EPA readies plan to lower RFS biofuel volumes

Source: By Inside EPA • Posted: Tuesday, August 24, 2021

EPA is close to sending its overdue proposal setting biofuel blending volumes under the Renewable Fuel Standard (RFS) for 2021 to the White House for pre-publication review, with recent reports indicating the plan may reduce blending volumes for this year in response to lowered fuel demand due to the COVID-19 pandemic.

By law, EPA must set final volumes by Nov. 30 each year for the following year, but the agency has yet to even propose volumes for 2021, citing difficulties predicting fuel demand as one reason for the delay.

The agency has also faced litigation on a series of issues, resulting in a major Supreme Court ruling supporting continued issuance of small refinery waivers from RFS compliance that may influence the blending rule, as well as ongoing legal action in the U.S. Court of Appeals for the District of Columbia Circuit on various waiver and volumes-related topics.

According to reports by Reuters and other outlets, EPA is poised to send the 2021 proposed volumes to the White House Office of Management and Budget (OMB), the final step before publication, along with a proposed volume for 2022.

EPA may lower volumes for 2021 relative to 2020 levels, but boost them again for 2022, these reports suggest.

“I’m disappointed to hear the EPA is planning to lower the minimum required renewable fuels volumes for this year. If the reports are true, then once again, the EPA is giving a gift to Big Oil and is playing games with the Renewable Fuel Standard law,” said Sen. Charles Grassley (R-IA), a long-time biofuels advocate, in an Aug. 20 statement.

“President Biden must keep his promise to biofuels producers to limit welfare to Big Oil, and promote greater reliance on renewable fuels. The President has the opportunity to ensure that his EPA follows the law to maintain and grow the amount of biofuel[s] that are required to be blended,” Grassley added.

One of the key issues EPA must decide in setting blending volumes is whether to increase blending rates to compensate for small refinery waivers it anticipates it will issue.

The refining sector opposes the practice, while the biofuels sector supports it. This issue is under litigation in the consolidated lawsuit RFS Power Coalition v. EPA, now before the D.C. Circuit.

EPA did this for the 2020 volumes for various categories of biofuel but has so far not issued any such economic hardship waivers for 2020, even as pressure mounts.

For example, small refiner Delek Aug. 20 sued EPA in the U.S. District Court for the District of Columbia over the agency’s failure to respond to four petitions for small refinery waivers for its facilities.

The four petitions are among dozens that EPA has yet to act on. EPA in February missed a 90-day deadline to respond to its petitions, the company says in its initial filing.

At a minimum, biofuels sources say EPA must provide the $15 billion gallons “implied” by statute for conventional corn-based ethanol. Although there is no explicit corn ethanol mandate in the RFS, established under the Clean Air Act, the bulk of renewable and alternative fuel required under the program is still supplied by corn ethanol. While corn ethanol must achieve a 20 percent greenhouse gas reduction relative to unblended gasoline under the program, “advanced” biofuel and biodiesel must attain a 50 percent reduction, and cellulosic fuels a 60 percent reduction.

Reduced RFS blending volumes would further challenge a biofuels sector that has seen the Supreme Court reject its arguments against continued issuance of small refinery waivers, and also the D.C. Circuit strike down the Trump EPA’s authorization of summer sales of 15 percent ethanol fuel (E15).