EPA to Propose Lower RFS Blend Volumes

White House to Keep Status Quo on Biofuel Blends Even as Biden Pushes to Lower Emissions

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Brian Jennings, CEO of the American Coalition for Ethanol, speaking at the group's annual meeting on Thursday. Jennings expressed frustration on Friday when learning EPA will not set a higher blend volume for biofuels this year. (DTN photo by Chris Clayton)

MINNEAPOLIS (DTN) -- The Biden administration will apparently kick the can down the road on ethanol blending requirements for 2021 and propose blend volumes lower than 2020 levels, according to reports coming out of Washington, citing unnamed officials.

Reuters and the Oil Pricing Information Service (OPIS) first reported EPA would not issue specific ethanol blending requirements for 2021, known as "renewable volume obligation," or RVO. The move comes after the Trump administration last year passed on proposing blend volumes for 2021 and the Biden administration chose to do the same.

Reuters reported EPA will propose blend volumes below 2020 levels for refiners, according to unnamed sources in the article.

EPA is required under the law to set blend volumes for cellulosic, biodiesel and advanced biofuels, as well as total blend volumes. In 2020, total biofuel blend volumes topped 20.09 billion gallons.

The news reports and social media posts on the EPA decision came just as the American Coalition for Ethanol (ACE) was ending its annual meeting in Minneapolis. Brian Jennings, CEO of ACE, said it's hard to know what is coming from unnamed sources, but the White House and EPA have decided not to set a blend volume for 2021.

"So, for all practical purposes, they are just going to let blending be as blending is, based on what the market has consumed," Jennings said.

The move effectively sets status quo ethanol blend volumes under the Renewable Fuels Standard for 2020 and 2021 without any increase in refiner obligations to increase blends or go out on the regulatory market and buy more Renewable Identification Numbers (RIN) credits for 2021.

The 2021 D6 RIN prices, which topped $2 a gallon in June, fell Friday to $1.41 a gallon after sitting at $1.65 a gallon on Wednesday.

Despite the rhetoric from President Joe Biden about lowering emissions from fossil fuels, Jennings said the move Friday reflects that oil refiners still have some weight with the Biden administration.

"The refiners are finding sympathetic ears in both Republican and Democratic administrations that they don't want the RFS carried out in the way the law intends for it to be carried out, and that is frustrating for us," Jennings said. "We just spent the last two days talking about how we're part of the climate solution -- and going to be an important part of it -- but policymakers have to give us a chance to shine."

Jennings said the administration doesn't connect the dots between following the RFS and increasing biofuel blends to reduce greenhouse-gas emissions, which is a goal Biden has set. "The disconnect is amazing."

EPA under the Obama administration had problems meeting deadlines for proposing annual RVO blend requirements. Under an agreement reached following a lawsuit, EPA had agreed to propose annual RVO rules in June or July, then finalize those requirements sometime in November -- the deadline under the law. EPA last year opted not to propose a rule for 2021.

EPA's handling of the 2021 blend requirements raised more questions about 2022 because EPA has not issued any guidance or proposed rules for next year either.

"There are still no answers for the 2022 RVO, and there is no proposal," Jennings said. "So, the likelihood is they are not going to meet the November statutory deadline for the 2022 volume."

The Biden administration's decision to pass the buck should also raise doubts about the president's series of executive orders to reduce emissions, such as the order earlier this month to increase the sale of electric vehicles by 2030.

"If you can't follow the law that calls for lower-carbon fuels to displace petroleum, how can anyone expect executive orders to be met?" Jennings said. "If you can't enforce something that is already in statute, how are you going enforce a voluntary pledge on electric vehicles?"

The reports on EPA's move come just a day after USDA announced a $26 million investment to build out biofuel infrastructure with grants in 23 states. The funding under the Higher Blends Infrastructure Incentive Program will go towards dozens of projects to help replace old fuel dispensers and storage tanks with blender pumps and tanks that can be used for both E15 and E85, as well as biodiesel. USDA stated the grants would increase potential biofuel sales by as much as 822 million gallons annually. USDA championed its funding announcement as a way to achieve Biden's goals to reduce emissions.

"Investments like these increase opportunities for American consumers to make climate-smart decisions and move the country closer to President Biden's goal of net-zero carbon emissions by 2050," said Justin Maxson, USDA's deputy undersecretary for Rural Development, in a news release Thursday. "By expanding the availability of higher-blend biofuels, we're giving consumers more environmentally friendly fuel choices when they fill up at the pump and stimulating an important market for U.S. farmers and ranchers."

Fridays, overall, have become tough days for ethanol announcements this summer. At least two court rulings, including one by the Supreme Court, have gone against the industry and were released on Fridays. The Supreme Court threw out a lower court ruling earlier this summer that had limited small-refinery exemptions, then the DC Circuit ruled against the industry and tossed out the Trump administration's E15 rule.

Ron Lamberty, a senior vice president for the American Coalition for Ethanol (ACE), had joked during the group's event that the ethanol industry this summer has gone through a stretch of bad Friday court rulings and announcements. Lamberty used terminology to describe those Fridays in a manner that would not be appropriate for DTN to publish.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Chris Clayton