National Biodiesel Board (NBB) executives criticized the Environmental Protection Agency’s (EPA) proposal for the 2020 Renewable Fuel Standards and the 2021 Biomass-based Diesel Volumes. The executives testified at a field hearing hosted by EPA in Michigan, emphasizing that EPA is sending a negative signal to the biodiesel industry by proposing flat volumes and then rolling them back through retroactive small refinery exemptions.
“EPA has selected volumes for the biomass-based diesel market that are simply too low. Year after year, the U.S. biodiesel and renewable diesel industry continues to demonstrate sustainable growth. We can achieve still higher volumes over the coming years,” stated NBB Chairman Kent Engelbrecht, who is also the biodiesel trade manager at Archer Daniels Midland Company (ADM). “When EPA sends the wrong signals for this program, biodiesel producers see significant investments put at risk. Flatlined volumes block achievable growth and undermine the goals of the RFS.”
Kurt Kovarik, NBB’s Vice President of Federal Affairs, emphasized, “Without properly accounting for small refinery exemptions, EPA is failing its duty to ensure that the annual required volume obligations are met. What that means for the current rule is that the agency must find a way to reconcile small refinery exemptions. And there are multiple options.”
EPA’s calculation of the 2020 annual percentage standards uses 0 as the number of gallons of diesel and gasoline produced by exempt small refineries. For 2015, 2016 and 2017, EPA exempted nearly 28 billion gallons of gasoline and diesel produced by small refineries, without accounting for them in the RFS program. Those exemptions reduced demand for biodiesel and renewable diesel by hundreds of millions of gallons. According to University of Illinois Professor Scott Irwin, the demand destruction for biodiesel and renewable diesel could reach 2.45 billion gallons over the next few years causing a $7.7 billion economic loss for the biodiesel industry.
Doug Whitehead, Chief Operating Officer of NBB, added, “As it finalizes the current rule, EPA has several options to ensure that the volumes it sets are reliable and will be met. First and foremost, the agency must only grant exemptions to small refineries that actually qualify. Second, EPA must account for the exemptions in the annual RVO formula. The agency does have authority to include volumes that it has exempted or plans to exempt.”
NBB Director of Federal Affairs David Cobb also commented on EPA’s proposed handling of the Americans for Clean Energy V. EPA case, remanded by the U.S. Court of Appeals for the DC Circuit in July 2017. “Two full years after receiving the remand from the Court, EPA is now proposing to ignore it. Worse, the agency’s reason for ignoring the Court’s directive — that there is a lack of demand for renewable fuel by the oil industry — is exactly the same reasoning the Court struck down. The proposed rule openly contradicts the DC Circuit Court’s explicit direction to EPA,” Cobb stated.