EPA Finalizes Increases in Renewable Fuel Levels
April 24, 2016
Written By Adam Buckallew
Nov. 30, 2015, the U.S. Environmental Protection Agency (EPA) announced long-awaited blending requirements that will increase the amounts of ethanol, biodiesel and other renewable fuels in the nation’s fuel supply. The EPA mandate calls for 18.11 billion gallons of renewable fuels to be blended with gasoline and diesel in 2016, yet falls short of the 22.25 billion gallons that Congress had in mind when it drafted the Renewable Fuel Standard (RFS) in 2005 and expanded it in 2007.
The final RFS ruling outlines production targets of 14.5 billion gallons of ethanol in 2016 and 1.9 billion gallons of biodiesel in 2016 and 2 billion gallons in 2017.
“The volumes we think are considerable, and really set a good direction and a stable signal for the industry to really produce both total renewable fuel in 2016 and also advanced fuel,” said Janet McCabe, the acting assistant administrator for EPA’s Office of Air and Radiation. “EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.”
Mixed Industry Reaction
The EPA had been walking a tightrope between the demands of renewable fuels producers, who have generally supported the ever-increasing statutory requirements, and the petroleum and refining industries, which have said that absorbing more biofuels into the fuel supply is not feasible.
Bob Dinneen, president and CEO of the Renewable Fuels Association, expressed disappointment with the EPA’s decision, saying it would create uncertainty in the industry.
“EPA’s decision today turns our nation’s most successful energy policy on its head,” Dineen said in a press release. “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.”
Maryland farmer Chip Bowling, who serves as president of the National Corn Growers Association, acknowledged the RFS ruling was a step in the right direction but fell short of his organization’s expectations.
“While we are pleased to see the EPA take a step forward and revise its original proposal, the fact remains that any reduction in the statutory amount will have a negative impact on our economy, our energy security and the environment,” Bowling said. “We should be strengthening our commitment to renewable fuels, not backing down.”
On the other side of the debate, the American Petroleum Institute (API) argues that increasing biofuel usage is not in consumers’ best interests. API cites a 2014 report from the Congressional Budget Office that claims fuel prices could rise if the EPA mandated more than 10 percent ethanol into gasoline.
“EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them,” said Bob Greco, API downstream manager.
A Win for Biodiesel
Under the new RFS rule, biomass-based diesel volumes are projected to grow. The biomass-based diesel category—a diesel subset of the overall advanced biofuel category—+is made up mostly of biodiesel but also includes renewable diesel, another diesel alternative made from the same feedstocks using a different technology.
The new standards reflect modest but meaningful growth over recent years when the U.S. market has hovered around 1.8 billion gallons annually.
“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 Joe Jobe, CEO of the National Biodiesel Board. “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. We certainly think the biodiesel and overall advanced biofuel standards could and should have been higher. The production capacity is there, and we have surplus fats and oils that can be put to good use.”
The EPA is expected to release its next proposed rule for the RFS no later than June 2016. The proposal is expected to include the 2017 conventional biofuels target and the 2018 biomass-based diesel target, along with other advanced and total RFS volumes.
MFA Oil is a leading provider of ethanol and biodiesel in the state of Missouri and is a part-owner in Mid-America Biofuels, LLC, the state’s first major biodiesel production facility located in Mexico.