WASHINGTON - The Environmental Protection Agency has released a draft rule proposing Renewable Fuels Standard, or RFS, levels for conventional, advanced and cellulosic biofuels for 2019 and biodiesel for 2020. So far the biofuels blending requirements are garnering mixed reaction from the industry.
The EPA proposal boosts Renewable Volume Obligation (RVO) levels for conventional ethanol, most often satisfied with corn ethanol, to 15 billion gallons annually, which is an uptick. However, leaders from several biofuel and farm groups say the RFS is being undermined by the uncertainty regarding EPA's improper use of 1.5 billion gallons of waivers for large and highly profitable refiners and the administration's failure to live up to its commitment to support year-round E15 sales.
Kevin Skunes, a North Dakota farmer and president of the National Corn Growers Association, says it is encouraging that the EPA is following Congressional intent and proposing some growth in the RFS volumes and continuing to propose an implied 15 billion gallon volume for convention ethanol. "However, by continuing to allow retroactive exemptions to refineries, EPA will undercut the volumes in this rule, rendering the proposed blending levels meaningless," he says.
American Coalition for Ethanol CEO Brian Jennings says that the waived volumes for convention ethanol need to be reallocated to ensure the RFS remains intact and proposed future increases are meaningful. "The 2019 proposed RVOs reinforce our decision to challenge certain Small Refinery Exemptions in court, and to petition EPA to account for lost volumes of renewable fuel resulting from the unprecedented number of retroactive small refinery exemptions granted by the agency," he says.
Cellulosic biofuel levels for 2019 were increased to 381 million gallons and advanced biofuel volumes were set at 4.88 billion gallons. However, Jennings says this is an increase that will be more than offset by plant waivers. "The proposal to modestly increase cellulosic and advanced RVOs for 2019 is welcome, but EPA's waivers and exemptions have collapsed RIN prices across-the-board discouraging investment in production and use of cellulosic and advanced biofuels," he says.
Biofuels industry group leaders also note the EPA proposal rejects any forthcoming comments citing concerns about "how small refinery exemptions are accounted." The proposal will be open to public comment until August 17. A final rule is due by November 30.
The one area that was positive was biomass based diesel production levels for 2020 were increased to 2.43 billion gallons. Todd Hanten, a soybean farmer from Goodwin, S.D., serves on the National Biodiesel Board. He says they're pleased with the 300 million gallon increase in the volume of biodiesel over 2019 that must be blended into the nation's fuel next year. "They came out with 2.43 billion gallons and that was an increase over the 2.1 billion gallons that we had been getting for the last couple of times," Hanten says.
However, the industry is not at capacity and production has been exceeding the mandate so they continue to ask for more aggressive levels.
The mandate does provide certainty to the plants producing biodiesel and will help the industry grow. "That secures the fact that it will be used because otherwise the companies may not choose to use them, and could easily squash our small fledgling biodiesel industry," Hanten says.
It is also an advanced biofuel, so it's environmentally friendly for consumers. "It helps on emissions. It's actually a superior product in lubrication for the engines," he says. Plus, Hanten says biodiesel adds 62 cents per bushel to the price of his soybeans. "I don't think right now any producer or farmer out there would want to take another 62 cents less, so it's helping us a lot," he says.