What Did EPA Propose for 2014-2016 Targets and What’s Expected?

Source: By Rachel Gantz, OPIS • Posted: Wednesday, November 18, 2015

By Nov. 30, EPA is expected to finalize its 2014-2016 Renewable Fuel Standard (RFS2) targets. It would be the first finalized targets since August 2013, since EPA proposed, but never finalized, its 2014 rule. With the agency issuing three-year targets, it’s worth reviewing what EPA proposed and what is likely to occur.

EPA’s proposed 2014-2016 targets, issued on May 29, are as follows:

2014:
–Conventional biofuel: 13.25 billion gal (versus 14.4 billion gal in the statutory requirement and 13.01 billion gal in the previous 2014 RFS proposal)
–Advanced biofuel: 2.68 billion gal (versus 3.75 billion gal in the statutory requirement and 2.20 billion gal in the previous 2014 RFS proposal)

–Cellulosic biofuel: 33 million gal (versus 1.75 billion gal in the statutory requirement and 17 million gal in the previous 2014 RFS proposal)

–Biomass-based diesel: 1.63 billion gal (versus at least 1 billion gal in the statutory requirement and 1.28 billion gal in the previous 2014 RFS proposal)

–Total: 15.93 billion gal (versus 18.15 billion gal in the statutory requirement and 20.5 billion gal in the previous RFS proposal)

2015:
–Conventional biofuel: 13.40 billion gal (versus a cap of 15 billion gal in the statutory requirement)

–Advanced biofuel: 2.90 billion gal (versus 5.5 billion gal in the statutory requirement)

–Cellulosic biofuel: 106 million gal (versus 3 billion gal in the statutory requirement)

–Biomass-based diesel: 1.70 billion gal (versus at least 1 billion gal in the statutory requirement)

–Total: 16.30 billion gal (versus 20.5 billion gal in the statutory requirement).

2016:
–Conventional biofuel: 14 billion gal (versus a cap of 15 billion gal in the statutory requirement)

–Advanced biofuel: 3.40 billion gal (versus 7.25 billion gal in the statutory requirement)

–Cellulosic biofuel: 206 million gal (versus 4.25 billion gal in the statutory requirement)

–Biomass-based diesel: 1.80 billion gal (versus at least 1 billion gal in the statutory requirement)

–Total: 17.40 billion gal (versus 22.25 billion gal in the statutory requirement).

Additionally, for 2017, EPA is proposing 1.90 billion gal for biomass-based diesel.

According to Tim Cheung, vice president and research analyst at ClearView Energy Partners, the finalized RFS targets are expected to be raised. “Although exact numbers are important, we have focused on the levels needed to avoid triggering a reset,” he said.

As OPIS has previously reported, if EPA issues a waiver (under its general waiver authority) for any of the RVO targets by a) at least 20% for two consecutive years or b) at least 50% for a single year, then EPA is required to promulgate a rule within one year after issuing the waiver to essentially reset the overall RVO schedule, through 2022. The statute allows the RFS reset to be made as early as 2015.

“We think EPA could avoid triggering a reset for the total renewable requirement (i.e., the conventional ethanol portion). That would imply an increase to any biofuel category. We do not think EPA is likely to avoid triggering a reset for the advanced portion,” Cheung added.

Other sources also expect EPA to raise some of the targets in a final rule, but no specific figures have been discussed.

The White House’s Office of Management and Budget began interagency review of the final RFS targets on Oct. 30, and at least eight stakeholder meetings have already been scheduled to discuss the issue.

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