EPA’s RFS Final Rulemaking 2023-25: The Bottom Line

by Jennifer LeRow (Lee Enterprises Consulting/Biofuels Digest) ... EPA was faced with a significant challenge, as it was statutorily required to consider numerous factors when using its “set” authority, including the impacts of the program on cost, air and water quality, climate change, previous implementation, environmental justice, U.S. energy security and independence, available infrastructure, prices of related commodities (feedstocks, fossil fuels, food impacts), and supply factors.

Also of note are a number of constraints placed on the EPA when establishing the annual volumes under its newfound set authority beginning in the year 2023:

Much of the feedback that EPA received in comments and meetings applied pressure on the legitimacy of eRINs under the RFS, as well as antitrust issues surrounding the unprecedented move in regulatory parties and Renewable Identification Number (RIN) generation from the renewable fuel producers to the currently limited number of Original Equipment Manufacturers (OEMs) of electric vehicles.

Other arguments presented studies and data that showed the supply of renewable fuels coming online was much higher than the proposed volumes, in addition to feedstock studies and supporting data that illustrated higher-than-assumed availability with no impact on food prices or land use change. Further, the EPA received quite a bit of push-back on changes to statutory definitions throughout the program, in addition to potentially crippling recordkeeping and third-party oversight requirements that were proposed. As usual, the EPA’s proposal to raise the ethanol volumes was countered by stakeholders citing the “E10 blend wall.”

It seems the EPA listened, and they did raise the annual volumes for certain categories in the years 2023 – 2025. Many stakeholders were pleased, and of course, others insist it is still not enough. Additionally, they peeled eRINs out of the program, at least for now. Other potentially problematic proposals were also tabled for the time being, including alternatives to previously proposed recordkeeping and oversight requirements in some areas. EPA also delayed the finalization of any significant revisions to critical definitions that could cause dramatic changes for regulated parties until after more discussion and consideration of the implications.

Many of the more complex provisions proposed did not make it into the Final Rule, including:

They also tapered down the onerous recordkeeping and additional supply chain registration requirements previously proposed for certain stakeholders, including feedstock aggregators and other members of the waste feedstock supply chains.

Of the provisions that were retained was biogas regulatory reform, outlined in its own section of the EPA’s Final Rule and Response to Comments. Also of note is that since EPA delayed the eRINs program, the Cellulosic RVOs were reduced by the forecasted number of eRINs. While the decreases do not appear to be commensurate, they are indeed, because the EPA made sure to allocate volumes back to cellulosic RNG as appropriate. Compliance Deadlines for Obligated Parties were also outlined.

Also good news is the fact that there were increases from the proposed numbers in the advanced biofuel pool. Although it is nowhere near supply coming online in the next few years, it is a win.

Among the biggest changes to the rules for RNG is who will be generating the RINs for RNG used as renewable CNG or renewable LNG for transportation use. The RIN generator will be the RNG producer who upgrades the biogas to RNG when they inject it into the national pipeline system. This may trigger changes in RNG agreements between parties. Other parties who are registered to generate RINs for renewable CNG or LNG before July 1, 2024 have until January 1, 2025 to be compliant with the new rule.

Obligated Parties not part of the transactions will no longer be permitted to separate any biogas RINs when they come into their inventories. The only biogas RIN separation event occurs when a party withdraws the RNG from the pipeline and uses it to produce CNG/LNG from RNG, or when a party uses or dispenses the CNG/LNG as transportation fuel.

RFS Third-Party Oversight Enhancement

An entire section has been devoted to enhancements and increased Third-Party Oversight provisions to better mitigate fraudulent and illegal activity.

Finally, the EPA provided assurance that it will continue to work with other agencies to update its modeling, creating the potential to offer better RIN values for lower carbon-intensity fuels, using its set authority.

Industry stakeholders have asked that the EPA not use this final rule as the grounds for future rulemakings under their set authority and that they consider relevant factors for future years that include changes in the availability of feedstocks, renewable fuel volumes by category, and new modeling options, among others. EPA also cited that they set the volumes under the assumption that there will be no additional SREs (Small Refinery Exemptions), and their most recent denial of 26 Small Refinery Exemptions on July 14, 2023, supports that stance READ MORE

Excerpt from Inside EPA: Environmentalists are again attacking the environmental credentials of the renewable fuel standard (RFS), arguing that EPA’s “set” rule, which for the first time set biofuel blending volumes under the agency’s authority, relies on an unlawful and flawed assessment of climate and endangered species impacts. In a March 22 (2024) opening brief , Center for Biological Diversity (CBD) and the National Wildfire Federation (NWF) say EPA, the Fish and Wildlife Service (FWS) and National Marine Fisheries Service (NMFS) violated the Clean Air... READ MORE