EPA Sets Final RFS Rulings for 2021 and 2022

On Friday, EPA released RFS volumes for 2021 and 2022. Below are various industry statements on the news. More to come on this story.

 

EPA’s Forward-Looking Renewable Fuel Volumes for 2022 Ensure American Families Have Greater Access to Lower-Cost, Lower-Carbon Fuel at the Pump 

WASHINGTON, D.C. – Today, Growth Energy CEO Emily Skor released a statement in support of the U.S. Environmental Protection Agency’s (EPA) rulemaking under the Renewable Fuel Standard (RFS), which sets the 2022 Renewable Volume Obligation (RVO) for conventional biofuels at 15 billion gallons, a move that sets a baseline for strong future biofuel blending levels under the RFS, ensuring drivers have greater access to lower-cost, lower-carbon fuel at the pump.

“These last six months have been a rude awakening for those who have grown complacent about U.S. energy supplies. EPA’s 2022 renewable fuel blending requirements will deliver savings at the pump for working families, slash carbon emissions, and strengthen U.S. energy security by bringing more American renewable fuel into our fuel supply.

“In just the last few months, E15 has been a shield against skyrocketing fuel prices, saving drivers almost $0.60 per gallon in some areas while American biofuels cut greenhouse gas emissions by 46 percent compared to gasoline.

“We applaud President Biden and his EPA for this action, which will set the direction of total and advanced renewable fuel volumes for 2023 and beyond. By setting conventional implied 2022 RVO volumes at 15 billion gallons, coupled with restoring the first 250 million gallons that had been illegally waived in the 2016 RVO, EPA underscores the critical role biofuels play – and will continue to play – in mitigating climate change and lowering prices at the pump. Moreover, it sends a positive signal as the agency works through its new rule – “the Set” – that picks up where Congress left off and establishes multi-year renewable fuel blending requirements for 2023 and beyond.

“In addition to the 2022 volumes, today’s action from EPA halts all improper small refinery exemptions, a move that will return much needed certainty to the biofuels industry and the entire fuel supply chain.

“EPA does fail to address bipartisan concerns about volume requirements for the 2020 and 2021 RVOs. Nevertheless, we take the 2022 volumes as a strong signal of EPA’s commitment to getting the RFS back on track and we will remain vigilant in ensuring that volumes are met in a timely manner.”

Audio of Emily Skor’s statement is available here.

Background

The agency’s final rule lowers conventional ethanol volumes to 12.5 billion gallons for 2020, advanced biofuel at 4.63 billion, and cellulosic at 510 million. In addition, the rule sets conventional ethanol at 13.79 billion gallons in 2021 and 15 billion gallons in 2022, while setting advanced biofuels at 5.05 billion gallons in 2021 and 5.63 billion gallons in 2022, including 560 million gallons of cellulosic biofuel in 2021 and 630 million gallons of cellulosic biofuel in 2022. The rule adds a supplemental 250 million gallons that had been illegally waived in the 2016 RVO and denies 72 pending small refinery exemption requests before the agency. EPA’s announcement also provides important guidance to limit the abuse of small refinery exemptions in the future.

From the onset of the Renewable Fuel Standard, each year through 2022, EPA is required to issue a rulemaking establishing volumes of renewable fuel (the “renewable volume obligation” or “RVO”) that obligated refiners and importers must blend to ensure that annual renewable fuel volume requirements established by statute are met. Failure to issue RVOs on time undermines the RFS by eliminating prospective, market-forcing blending obligations, and by creating uncertainty in the market for obligated parties and renewable fuels producers alike. For more information on RVOs, click here for FAQ.

For 2023 and later, and as it has already done for the 2020-2022 RVOs under its “reset” authority, EPA, in coordination with the Department of Energy (DOE) and the Department of Agriculture (USDA), is required to “set” these renewable fuel volume requirements through one or more rulemakings, taking into consideration six statutory factors, including environmental impacts economic impacts, and energy security. EPA is required to set volume requirements for 2023 at least 14 months prior to the calendar year in which it is to take effect. In addition, EPA is constrained by the statute to ensure that, for each year starting in 2023, the advanced renewable fuel requirement is at least the same percentage of the total renewable fuel requirement as it was in 2022.

In December 2021, Growth Energy submitted to the Environmental Protection Agency (EPA) a notice of intent to sue (“NOI”) regarding its failure to timely fulfill the agency’s statutory obligation under the Renewable Fuel Standard (RFS) to issue the 2022 Renewable Volume Obligation (RVO) and in turn, the potentially multi-year “set” rulemaking process for renewable fuel volumes for 2023 and beyond. The RVOs for 2022 were due by November 30th, 2021, an annual deadline set by Congress in the RFS. Additionally, the final “set” rulemaking was due on November 1, 2021. Growth also previously submitted a NOI for EPA’s failure to timely issue the 2021 RVO, which was due on November 30, 2020.

In response to the NOI, Growth Energy and EPA reached agreement to enter into a consent decree to finalize the delayed 2021 and 2022 RVOs by no later than June 3, 2022. EPA then issued a notice of the proposed consent decree for public review and comment. After the close of the comment period on March 25th, EPA and Growth then jointly filed a motion in the U.S. District Court for the District of Columbia seeking approval of the consent decree, which the court granted on April 22, 2022.

EPA released its proposed RVOs for 2020, 2021, and 2022 on December 7, 2021. In January 2022, Growth Energy CEO Emily Skor testified before EPA on its proposed rule.

Clean Fuels Welcomes RFS Volumes for 2021 and 2022

WASHINGTON, DC – Today, Clean Fuels Alliance America welcomed the Environmental Protection Agency’s final rule for the 2021 and 2022 Renewable Fuel Standard volumes. The final rule recognizes the continued growth of biodiesel, renewable diesel and other clean fuels and establishes readily achievable program obligations. Clean Fuels supports EPA’s decision to deny pending small refinery exemptions and its consistent finding that the program benefits Americans without hardships for refiners.

“Clean Fuels and its members appreciate EPA Administrator Regan’s recognition that homegrown, clean fuels offer a better solution to high fuel prices stemming from high oil prices and supply shortages,” said Kurt Kovarik, vice president of federal affairs for Clean Fuels. “We support EPA’s efforts to get the Renewable Fuel Standard back on track and to finalize 2022 volumes as a jumping off point for future growth. We stand ready to work with the agency to move forward and set volumes for 2023 and beyond. And we encourage the agency to quickly finalize new feedstocks pathways, such as that for canola oil.”

“Biodiesel and renewable diesel are essential to keeping the U.S. economy moving right now, meeting more than 5 percent of the nation’s need for heavy duty transportation and shipping fuel. The clean fuels industry increased production and supply even during the economic emergency of the last few years, helping Americans save 4% on the cost of diesel fuel and all the other consumer items that rely on diesel fuel for shipping,” Kovarik added.

A recent study from the World Agricultural Economic and Environmental Service shows that U.S. biodiesel and renewable diesel production generates a 4 percent decrease in the price of diesel fuel. The WAEES study is available for download on cleanfuels.org.

Kovarik continued, “EPA’s denial of pending small refinery exemptions for 2019 through 2021 assures our industry that the volumes set today will be fully met, even with compliance flexibilities. This is an important first step in restoring integrity to the program.”

Today’s rule meets EPA’s consent decree with the U.S. Court of Appeals for the D.C. Circuit to finalize the 2021 and 2022 rules. EPA is currently taking comment on a proposed consent decree to finalize the 2023 RFS volumes and standards by April 2023.

The U.S. biodiesel and renewable diesel industry supports 65,000 U.S. jobs and more than $17 billion in economic activity each year. Every 100 million gallons of production supports 3,200 jobs and $780 million in economic opportunity. Biodiesel production supports approximately 13 percent of the value of each U.S. bushel of soybeans.

ACE Statement on EPA’s Final RFS Rulings

Sioux Falls, SD – Today, the U.S. Environmental Protection Agency (EPA) finalized Renewable Volume Obligations (RVOs) for the 2021 and 2022 Renewable Fuel Standard (RFS) compliance years and retrospective volumes for 2020, including plans to restore the 500 million gallons in remanded volume by the DC Circuit Court in 2017, as well as confirmed denial of pending RFS small refinery exemption (SRE) petitions. American Coalition for Ethanol (ACE) CEO Brian Jennings issued the following reaction to EPA’s package of final actions:

“While we strongly object to the unnecessary retrospective cut EPA is making to 2020 volumes, we are pleased the Agency is upwardly revising the 2021 volumes to align more closely with actual consumption and upholding base conventional volume of 15 billion gallons for 2022, along with 250 million supplemental gallons to address the DC Circuit court order in 2017. ACE members are also thankful EPA is reining in the abusive use of SRE waivers pioneered under the last Administration.

“When taken as a whole, today’s actions begin to get the RFS back on track and fulfill Administrator Regan’s commitment to follow the law and science when it comes to this program. However, continued vigilance is required to undo prior and prevent future mismanagement of the RFS — the only tool at EPA’s disposal to replace expensive foreign fossil fuel with low-cost, low-carbon and homegrown biofuels such as ethanol. Given pump prices remain at record high levels and the need to decarbonize the transportation sector, it’s particularly important to leverage the program’s full potential.

“We encourage EPA to utilize the upcoming RFS ‘set’ rule for post-2022 volumes to make good on Administrator Regan’s statement that ‘biofuels will be part of the solution for climate change and lowering prices at the pump.’”

RFA: Today’s Actions on RFS Restore Order,
Provide Solid Foundation for Growth
The final regulatory actions taken today by the Environmental Protection Agency (EPA) bring order and certainty back to the Renewable Fuel Standard and provide a solid foundation for future growth in the production and use of low-carbon renewable fuels, according to the Renewable Fuels Association. The actions will also lead to lower gas prices for consumers and greater energy security, RFA said.
EPA today finalized a strong renewable volume obligation (RVO) for 2022, requiring the statutory volume of 15 billion gallons of conventional renewable fuel and 5.63 billion gallons of advanced biofuels. In accordance with a court order, the agency also finalized a supplemental requirement of 250 million gallons in 2022 to offset illegally waived volume from the 2016 RFS. In addition, EPA set the 2021 RVO for conventional renewable fuel at 13.79 billion gallons, based on the latest estimates of actual consumption. Finally, EPA finalized the denial of 69 pending small refinery exemption petitions, ensuring that all refiners are held accountable and equally obligated to blend lower-carbon, lower-cost biofuels.
“At long last, the RFS is being put back on track. Today’s actions by EPA and the Biden administration restore integrity and stability to the RFS program after several years of wanton mismanagement and abuse by the previous administration,” said RFA President and CEO Geoff Cooper. “The combination of a strong RVO for 2022, restoration of illegally waived volume from 2016, and a new direction for the SRE program puts the RFS program on solid footing for the future. We thank Administrator Regan and President Biden for honoring their commitments to implement the RFS in a way that is fair, transparent, and focused on growth.”
Cooper also noted that today’s package couldn’t have come at a more important time, as consumers are facing record-high gas prices driven by instability in global energy markets. “By requiring petroleum refiners to blend larger volumes of low-cost biofuels like ethanol, today’s actions will put downward pressure on gas prices and provide economic relief to American families facing record-high pump prices,” he said. “In the last few days alone, wholesale ethanol prices have been as much as $1.30 per gallon lower than gasoline, leading to significant savings at the pump for consumers of ethanol-blended fuels like E10, E15, and E85.”
The association today released an explainer documenting how ethanol reduces prices at the pump, due to its lower cost and the fact that it augments the overall fuel supply.
RFA also underscored the important role a robust RFS plays in enhancing energy security. “Ukraine is 5,000 miles away, but American consumers are feeling the economic impacts of war in Eastern Europe every time they pull up to the pump,” Cooper said. “This is a poignant reminder that the very purpose of the RFS is to increase domestic fuel production, diversify our fuel supply with lower-carbon alternatives, and reduce demand for petroleum imports. Just imagine how much higher gas prices would be without the addition of 15 billion gallons of low-cost ethanol to our fuel supply.”
The only blemish on EPA’s package of regulatory actions is the agency’s decision to reopen and retroactively lower RFS requirements for 2020, Cooper said. “While today’s package of actions collectively marks a major step forward for the RFS program, it isn’t perfect, and we remain disappointed by the approach EPA took on 2020. But we are committed to working with EPA and other stakeholders to continue moving the RFS program forward and growing the market for low-carbon renewable fuels like ethanol.”
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