 billion gallons of conventional ethanol. Despite expectations for a release next week, the agency has in the past dropped the final rule the day before Thanksgiving, so everyone should stay on their toes for news.

Speaking of: Iowa Sen. Chuck Grassley responded to a Reuters report Tuesday night that EPA is expected to propose new targets for the final three years of the RFS in January with volumes closer to the industry's output. If the reports are accurate, Grassley said in a statement, EPA may now use the "weakened state" of the program after issuing hardship waivers to "justify gutting" it further. Acting Administrator Andrew Wheeler is now "in a position to avoid the missteps and abuses of power of his predecessor at the agency," he said. READ MORE

Excerpts from Energy Tomorrow Blog/Breaking Energy: EPA likely will need to take the lead in rescuing U.S. consumers from the potential negative impacts of the federal ethanol mandate, given the shrinking chance that Congress will pass significant reforms to the broken Renewal Fuel Standard (RFS) program.

That’s the view of the natural gas and oil industry, which continues to warn of the possible consumer risks posed by the RFS, which was launched before the shale energy revolution and has been largely made obsolete by surging domestic production.

With EPA poised to announce how much ethanol refiners will be required to blend into the nation’s fuel supply in 2019, Frank Macchiarola, API vice president of downstream and industry operations, briefed reporters on the RFS during a conference call:

“Over the years the RFS has bedeviled both parties. We’re hopeful that we can make some progress on reforming the RFS, but there are other avenues outside of the legislative process where you can at least mitigate some of the problems with this program – that’s with the RVO (renewable volume obligations) process, that’s with the potential reset – and so we’re hopeful that if the legislation doesn’t move that at least the agency can help mitigate these larger problems with the program.” READ MORE

Excerpt from Biomass Magazine: In his response to the Reuters article, Grassley connected reports of the “reset” rule with the EPA’s actions regarding small refinery hardship waivers. “Under former Administrator Scott Pruitt, EPA broke the spirit of the law by issuing so-called ‘hardship’ waivers to multibillion dollar oil companies exempting them from their legal obligations under the Renewable Fuel Standard,” Grassley said. “EPA systematically undermined the Renewable Fuel Standard, and if the reports are accurate, may now use its weakened state to justify gutting the biofuels program further. Today Acting Administrator Wheeler is in a position to avoid the missteps and abuses of power of his predecessor at the agency.” READ MORE