EPA releases RFS volumetric requirements for 2020, 2021, 2022
The Environmental Protection Agency today proposed the long-delayed volumetric requirements for biofuels under the Renewable Fuel Standard for years 2022, 2021, and 2020, but rejected petitions to exempt small refineries from their obligations under the RFS on the grounds that petitioners failed to show that EPA has a basis under the Clean Air Act and recent federal case law to approve them.
“Despite multiple challenging dynamics affecting the RFS program in recent years, EPA remains committed to the growth of biofuels in America as a critical strategy to secure a clean, zero-carbon energy future,” said EPA Administrator Michael Regan in a news release. “This package of actions will enable us to get the RFS program back in growth mode by setting ambitious levels for 2022, and by reinforcing the foundation of the program so that it’s rooted in science and the law.”
The Renewable Fuels Association called the announcement “a modest step in the right direction for the nation’s ethanol producers and farmers.”
RFA said it “welcomes EPA’s proposal to set the 2022 RFS conventional renewable fuel requirement at the statutory volume of 15 billion gallons (bg) and its move to deny all pending small refinery exemption (SRE) petitions based on the unappealed holdings of the 10th Circuit Court’s decision in the Renewable Fuels Association et al. v. EPA.” RFA also noted that EPA said “it will follow the court’s ruling when it considers future SRE petitions.” RFA also praised EPA’s proposal to restore 500 million gallons of illegally waived RFS requirements from 2016 — with that volume being added in the form of supplemental requirements to the 2022 and 2023 RFS requirements.
RFA President and CEO Geoff Cooper said, “We commend EPA Administrator Michael Regan and the Biden administration for denying all pending small refinery exemptions, and we are extremely pleased to see the agency shutting the floodgates on these destructive waivers. Under the previous administration, these exemptions destroyed demand for more than 4 billion gallons of renewable fuel, resulting in higher fuel prices for the consumer, increased GHG emissions, and lower farm income. Today’s announcement should finally put an end to the rampant abuse of the exemption program that we experienced under the last administration.”
RFA said it was also pleased to see EPA’s proposal to bring more transparency to the SRE process by requiring public disclosure of certain information that has previously been treated as confidential business information — something for which the association has been advocating for many years.
CHANGING 2020 RVO
But RFA added, “Unfortunately, today’s package also seeks to cut the 2021 conventional renewable fuel requirement to just 13.32 bg, representing EPA’s view of actual consumption. In addition, EPA is proposing to reopen the already-finalized 2020 RVO and reduce the requirement from the original volume of 15 bg to just 12.5 bg, again reflecting EPA’s estimate of actual consumption.”
“While we are pleased to see that EPA’s proposal for 2022 is consistent with congressional intent to require 15 billion gallons of conventional renewable fuels like corn ethanol, it would be completely unprecedented — and contrary to EPA’s past policies and practices — for the agency to go back in time and revise the 2020 RFS requirements,” Cooper said. “The 2020 volumes were finalized nearly two years ago. Revising them now would undermine investment, create uncertainty, and go against EPA’s long-standing position that it does not have the authority to change RVOs once they are finalized.”
“We recognize that the previous administration left the RFS program in total disarray when it departed Washington, and today’s package from EPA marks an important step toward finally putting the RFS back on track,” Cooper said. “However, today’s proposals do not quite get us all the way there, and more work is needed to ensure the RFS drives maximum growth in the production and use of low-carbon renewable fuels. RFA and our allies in the farm community will engage with EPA and actively pursue improvements to these proposals during the public comment period.”
Emily Skor, president of Growth Energy, which represents ethanol plant builders and managers, called the announcement “a mixed bag.”
“EPA’s projection of strong biofuel blending requirements in 2022, commitment to halt illegal refinery exemptions, and long-awaited progress toward complying with a 2017 court order on lost gallons represent a welcome step forward,” Skor said. “These forward-looking plans underscore the critical role biofuels play in mitigating climate change and lowering prices at the pump. However, we are extremely disappointed EPA has proposed rolling back requirements for 2020 and lowering volumes for 2021.”
Skor continued, “Retroactive cuts to 2020 blending requirements impact the entire fuel supply chain, including the farmers, producers, blenders, retailers, and responsible refiners who based business decisions on final requirements in place for some time.
“This unprecedented move not only exceeds EPA’s legal authority under the RFS, it fails to recognize the law’s built-in mechanism that adjusts requirements when fuel demand differs from original projections. At face value, the EPA’s plan for 2020 gallons serves as a giveaway to petroleum companies at the expense of rural families and future investment in low-carbon energy.
“On the campaign trail, President Biden committed to strengthening the rural economy and addressing climate change with a strong RFS, and we hope to see the president’s promises fully reflected in the final rule. We look forward to engaging with the EPA during the comment period to get the RFS fully back on track.
“The Biden administration simply cannot meet its climate goals while retroactively rolling back low-carbon biofuel blending requirements to help oil refiners,” Skor concluded.
National Corn Growers Association President Chris Edgington said, “Because low carbon ethanol replaces high-carbon gasoline and cuts emissions from vehicles, the proposed volumes for 2022 would help the Biden administration meet emission reduction commitments and lower fuel prices. Denying pending refinery exemption petitions and restoring gallons improperly waived in the past are important steps toward restoring RFS integrity. These actions help move renewable fuels forward.
“However, reopening 2020 volumes is unprecedented and rewards the use of more oil at the expense of the environment. We strongly urge EPA to move forward with finalizing the strong 2022 volumes while correcting course on the proposed retroactive cuts.”
The National Biodiesel Board welcomed the proposal.
Kurt Kovarik, NBB’s vice president of federal affairs, stated, “During the past two years’ economic challenges, our industry worked hard to meet growing U.S. demand for cleaner, better fuels. We are confident that we can continue to grow and innovate to meet additional market needs. EPA’s rule provides some growth for advanced biofuels in 2022 and, we hope, puts an end to the demand destruction that resulted from unwarranted small refinery exemptions. We look forward to working with the agency to getting the RFS back on track.”
“The long delay in setting 2021 volumes is a missed opportunity,” Kovarik continued. “Moreover, EPA is setting a bad precedent by recalculating the 2020 obligations. The retroactive lowering of volumes creates uncertainty about future growth.”
EPA is proposing sustainable growth opportunities consistent with industry expectations along with a statutorily required increase of 500 million gallons in the overall advanced biofuel category, NBB said.
National Sorghum Producers Chairman Kody Carson, a sorghum farmer from Olton, Texas, said, “The EPA announcement is a patchwork proposal. The bid to roll back 2020 RVOs is deflating, but in the same breath, we are encouraged to see the proposed increase in obligations to historic levels for 2022 and denial of pending SREs. Congress was clear in their intent when they crafted the Renewable Fuels Standard to spur increased production and blending of biofuels. At a time when farmers are facing record-high costs of production, historic regulatory uncertainty and extreme weather challenges, going backward on past obligations will further weaken the largest domestic market to the detriment of American farmers and rural communities. We encourage the EPA to reverse this proposed action on 2020 RVOs and move forward with strengthened blending intent for 2022.”
American Farm Bureau Federation President Zippy Duvall said, “President Biden promised his administration would ‘honor the critical role the renewable fuel industry plays in supporting the rural economy and the leadership role American agriculture will play in our fight against climate change.’
“Today’s EPA announcement upholds the integrity of the RFS by setting a positive target for 2022 Renewable Volume Obligations of 20.77 billion gallons of blending and saying no to all 65 pending small refinery exemptions, which have undermined renewable fuel production in the past. We’re also pleased USDA will finally be allocating $700 million in pandemic assistance for losses related to biofuel production.”
But the Iowa Renewable Fuels Association said the overall proposal would break Biden’s “bond” with rural America.
“The proposed rule from the Biden EPA falls woefully short of any attempt to leverage domestic biofuels to help lower fuel prices and carbon emissions,” stated IRFA Executive Director Monte Shaw. “We also have serious concerns it likely violates the RFS law, especially with regard to the 2020 actions. Why on earth should the United States be asking OPEC for more oil and releasing our strategic petroleum reserves while at the same time proposing to undermine the one and only law on the federal books that seeks to expand domestic fuel supplies that reduce carbon emissions. We urge President Biden to step in and provide a course correction to his EPA in order to realign this proposed rule with his commitments to Iowa voters.”
“We do want to say a strong thank you for the COVID relief funding announced today and for the Biden EPA stepping up to begin applying the 10th Circuit Court ruling to all refinery exemption determinations,” stated Shaw. “Having said that, I’d be lying if I didn’t acknowledge the frustration I’ve heard out here of having to wait for these announcements that could have come in March just so the Biden EPA would have a spoonful of sugar to try to help the proposed RVO demand destruction go down. These disparate actions are not tied to one another and should stand on their own merits.”
“The Biden EPA’s proposal to reopen the finalized 2020 rule is ill conceived, illogical, and, we believe, illegal,” stated Shaw. “The EPA has long maintained it does not have the authority to reopen a final RVO rule, and we agree. Further, the self-correction mechanisms in the RFS have already adjusted the biofuels requirement for 2020 down to account for COVID-related reduced gasoline use. Adjusting the 2020 levels down further is biofuel demand destruction, pure and simple.
“Further, the 2021 number was reduced well below actual blending. That’s unfathomable and, if allowed to stand, would blow apart the many commitments President Biden made to Iowa voters when running for president. We have not forgotten that Biden said the RFS ‘marks our bond with our farmers and our commitment to a thriving rural economy.’ We urge President Biden to ensure the final rule lives up to his promise.”
The co-chairs of the House Biofuels Caucus – Reps. Cindy Axne, D-Iowa; Angie Craig, D-Minn.; and Mark Pocan, D-Wis. – joined Rep. Ron Kind, D-Wis., in a joint statement:
“After months of unnecessary delay, we are glad that the EPA has released the long-overdue Renewable Volume Obligations. The 2022 number sets the biofuels industry on the right path moving forward. And the end of the abuse of Small Refinery Exemptions – which provide relief to oil companies at the expense of family farmers – is welcome news.
“These decisions will help lower prices at the pump for hardworking Americans and accelerate the positive impact that biofuels can and must play in our effort to decarbonize the transportation sector, tackle climate change, and drive economic growth across rural America.
“However, the proposed decision to retroactively lower the 2020 RVO target does not reflect a sufficient commitment to renewable fuels and family farmers. As we have emphasized in repeated conversations with the administration, now is the time to invest in renewable biofuels and the communities they support – not to prioritize the interests of fossil fuel companies that continue to ignore the law of the RFS.
“We look forward to conversations about changing the proposed 2020 RVO number to better reflect the role biofuels must have in our clean energy economy.”
Sen. Deb Fischer, R-Neb., said, the RVOs “are a betrayal of rural America.”
“The Biden administration claims to care about addressing climate change but is giving big oil a huge break at the expense of the farmers in the Heartland who produce cleaner fuel,” Fischer said. “That doesn’t add up. Retroactively lowering the 2020 RVOs and setting low 2021 RVOs is a betrayal of the hardworking men and women of rural America.
“To pile on, the administration is trying to conceal this bad news by taking credit for biofuels COVID-19 assistance I fought for that Congress passed and President Trump approved in 2020. The administration held this assistance back for three extra months and is releasing it now to distract Americans from its actions. Further, it appears the administration has intentionally delayed denying 65 small refinery exemptions until today, instead of letting the biofuel industry know sooner and providing certainty.
“The administration has broken its promises. I will continue to work with my colleagues on both sides of the aisle to fight for fairness and certainty for our ethanol producers.”
Sen. Chuck Grassley, R-Iowa, said, “The administration’s unprecedented plan to retroactively cut blending levels for previous years is a boon for Big Oil. What’s to stop the administration from slashing 2022 obligations down the line? No matter how rosy future outlooks might be, this precedent makes clear the administration is not committed to renewable fuels. It’s a disgrace and an outrage to Iowa producers and anyone who cares about our environment.
“This administration has spent much of its first year crowing about its climate priorities while simultaneously begging OPEC to reduce skyrocketing oil costs. Domestically-produced biofuels help to solve both of these problems, but the Biden administration opted not to take yes for an answer. I don’t want to hear another word about President Biden’s so-called climate priorities until he puts his money where his mouth is and delivers cleaner, cheaper biofuels for Americans, just as he promised Iowans on the campaign trail.”
EPA EXPLAINS RVOS
EPA said, “The proposed volumes for 2022 are over 3.5 billion gallons higher than the volume of renewable fuel used in 2020. The proposed volume of advanced biofuel for 2022 is over 1 billion gallons greater than the volume used in 2020. EPA is also proposing to add a 250-million-gallon ‘supplemental obligation’ to the volumes proposed for 2022 and stating its intent to add another 250 million gallons in 2023. This would address the remand of the 2014-2016 annual rule by the D.C. Circuit Court of Appeals in Americans for Clean Energy v. EPA. Spreading this obligation over two years would provide the market time to respond to this supplemental obligation. The last administration failed to act on the agency’s outstanding obligation to address the court’s remand.
“EPA is proposing 2021 volumes at the level that it projects the market will use by the end of the year. EPA is proposing to revise the 2020 standards to account for challenges the program and the market faced that year, including from the COVID-19 pandemic.
EPA said it seeking public comment on the small refinery exemption proposal “because today’s proposed SRE action is highly consequential to impacted parties, reflects an updated interpretation of the CAA, and is a change from previous EPA practice.”
The Senate on Sunday passed the Inflation Reduction Act, also known as the reconciliation bill, with all Democrats supporting it and all Republicans opposed.
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