EPA’s Final RFS Rule Leaves Biofuels with Hollow Feeling

Contact: Cassidy Walter

JOHNSTON, IOWA – Today the Environmental Protection Agency released the final rule setting Renewable Fuel Standard (RFS) levels for conventional, advanced and cellulosic biofuels for 2019 and biodiesel for 2020.

The 2019 conventional biofuels level, most often satisfied with corn ethanol, is proposed at 15 billion gallons, in line with statute. The biomass-based diesel, advanced, and cellulosic categories all received modest boosts. However, the rule failed to address demand destruction caused by highly questionable small-refinery exemptions that directly undercut all RFS levels. The rule also did not address a court order to restore 500 million gallons of conventional biofuels that were illegally cut from the RFS program in 2016.

“On paper, this looks like a solid rule that drives the biofuels industry forward,” said Iowa Renewable Fuels Association Executive Director Monte Shaw. “But in reality, small-refinery exemptions erode any potential market growth. Without reallocation of small-refinery exemptions, the numbers released today may look good on the outside, but just like the chocolate bunnies my children open up on Easter morning, they are hollow on the inside. In the final analysis, there will not be a 15 billion-gallon RFS level for 2016, 2017, 2018, or 2019 as Congress intended.”

The rule does increase advanced biofuels for 2019, including a specific increase for cellulosic ethanol, with the rest allocated to any advanced biofuel. The 2020 level for biomass-based diesel was also increased after being flatlined last year.

“While any increase is better than a flatline, these modest increases vastly underrate the potential of advanced biofuels,” Shaw said. “By EPA’s own estimations, biomass-based diesel consumption will be at 2.8 billion gallons in 2019. The RFS was designed to be a market-pushing mechanism. When EPA sets standards that fall below current market demand, they fail to achieve the primary goal of the RFS.

“Finally, despite proven technologies, the approval of new cellulosic pathways under the RFS have been stalled for far too long. We have several cellulosic projects at Iowa plants ready to go, but they have been waiting over a year for the green light from EPA. With those approvals, cellulosic ethanol production could grow rapidly.”

Shaw concluded that with sagging commodity prices and trade sanctions, a robust RFS can help boost rural America.

“This rule could have and should have addressed small-refinery exemption reallocation and the 500-million-gallon court-ordered remand, but it did not. We are left hoping that Acting Administrator Andrew Wheeler will take a more judicious approach to exemptions. If not, President Trump’s pledge to protect the RFS and American farmers will be hollowed out from inside his own administration. Refiners are making record profits while farmers are bleeding red ink and ethanol plants are being shut down and even sold off for scrap. It is time to restore sanity to the RFS exemption process and we’ll be watching very closely how the new EPA leadership team handles the 2018 requests.”

The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 44 ethanol refineries capable of producing nearly 4.4 billion gallons annually – including approximately 55 million gallons of annual cellulosic ethanol production capacity – and 12 biodiesel facilities with the capacity to produce 400 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org.