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EPA Plans Biofuel Boost in 2020

Increased blending to help offset small-refinery exemptions
Photograph: Shutterstock

WASHINGTON —The Trump administration is aiming to placate ethanol supporters with new but not yet defined plans to boost biofuel blending obligations under the Renewable Fuels Standard (RFS).

The U.S. Environmental Protection Agency (EPA) and U.S. Department of Agriculture (USDA) have agreed to the following actions, to take place “later this year,” according to an Oct. 4 announcement:

  • Propose expanding biofuel requirements in 2020 that are “building off” the recently announced 2020 blending volumes for renewable fuels and 2021 volumes for biodiesel through an upcoming supplemental notice.
  • Ensure that more than 15 billion gallons of conventional ethanol is blended into fuel beginning in 2020 and that obligated parties meet the volume obligation for biodiesel.

“This will include accounting for relief expected to be provided for small refineries,” the statement said.

The issue of small-refinery exemptions (SREs), which are meant to waive a small, financially distressed refiner’s biofuel blending obligations under the RFS, has been a sore point between the Trump administration and ethanol and corn supporters. According to the EPA, it granted 31 SREs in the most recent compliance year. Critics such as ethanol industry group Growth Energy have argued that the EPA has been too generous in handing out the SREs and needs to better define “small refinery,” because many of these exemptions have been given to small refineries owned by large, multinational corporations. They also have charged that the SREs have been eroding biofuel demand.

A senior EPA official told the Des Moines Register that before the agency decides on how many gallons will be restored to offset the SREs, it would first go through a public comment period to help it determine how to go about the process. The change “would effectively force bigger, nonexempted refineries to take up the slack,” a Bloomberg report said.

The same announcement said the USDA plans to use the budget process to consider infrastructure projects that would ease the introduction of higher biofuel blends. The Trump administration would also continue to address ethanol and biodiesel trade issues.

More E15 Moves

Concerning higher biofuel blends, the EPA said it planned to further reduce regulatory restrictions on E15, just a few months after it provided the 15% ethanol blend with a waiver of seasonal Reid vapor pressure restrictions that enable its sale year-round. The EPA plans to begin rulemaking to "streamline labeling and remove other barriers to the sale of E15.”

Groups representing the oil industry, which the Trump administration had also been attempting to mollify, immediately criticized the announcements. In a joint statement, the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers decried the Trump administration’s decision to boost biofuel blending.

“We are deeply concerned about the administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect and threatening higher costs for consumers,” the statement said. “The misguided reallocation of volumes punishes companies working to comply with the RFS and is an empty attempt to force more E15 into the fuel supply.”

The groups vowed to “vigorously challenge” the new policy.

In a nod to the oil industry, the EPA said it would continue to consider reforms to the market for Renewable Identification Numbers (RINs), credits that obligated parties such as refiners under the RFS use to demonstrate compliance to biofuel blending quotas. Some refiners have argued that the RIN market lacks transparency and that RIN prices have been manipulated by speculators. According to Bloomberg, 2019 ethanol RIN prices leapt 13% to 26 cents each after the EPA and USDA’s announcement, hitting their highest point since late June. Notably, the Oct. 4 announcement did not mention plans to introduce a cap on RIN prices, which refiners have been seeking.

“Today’s agreement is the latest in a series of steps we have taken to expand domestic energy production and improve the RFS program that will result in sustained biofuel production to help American farmers," said EPA Administrator Andrew Wheeler.

“Building on the success of the year-round E15 rule, this forward-looking agreement makes improvements to the RFS program that will better harness the production of our farmers and ensure America remains energy dominant,” said USDA Secretary Sonny Perdue.

Ethanol industry groups largely applauded the announcement. “The plan announced today takes a crucial step toward repairing the damage done by EPA’s small refinery waivers and re-establishes the RFS as a driver of growth in the production and use of low-carbon renewable fuels,” said Renewable Fuels Association President and CEO Geoff Cooper. The announcement marks only the beginning of the regulatory process, he said. “We will continue to diligently work with EPA and the administration to ensure this action is finalized in a way that guarantees a 15-billion-gallon requirement in 2020 truly is a 15-billion-gallon requirement,” he said.

 

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