The US Environmental Protection Agency (EPA) has issued a proposed multi-year Renewable Volume Obligations (RVOs) for the 2023-2025 Renewable Fuel Standard (RFS) compliance years. Released on December 1, 2022, the "fresh look" proposal which also implements the remaining 250 million (US) gallons (≈946 million litres) in remanded volumes by the DC Circuit Court in 2017, has been welcomed and criticized by US biofuel trade bodies.
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According to the Renewable Fuels Association (RFA), EPA’s 2023-2025 Renewable Fuel Standard (RFS) proposed volumes create “a clear pathway for sustainable growth in the production and use of low-carbon renewable fuels.”
EPA’s proposed rule solidifies a role for the Renewable Fuel Standard in future efforts to reduce carbon emissions and enhance our nation’s energy security. Once finalized, this rule will significantly accelerate growth and investment in the low-carbon renewable fuels that will help decarbonize our nation’s transportation sector, extend domestic fuel supplies, and bolster the rural economy, said RFA President and CEO Geoff Cooper.
Good for corn- and cellulosic ethanol
EPA proposes to set the 2023 total RFS requirement at 20.82 billion (US) gallons (≈78.8 billion litres), with 5.82 bg (≈22 billion litres) coming from advanced biofuels and 15 bg (≈56.8 billion litres) from conventional renewable fuels like corn ethanol.
In addition, EPA proposes to add a supplemental volume of 250 million gallons (≈946 million litres) on top of the 2023 standards to address a 2017 decision from the DC Circuit Court in a case brought against EPA by RFA and other leading farm and biofuel groups.
For 2024, EPA proposes a total RFS volume of 21.87 bg (≈82.78 billion litres), comprising 6.62 bg (≈25 billion litres) of advanced biofuel and 15.25 bg (≈57.7 billion litres) of conventional renewable fuels.
In 2025, EPA proposes to require 22.68 bg (≈85.8 billion litres) of total renewable fuel, including 7.43 bg (≈28.1 billion litres) of advanced biofuel and 15.25 bg (≈57.7 billion litres) of conventional renewable fuel.
By including three years’ worth of RFS volumes, EPA’s proposed rule will finally provide certainty and stability for the entire supply chain. EPA Administrator Michael Regan put the RFS program back on track with the 2022 volume obligations, and today’s proposal builds upon that solid foundation. RFA thanks Administrator Regan and the Biden administration for continuing to make good on their commitment to growing the marketplace for lower-carbon, lower-cost renewable fuels said Geoff Cooper.
Cooper noted that these renewable volume obligations also would stimulate rapid growth in E15 and E85, making it that much more important that a resolution is found for allowing year-round sales of E15, especially with new legislation filed recently with the support of RFA, the American Petroleum Institute (API) and others.
American Coalition for Ethanol (ACE) CEO Brian Jennings was of a similar sentiment.
This proposed rule is a critical opportunity for the EPA to leverage the greenhouse gas-reducing benefits of increasing biofuel blending targets by getting the RFS back on track, and we’re pleased the Agency is taking steps in the right direction. Multi-year targets help provide clarity on the market need to lean into climate-benefiting transportation fuels such as ethanol. The Inflation Reduction Act is poised to boost investments in clean fuel technologies that support the Agency in increasing the use of clean fuels like ethanol through RFS targets moving forward. Our comments to the proposal will emphasize the millions in biofuel infrastructure investments being made through the USDA that underscore the opportunity for expanded RFS targets for ethanol, as well as the long overdue need for EPA to formally adopt the latest GREET model to determine the lifecycle GHG emissions of biofuel which continues to trend lower, Brian Jennings said in a statement.
A “fresh look” opens for RNG and biopower
EPA’s proposal also includes some long-awaited guidance in a couple of key areas and multi-year fuel volumes for biopower and renewable natural gas (RNG).
The American Biogas Council (ABC) thanks EPA for several actions in this proposed rule: the creation of a regulatory framework to generate credits (eRINs) from biogas projects that generate renewable electricity for electric vehicles; an alternate accounting methodology to help increase food waste recycling; and fuel volumes for the next three years, said Patrick Serfass, Executive Director, American Biogas Council.
According to ABC, of the 2 300 biogas systems currently operational in the United States, 2 000 of them produce “uninterruptible” renewable electricity.
This guidance from EPA will create the opportunity for these projects as well as new ones to generate RFS credits called eRINs if their electricity is used to charge electric vehicles. This with help decarbonize transportation and increase the volume of organic material that we recycle in the US, especially smaller volumes from small towns, farms, and food processors. There is a long list of other benefits that help protect the environment and spur economic growth as well, Patrick Serfass said.
Serfass pointed out that food waste today is often rejected from biogas systems that participate in the RFS because the program has, in most cases, required system owners to devalue all their RNF credits if they accept it.
We are hopeful this new methodology will not only address that issue but encourage a new wave of food waste recycling across the US, producing more renewable energy and recycling nutrients to reduce dependence on the fossil-fuel-derived, synthetic fertilizers used across agriculture, said Patrick Serfass.
Underestimating RNG growth
While ABC welcomes the multi-year renewable fuel volumes proposed for 2023-2025, it believes EPA is in fact underestimating the growth of RNG.
Previously, EPA’s volumes have only recognized an 8 percent annual growth rate of RNG while the number of RNG projects has been increasing at a rate of 20-40 percent and the industry this year is already likely to exceed 2022’s target.
As a result, while the proposed fuel volumes recognize a higher 36 percent annual growth over the next three years, they are probably still too low.
We think EPA is still underestimating the impact of continued strong growth in RNG production, new renewable electricity projects participating in the RFS in 2024, and potentially more food waste generated biogas electricity and RNG. If EPA doesn’t make the volumes higher, it risks crashing credit values and halting renewable fuel production, development, and investments. We are still analyzing the nearly 700-page proposal, which mentions biogas nearly 1 500 times, but we want to extend our appreciation now to EPA staff for working so hard to address key issues that have been slowing industry growth and environmental protection, Patrick Serfass said.
Undercutting biomass-based diesel investments
Clean Fuels Alliance America (CFAA), previously known as National Biodiesel Board (NBB), criticized the EPA’s proposed multi-year RFS volumes for “undercutting investments in biodiesel and renewable diesel capacity.”
According to CFAA, the minor increases for biomass-based diesel volumes in 2023, 2024, and 2025 are below the industry’s existing production and ignore the clean fuels industry’s significant investments in new capacity.
The volumes provide no additional space for sustainable aviation fuel (SAF) and short-circuit the nation’s goals to cut carbon emissions.
EPA’s overdue set proposal significantly undercounts existing biomass-based diesel production and fails to provide growth for investments the industry has already made in additional capacity, including for sustainable aviation fuel. The volumes EPA is proposing for 2023, 2024, and 2025 ignore the more than 3 billion gallons currently in the market and fail to take into account the planned growth of the clean fuels sector, said Kurt Kovarik, VP of Federal Affairs at CFAA.
EPA’s data from the RFS program show that the US market reached 3.1 bg (≈11.7 billion litres) of biomass-based diesel in 2021 and already 2.9 bg (≈11 billion litres) through October 2022, with two months still to go.
The Energy Information Administration’s (EIA’s) Short-Term Energy Outlook, which informs EPA’s decisions on annual RFS volumes, currently projects a 500-million-gallon (≈1.89 billion litre) increase in biodiesel and renewable diesel consumption for 2023.
EIA has also projected 2.4 bg (≈9 billion litres) of added renewable diesel capacity coming online by 2024 and calculated another 1.8 bg (≈6.8 billion litres) in announced planned capacity.
The biodiesel and renewable diesel industry have already made considerable investments in production capacity and distribution infrastructure that will come online by 2025. The soybean and canola industries have invested more than US$4 billion to bring additional feedstock capacity online over the next several years. EPA’s proposed biomass-based diesel volumes undercut those investments Kurt Kovarik said.
CFAA supports the EPA’s proposed alternative compliance method to document points of origin for used cooking oil (UCO) supplies under separated food waste plans.
This method will allow small producers to continue using a low-carbon feedstock and rely on documentation from UCO aggregators.
CFAA says it appreciates EPA’s final rule creating a pathway to produce renewable diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas (LPG) from canola oil, which will generate even more biomass-based diesel and advanced biofuel gallons for the program.
However, while the approval enables a more diverse feedstock supply for the clean fuels industry, the potential growth is not accounted for in the proposed volumes.
When setting RFS volumes, EPA must consider the infrastructure and rate of future commercial production for advanced biofuels like biodiesel, renewable diesel and SAF.
The clean fuels industry is meeting and exceeding all of the statutory factors that the EPA is supposed to consider when setting volumes. Our industry’s growth can generate new jobs and increase economic opportunities for growers, fuel producers, and other economic sectors. Increasing production of clean fuels improves US energy security, lowers diesel fuel prices, and generates carbon and emission reductions today that are necessary to meet future national environmental goals, ended Kurt Kovarik.