EPA proposes mostly lower renewable fuel obligations for 2018

The US Environmental Protection Agency proposed renewable fuel obligations for 2018 that generally are lower than quotas it previously adopted for 2017. The proposed volumes reflect market realities focused on actual production and consumer demand while recognizing challenges in bringing advanced biofuels to the marketplace, Administrator E. Scott Pruitt said.

The US Environmental Protection Agency proposed renewable fuel obligations for 2018 that generally are lower than quotas it previously adopted for 2017. The proposed volumes reflect market realities focused on actual production and consumer demand while recognizing challenges in bringing advanced biofuels to the marketplace, Administrator E. Scott Pruitt said.

The proposal would reduce federal Renewable Fuel Standard quotas year-to-year in 2018 for cellulosic biofuel by 73 million gal to 238 million gal, for advanced biofuel by 40 million gal to 4.24 billion gal, and for renewable fuel by 40 million gal to 19.24 billion gal. The previously set 2018 quota of 2.1 billion gal of biomass-based diesel fuel would be the same in 2019.

EPA will take comments on the proposal for 45 days following its publication in the Federal Register, which it expected in a few days.

Officials from the American Petroleum Institute and American Fuel & Petrochemical Manufacturers each welcomed EPA’s July 5 announcement. They also said that the proposals do not go far enough to solve RFS implementation problems, and called on Congress to substantially reform or repeal the program.

“Today’s proposal reaffirms the importance of RFS reform, as it is essential that Americans have access to fuels they want and can safely use in their vehicles. Congress must fix this broken, outdated program,” API Downstream Group Director Frank J. Macchiarola said.

The RFS’s primary goals have been achieved, not by ethanol mandates but market forces and technological innovations, leaving the policy with only hypothetical benefits and added costs to consumers, Macchiarola said.

AFPM Pres. Chet Thompson said, “Acknowledgment of the high cost of compliance has been a long time coming, and we are grateful that this EPA proposal comes closer to reflecting what the market has shown year after year—the mandated levels of advanced, cellulosic, and biodiesel in the RFS are unrealistic. Nevertheless, the mandates for conventional and advanced biofuels are still too high—either exceeding demonstrated domestic biofuel production or the ability to use more biofuel than vehicles, engines, and the fueling infrastructure can handle,” he said.

EPA also proposed keeping conventional biofuel quotas under the federal RFS at the congressionally established 15 billion-gal target, which Renewable Fuels Association Pres. Bob Dineen applauded.

“By maintaining the 15 billion-gal level for corn ethanol, the rule will also help to drive more investment in infrastructure to accommodate higher ethanol blends,” he said. “The RFS is a vital policy, and we encourage EPA to finalize this rule as quickly as possible, and certainly in time to meet the statutory deadline of Nov. 30.”

A National Biodiesel Board official called EPA’s proposal a missed opportunity. “EPA should be committed to diversifying the diesel fuel market and prioritizing advanced biofuels. Targets like this ignore reality and the law, inhibiting growth in the industry,” said Anne Steckel, NBB vice-president of federal affairs.

EPA said it also is taking comments on concerns that some RFS obligations are increasingly met with imported fuel from Brazil, Argentina, and Indonesia. It also is assessing the impacts of higher levels of ethanol-free gasoline, and bolstering an existing memorandum of understanding with the US Commodity Futures Trading Commission to analyze and address the need for increased transparency and a host of other market concerns.

The agency also is beginning technical analysis that will inform a future rule to reset the statutory volumes for cellulosic, advanced, and total biofuels, which Pruitt said the federal Clean Air Act requires when certain conditions are met. “We expect those conditions to be met in the near future, so we are conducting technical analysis now,” he said.

Contact Nick Snow at nicks@pennwell.com.

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