EPA delivers final RFS ‘set’ rule to White House OMB

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Thursday, May 18, 2023

The U.S. EPA has delivered its final rule to set 2023, 2024 and 2025 Renewable Fuel Standard blending obligations to the White House Office of Management and Budget. OMB review marks a final stage before promulgation of a rulemaking.

According to information published to the OMB website, the final rule was submitted on May 15. The OMB’s description of the rulemaking does not indicate whether it will contain provisions related to electric renewable identification numbers (eRINs). eRINs were addressed in the proposed rule, but recent reports have suggested the EPA may exclude or separate eRIN provisions from the pending rulemaking.

The EPA released the proposed rule, referred to as the “set” rule, in December. A public comment period was open through Feb. 10.

The proposed rule sets the 2023, 2024 and 2025 renewable volume obligations (RVOs) at 20.82 billion gallons, 21.87 billion gallons, and 22.68 billion gallons, respectively. A 250-million-gallon supplemental obligation would also be imposed for 2023. That supplemental obligation aims to address remand of the 2014-2016 annal rule by the D.C. Circuit Court of Appeals in Americans for Clean Energy v. EPA. A similar 250-million-gallon supplemental obligation was implemented for compliance year 2022.

The proposed 2023 RVO of 20.82 billion gallons would be up 190 million gallons when compared to the 2022 RVO finalized last year. The proposed 2023 RVO included the nested requirements of 720 million gallons of cellulosic fuel, 2.82 billion gallons of biomass-based diesel and 5.82 billion gallons of advanced biofuel. Conventional biofuels, such as corn ethanol, could fill up to 15 billion gallons of the RVO requirement. The 250-million-gallon supplemental obligation would boost the total proposed 2023 obligation to 21.07 billion gallons.

For 2024, the EPA proposed to increase the total RVO by 1.05 billion gallons to 21.87 billion gallons, including 1.42 billion gallons of cellulosic biofuel, 2.89 billion gallons of biomass-based diesel, and 6.62 billion gallons of advanced biofuel. Those nested requirements would allow for up to 15.25 billion gallons of conventional biofuel to be used by obligated parties to fill their blend requirements.

For 2025, the agency proposed to increase blend obligations by an additional 810 million gallons to 22.68 billion. The nested RVO would include 2.13 billion gallons of cellulosic biofuel, 2.95 billion gallons of biomass-based diesel, and 7.43 billion gallons of advanced biofuel. The volume of conventional biofuels that can be used to meet RFS blend requirements would be maintained at 15.25 billion gallons.

On a percentage basis, the 2022 RVO requires biofuels to account for 10.82 percent of transportation fuel. The proposed RVOs for 2023, 2024 and 2025 would boost the biofuel blend levels to 11.92 percent, 12.55 percent and 13.05 percent respectively.

Representatives of the biodiesel and renewable diesel industries have criticized the “set” rulemaking for proposing to set biomass-based diesel targets at far below the level of expected production. U.S. consumption of biodiesel and renewable diesel reached an estimated 3.1 billion gallons last year. Current combined capacity for biodiesel and renewable diesel is nearly 5.5 billion gallons. Data published by the U.S. Energy Information Administration data currently projects renewable diesel capacity alone will double to 5.9 billion gallons by the end of 2025, far above the proposed 2.95 billion gallon RVO for biomass-based fuels proposed by the EPA.

The EPA is required to issue a final rule setting 2023, 2024 and 2025 RFS RVOs by June 14 under a consent decree reached as part of a legal challenge filed by Growth Energy last year related to the EPA’s failure to meet statutory RFS deadlines. With the final rule now under OMB review, the agency seems on track to meet that deadline.