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EPA Explains Thinking Behind Biomass-Based Diesel Volumes, Other Reaction to RFS Volumes

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The EPA released the final Renewable Fuel Standard rule for 2023, 2024 and 2025. (DTN file photo)

LINCOLN, Neb. (DTN) -- In finalizing the Renewable Fuel Standard volumes on Wednesday, the EPA fell short on the volumes the biomass-based diesel industry says it can produce.

In the final 468-page RFS rule the agency explains its thinking about the biomass-based diesel numbers as it relates to the advanced biofuels category.

The rule also sets the biomass-based diesel mandate at 2.82 billion gallons in 2023, from a proposed 2.89 billion to 3.04 billion in 2024 and from 2.95 billion to 3.35 billion in 2025. Industry officials had been pressing on the Biden administration to set the volumes even higher, to reflect investments in the industry and production capacity.

Here's how EPA explained the volumes:

"As in recent years, we believe that excess volumes of BBD beyond the BBD volume requirements will be used to satisfy the advanced biofuel volume requirement within which the BBD volume requirement is nested," the agency said in the final rule.

"Historically, the BBD standard has not independently driven the use of BBD in the market. This is due to the nested nature of the standards and the competitiveness of BBD relative to other advanced biofuels. Instead, the advanced biofuel standard has driven the use of BBD in the market. Moreover, BBD can also be driven by the implied conventional renewable fuel volume requirement as an alternative to using increasing volumes of corn ethanol in higher level ethanol blends such as E15 and E85. We believe these trends will continue through 2025.

"We also believe it is important to maintain space for other advanced biofuels to participate in the RFS program. Although the BBD industry has matured over the past decade, the production of advanced biofuels other than biodiesel and renewable diesel continues to be relatively low and uncertain. Maintaining this space for other advanced biofuels can in the long term facilitate increased commercialization and use of other advanced biofuels, which may have superior environmental benefits, avoid concerns with food prices and supply, and have lower costs relative to BBD.

"Conversely, we do not think increasing the size of this space is necessary through 2025 given that only small quantities of these other advanced biofuels have been used in recent years relative to the space we have provided for them in those years."


Also on Wednesday, the EPA dropped its proposal to create electricity renewable identification numbers as part of the RFS.

EPA explained in the final rule why it decided to scrap the idea for now.

"The large number of comments EPA received on our proposed eRIN language, representing a range of perspectives, is a clear signal that stakeholders care a great deal about a potential eRIN program," the agency said.

"As discussed in the proposed rule, EPA's policy goal in developing an eRIN program would be to support one of the objectives of the RFS program, which is to increase the use of renewable transportation fuels, in particular cellulosic biofuels, over time, consistent with the statute's focus on growth in this category.

"Given strong stakeholder interest in the proposed eRIN program and the range of potential benefits that the program could provide, EPA will continue to work on potential paths forward for the eRIN program."


Also, as is the case each time EPA finalizes RFS volumes, DTN received a number of press statements reacting to the numbers.

Here are some additional comments not making the news coverage:

--Sen. Charles Grassley, R-Iowa:

"For an administration obsessed with reducing carbon emissions, this rule makes absolutely no sense. The EPA's proposed rule signaled an increase in biofuels products for the next three years and the industry is more than capable of meeting those production levels. Today's RFS rule waters down the earlier proposal. It's an insulting bait-and-switch for the American biofuels industry and totally inconsistent with this administration's climate agenda.

"American biofuels producers are leading the way in cleaner, cheaper, homegrown fuel. Rather than partnering with the biofuels industry, the Biden administration is turning its back on an opportunity to reduce emissions, consumer costs and reliance on foreign oil."

--Tom Haag, president of the National Corn Growers Association:

"Today's final RFS volumes came in below levels EPA proposed for conventional biofuels for 2024 and 2025, holding ethanol volumes steady at 15 billion gallons. A multi-year RFS volume rule offers stability and certainty for renewable fuels. However, when it comes to addressing pressing energy, environmental and economic challenges, EPA's final rule falls short of the emission reductions and cost-saving benefits the higher proposed ethanol volumes would have provided."

--National Oilseed Processors Association President Thomas Hammer:

"We are disappointed with the lower-than-expected volumes, particularly for 2023 and 2024, which don't reflect the significant investments that NOPA members are making, nor the existing and anticipated biodiesel and renewable-diesel-production capacity."

--Brooke Coleman, executive director of the Advanced Biofuels Business Council:

"It's a step back from the proposal and too many advanced-biofuel gallons were left on the table, but we're seeing some progress on cellulosic biofuels. It also takes long-overdue steps toward putting an end to small-refinery exemptions. There is no path to a decarbonized economy without taking advantage of America's world-class biomanufacturing sector. Ultimately, however, achieving real-world growth under this rule will depend heavily on the administration making the right decisions on a range of issues, from Inflation Reduction Act tax credit eligibility to market access for higher biofuel blends."

--American Soybean Association President Daryl Cates, an Illinois soybean farmer:

"This announcement is a letdown for soy growers. It threatens the success of the biomass-based diesel industry by significantly dialing back annual increases in volume obligations and failing to account for the progress being made in biofuels investment and growth. Farmers and biomass-based diesel producers face real, concerning consequences from low RFS volumes that do not reflect current production and demand, and we're disappointed in this lack of support for the industry."

The ASA said the expanded crush capacity companies have announced for the next three years would increase soybean-oil supplies by about 5.5 billion pounds. "This translates into about 700 million gallons of renewable diesel, far above EPA's three-year RVO (renewable volume obligation) growth of only about 590 million gallons," ASA said in a news release. "Adding growth from other feedstocks to the announced crush expansion creates a feedstock-abundant situation."

--American Coalition for Ethanol CEO Brian Jennings:

"If EPA's goal with the Renewable Fuel Standard is to maximize reductions in greenhouse gas emissions from the transportation sector, today's final rule falls short by arbitrarily limiting conventional biofuel use to 15 billion gallons in 2024 and 2025 compared to the agency's proposal of 15.25 billion gallons for each of those years. Higher blending targets would enable fuels such as E15 and E85 to quickly displace carbon pollution from gasoline, but EPA's proposal will rein in those opportunities.

"ACE's experience with EPA's oversight of the RFS over time requires us to remain vigilant to ensure mismanagement or unwarranted waivers are not used to undermine the physical blending of ethanol that has required litigation to rectify in previous years. We will also continue to press the agency to once and for all update its antiquated greenhouse gas model assumptions about corn ethanol. We continue to urge EPA to follow the science and adopt the latest GREET model for its lifecycle modeling, consistent with what Congress required of Treasury in the Inflation Reduction Act 45Z clean fuel production tax credit."

--American Fuel and Petrochemical Manufacturers President and CEO Chet Thompson:

"Refiners are pleased to see that EPA has chosen to abandon its unlawful attempt to turn the RFS -- a liquid fuel program designed to promote U.S. energy independence -- into yet another nine-figure government subsidy program for electric vehicles. eRINs do not belong in the RFS and shouldn't be resurrected."

--Iowa Secretary of Agriculture Mike Naig:

"The EPA's final RFS volumes fail to meaningfully expand access to homegrown, domestic sources of energy like ethanol and biodiesel. While the increased blend levels for biodiesel and renewable diesel in this final rule are a slight improvement, the targets are still below production and usage levels. Additionally, the Biden administration chose to do so at the expense of ethanol, therefore pitting one biofuel against another."

Read more on DTN:

"EPA Finalizes Multi-Year RFS Volumes,"…

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