EPA sends blending requirements to White House for review

Source: By Marc Heller, E&E News reporter • Posted: Monday, May 18, 2020

Biofuel splashing. Photo credit: U.S. EPA

EPA’s 2021 renewable fuel standard blending requirements are under White House review. U.S. EPA

EPA’s proposed biofuel volumes for next year are now in the hands of the White House, as the industry grapples with sinking production tied to the coronavirus pandemic.

The environmental agency last week submitted the annual proposal to the Office of Management and Budget, beginning a monthslong process that usually generates a final rule late in the year. Once OMB signs off on the plan, EPA publishes it and opens a period of public comment.

Industry groups on both sides say they’re watching for overall volumes and how the agency addresses biofuel-blending exemptions for small petroleum refineries, which can petition for them based on economic hardship.

EPA has handed out the exemptions in much greater numbers since the Trump administration took over, but a legal battle over them has handed the agency some losses. Officials may be forced to scale back the exemptions dramatically.

When granted in big enough numbers, exemptions can affect overall biofuel volumes and influence the price of renewable fuel credits that refineries buy to show compliance with the renewable fuel standard. Biofuel and petroleum industry groups have been arguing over how big those impacts are, and EPA is drawn into the fight.

EPA says it tries to project the volume of biofuel tied to the refinery exemptions in setting the annual numbers. A wrong guess on exemptions can have consequences on the actual required volume of renewable fuel, the agency said in the rule for this year.

This year, EPA faces the outcome of a ruling in the 10th U.S. Circuit Court of Appeals, which said the agency only can extend exemptions that were in place from the program’s early days in the mid-2000s, not grant new ones.

EPA has said it won’t change its approach on exemptions, however, until the legal fight over them is settled. Refining companies have said they’ll ask the U.S. Supreme Court to take up the issue, but the CEO of the Renewable Fuels Association, Geoff Cooper, told reporters last week he considers that highly unlikely.

The industry, like the oil industry, is suffering from the drop in transportation and fuel consumption amid the pandemic. Cooper said the biofuel industry lost as much as 50% of production due to plant closures and slowdowns, although the drawback has slowly started to reverse.