The second round of comments piled in for the Environmental Protection Agency’s proposed volume requirements for the Renewable Fuels Standard. The ongoing battle between oil and corn sector groups did not look to back down as groups made their last attempt to make their views known to the agency as they establish blending requirements for three years.
During the first comment period of November 2014, over 1 million comments were filed on the proposal. Once the re-proposal was issued earlier this summer, both sides of the aisle again geared up for another push on making their views known. The comment period closed July 27 and regulations.gov reported 48,510 comments had been received. Fuels America released a statement earlier in the day that they had hand delivered 200,000 comments to the EPA.
On May 29 the EPA proposed levels that were below the congressional levels laid out in the 2007 law, but above levels previously proposed in November 2013. These proposed volumes would allow volumes of conventional (non-advanced) renewable fuel of up to 13.25, 13.40, and 14.00 billion gallons to be used to satisfy the total renewable fuel requirements for years 2014, 2015, and 2016, respectively. The original statute called for levels of 14.4 billion gallons for 2014 and 15 for 2015 and 2016.
For corn and ethanol producers, the complaint lies in the reduction of volume levels in the 2014, 2015 and 2016 years and a departure away from setting limits in a fashion that encourages increased consumption as Congress intended.
The Renewable Fuels Assn. explained, “By failing to consider the carryover renewable identification numbers (RINs) in the assessment of available supply; by miscalculating RIN retirements from 2014 ethanol exports; by underestimating gasoline demand; and, most importantly, by deliberately misunderstanding the statute’s general waiver authority and infusing consumption, infrastructure and demand considerations into a provision designed explicitly for lack of supply, the Agency has turned this important program on its head. In the process, EPA has rewarded oil companies for their steadfast refusal to allow renewable fuels access to the consumer – the very problem the RFS was designed to address,” RFS said.
Growth Energy, another ethanol industry association, said that EPA’s proposal “rests on a fundamental misunderstanding of the RFS program as Congress designed it….The proposal ignores this mandate and instead only looks backward, setting volumes based on existing capacity to produce, distribute, and use renewable fuel. Under EPA’s approach, distribution constraints and weak demand become a self-fulfilling prophecy.”
Biodiesel falls under the Biomass-based Diesel category of the RFS, which is a subset of the overall Advanced Biofuels category. The EPA proposal would gradually raise biodiesel volumes by about 100 million gallons per year to a standard of 1.9 billion gallons in 2017. The overall Advanced Biofuel standard would rise to 3.4 billion gallons in 2016.
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. Thirty-six U.S. senators also had requested EPA raise its biodiesel levels.
The National Chicken Council was supportive of the EPA’s proposed targets, saying it reflects “the practical limits imposed by the blendwall.” NCC president Mike Brown said NCC would support further reduction in the target level for conventional biofuels for 2015 and 2016 to account for the “distorting effects the RFS has on the market for corn, substitute feed products, chicken prices and food prices in general.”
Additionally, Brown pointed out that ethanol exports are supported by the RFS and diverting more corn from the feed market, which was not foreseen in 2007. Through the first five months of 2015, ethanol exports are on pace to exceed 900 million gallons, which would represent more than 320 million bushels of corn diverted from the feed market in addition to that diverted by the domestic supply of ethanol.
In joint comments on proposed Renewable Fuel Standard requirements, the American Petroleum Institute (API) and American Fuels & Petrochemical Manufacturers (AFPM) said EPA’s assumptions of growing demand for high-ethanol fuel blends are simply wrong. The groups ask EPA to limit ethanol mandates to no more than 9.7% of total gasoline demand. In 2014, E85 demand remained flat at just 0.15% of gasoline demand, while E0 represented nearly 7% of demand – up from 3.4% in 2012, according to Energy Information Administration data compiled by API.
EPA said it intends to take final action on this proposal by November 30, 2015, which will return the Agency to the program’s statutory timeline for issuing RFS annual rules.