EPA increase RFS volumes in final RVOs

Final total renewable levels allow for increased biofuels use beyond blend wall.

Monday the Environmental Protection Agency (EPA) announced the final renewable fuel targets for 2015 and 2016 under the federal Renewable Fuel Standard (RFS). The final levels were above the previously proposed levels, but still below the levels called for by Congress in the law. 

The original corn-based ethanol targets under the RFS call for 15.0 billion gallons in 2015 and 2016. Today, the EPA finalized these targets at 14.05 billion gallons for 2015 and 14.5 billion gallons for 2016.

With today's announcement, EPA is two years late in setting the 2014 volume, thus setting the mandate retroactively, after twice increasing the initial proposed volume levels. The first proposed volume was issued in November 2013 set at 13 billion gallons. A revised proposal was issued in May 2015, raising the implied corn ethanol volume to 13.25 billion gallons. Today's announcement retroactively sets the 2014 compliance volume at 13.61 billion gallons. Additionally, the agency is one year late in setting the 2015 volume, also effectively setting this year's standard retroactively and at 14.05 billion gallons, which is 650 million gallons more than the 13.4 billion gallon volume initially proposed in May.

Moreover, the 2016 volume has been increased from the 14 billion gallons provided by the May proposal to 14.5 billion gallons, a level that will break the 10 percent blend wall. 

Janet McCabe, EPA acting administrator for the office of air and radiation, said the levels are ambitious but achievable growth, especially in advanced biofuel levels. Levels do go beyond the “blend wall” levels, but she said the agency had to strike a balance of the law’s intent to increase biofuels but also takes into account real world circumstances that have affected the advancement of next generation fuels.

The final 2016 standard for cellulosic biofuel — the fuel with the lowest carbon emissions — is nearly 200 million gallons, or 7 times more, than the market produced in 2014. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35%, higher than the actual 2014 volumes; the total renewable standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, which is 11% higher than 2014 actual volumes.

Ethanol supporters were pleased that EPA at least somewhat improved upon its levels to encourage additional blending.

A statement from Growth Energy said the “numbers for 2016 represent a final rule closer to the statutory levels established by Congress, avoid the ‘reset’ and indicate a more certain future for renewable fuels.”

McCabe confirmed in a media call Monday afternoon that the levels “do not trigger the reset for the total renewable fuel levels,” but it does for cellulosic and advanced biofuels levels.

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Biodiesel growth

Under the new RFS rule, Biomass-based Diesel volumes would grow to 1.9 billion gallons in 2016 and 2 billion gallons in 2017. The Biomass-based Diesel category – a diesel subset of the overall Advanced Biofuel category – is made up mostly of biodiesel but also includes renewable diesel, another diesel alternative made from the same feedstocks using a different technology.

The new standards reflect modest but meaningful growth over recent years when the U.S. market has hovered around 1.8 billion gallons annually. The National Biodiesel Board had requested more aggressive growth to a biodiesel standard of 2.7 billion gallons by 2017, along with additional growth in the overall Advanced Biofuel category.

Where now

It was widely anticipated that one side at least would challenge EPA’s final numbers in court. Ethanol supporters said the action still will have a negative impact on the economy, energy security and the environment.

“In light of the EPA’s decision, we are evaluating our options,” said National Corn Growers Assn. president Chip Bowling in statement. “We will fight to protect the rights of farmers and consumers and hold the EPA accountable.”

American Petroleum Institute president and chief executive officer Jack Gerard said today’s announcement makes clear that Congress must step in and repeal or significantly reform the RFS. Other groups including the National Chicken Council and National Council of Chain Restaurants also called for legislative action.

In a release from the NCC, they stated ethanol has been more expensive than gasoline for several months now, and is projected to remain more expensive well into 2016. NCC president Michael Brown criticized EPA for not accounting for the amount of ethanol that is exported when setting the domestic mandates.

Last year nearly 850 million gallons of ethanol were exported, and through August of this year, exports are running about five percent higher. Combined, 2014 and 2015 ethanol exports are likely to divert the equivalent of an additional 600 million bushels of corn away from feed and food use - in addition to that which is mandated by the RFS.

Final Renewable Fuel Volumes

 

2014

2015

2016

2017

Cellulosic biofuel (million gallons)

33

123

230

n/a

Biomass-based diesel (billion gallons)

1.63

1.73

1.90

2.00

Advanced biofuel (billion gallons)

2.67

2.88

3.61

n/a

Renewable fuel (billion gallons)

16.28

16.93

18.11

n/a

(Units for all volumes are ethanol-equivalent, except for biomass-based diesel volumes which are expressed as physical gallons.)

Final Percentage Standards

 

2014

2015

2016

Cellulosic biofuel

0.019%

0.069%

0.128%

Biomass-based diesel

1.41%

1.49%

1.59%

Advanced biofuel

1.51%

1.62%

2.01%

Renewable fuel

9.19%

9.52%

10.10%

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