The Environmental Protection Agency’s final Renewable Fuel Standards for 2017 and biomass-based diesel volume for 2018 appear to put the program back on track and will provide considerable additional certainty for investors in advanced and cellulosic biofuels. Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, issued the following statement in reaction to EPA’s release of the rules:
“By abandoning its legally flawed reliance on general waiver authority as a basis for departing from statutory biofuels volumes requirements, EPA has sent a strong signal that it will support the biofuels industry and grow advanced and cellulosic biofuel production. BIO and its members welcome this change in course by EPA; today’s rule adheres to Congress’s intent in enacting the RFS statute and ends several years of instability in the RFS program. We greatly appreciate EPA’s efforts to issue a timely rule, to understand BIO’s comments and legal policy points, to listen carefully to our members’ concerns about the program’s impact on investment, and to ensure that the U.S. transportation fuels market will use all available biofuels. The RFS will continue to be successful in driving development of cleaner transportation fuels that measurably reduce carbon emissions.
“EPA’s actions finally dispel the myth of the blend wall. In a recent white paper, BIO demonstrates that oil refiners and importers easily met the RFS obligations every year since 2010 – and were even able to build a bank of excess RINs – despite ethanol blending requirements that exceeded 10 percent of obligated gasoline volumes.
“BIO continues to strongly disagree with EPA’s prior interpretation of its general waiver authority under the RFS statute and with EPA’s ongoing stockpiling of carryover RIN credits. The RFS statute does not allow EPA to rely on demand-side factors under the oil industry’s control as a basis for decreasing the fundamental requirement to use as much renewable fuel as the biofuel industry can produce. And the statute does not grant the agency leeway to create a permanent carryover RIN bank.”
After considering comments from BIO and other stakeholders, EPA decided in its final rule to change course and to “follow … the approach suggested by these commenters in using the cellulosic waiver authority exclusively to reduce volumes of both advanced biofuel and total renewable fuel.” BIO had specifically noted in its comments on EPA’s proposed rule for 2017 that “[v]ery modest increases in the total renewable fuel RVO for 2017 would allow EPA to rely entirely on its cellulosic waiver authority in setting 2017 RVOs.”
BIO’s recent white paper, “The Myth of High RIN Prices As Proof of the Blend Wall,” challenges the widely accepted assumption that the blend wall – the point at which ethanol blending in gasoline exceeds 10 percent – caused the 2013 spike in Renewable Identification Number (RIN) spot market prices. The white paper is available at: https://www.bio.org/sites/default/files/Disproving_the_Blend_Wall.pdf.