EPA Boosts Biofuels Across Board, But Leaves Corn Ethanol Alone

Source: By Todd Neeley, Progressive Farmer • Posted: Wednesday, June 27, 2018

OMAHA (DTN) — Every category of biofuels — except corn ethanol — would receive a bump in Renewable Fuel Standard volumes in the latest proposed renewable volume obligations for 2019 announced by the EPA on Tuesday.

On the surface, the news is good for the biofuels industry and agriculture. But there was one number that mattered most this time around: the percentage of the renewable volume obligations. That number moved little, accounting for only an overall 3% bump in total volumes.

EPA proposes a bump in the total percentage of renewable fuel in the fuel supply from 10.67% to 10.88%. Had the agency decided to reallocate gallons to other obligated parties, it would have increased the percentage by more. The 0.21% bump reflects the proposed increases in all categories, minus corn ethanol.

A Renewable Fuels Association analysis found the agency has exempted a total of about 1.6 billion gallons from the RFS in 2016 and 2017 through small-refinery waivers. Those estimated gallons are not reallocated by the latest EPA proposal.

The EPA previously asked the public for comment on how to improve transparency in the biofuels credit market. Though the agency has been challenged in court on the methodology it uses to determine waivers, the EPA indicated it was not seeking comment on how to change the process.

“EPA is not soliciting comments on how small-refinery exemptions are accounted for in the percentage standards formulas in 40 CFR 80.1405, and any such comments will be deemed beyond the scope of this rulemaking,” the agency said.

PROPOSED VOLUMES

The EPA announced a proposed increase in overall biofuel volumes from 19.29 billion gallons in 2018 to 19.88 billion gallons in 2019. That includes leaving corn ethanol at 15 billion gallons. There are questions as to whether the 15-billion-gallon level can be reached in light of an increasing number of waivers being issued.

The agency also proposed an increase in biomass-based diesel volume from 2.1 billion gallons in 2018 and 2019 to 2.43 billion gallons in 2020. In addition, cellulosic ethanol would be increased from 288 million gallons to 381 million gallons in 2019, and the advanced biofuel number from 4.29 billion gallons to 4.88 billion gallons in 2019.

A tug-of-war between the oil and ethanol industries with the EPA in the middle hit an impasse last week as the agency delayed what was an expected announcement of the latest volumes last Friday.

Reports surfaced last week that EPA Administrator Scott Pruitt was expected to offer a proposal to reallocate ethanol gallons lost to small-refinery waivers to larger refiners.

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