EPA finalizes 2013 Renewable Fuel Standard

Aug 9, 2013

The U.S. Environmental Protection Agency (EPA) announced the finalization of its proposed Renewable Fuel Standard (RFS) volume requirements for 2013 for conventional biofuels, cellulosic biofuels and the total amount of Advanced Biofuels. EPA had previously finalized the 2013 volume requirements for biomass-based diesel at 1.28 billion gallons.

The announcement finalizes the requirement for total Advanced Biofuel at 2.75 billion gallons, about nine months behind schedule.

The Advanced Biofuel requirement is important to the biodiesel industry because biodiesel, as an EPA-designated Advanced Biofuel under the RFS, can fill not just the Biomass-based Diesel requirement of the program but also part, or all, of the overall Advanced Biofuel requirement. The decision to maintain the Advanced requirement at 2.75 billion gallons offers an additional market opportunity for biodiesel above and beyond the minimum 1.28 billion-gallon Biomass-based diesel requirement for 2013.

“As producers of the feedstock that accounts for more than half of all domestic biodiesel production, we are very pleased with today’s announcement,” says American Soybean Association President Danny Murphy, a soybean farmer from Canton, MS. “The updated volumes for 2013 will allow the promising growth of the biodiesel industry to continue unhindered, and we appreciate Administrator McCarthy and the EPA’s work to see that through.”

EPA also announced it has denied two petitions for reconsideration of the 2013 biomass-based diesel standard of 1.28 billion gallons. These appeals were submitted by petroleum groups in late November 2012 raising a number of issues, including the impact of the 2012 drought and concerns about fraudulent Renewable Identification Numbers (RINs). EPA determined that the petitions failed to meet the requirements for reconsideration under the Clean Air Act.

“During the confirmation process, Administrator McCarthy repeatedly expressed her commitment to building bridges between the agricultural community and the EPA, and this announcement, which recognizes the strengths and benefits of the RFS and takes into account both the current and potential capabilities of the industries that produce these biofuels is a pragmatic and constructive step toward doing just that,” Murphy said.

In addition to confirming the 1.28 billion-gallon requirement for biomass-based diesel and the 2.75 billion-gallon requirement for total Advanced Biofuels, EPA’s announcement imposes the following requirements for 2013:

• Cellulosic biofuel: 6 million gallons. This is a reduction from the 14 million gallons previously proposed by EPA for 2013 and the 1 billion gallons called for under the statute. EPA’s action to reduce the cellulosic biofuel requirement recognizes that significant quantities of cellulosic biofuels are not yet available in the marketplace.

• Conventional biofuel (mostly corn ethanol): 13.8 billion gallons. This quantity maintains the volumes required under the statute for 2013. • Total renewable fuel: 16.55 billion gallons.

Despite fear about markets being unable to take higher amounts of biofuels, energy groups such as the National Biodiesel Board (NBB) and Growth Energy lauded the decision, what they called a “commitment to the RFS.”

“Biodiesel is proving that Advanced Biofuels are working today and that they can reduce prices for consumers,” said Anne Steckel, NBB vice president of federal affairs. “Today’s announcement also demonstrates that the EPA has tremendous flexibility in addressing concerns stemming from the various volume requirements under the RFS, and that it is prepared to use that flexibility in a practical way to ensure that the policy is running smoothly.”

According to a Bloomberg article, prior to the EPA’s announcement, the value of certificates that track mandated ethanol use fell on speculation that the Obama administration would adjust requirements.

Corn-based ethanol RINs dropped 17 percent to 85 cents, their lowest level since May 28.

EPA has yet to propose the RFS for 2014, but agency officials indicated that those figures likely will not be issued until next June, according to DTN’s Washington Insider. In the meantime, the debate on the issue will continue in Congress and among crop and livestock producers and their lobbying organizations in Washington about how to reform the RFS system that has become increasingly unwieldy. — Traci Eatherton, WLJ Editor