OMAHA (DTN) -- The U.S. Environmental Protection Agency on Wednesday added 200 million gallons to the implied corn ethanol renewable volume obligations in the Renewable Fuel Standard final 2017 numbers. The move essentially puts the original law back on track for corn ethanol.
The total RVO is finalized at 19.28 billion gallons. That includes 4.28 billion gallons of advanced biofuel and 311 million gallons of cellulosic biofuel. That means the implied RVO for conventional biofuels including corn ethanol will be 15 billion gallons. The EPA had proposed a 14.8-billion-gallon mandate for corn ethanol back in May.
EPA originally called for a total RVO of 18.8 billion gallons. In addition, the agency had proposed 4 billion gallons for advanced biofuel and 312 million gallons for cellulosic biofuel. Although the biodiesel industry is poised to produce about 2.6 billion gallons in 2016, the EPA went with its original proposal of 2 billion gallons for biomass-based biodiesel in 2017 and 2.1 billion gallons in 2018.
DTN Market Analyst Todd Hultman said the EPA's final numbers are unlikely to move the corn market.
"If we use the traditional 2.8 gallons of ethanol from 1 bushel of corn, 15 billion gallons works out to 5.36 billion bushels of corn," he said. "USDA has the ethanol estimate for 2016-17 at 5.3 billion bushels, so it's 60 million bushels more. But here is where it's hard to tell if the industry is doing better than 2.8 gallons of ethanol from 1 bushel of corn. Regardless, these are small adjustments that can help, but probably don't have much price impact."
The American Petroleum Institute has been pushing for RFS reform and was less than pleased about the final volumes.
"We are disappointed that EPA has taken a step backwards with this final rule," said Frank Macchiarola, downstream group director for API.
"The RFS mandate is a bad deal for the American consumer. Today's announcement only serves to reinforce the need for Congress to repeal or significantly reform the RFS. Democrats and Republicans agree this program is a failure."
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the Obama administration took a final important step for the RFS.
"In a dramatic return to their roots, they chose to uphold the law and, in doing so, boosted fuel competition, consumer choice and rural America," he said.
U.S. Sen. Joni Ernst, R-Iowa, said maintaining the RFS is important to rural America.
"The RFS is critical in reducing our dependence on foreign oil, and provides consumers with choices at the pump," she said. "Most importantly, it spurs investment and research in renewable fuels and supports our rural economy in Iowa."
Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said the final numbers will help get the RFS back on track.
"The move will send a positive signal to investors, rippling throughout our economy and environment," he said. "By signaling its commitment to a growing biofuels market, the agency will stimulate new interest in cellulosic ethanol and other advanced biofuels, drive investment in infrastructure to accommodate E15 and higher ethanol blends, and make a further dent in reducing greenhouse gas emissions."
Emily Skor, CEO of Growth Energy, said in a statement EPA's final rule is important.
"The Renewable Fuel Standard is our country's most successful energy policy," she said. "It continues to inject much-needed competition and consumer choice into the vehicle fuels marketplace... This announcement is a win for our energy security, the environment, the American consumer and American innovation."
Though EPA did not set upward the final biodiesel volumes, National Biodiesel Board CEO Donnell Rehagen said the announcement still was positive for the industry.
"The real winners with this announcement are American consumers who will now have access to even more cleaner-burning, advanced biofuel," he said. "These benefits extend far beyond the biodiesel industry, supporting high-paying jobs and clean air across the nation. Though we are poised to top these numbers this year, growth in advanced biofuels still sends positive signals to the marketplace."
The RFS originally passed Congress in 2005 and was signed into law by President George W. Bush. The law divides biofuels into two categories -- conventional and advanced.
Conventional biofuels are required to reduce greenhouse gas emissions by at least 20%, and advanced biofuels are required to have a 50% reduction. Biodiesel is the first advanced biofuel to reach commercial-scale production and makes up the majority of the advanced biofuel category.
"While NBB applauds the increased volumes, there is room for more aggressive growth," Rehagen said. "The U.S. biodiesel industry can do more. The production capacity and feedstock are clearly available as the market is already topping these levels. We will work with the incoming administration to help them understand the benefits provided by our growing domestic biodiesel industry and the potential to support additional jobs and investment in rural economies."
Read more about the final rule here: http://bit.ly/…
For more on the reaction to EPA's RFS announcement Wednesday, see the Ethanol Blog at http://bit.ly/…
Todd Neeley can be reached at firstname.lastname@example.org
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