EPA Biofuel-Blending Mandates to Hew to Earlier Proposals

Source: ByJennifer A Dlouhy and Kim Chipman, Bloomberg • Posted: Thursday, June 2, 2022

Final 2022 quotas track a proposal to use 20.77 billion gallons of renewable fuel

The Biden administration is set this week to finalize biofuel-blending mandates that largely track plans it already proposed in December, according to several people familiar with the matter.

Environmental Protection Agency officials have told industry representatives to expect final 2022 quotas to be aligned with that initial proposal, which laid out a requirement for using 20.77 billion gallons of renewable fuel this year, said the people, who asked not to be named before a formal announcement.

The approach reflects a bid by the Biden administration to balance competing oil and refining industry interests, while trying to tame record-high gasoline prices and climbing food costs. Yet it would be a blow to oil refiners who said the proposed 2022 quota, which requires biofuel to make up at least 11.8% of transportation fuels, would end up boosting prices at the pump. It would raise industry compliance costs and strain the available pool of biofuel credits that refiners use to prove they have fulfilled annual quotas. Most gasoline sold in the US is made up of 10% ethanol.

The proposed 2022 quota would represent the highest-ever biofuel target EPA has established under the renewable fuel program since its creation 17 years ago.

Spokespeople for the EPA didn’t immediately respond to emailed requests for comment.

Read More: Spiking Gasoline and Food Costs Weigh on Biden Biofuel Plans

Ethanol and biodiesel producers have lobbied the White House to boost targets, arguing the proposed quotas underestimate potential production.

The EPA is on track to issue the proposal Friday, fulfilling a deadline under a legal settlement with advocates for corn-based ethanol. The agency is set to retroactively lower already established targets for 2020, partly to adjust for pandemic-battered fuel demand that year.

The final rule is set to include slightly higher-than-proposed targets for biofuel blending in 2021, based on updated consumption data that year, two of the people said. The initial proposal, coming weeks before the end of the year, did not reflect final government data on renewable fuel demand in 2021.