Biofuel blending targets could include big volume cuts

Source: By Spencer Chase, AgriPulse • Posted: Thursday, September 23, 2021

The Biden administration is considering a multi-year reduction to the nation’s biofuel mandate, a move that would surely anger farmers and biofuel interests hoping to see stronger support for the program.

According to industry sources and media reports, the Environmental Protection Agency is circulating a document that would set blending targets below levels finalized in 2019, the last volumes set prior to the U.S. outbreak of COVID-19. In that announcement, EPA finalized total biofuel blending of about 20.1 billion gallons for 2020, a move that came several months before the pandemic greatly reduced vehicle traffic and fuel consumption across the country.

According to a document analyzed by Agri-Pulse, the total renewable fuel volume for 2020 would be revised to 17.1 billion gallons. The proposed 2021 volume would be set at a total of 18.6 billion gallons, and the 2022 proposal would come in at 20.7 billion gallons.

If proposed and ultimately finalized, the figures would represent dramatic cuts in the overall volumes of biofuels mandated for use as well as the conventional biofuel gallons typically called for in the Renewable Volume Obligations.

The RVO, set annually by the EPA to outline the blending required under the Renewable Fuel Standard, has in recent years left room for the 15 billion gallons called for under the legislation that created the biofuel mandate (other fuel categories have fallen short of statutory blending targets). But according to the document, conventional biofuel gallons – typically fulfilled by corn ethanol – would drop to 12.5 billion gallons for 2020 before increasing to 13.4 billion gallons for 2021 and 13.8 billion gallons for 2022.

University of Illinois ag economist Scott Irwin said the 12.5 billion conventional ethanol figure for 2020 “is very close to my computation of domestic ethanol disappearance for 2020.”

An EPA spokesperson did not immediately respond to a request for comment.

Under the law, the RVOs are to be finalized annually by the end of November. That announcement will include the following year’s biofuel blending requirements and the biomass-based diesel requirements two years in advance. Under normal practice, the EPA releases proposed volumes earlier in the year to allow for public comment.

The Trump administration did not propose an RVO in 2020, citing the uncertainty caused by the pandemic. The lack of levels left EPA to set a multi-year standard in its upcoming proposal, which sources say could be released as early as this week. It is currently before the White House Office of Management and Budget for regulatory review.

“If these rumors are true, this would be backpedaling on the president’s commitments to uphold the RFS and would add 22.8 million metric tons of carbon emissions back into the air – the equivalent of putting 5 million cars back on the road,” Growth Energy CEO Emily Skor said in a statement. “It’s hard to imagine any justification for the administration to make such a move.”

Another industry source told Agri-Pulse the possibility of reduced levels was not necessarily surprising given last year’s reduced consumption.

“To me, this looks like catchup,” the source said. “The administration is trying to get a program that can be managed moving forward. To do that, they have to clean up what the last administration didn’t do.”

Speculation about of reduced levels has been circulating for some time, including in comments Tuesday from a pair of Senate Republicans. Iowa’s Chuck Grassley told reporters he was bracing for cuts to the gallon requirements.

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“If we get a bad RVO out of EPA, the farmers aren’t going to forget it, and they’re going to blame Biden,” he said. “The rumors we’re hearing, it could even be worse than what we had under Trump.”

Sen. Roger Marshall, R-Kan., tweeted Tuesday that if the rumors are true, “then it’s like adding the (greenhouse gas) equivalent of 5 million cars to the road … and then throwing our farmers and biofuels producers under the tires.”

While the document does cite potential cuts to ethanol and total biofuel blending, it does suggest boosts to cellulosic biofuels and renewable diesel. If finalized, cellulosic biofuel volumes would grow by about 51% between 2020 and 2022; renewable diesel gallons would increase more than 200% to about 1.6 billion actual gallons.

The oil and biofuel industries will now anxiously await an official announcement from EPA to see if the figures from the agency match the circulated documents. But in a bizarre development Wednesday, the Renewable Fuels Association distanced itself from an email that contained a set of potential volumes purportedly from the organization. RFA spokesman Ken Colombini called the message “a complete fabrication and a shameful ‘spoofing’ attempt.”

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