EPA Pushes Conventional Blending Target Over 15 Billion Gallons for First Time

Contact: Monte Shaw
515-252-6249

JOHNSTON, IOWA – Today EPA released the long-awaited draft rule to set Renewable Fuel Standard (RFS) blending levels for 2023 through 2025. The draft rule is the first time EPA is not bound by Congressionally required volumes. While EPA increased the prior blending levels for conventional biofuels, the proposed increase for the advanced biofuels blending level falls short of what is already occurring in the marketplace.

“Today is our first peek into the new era of the RFS where EPA has more discretion,” said Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw. “As the finalized rule will set the foundation for this new era, it is more important than ever for EPA to get it right. They must lean into expanding the use of low carbon biofuels as Congress intended. The RFS should be, and always was intended to be, a market moving mechanism. From that viewpoint, today’s draft rule sets a solid foundation for conventional biofuels like ethanol. However, IRFA believes the final rule must better account for the rapid increase in advanced biofuels like biodiesel and renewable diesel. IRFA will work with EPA during this review process for improvements that will benefit consumers, farmers, and the environment.”

Conventional Foundation

For the second year in a row, EPA has proposed setting the conventional blending level at 15 billion gallons in 2023. In addition, EPA added 250 million supplemental gallons in 2023, following through on its commitment to comply with a federal court order to restore gallons illegally waived from the program in 2016. For 2024 and 2025, EPA moves the conventional baseline to 15.25 billion gallons, the first time it is proposed to be higher than 15 billion gallons.

Advanced Biofuels

In addition to biodiesel, renewable diesel production has been accelerating rapidly in recent years and the EPA’s proposal does not keep up – let alone act as a market moving mechanism. The Department of Energy’s Energy Information Agency (EIA) projects the use of biodiesel and renewable diesel to hit 3.9 billion gallons in 2023. Further, hundreds of millions of gallons of new production capacity are scheduled to come on line over the next 3 years.  However, EPA set the biomass-based diesel blending target at only 2.82 billion gallons in 2023, rising to 2.95 billion gallons in 2025. Not only does this not sufficiently incent increased biodiesel use, but the new renewable diesel consumption driven by state policies, such as California, will generation RFS credits (known as RINs) that could flow down into the conventional pool and displace ethanol blending.

E-RINs

For the first time, EPA is also proposing to allow RFS credits to be generated for electricity produced from biomass. While IRFA is supportive of “eRINs,” it will closely study this proposal to ensure that eRINs are accretive to the RFS goals and won’t merely cannibalize other renewable fuels. Further, ensuring eRINs adhere to the same strict standards of generation and traceability as other renewable fuels is a must for fairness and equity in the program. The proposal to let automakers generate eRINs makes no sense. This is a Renewable Fuel Standard. The eRINs should be tied to the production of renewable electricity from a biomass feedstock. That is the law and that is what will allow farmers and ranchers a fair opportunity to compete in this new area.

 

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 42 ethanol refineries capable of producing 4.5 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 11 biodiesel facilities with the capacity to produce 410 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org.

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