Biofuels Sector Worries Over EPA’s Reported RFS Blending Cuts

Source: By Stuart Parker, InsideEPA • Posted: Monday, September 27, 2021

Biofuels industry groups and their congressional champions are asking the Biden administration to pull EPA “back from the brink,” amid unconfirmed reports that the agency will significantly cut annual biofuel blending targets under the renewable fuel standard (RFS).

With EPA’s RFS volume proposal currently undergoing review by the Office of Management and Budget (OMB), the groups and their supporters are urgently seeking to intercede with the White House to prevent promulgation of a rule based on a leaked document purporting to be the agency’s proposal to set blending levels for 2021 and 2022 and to make retroactive blending cuts for 2020.

“While a formal proposal has not been released, the expected standards would destroy a decade of progress on low-carbon biofuels and brazenly violate the promises that President Biden made to farmers, green voters, and his own allies in Congress,” said the Advanced Biofuels Business Council, American Farm Bureau Federation, American Soybean Association, Growth Energy, National Biodiesel Board, National Corn Growers Association, National Farmers Union, and Renewable Fuels Association Sept. 23.

“We are deeply concerned that this administration is favoring the oil industry over the environment, rural communities, and hardworking farmers by providing handouts that eclipse those obtained by fossil fuel advocates under the previous administration. A move to cut U.S. biofuel requirements would be a devastating blow to rural families and derail this White House’s plan to decarbonize the transportation and agriculture sectors,” the groups added.

“Reports even suggest the agency could eliminate renewable fuels from past obligations, effectively giving select petroleum companies a retroactive license to force more fossil fuels into the U.S. energy mix.”

Therefore, “We urge the president to ensure the EPA avoids a mistake that would undermine the Biden-Harris administration’s relationship with farmers, biofuel producers, and climate advocates across rural America.”

The leaked document outlines a steep cut in the “implied” RFS volumes for conventional corn ethanol. There is no explicit corn ethanol volume, but the bulk of the overarching statutory total renewable fuel requirement is still satisfied by corn ethanol, at an implied 15 billion gallons (bn gal).

The document cites “conventional renewable fuel” at 12.5 bn gal for 2020 — a retroactive cut from the final 2020 level of 15 bn gal — and the proposed 2021 volume at 13.453 bn gal, with the 2022 level at 14.096 bn gal, of which 13.788 bn gal would be ethanol, and the remainder renewable diesel.

The overall total renewable fuel volume would be set at 17.129 bn gal in 2020, 18.628 bn gal in 2021 and 20.765 bn gal in 2022. This compares to a current 2020 total volume of 20.09 bn gal, marking a steep retroactive cut.

Advanced biofuel, which must achieve a greater greenhouse gas reduction than corn ethanol, would be set at 4.63 bn gal, a reduction from the final 2020 volume of 5.09 bn gal, rising to 5.175 bn gal in 2021 and 5.765 bn gal in 2022.

Cellulosic biofuel, also required to achieve a much greater GHG cut than corn ethanol, would be set at 0.505 bn gal in 2020, down from 0.590 bn gal in the final volume for 2020. In 2021, this would rise to 0.621 bn gal, then 0.765 bn gal in 2022.

An EPA spokesperson said only that “we do not have a comment” on the leaked numbers, though sources say the agency may issue the proposal within days.

EPA faces a statutory deadline of Nov. 30 to finalize the proposal for 2022, but it is likely to miss this target, given the need to take public comment on its yet-to-be released proposal. The proposed volumes for 2021 are already seriously overdue, having missed a Nov. 30, 2020, deadline for finalization.

‘Feet To The Fire’

Lawmakers supportive of biofuels from both parties also weighed in with warnings that substantial cuts to biofuels blending will harm farmers and the rural economy, damaging President Joe Biden’s standing with rural voters.

Speaking to farm news service AgriTalk Sept. 22, as news broke of the possible steep cut in biofuels volumes, Sen. Charles Grassley (R-IA), a longtime proponent of biofuels, said, “If it is bad news, I’m going to say Biden needs to back our farmers and I’m going to have a lot of work to hold his feet to the fire, and also along with EPA.” Grassley ventured that a Biden administration preference for electric vehicles over biofuel-burning vehicles might be behind a cut in blending volumes.

EPA is expected to justify any cuts in terms of reduced overall fuel demand spurred by the COVID-19 pandemic, however.

In a Sept. 24 letter to Biden, the Iowa Renewable Fuels Association said, “While we hope the media reports are untrue, we feel compelled to reiterate the huge negative economic impact this would have on states like Iowa.”

“A thriving biofuels sector means a thriving Iowa. In short, if you walk away from ethanol, you walk away from Iowa,” the association says. — Stuart Parker (