OMB Reviewing 2017 RFS Proposals from EPA

EPA proposals for the 2017 Renewable Fuel Standard are now undergoing review by the White House Office of Budget and Management and are nearing publication in the Federal Register that will lead to public comment.

In a notice posted on the agency’s website, OMB said it received the proposals last Friday, putting the suggested biofuel blending requirements on track for public airing this summer. OMB has 90 days to review the proposal, but the White House agency took less than 30 days to review RFS proposals for 2014, 2015 and 2016 when they were submitted in early May last year.

The proposal offers renewable volume obligations (RVOs) for renewable fuel, advanced biofuel and cellulosic biofuel in 2017, plus the 2018 RVO for biomass-based diesel. (The 2017 standard for biodiesel and renewable diesel was finalized in last year’s RFS rule.)

The timely delivery of the 2017 RFS proposal is in stark contrast to recent years when EPA failed to offer any blending requirements for 2014, 2015 and 2016 until well into 2015, missing the Nov. 30 statutory deadline for final approval of the 2014 and 2015 rules.

The delays were the subject of many criticisms of EPA, the biggest of which being the reduction in blending limits by some 20 percent below those set by in the eight-year-old law that reauthorized and strengthened the RFS.

Most biofuel trade groups joined to sue the agency for what they say is EPA’s inappropriate use of its “waiver” authority to reduce blending limits for corn ethanol and advanced ethanol, depending on market conditions. Biodiesel interests said blending limits for their fuel tracked production expectations and did not join in the lawsuit.

The oil industry, which also complained about the late rulemaking, filed suit as well, complaining the limits set for the amount of biofuels to be blended into the gasoline supply were too high for market conditions.

The biofuel blending targets finalized last November were higher than those EPA proposed in May of last year, but they fell far short of the levels set in the 2007 Energy Independence and Security Act (EISA), which Congress adopted by a wide bipartisan margin.

The agency set total blending requirements in 2015 to 16.93 billion gallons, well below the 20.5 billion gallons called for by EISA, and 18.1 billion gallons this year, down from the EISA-set 22.5 billion gallons.

The totals included 14.05 billion gallons of “undifferentiated biofuels,” or corn ethanol, in 2015, even though the industry produced at least 14.7 billion gallons and EISA had set the RVO at 15 billion. For 2016, EPA set the corn ethanol number at 14.5 billion gallons, below the 15 billion gallons authorized by EISA.

Given the slow development of commercially viable advanced biofuels, the agency continued to set cellulosic ethanol volumes at levels far below those set by EISA. The cellulosic amounts set by EPA of 33 million gallons for 2014, 123 million gallons for 2015, and 230 million gallons in 2016 represent a miniscule portion of the original EISA targets of 1.75 billion gallons in 2014, 3 billion gallons in 2015, and 4.25 billion gallons in 2016.

The biofuel industry acknowledges the delays in the development of the technology that could bring cellulosic biofuels mainstream, but say the levels set by EPA hinder that very development.

Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA), said the rule adopted last November undermines the intent of Congress in 2007 to allow volumes that drive marketplace change.

“EPA’s decision today turns our nation’s most successful energy policy on its head,” Dinneen said in a statement released by RFA in November. “When EPA released its proposed RFS rule in May (2015), the agency claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that. It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels.”

Source: 25X’25 Resource Newsletter