Biden Set to Raise Refiners’ Biofuels Quotas in Green Push

Source: ByJennifer A Dlouhy and Kim Chipman, Bloomberg • Posted: Sunday, December 4, 2022

EPA seeks to boost quotas for corn- and soy-based biofuels Modest increase planned for biodiesel, despite new production

Inside Croatia's INA Industrija D.D Oil Refinery
Photographer: Oliver Bunic/Bloomberg

The Biden administration is seeking to boost the amount of renewable fuels that oil refiners and importers must blend into their products over the next three years, according to people familiar with the matter.

The Environmental Protection Agency will ask companies to blend 20.82 billion gallons of renewable fuel into their diesel and gasoline next year — with as many as 15 billion gallons potentially coming from conventional, corn-based ethanol — said the people, who asked not to be identified because the proposal isn’t public.

The numbers aren’t yet final and could change before publication. The proposal — set to be released as early as Wednesday evening and finalized by the EPA in mid-2023 — is part of a broader push by the Biden administration to promote greener energy sources and support biofuels produced in rural America.

By setting Renewable Fuel Standard targets through 2025, the EPA will provide more certainty and foster new biofuel projects, said Justin Dirico, a principal at New York-based brokerage OTC Direct. “Having the RFS known through 2025 allows for easier hedging of environmental credits,” Dirico said.

The overall renewable fuel quota would climb to 21.87 billion gallons in 2024 — up from this year’s 20.87-billion-gallon requirement, and up to at least 22.68 billion gallons in 2025. The requirements set for the later years could be subject to change depending on whoever wins the next US presidential election.

Oil refiners had urged the EPA to pare implied quotas for corn-based ethanol. The agency’s coming proposal appears to be a “missed opportunity” to “modernize the RFS and set it on a more sustainable course for all stakeholders,” said Geoff Moody, senior vice president of government relations at the American Fuel and Petrochemical Manufacturers association.

Much of the planned increase is driven by expectations for significant growth in the amount of renewable natural gas harvested from landfills and farms. The EPA is also set to propose expanding the 17-year-old Renewable Fuel Standard program to incorporate electric vehicle charging with power produced from some renewable energy sources, such as biogas.