By Keith Reid
The final Renewable Fuel Standards 2014-2016 have been announced making some parties happier than others. The ethanol camp in particular was perturbed, even though it could reasonably be considered from a “glass half-full” perspective compared to previous EPA announcements. The volumes are greater than those fairly recently proposed, but they are lower than the mandated volumes which were waived. As EPA noted, the mandated renewable fuel volume requirement for 2016 would have been 22.25 billion gallons without the waiver, and it is now 18.11 billion gallons. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35%, higher than the actual 2014 volumes, while the total renewable standard requires growth from 2014 to 2016 of over 1.8 billion gallons of biofuel, or 11% higher than 2014 actual volumes. EPA also pointed out that biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017.
Here are EPA charts giving the breakdowns:
Click to enlarge
EPA noted in the rule summary: Our decision to finalize volumes for total renewable fuel that rely on exercising the general waiver authority is based on the same fundamental reasoning we relied upon in the June 10, 2015 proposal. Despite significant increases in renewable fuel use in the United States, real -world constraints, such as the slower than expected development of the cellulosic biofuel industry and constraints in the marketplace needed to supply certain biofuels to consumers, have made the timeline laid out by Congress impossible to achieve. These challenges remain, even as we recognize the success of the RFS program over the past decade in boosting renewable fuel use, and the recent signs of progress towards development of increasing volumes of advanced, low GHG-emitting fuels, including cellulosic biofuels.
We believe that the RFS program can and will drive renewable fuel use and, indeed, we have considered the ability of the market to respond to the standards we set when we assessed the amount of renewable fuel that can be supplied. Therefore, while this final rule applies the tools Congress provided to make adjustments to the statutory volume targets in recognition of the constraints that exist today, we believe the standards we are finalizing today will drive growth in renewable fuels, particularly advanced biofuels which achieve the lowest lifecycle GHG emissions. In our view, while Congress recognized that supply challenges may exist as evidenced by the waiver provisions, it did not intend growth in the renewable fuels market to be stopped by those challenges, including those associated with the “E10 blendwall.”10 The fact that Congress chose to mandate increasing and substantial amounts of renewable fuel clearly signals that it intended the RFS program to create incentives to increase renewable fuel supplies and overcome constraints in the market. The standards we are finalizing will provide those incentives.
The full PDF of the EPA rule can be found HERE.
Feeback to the announcement had few surprises:
The National Association of Convenience Stores: NACS is continuing to review the more than 200-page rule, but at first blush is pleased that EPA exercised its waiver authority to set RVOs lower than the levels mandated by Congress. Further analysis is needed, and NACS welcomes input from members regarding how these numbers will impact the fuels marketplace.
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Petroleum Marketers Association of America: The new biofuels blending volumes for 2014, 2015 and 2016 are not expected to require the introduction of E15 gasoline. PMAA is opposed to volumetric ethanol blending mandates for gasoline that would require the introduction of E15 until all practical and legal UST compatibility issues are settled for petroleum marketers. PMAA advocated this position to the EPA via written comments and public testimony. PMAA also recently met with the White House Office of Management and Budget to express the industry’s concern over a possible E15 mandate should ethanol blending levels be set too high in this round of annual renewable fuel blending requirements.
Renewable Fuels Association President and CEO Bob Dinneen released the following statement: “EPA’s decision today turns our nation’s most successful energy policy on its head. When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that. It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry. Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”
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The National Biodiesel Board: “This decision means we will displace billions of gallons of petroleum diesel in the coming years with clean-burning biodiesel. That means less pollution, more American jobs, and more competition that is sorely lacking in the fuels market,” said NBB CEO Joe Jobe. “It is a good rule. It may not be all we had hoped for but it will go a long way toward getting the U.S. biodiesel industry growing again and reducing our dangerous dependence on fossil fuels.”
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American Petroleum Institute: “EPA has taken a significant step in the right direction by using its waiver authority to lower ethanol mandates, acknowledging the market limitations of the ethanol blend wall,” API President and CEO Jack Gerard said. “However, the agency must do more to protect consumers. EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them. Motorists have largely rejected these fuels.”
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Growth Energy: Growth Energy and its members are pleased to see that the President and the Environmental Protection Agency have recognized the need to move the renewable fuel industry past the so-called blend wall for the sake of America’s climate, energy security and rural economy. While this rule still relies on a flawed methodology that sets renewable fuel volumes below the statutory levels enacted by Congress, it is an important improvement from the proposed rule, and moves us closer to getting America’s most effective climate policy back on track and providing certainty for biofuels in the marketplace
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American Coalition for Ethanol: “When Congress enacted the Renewable Fuel Standard it voted to side with those of us who said ‘yes we can’ reduce greenhouse gas emissions from motor fuel, ‘yes we can’ allow consumer access to E15 and flex fuels, and ‘yes we can’ spark innovative ways to produce cleaner fuels,” said Brian Jennings, the Executive Vice President of the American Coalition for Ethanol. “While we appreciate that the Administration made incremental improvements compared to the proposed RFS rule, unfortunately, today they are choosing to side with those who say ‘no, we can’t’. Regrettably, EPA’s final RFS rule protects the old way of doing business by obstructing consumer access to cleaner fuels, stifling competition in the marketplace, and undermining innovation. Given all the President hopes to accomplish at the international climate talks which begin in Paris today, it is inconsistent for the Administration to unravel the most effective policy at their disposal to support low carbon fuels.”
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Editor: New!
BIO Statement: The final rule for the 2014, 2015 and 2016 Renewable Fuel Standards (RFS), issued today by the Environmental Protection Agency (EPA), is an unnecessary, unlawful about face for a program that was successfully driving development of cleaner biofuel technologies and reduction of U.S. greenhouse gas emissions. The rule undermines the goals of the statute, and it will continue to undercut investment in advanced and cellulosic biofuels and increase greenhouse gas emissions in the transportation fuel sector.
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