U.S. EPA proposes higher biofuel volumes in 2022

The U.S. Environmental Protection Agency (EPA) has proposed a package of actions setting biofuels volumes for years 2022, 2021, and 2020, and introducing regulatory changes intended to enhance the Renewable Fuel Standard (RFS) program’s objectives.

In addition, the EPA is seeking public comment on a proposed decision to deny petitions to exempt small refineries from their obligations under the RFS on the grounds that petitioners failed to show that the EPA has a basis under the Clean Air Act (CAA) and recent federal case law to approve them.

Together, these actions reflect the Biden Administration’s commitment to reset and strengthen the RFS program, “following years of mismanagement by the previous administration and disruptions to the fuels market stemming from the Covid-19 pandemic.”

“Despite multiple challenging dynamics affecting the RFS program in recent years, EPA remains committed to the growth of biofuels in America as a critical strategy to secure a clean, zero-carbon energy future,” said EPA Administrator Michael S. Regan. “This package of actions will enable us to get the RFS program back in growth mode by setting ambitious levels for 2022, and by reinforcing the foundation of the program so that it’s rooted in science and the law.”

For 2022, the EPA is proposing the highest total volumes in history, putting the program on a stable trajectory that provides for significant growth. The proposed volumes for 2022 are more than 3.5 billion gallons higher than the volume of renewable fuel used in 2020. The proposed volume of advanced biofuel for 2022 is more than 1 billion gallons greater than the volume used in 2020.

The EPA is also proposing to add a 250-million-gallon “supplemental obligation” to the volumes proposed for 2022 and stating its intent to add another 250 million gallons in 2023. This would address the remand of the 2014-2016 annual rule by the DC Circuit Court of Appeals in Americans for Clean Energy v. EPA. Spreading this obligation over two years would provide the market time to respond to this supplemental obligation.

“The last Administration failed to act on the agency’s outstanding obligation to address the court’s remand,” the EPA said in a statement.

The EPA is proposing 2021 volumes at the level that it projects the market will use by the end of the year. The EPA is also proposing to revise the 2020 standards to account for challenges the program and the market faced that year, including from the Covid-19 pandemic.

To promote efficiency and opportunity in producing biofuels, this action also proposes a regulatory framework to allow biointermediates to be included in the RFS program, while ensuring environmental and programmatic safeguards are in place.

Biointermediates are feedstocks that have been partially converted at one facility but are then sent to a separate facility for final processing into an RFS-qualified biofuel. Providing a way for producers to utilize biointermediates could reduce biofuel production costs in some cases, and potentially expand opportunities for more cost-effective biomass-based diesel, and advanced, and cellulosic biofuels.

Small Refinery Exemptions

The EPA’s proposed action denying 65 pending applications for small refinery exemptions (SREs) responds to the decision from the U.S. Court of Appeals for the Tenth Circuit in Renewable Fuels Association et al. v. EPA. This decision, issued in 2020, narrowed the situations in which EPA can grant SREs. EPA is sharing a proposed adjudication of pending SRE petitions that presents the EPA’s approach in applying the direction from the Court. The proposed decision document articulates the agency’s updated interpretation of its Clean Air Act statutory authority to grant small refinery exemptions.

USDA allocates USD800 million to support biofuel producers

Simultaneous with the EPA’s announcement, the U.S. Department of Agriculture (USDA) is announcing USD800 million to support biofuel producers and infrastructure. This includes up to USD700 million to provide economic relief to biofuel producers and restore renewable fuel markets affected by the pandemic.

In the coming months, the USDA will also make an additional USD100 million available to significantly increase the sales and use of higher blends of bioethanol and biodiesel by expanding the infrastructure for renewable fuels derived from U.S. agricultural products.