The U.S. Environmental Protection Agency heard testimony from the biofuels industry on Jan. 4 in a virtual hearing on the shortcomings of the agency’s proposed rule for renewable energy volume obligations for 2020, 2021 and 2022. In December, the EPA proposed RVOs that would reduce blending requirements for biofuels in 2021 and retroactively waive 2.96 billion gallons from the 2020 RVOs finalized nearly two years ago. year.

Under the proposal, 2022 volumes return to regulatory levels and the administration is committed to denying all inappropriate exemption requests for small refineries, which was welcomed by witnesses. However, the action of retroactively eliminating the required mixed gallons has raised concerns.

Geoff Cooper, president and CEO of the Renewable Fuels Association, said the RFA supports the proposed volumes for 2022 for all renewable fuel categories. “We specifically applaud the EPA for proposing to set the implicit requirement for conventional renewable fuels at the statutory level of 15 billion gallons,” Cooper said. “We also support the EPA’s proposal to take into account the projected exempt volumes of small refineries when setting the RVO percentages.”

And, RFA agrees with the EPA that “in the interest of transparency,” the agency should publish basic information about entities seeking to be exempt from RFS compliance. Cooper also expressed RFA’s strong support for the related EPA proposal to deny 65 pending small refinery exemption petitions.

“During the previous administration, the small refinery exemption program undermined the objectives of the RFS, preventing the EPA from ensuring that the RVO was met every year,” adds Emily Skor, CEO of Growth Energy. “We appreciate the agency’s work to end this abuse and return to a true implied conventional volume of 15 billion gallons by 2022, while fostering strong growth in advanced biofuels. We’re also delighted that the agency has finally offered to return the first 250 million gallons illegally canceled in the 2016 RVO with a commitment of the next 250 million gallons for 2023.

RFS reset causes concern

Skor adds that the EPA’s proposal has serious flaws that need to be corrected. “This sets an extremely troubling precedent of revising the finalized volumes for 2020 and lowering volumes for 2021 rather than stimulating the growth of renewable fuels. The retroactive reductions proposed until 2020 exceed the legal authority of the EPA and have negatively impacting all agricultural and fuel supply chains, ”Skor said.

Cooper notes: “While we understand that EPA has a legal obligation to consider resetting future RFS volumes when certain thresholds are reached, it does not appear that Congress intended EPA to use its. reset authority for the purpose of retroactively dealing with unforeseen market anomalies like COVID or weather-related disasters.

Even though the EPA’s use of its reset authority to reduce volumes in 2020 and 2021 was warranted, the agency significantly underestimated actual consumption of conventional ethanol in 2021, Cooper said. The latest data from the Energy Information Administration suggests that 13.73 billion gallons of conventional ethanol were consumed in the country in 2021, more than 400 million gallons more than projected by the EPA.

Regarding the impact of COVID on RFS 2020 compliance, the RVO already includes a self-correction mechanism that resulted in a lower adjustment of the actual renewable fuel volume requirements with reduced gasoline and diesel consumption.

Cooper says the EPA has long opposed retroactive volume reductions. The EPA has repeatedly stated that “Congress … has not provided a way to correct the percentage standards after November to ensure that the applicable renewable fuel volumes are exactly met within a year of compliance. given “. The agency has also previously taken the position that “… periodically and retroactively changing standards … would make standards a moving target.” “

Testimony from American Coalition for Ethanol CEO Brian Jenning highlights how refiners “are pushing the EPA to help them escape their legal responsibility to blend increasing volumes of renewable fuel.” Taken in isolation, some provisions of the proposal move away from the EPA’s previous mismanagement of RFS, but the proposal as a whole neglects to highlight the role that grain-based ethanol can play in helping achieve administration decarbonization objectives.

“… EPA’s continued obsession with maximum compliance flexibility for refiners means excess RINs can be used to meet future obligations instead of the physical blend of E15 and higher blends,” says Jennings in his testimony.

Skor suggests that the EPA should restore the integrity of the RFS program and remove barriers to the use of higher biofuel blends by first leaving the 2020 RVOs finalized in 2019, bringing the conventional 2021 and 2022 RVOs into line with the law and finalize the rule making as quickly as possible. possible.

Additionally, Growth Energy submitted comments to the EPA on Monday on its November 18, 2021 proposal to extend RVO compliance deadlines for 2019, 2020, and 2021. The 2019 RVO compliance deadline for small refineries was November 30, 2021, and the RVO 2020 compliance deadline for all obligated parties is currently January 31, 2022.

RFA Board Secretary Rick Schwarck of Absolute Energy and Board Members Jeff Oestmann of Granite Falls Energy, David Sovereign of Golden Grain Energy and Derek Peine of Western Plan Energy, as well as Lindsay Fitzgerald of member firm Gevo, also testified at Tuesday’s hearing.

Biodiesel interests want RFS back on track

Representatives of member companies and National Biodiesel Board staff also said they are looking to work with the EPA to get the RFS program back on track. Industry representatives welcomed the proposed growth for 2022, urged the EPA to maintain the integrity of the program, and asked the agency to avoid further or future delays in setting annual volumes.

NBB CEO Donnell Rehagen stressed that the clean fuel industry is ready to respond to higher volumes and thanked the EPA for restoring the unduly canceled volumes from 2016. “Over the past two years For years, the biodiesel industry has worked hard to meet Americans’ growing demand for better, cleaner fuels. », Testifies Rehagen. “In 2020, the US market for biomass-based diesel and renewable diesel grew to 3 billion gallons – its highest volume on record – and generated more than 4.5 billion advanced biofuel credits. In the first 11 months of 2021, the industry has maintained a sustainable production rate comparable to 2020. ”

Kate Shenk, BNB Director of Regulatory Affairs, also welcomed the proposed growth in 2022, adding, “We want to ensure that BBD volume is fully achieved each year and continues to reflect the growth in diesel-based production. biomass. We also hope that the EPA will continue to create room for growth in the global advanced pool, as some additional advanced biofuels are co-products of biomass-based diesel.

The BNB and its members also highlighted the uncertainty created by the EPA’s proposal to reset 2020 volumes and proposed – rather than outright – denying exemptions for small refineries. “Today’s proposal – while positive for growth in future years – continues to undermine the industry and succumb to pressure from refiners,” said David Cobb, director of federal affairs at the BNB. “The fact that this proposed rule opens up another comment period for SREs only adds further delays in finalizing a rule that is already overdue.”

The NBB further urged the EPA to promptly come up with RFS 2023 volumes, which were legally due on November 30, 2021.