More than 290,000 comments filed on 2019 RFS proposal

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Wednesday, August 22, 2018

The public comment period on the U.S. EPA’s proposed rule to set 2019 renewable volume obligations (RVOs) under the Renewable Fuel Standard, along with the 2020 RVO for biomass based diesel, closed Aug. 17. More than 290,000 public comments were filed on the proposal. Many in the biofuels industry focused on the impact of small refinery hardship waivers in their submissions to the EPA.

The EPA released the proposed rule on June 26. It aims to require 19.88 billion gallons of biofuels to be blended into the U.S. fuel supply in 2019, up from 19.29 billion gallons in 2018.

The proposed 19.88 billion gallon RVO for 2019 includes 381 million gallons of cellulosic biofuel, 4.88 billion gallons of advanced biofuel and 2.1 billion gallons of biomass-based diesel. The 2019 RVO for biomass-based diesel was set last year. The proposed 2019 RVOs would allow for up to 15 billion gallons of conventional biofuel to meet the annual blending requirement, most of which is corn ethanol.

The rulemaking also proposes to set the 2020 RVO for biomass-based diesel at 2.43 billion gallons, up 330 million gallons when compared to the 2019 and 2018 RVOs of 2.1 billion gallons.

On a percentage basis, the proposed rule would require total renewable fuel to comprise 10.88 percent of U.S. transportation fuel next year, including 2.67 percent advanced biofuel, 1.72 percent biomass-based diesel and 0.209 percent cellulosic biofuel.

In its comments, the Renewable Fuels Association stressed that the EPA’s continued abuse of small refinery hardship waivers renders the proposed 2019 RVOs meaningless.

“Issuing small refiner exemptions after the RVO rule is finalized—as EPA did for the 2016 and 2017 RVO rules and appears poised to do for the 2018 RVO—has the practical impact of reducing the actual required blending volumes to levels below those specified in the final rule. Thus, we do not consider the volumes that appear in the proposed rule to be authentic, meaning the preamble’s analyses of the impacts of the 2019 proposed volumes are flawed and indefensible,” Bob Dinneen, president and CEO of the RFA, wrote in comments to EPA Acting Administrator Andrew Wheeler.

Dinneen noted that a preliminary draft of the 2019 RFS proposal included projections of exempted volumes of gasoline and diesel from small refineries. “The effect of including these exemptions in the RVO calculation is to increase the RVO percentage for remaining obligated parties, ensuring that the statutorily specified volumes of renewable fuel are in fact blended with gasoline and diesel,” Dinneen wrote. “However, the administrative record shows that just days before the proposed rule was made public, EPA inexplicably deleted the provisions that would have effectively reallocated the projected small refiner exemptions.”

Dinneen called on the EPA to account for projected small refinery exemptions in calculating the 2019 RVO percentages in the final rule. He also urged the agency to comply with a court mandate to reallocate 500 million gallons of conventional renewable fuel that were missing from the 2016 RVO due to EPA’s illegal application of its general waiver authority.

Growth Energy also urges the EPA to make the proposed RVOs real by accounting for gallons lost due to small refinery exemptions. In addition, the organization reiterated its request for Reid vapor pressure (RVP) relief to allow for year-round sales of E15.

“On it’s face, this is a strong proposal with a 15-billion-gallon commitment to starch ethanol and a significant increase in cellulosic biofuels,” Emily Skor, CEO of Growth Energy. “However, the proposed RVO has failed to account for the 2.25 billion gallons lost due to small refinery exemptions. By failing to account for these exemptions, EPA has made the numbers hollow turning the clock back on the RFS by 5 years.”

The American Coalition for Ethanol also addressed the impact of small refinery waivers and the need for RVP relief in its comments.

“Unfortunately, EPA continues to take actions which undermine the letter and spirit of the statute and harm the rural economy,” wrote Brian Jennings, CEO of ACE, in his comments. “While refiners are reporting double-digit profits, the heart of America is being left behind. Farmers are losing money while refiners have the best of both worlds: fat profit margins and minimal RFS compliance costs. EPA needs to discard its refiner-win-at-all-costs mentality and get the RFS back on track.”

“While the proposed rule purports to maintain the 15-billion-gallon conventional blending target for the 2019 RVO, nearly 50 Small Refinery Exemptions (SREs) will reduce ethanol blending far below 15 billion gallons,” Jennings continued. “Known exemptions for 2016 and 2017 have resulted in at least 2.25 billion in demand destruction for U.S. ethanol. These so-called ‘hardship’ waivers flood the market with RINs which refiners can bank, thereby artificially inflating the size of the RIN carryover to more than 3 billion gallons.  As a result, D6 RIN prices have cratered.  One year ago, D6 RINs were fetching approximately 90 cents but SREs have sunk those prices to about 20 cents today, nearly an 80 percent collapse. This, consequently, has reduced the incentive to blend ethanol with gasoline.”

The Biotechnology Innovation Organization urged the EPA to use its authority under the RFS to help boost America’s rural economy.

“At a time when America’s farmers and rural businesses are suffering under the weight of low crop prices and so much trade uncertainty, EPA should seize the opportunity afforded by the RFS program to promote the type of innovation that will help grow advanced and cellulosic biofuels, create more good paying jobs, and help revitalize rural America by strengthening our world-leading biobased economy,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section.

“The RFS program is an important program for ensuring that America’s rural economies can remain globally competitive and that the hard-working families in these communities are able to flourish and thrive,” Erickson continued, noting a boost in advanced and cellulosic biofuel RVOs will drive more investment in these technologies.

Erickson also addressed demand destruction resulting from the EPA’s increased use of small refinery hardship waivers, stressing that the waivers undermine the agency’s obligations to enforce both the letter and spirit of the law. He called on the agency to reallocate the gallons lost to waivers. In addition, Erickson said the EPA should reject any further proposals to artificially lower renewable identification number (RIN) prices.

The Coalition for Renewable Natural Gas (RNG Coalition), Energy Vision, National Waste and Recycling Association, Natural Gas Vehicles for America, and Solid Waste Association of North America submitted joint comments in support of EPA’s proposal to increase 2019 RVOs for cellulosic and advanced biofuels.

“The renewable natural gas (RNG) industry is leading the way in the delivery of cellulosic biofuel in the United States, making up over 95 percent of our nation’s cellulosic biofuel production and generation of D3 Renewable Identification Numbers under the RFS,” said RNG Coalition CEO Johannes Escudero.  “Our comments are supportive of EPA’s proposal to increase the 2019 minimum applicable volume for both cellulosic and advanced biofuels from 2018 to reflect the continued growth and investments being made in the RNG industry.”

Within their comments, the groups note that the RNG industry has developed more than 45 new facilities producing cellulosic biofuel since 2011, with an additional 50 projects under construction or development. The RNG groups also urge EPA to use a predictable methodology for projecting cellulosic biofuel by providing a consistent formula and consistent data to the RNG industry by which investment decisions can be made.

The National Biodiesel Board urged the EPA to increase the 2020 RVO for biomass-based diesel and the 2019 RVO for advanced biofuel, and to fully account for small refinery exemptions in the final rule.

“The biomass-based diesel industry has proven year after year that it can deliver increasing volumes. We appreciate the agency’s recognition of that fact and welcome the signal of growth in the proposed rule. NBB asks that you fully support the industry’s growth by setting the biomass-based diesel volume for 2020 at 2.8 billion gallons and increasing the 2019 advanced biofuel volume to allow growth,” said Kurt Kovarik, vice president of federal affairs for NBB.

Additional information, including copies of the more than 290,000 comments submitted on the proposed rule, is available under Docket ID No. EPA-HQ-OAR-2018-0167 on Regulations.gov.

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