EPA Proposed Rulemaking Opens Opportunities for eRINs and AD of Food Waste

December 07, 2022

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(BioCycle Magazine) On December 1, the U.S. EPA released a proposed rulemaking under the Renewable Fuel Standard (RFS) program, which includes a long-awaited regulatory framework to generate credits (“eRINs”) from biogas projects, including anaerobic digestion (AD) facilities, that produce renewable electricity for electric vehicles. The proposed rulemaking also includes an alternate accounting methodology to help increase food waste recycling in anaerobic digesters, and fuel volumes for the next three years.

“Of the 2,300 biogas systems currently operational in the U.S., 2,000 produce uninterruptible renewable electricity,” says Patrick Serfass, executive director of the American Biogas Council (ABC). “This guidance from EPA will create the opportunity for these projects as well as new ones, to generate eRIN RFS credits if their electricity is used to charge electric vehicles. This with help decarbonize transportation and increase the volume of organic material that we recycle in the U.S., especially smaller volumes from small towns, farms, and food processors.”

The proposal also addresses a core problem for digesters processing various food waste streams. “Food waste today is often rejected from biogas systems that participate in the RFS because the program has, in most cases, required system owners to devalue all their renewable fuel credits if they accept it,” adds Serfass. “The ABC is hopeful the new [accounting] methodology will not only address that issue but encourage a new wave of food waste recycling across the U.S., producing more renewable energy and recycling nutrients to reduce dependence on the fossil-fuel derived, synthetic fertilizers used across agriculture.”

Another key element of the proposal is setting renewable fuel volumes for 2023-2025.

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While ABC appreciates having three years of renewable fuel volumes proposed, it notes the amounts attributed to renewable natural gas (RNG) are inadequate. “Previously, EPA’s volumes have only recognized an 8% annual growth rate of RNG while the number of RNG projects has been increasing at a rate of 20% to 40% and the industry this year is already likely to exceed 2022’s target,” explains Serfass. “As a result, while the fuel volumes proposed recognize a higher 36% annual growth over the next three years, they are probably too low. We think EPA is still underestimating the impact of continued strong growth in RNG production, new renewable electricity projects participating in the RFS in 2024, and potentially more food waste generated biogas electricity and RNG. If EPA doesn’t make the volumes higher, it risks crashing credit values and halting renewable fuel production, development, and investments.” READ MORE

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A Foot in the Door: After a decade-plus pursuit, some biomass-based power generators will have the opportunity to participate in the federal Renewable Fuel Standard program (Biomass Magazine)

Excerpt from Biomass Magazine: The RFS Power Coalition has been pursuing inclusion of biomass-based power in the federal Renewable Fuel Standard for longer than a decade.

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Despite a provision in the 2007 statute that that nonliquid fuels—renewable electricity from biomass or renewable natural gas (RNG), for example—could be deemed as electric vehicle transportation fuels if properly demonstrated, the electricity component has never been acted upon. That is, until now. More than a decade after the pursuit began, the RFS Power Coalition has a foot in the door. The EPA released its proposed “set” rule on Dec. 1, setting the 2023, 2024 and 2025 RVOs, and including long-awaited regulatory provisions to allow RINs to be generated for renewable electricity used to fuel vehicles, or eRINs, the first major progress in implementing an extremely complex facet of the RFS.

In mid-December, the coalition held a webinar featuring Bob Cleaves, attorney and president of the Biomass Power Association, who guided attendees through an analysis of the proposed set rule’s eRIN provisions. Cleaves, who has spearheaded the effort, began by explaining that though a lawsuit against the EPA a few years ago was not successful, ultimately, the campaign and efforts at the congressional and federal levels led to this development. “While this rule is focused on RNG and biogas in the near-term, what we’re really focused on is the fact that EPA has already begun to review pathway petitions for our industry, for the use of our fuels to make electricity,” he says. “EPA does not give our [industry’s] potential to contribute enough credit in this proposed RSF rule …” While the proposal is limited to biogas, Cleaves says, in the regulatory impact analysis, EPA does recognize that nonbiogas potential, such as wood and the biogenic portion of MSW, is significant.

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Cleaves points out that liquid cellulosic biofuel from wood has never taken off, and that RNG, CNG and LNG are meeting about 95% of the D3 RIN category. “That modestly increases over the three-year period, but the real action is eRINs,” he says. There is a dramatic ramp up from 2025 and beyond.”
Currently, EPA has set eRINs at 600 million in 2024, doubling to 1.2 billion in 2025.

Cleaves says BPA has not yet done a thorough analysis, but he believes that fairly quickly after 2025, the nation will run out of biogas-to-electricity sources, and that’s when the opportunity for nonbiogas, biomass-based electricity will come into play.

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From Cleaves’ perspective, a critical issue regarding the rule—one that the EPA seems to acknowledge—is uncertainty regarding whether projected demand for EVs exceeds the currents supply, and how and when nonbiogas feedstock sources used to make electricity will help satisfy that demand. “It’s unlike ethanol, where if you produce a gallon, you qualify under the RFS—you don’t have to prove that’s used for transportation,” he says. Rather, eRINs are to be based on the number of EVs deployed, instead of the amount of renewable electricity that could be theoretically matched with EVs. “We, as an industry, are really beholding to the projected demand for EVs, which I think has made the EPA’s job particularly challenging,” Cleaves says, adding that many groups release annual projection reports for EV uptake, but they’re typically inaccurate due to market factors that are impossible to predict.

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“Importantly, I think EPA is saying ‘If we get it wrong, we’ll consider adjusting it,’ and I think it’s highly likely EPA will get it wrong … we need to figure out how the agency can make a mid-course correction. This will be a focus of our comments on the proposed rule.”

Program Structure
In the case of eRINs, OEMs—the auto manufacturers such as Tesla, General Motors, Ford—are the RIN generators, and can do so based on light duty EVs through established contracts with parties who produce renewable electricity from qualifying biogas sources. “The qualifying electricity produced—put on a commercial electric grid serving the conterminous U.S.—is contracted for eRIN generation, so long as the OEM demonstrates that the vehicles it produces have used a corresponding quantity of electricity,” Cleaves says. “The requirements for biogas generation and electricity producers are in the proposed rule, but only the OEM is allowed to generate the RIN … in this rule, electricity generated from solar, wind and hydropower do not quality under the RFS, because the program is only focused on renewable biomass.”

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The reason for that is it’s physically impossible to distinguish renewable from nonrenewable electricity when it’s put onto the grid, according to Cleaves. “So, EPA is saying there has to be an accounting or records management system.”

The only parties that ultimately matter for eRIN creation are the generator and the OEM, Cleaves emphasizes. “The generator is in the best position for certifying the amount of electricity put on the grid—through revenue-grade meters—and certifying that the fuels they’re using are compliant with the RFS. The OEM is in the best position to calculate how much electricity is consumed by the fleets they sell in the U.S. Those two pieces of data need to be matched, and that’s essentially how the program works.”

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“An interesting feature is that EPA is indicating that because of energy losses and charging efficiencies, OEMs need to contract 24.2% more electricity than what is actually consumed in the fleet.”

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Another issue is that the rule is very narrowly focused on biogas, with no timeline for integration of other sources of renewable biomass-based electricity. READ MORE