EPA’s RFS Announcement Last Week Unleashed a Mix of Support and Questions; Here’s What to Watch Next

Source: By TYNE MORGAN, AgWeb • Posted: Sunday, December 12, 2021

After months of waiting and rumors regarding the Biden administration’s plans for the Renewable Fuel Standard (RFS) and pending waivers, EPA released updated blending requirements within the RFS earlier this week. The announcement was largely celebrated by those in the renewable fuels industry, as USDA also announced financial relief for the drop in demand that hit renewable fuels during the pandemic.

In the slew of EPA announcements this week, the agency detailed annual production requirements for ethanol and other biofuels, which included:

  • Retroactively lowering the total renewable fuel volumes to 1.13-billion gallons
  • The 2020 levels also includes 12.5 billion of corn-based ethanol.
  • The previously finalized rule was for just over 20 billion gallons.

For 2021, the agency announced the following:

  • Total volumes set at just over 18.5 billion gallons
  • Just over 13 billion gallons for ethanol

And for 2022, EPA announced:

  • Volume increases to 20.77 billion gallons
  • Ethanol returns to the statutory 15 billion gallons

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Renewable Fuels Relief

In conjunction with the new levels being released, USDA announced it’s promising $700 million in grants to biofuels producers who collectively lost about 4.4 billion dollars due to the pandemic.

“Ethanol producers were especially hard hit. For example, ethanol production in april 2020 was just 55 percent what it was in April 2019,” says Dr. Karama Neal, administrator of USDA Rural Business Cooperative Service.

USDA says it’s also making another $100 million available in grants to expand availability of higher blends of biofuels, gas and diesel.

RFS Reaction

AgDay’s Clinton Griffiths spoke with Senator Chuck Grassley (R-Iowa) on AgriTalk, who has been a very vocal supporter of ethanol. Griffiths asked Grassley about what he would like to see from the industry going forward.

“Well, there’ll be two things long term, I want them to assure us that after 2022, when the mandates run out in the 2007 legislation of 15 billion gallons, that they’re going to continue to do as good or better in the future for the year 2021 and 2022,” Grassley said. “I want a dramatic increase in the mandates for biofuels to be mixed with gasoline. “

Renewable Fuels Association (RFA) welcomed EPA’s proposal this week regarding 2022 levels, but but also celebrated the fact EPA says it’s working to deny all pending small refinery exemption (SRE) petitions, a decision EPA says is based on the unappealed holdings of the Tenth Circuit Court’s decision.

“Over the past four years, RFA has led the charge to stop the previous EPA’s illegal abuse of the small refinery waiver provision,” RFA President and CEO Geoff Cooper said after the announcement. “We commend EPA Administrator Michael Regan and the Biden administration for denying all pending small refinery exemptions, and we are extremely pleased to see the Agency shutting the floodgates on these destructive waivers. Under the previous administration, these exemptions destroyed demand for more than 4 billion gallons of renewable fuel, resulting in higher fuel prices for the consumer, increased GHG emissions, and lower farm income. Today’s announcement should finally put an end to the rampant abuse of the exemption program that we experienced under the last administration.”

American Soybean Association (ASA) also threw their support behind the announcements, while also questioning EPA’s plans for 2023.

“We are appreciative that EPA has released its decision on these numbers that are critical to implementation of the Renewable Fuel Standard (RFS), but of course we would have liked to have seen higher retroactive numbers for 2020 and 2021. And, we would like to have the 2023 volume announcement that was due the end of November. We are heartened, however, by the 2022 RVO and hope 2023 remains on that upward trajectory,” said Kevin Scott, soybean farmer from Valley Springs, South Dakota, and ASA grower president.

Long Waited Announcement from EPA

Just last month, EPA Administrator Regan said the annual blending quotas “are designed to take advantage of biofuels, so agriculture is at the table.” Those comments were  made on the sidelines of the COP26 summit in Scotland, as Regan went on to say, “We’re listening to agriculture, but we’re really following the law, following the science in doing what we believe Congress intended, recognizing that there may be people unhappy with various elements” of the proposal.

As Wiesemeyer reported in late September, the White House Office of Management & Budget was reviewing a draft EPA proposal to specify how much renewable fuel, such as corn-based ethanol and soy-based biodiesel, must be mixed into gasoline and diesel in 2021 and 2022.

“We recognize the sense of urgency, and we recognize the desire of certainty that both industries want, and we’re hoping to provide that sooner rather than later,” Regan said during gate COP26 summit.

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