US EPA proposes increased RFS blending volumes

The new proposal would help restore approximately 500 million gallons of blending volumes previously waived by the agency in 2016

The US Environmental Protection Agency (EPA) has proposed to increase biofuel blending volume requirements for the next three years under the Renewable Fuel Standard, according to long-awaited figures published on Thursday, December 1.

The agency’s much-delayed proposal, which is more or less in line with figures circulated in the country’s biofuels industry prior to publishing, calls for an overall blending mandate (renewable volume obligations, or RVO) of 20.82 billion gallons for 2023.

For 2024 the EPA has called for blending volumes of 21.87 billion gallons and 22.68 billion gallons in 2025, according to figures published on the EPA website.

The EPA has also recommended adding a 250-million-gallon supplemental for volumes of conventional biofuels, including corn-based ethanol, to be set at 15 billion gallons or higher - specifically 15 billion in 2023 and 15.25 billion each in 2024 and 2025.

The supplemental in 2023 would form part of restoring approximately 500 million gallons, which were illegally waived by the EPA in 2016 and caused uproar in the sector.

Overall, the EPA has proposed advanced biofuel volumes of 5.82 billion gallons in 2023, 6.62 billion gallons in 2024, and 7.43 billion gallons in 2025.

Fastmarkets Agriculture previously reported that the Biden administration was expected to set out annual biofuel blending mandates for three years instead of the currently-instituted annual update – a measure that refiners and ethanol producers alike hope will bring increased longer-term certainty.

The release of the new Renewable Volume Obligations (RVOs) has also, for the first time, included the transformation of biofuels, such as biogas, into electricity that can charge electric vehicles (EVs).

EV credits

This proposal would give EV automakers the opportunity to generate up to 1.4 billion new tradeable credits, as previously reported by media outlets last month.

This inclusion of EV credits, has raised potential D3 credit volumes from 720 million in 2023 to 1.42 billion in 2024 and 2.13 billion by 2025, the official proposed figures show.

Biogas producers in the US already get D3 RINs under the RFS, but typically focus on California’s Low Carbon Fuel Standard instead, where the returns from compliance credit revenue are generally much greater than those on offer through federal biofuel laws.

The release of the RVO volumes was delayed from early November after the EPA and ethanol lobby Growth Energy agreed to a later issuance of the proposed 2023 rule by a few weeks, which Growth Energy noted would not affect a ‘consent decree’ deadline to finalize the RVOs by no later than June 14, 2023.

Last month a group of US senators called on the EPA for higher RVOs ahead of the release of the 2023 blending targets.

They said that RVOs previously backed by statutory volumes had been undermined by exemptions given to small refineries.

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