US biofuels sector alarmed as EPA considers reductions to RVOs

Source: ICIS News


HOUSTON (ICIS)--US biofuels markets were thrown into chaos late on Wednesday after a notice from the US Environmental Protection Agency (EPA) called into questions renewable fuel blending levels. 

The EPA released a Notice of Data Availability (NODA) giving public notice and inviting comment on potential options for reductions in the 2018 biomass-based diesel, advanced biofuel and total renewable fuel volumes, and/or the 2019 biomass-based diesel volume under the Renewable Fuel Standard (RFS) program. 

 A 15-day comment period will be triggered when the NODA is published in the Federal Register. 

“This all gives me a strong suspicion that Big Oil and refineries are prevailing, despite assurances to the contrary,” said US Senator Chuck Grassley (Republican-Iowa) in a press statement. “This seems like a bait-and-switch from the EPA’s prior proposal and from assurances from the president himself and cabinet secretaries in my office prior to confirmation for their strong support of renewable fuels.”

Among possible changes, EPA is requesting comment on a further reduction of the 2018 advanced biofuel volume requirement from the proposed level of 4.24bn gal/year to 3.77bn gal/year and the 2018 total renewable fuel volume requirement from the proposed level of 19.24bn gal/year to 18.77bn gal/year, driven by concerns over biofuel imports. 

In July, the EPA announced Renewable Volume Obligations (RVO) for 2018 as well as biomass-based diesel for 2019 at levels that did not please biofuels supporters.  

“There is no rationale for further lowering either the 2018 advanced biofuel volume requirement or the total renewable fuel volume. As we outlined in our recent public comments to EPA on the proposed 2018 RVO, we see no statutory basis whatsoever for attempting to limit biofuel imports through the use of a general waiver," Renewable Fuels Association President and CEO Bob Dinneen said. "It is also likely that using RFS waiver authorities in an attempt to limit exports would be perceived as a non-tariff trade barrier, which could run afoul of US obligations under World Trade Organization rules." 

The NODA states that statute provides EPA with the authority to waive a portion of the biomass-based diesel standard if there is significant feedstock disruption or other market circumstances that would make the price of biomass-based diesel increase significantly. The statute would also allow the EPA to make related reductions to the advanced biofuel and total renewable fuel RVOs. 

The EPA said it is seeking comments on whether it would be appropriate to use this waiver authority to set final RVOs for 2018 and the final 2019 RVO for biomass-based diesel in light of recent developments, including those related to cost and supply of advanced biofuel. 

“EPA appears to be adopting API’s argument that ‘domestic supply’ somehow means ‘domestic production,’ when this is clearly not the case," Dineen said. "The domestic supply of biofuels includes both imported and domestically produced biofuel volumes, just as USDA recognizes in its monthly supply-demand estimates that the total domestic supply of corn includes corn imports from other countries." 

Biodiesel supporters were also critical of the EPA's move. 

“EPA’s proposal earlier this summer was inadequate, underestimating the power of domestic biodiesel production and ignoring the intent of the law," said Doug Whitehead, chief operating officer at the National Biodiesel Board (NBB). "This request for comment is even more disappointing. NBB will be working with EPA to demonstrate the industry’s proven success record, continued growth and impacts to American workers who were promised that this administration had their back.”