US EPA Climate Changing on RFS?

by Michael McAdams (Advanced Biofuels Association/Biomass Magazine) At ABFA, we’ve been keeping our eyes on the U.S. EPA during the first quarter of 2018. The EPA’s actions over the next several months will have ripple effects through the industry, in the RIN markets, and on Capitol Hill. As such, I think it appropriate to lay out the challenges ahead.

First and foremost, EPA has been party to a number of top-level political meetings at the White House, engaging with individual companies to discuss options for a politically driven compromise deal between corn ethanol and the merchant refining industry. During these meetings, Administrator Scott Pruitt publically called to cap the conventional pool D6 RIN value to address the alleged issues with the program’s compliance costs, a move that would seemingly reverse the current EPA’s own logic as spelled out in its defense for the rejection of the petitions to change the point of obligation under the RFS.

"... Merchant refiners can indeed expend significant funds to purchase RINs needed to demonstrate compliance with the RFS program, but the cost is offset by a corresponding increase in the price of the fuel they sell. That market price reflects the cost of RINs. The same dynamic applies to both merchant and integrated refiners.”

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Second, EPA is working twofold to eliminate any obligation small refiners might otherwise have under the RFS program, by granting additional waivers, and by seeking to expand the definition of “small refinery.” As these small refiners produce almost 10 percent of the gasoline and diesel sold in the U.S., both of these actions will further undercut the RFS program. We must demand that EPA make these decisions with absolute transparency, clearly justifying for whom, and on what criteria, these decisions are made.

Indeed, let’s not forget the regulatory role EPA plays. In 2018, EPA has so far silent on approving new pathways and issuing new rules, such as a regulatory framework for biointermediates. We will need to continue fighting to ensure EPA does its job in this space, enabling growth in the program.

And, finally, given this EPA’s lackluster support for the RFS so far, it would be foolish to expect the 2019 renewable volume obligations (RVOs) to recognize growth in the renewable fuels industry. As with last year, we should expect the need to fight for growth in the D4 pool RVO. Last year, the proposed 2018 RVOs included lower volumes than actual production in 2017; the same could be true in this year’s proposed RVOs.

Outside the walls of EPA, we can expect to see Capitol Hill actively working to legislatively reform the RFS program this year. READ MORE