EPA to Recommend Lower U.S. Biofuel Blending Mandates below 2020 Levels - Sources Say

August 23, 2021

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by Stephanie Kelly and Jarrett Renshaw (Reuters/Capital) The U.S. Environmental Protection Agency is expected to recommend to the White House reducing federal biofuel blending mandates for 2021 to below 2020 levels in what would be a blow to the biofuels industry, two sources familiar with the matter said on Friday.

The EPA also is expected to make a separate recommendation to boost the blending mandates for 2022 above the previous two years, according to the sources, who spoke on condition of anonymity.

In the short term, the agency is looking to lower the amount of biofuels that refiners are required to blend into the U.S. fuel pool because the COVID-19 pandemic has sapped fuel demand. The move could be a risk for President Joe Biden’s administration, as some could view it as favoring oil refiners over the lower-carbon biofuels industry even as the administration presses companies to reduce emissions.

The EPA is expected to propose the 2021 and 2022 mandates at the same time, the two sources said. The proposals could change during a formal interagency review process.

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Biofuel producers rely on the national blending mandate to get their products into the U.S. fuel market. Cutting the mandate would hurt their market share. The mandates are intended to reduce U.S. reliance on imported oil. READ MORE

White House edges near biofuel plan in farm-versus-oil clash (Bloomberg)

US nears proposal of biofuel targets for 2021-22 (Argus Media)

EPA readies proposed biofuel mandates for 2021, 2022 (Agri-Pulse)

RIN prices fall sharply after news about RVOs, talk of refiner selling (S&P Global)

EPA to Propose Lower RFS Blend Volumes: White House to Keep Status Quo on Biofuel Blends Even as Biden Pushes to Lower Emissions (DTN Progressive Farmer)

REPUBLICANS ON RENEWABLE FUELS: (Politico's Morning Energy)

Clearing the Air: What We Know About EPA's Rumored RVO Revisions Lower Within the RFS (Farm Journal AgWeb; includes VIDEO)

Biden may reduce biofuel quotas, handing a win to oil-state Democrats (World Oil)

Bloomberg: EPA to recommend lower biofuel blending mandates (Fence Post)

Waiting on the White House for the 2021 RVOs (Red River Farm Network)

RFS volume proposal for 2021-’22 at White House for review (Biobased Diesel Daily)

RFA CONCERNED LOW RVO WOULD CRIPPLE ETHANOL (Brownfield Ag News)

Fire, Fuel and Food: Secretary Vilsack Outlines How USDA Is Helping Producers, Combatting Climate Change (AgWeb; includes VIDEO)

Excerpt from Politico's Morning Energy: REPUBLICANS ON RENEWABLE FUELS: GOP senators are pushing for EPA to give small refiners a break under the Renewable Fuel Standard as the administration reportedly aims to propose its new quotas for 2021 and 2022. The administration plans to soon send its recommendations for both compliance years to the White House for interagency review, where they're expected to propose 2021 blending mandates below 2020 levels.

Sen. Pat Toomey (R-Pa.), joined by 16 of his Republican peers, wrote to EPA Administrator Michael Regan to take “concrete steps” to stabilize RFS compliance by setting the RVOs for 2021 and 2022 below the blend wall, Kelsey Tamborrino reports for Pros. Small refiners have recently contended that the economic downturn of the pandemic has caused compliance with the RFS to become far more burdensome, with soaring prices for compliance credits, called RINs.

But Emily Skor, CEO of biofuels trade group Growth Energy, said in a statement that if EPA were to lower blending levels, it would “mark a dramatic reversal of this administration’s repeated and unequivocal promises to support rural clean energy jobs and uphold the Renewable Fuel Standard. We urge the Biden Administration to set any proposed blending targets at 15 billion gallons for conventional ethanol and make it clear that this EPA will ensure continued growth in the low-carbon biofuels that are vital to the nation’s clean energy transition and rural recovery.” READ MORE

Excerpt from Farm Journal AgWeb: Reuters and Bloomberg reported Friday the Environmental Protection Agency (EPA) is expected to recommend to the White House lowering the nation's biofuel blending mandates, or renewable volume obligations (RVOs), below 2020 levels. Then, the same day, Reuters had another story that said sources say EPA is recommending higher biofuel mandates for 2022 than 2021 and 2020.

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Growth Energy did confirm no official proposal had been sent to the Office of Management & Budget (OMB) as of Monday afternoon.

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“It was confusing, because those reports by both of those new services [Reuters and Bloomberg] who are usually pretty good, they brought that policy debate back into focus for commodity markets, and it affected markets,” Pro Farmer Washington Correspondent Jim Wiesmeyer told Chip Flory on “Signal to Noise” podcast. “Both news services issued reports that EPA was poised to send its proposed levels for 2021 biofuels, those are the mandates and they’re called RVOs, and 2022 biofuels levels, which the 2020 part is far more important to me. The reports said EPA was sending it for review by the White House, and they really should have said Office of Management and Budget.”

The reports indicated the proposed levels for 2021 would either be even with 2020 biofuels levels, or slightly below.

“Then Reuters later updated their story to say that the levels for 2022 would be above those for 2021 and 2020, after they had reported the 2021 marks would be below those for the year before. In other words, 2020,” adds Wiesemeyer.

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In July, Reuters also reported the White House was delaying its biofuel mandates over political concerns. President Biden campaigned on supporting renewable fuels, with biofuels groups hopeful the Biden administration would follow through on its campaign promises and restore the integrity of the RFS. However, with the recent push to move toward electric vehicles, and no clear plan on how Biden will use renewable fuels to meet his climate goals, renewable fuels groups haven't seen the campaign promises come to fruition, yet. READ MORE