EPA's Final RFS Rule Underwhelms the Corn and Biofuel Sectors

Posted on Thu, 12/19/2019 - 10:24

EPA finalized its Renewable Fuel Standard program for 2020 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel, and biomass-based diesel for 2021 at levels steady to just a touch higher relative to its initial proposal. You can access the official final rule here.  

As reported by several news outlets yesterday, the agency stuck with its initial proposal for reallocating gallons exempted from blending via hardship waivers. “For 2020, we proposed to project exempt volumes are based on a three-year average of the relief recommended by the Department of Energy (DOE) for 2016–2018. In this action, we are finalizing these proposed changes,” EPA says, adding “These changes result in increases to the percentage standards as compared to the percentage standards in the July 29 proposal.”

This angers the U.S. farm and ag sector who say relying on Department of Energy (DOE) recommendations regarding small refinery exemptions (SREs) for these calculations rather than actual waivers issues does not provide the industry certainty that corn-based ethanol blending will hold above 15 billion gallons. EPA is not bound to follow DOE recommendations and has in fact granted full waivers when DOE recommended partial or full waivers.

Addressing that, EPA says, “consistent with these changes, we are also announcing our general policy approach to small refinery exemptions going forward, including for now-pending 2019 petitions as well as for future 2019 and 2020 petitions. Although final decisions on any exemption petition must await EPA’s receipt and adjudication of those petitions, EPA intends to grant relief consistent with DOE’s recommendations where appropriate. This policy extends to DOE’s recommendations of partial (50%) relief: where appropriate, we intend to grant 50% relief where DOE recommends 50% relief.”

But the ag sector is hesitant to take EPA at its word, especially when its word comes with phrases like “where appropriate” that give the agency wiggle room.

The Trump administration has promised the RFS would ensure the mandated 15 billion-gallon corn-ethanol blending level holds, and won’t be undercut by SRE. Today’s announcement does not do that. This reneging of that pledge could have negative election impacts for the President Donald Trump in must-have farm states, such as Iowa.

“EPA had an opportunity to restore the broken trust of farmers and to follow through on the president's commitment, but it appears they've missed the mark ... again," Iowa Senator Joni Ernst (R) said today.

“After EPA’s overwrought abuse of the SRE program in recent years, agency officials had a chance to finally make things right with this final rule—but they blew it,” said RFA President and CEO Geoff Cooper. “EPA’s rule fails to deliver on President Trump’s commitment to restore integrity to the RFS, and it fails to provide the market certainty desperately needed by ethanol producers, farmers, and consumers looking for lower-cost, cleaner fuel options. While the final rule is an improvement over the original proposal, it still does not guarantee that the law’s 15-billion-gallon conventional biofuel blending requirement will be fully enforced by EPA in 2020.”

Iowa Senator Chuck Grassley (R) tweeted “These magic words from Oval Office Sept. 12 agreement are missing from today’s EPA rule on Renewable Fuel Standard ‘three year rolling average based on hard data and actual waived gallons.’ EPA changed deal from what was agreed to with Pres Trump will hold Wheeler’s feet to fire on RFS.”

His tweet gives us hope today’s “final” rule may not be the final word on the matter.

 

 

Final Volume Requirements a

 

2019

2020
Statutory Volumes

2020
Proposed Volumes

2020
Final Volumes

2021
Final Volumes

Cellulosic biofuel (billion gallons)

0.42

10.50

0.54

0.59

n/a

Biomass-based diesel (billion gallons)

2.1

≥1.0

n/a

2.43

2.43

Advanced biofuel (billion gallons)

4.92

15.00

5.04

5.09

n/a

Renewable fuel (billion gallons)

19.92

30.00

20.04

20.09

n/a

a All values are ethanol-equivalent on an energy content basis, except for BBD which is biodiesel-equivalent.