EPA Leaves Biodiesel Alone, Raises Cellulosic Volumes
Source: Todd Neeley, DTN/Progressive Farmer • Posted: Friday, December 1, 2017
The U.S. Environmental Protection Agency announced the 2018 final volumes for the Renewable Fuel Standard. (Logo courtesy of EPA)
OMAHA (DTN) — Despite a major push from the Midwest to bolster Renewable Fuel Standard volumes for biomass-based diesel and cellulosic ethanol, in the end, the U.S. Environmental Protection Agency left its final numbers released on Thursday virtually untouched from the original proposal.
Though the biodiesel industry pressed President Donald Trump’s administration for higher biomass-based diesel volumes above the proposed 2.1 billion gallons for 2019, the EPA left that number unchanged. The agency originally proposed a cut, while the industry wanted the number set at 2.5 billion gallons.
The EPA’s final biomass-based diesel numbers came as a huge disappointment to an industry that maintains it has the capacity to produce 2.6 billion gallons.
“EPA Administrator (Scott) Pruitt has disappointed the biodiesel industry for failing to respond to our repeated calls for growth,” said Doug Whitehead, chief operating officer of the National Biodiesel Board.
“These flat volumes will harm Americans across several job-creating sectors — be they farmers, grease collectors, crushers, biodiesel producers or truckers — as well as consumers.”
Corn ethanol blending requirements were set at 15 billion gallons for 2018, with overall biofuel blending obligations slightly higher overall, based on the final RFS volumes announced. Fifteen billion gallons of corn ethanol amounts to about 5.4 billion bushels of corn demand supported by the RFS.
The overall total Renewable Volume Obligation, or RVO, for 2018 was set at 19.29 billion gallons. That represents a slight bump from the original proposal of 19.28 billion gallons. The agency had considered cutting the number to 19.24 billion gallons. The bump comes from a slight increase in the advanced biofuels volumes.
The agency set the advanced category, including biomass-based biodiesel, at 4.29 billion gallons. EPA’s original proposal was to reduce the advanced number from 4.28 billion gallons to 4.24 billion gallons.
DTN Market Analyst Todd Hultman said it was unlikely the final volumes would affect markets.
However, January soybean oil was up 31 cents. He said that suggests traders might regard the agency’s decision to leave biomass-based biodiesel volumes at 2.1 billion gallons as “slightly favorable, or at least a relief” that the final volume wasn’t cut.
“The current environment for grains is so bearish that I don’t expect to see any significant price moves from this news,” Hultman said. “Of course, keeping the mandates near their expected levels is helpful to support corn prices, but that is outweighed by the market’s bigger concern of all the corn we have to work through this season.”
CELLULOSIC VOLUMES
Cellulosic ethanol’s blend requirement was set at 288 million gallons for 2018. The agency originally proposed a 73-million-gallon cut to 238 million gallons. Although the agency raised the number in the final rule, it still represents a cut from the 2017 number of 311 million gallons.
The EPA originally proposed a much higher cellulosic ethanol number in its plan sent to the Office of Management and Budget in June.