Biofuels Policy News: November
RFS final rule falls short of statutory requirements
On November 30, the EPA released its final rule for the 2014-2016 Renewable Volume Obligations (RVOs). As expected, the final rule raises most RVOs above the original flawed EPA proposal from May, but they remain lower than is required in the original law.
The biofuels industry has 60 days from the date of the ruling to file a lawsuit.
The 2014 RVOs for advanced biofuel, biomass-based diesel, and cellulosic RVOs changed very little from the originally proposed levels. The RVO for conventional renewable fuel was increased by 360 million gallons, as the result of a corrected EPA error in calculating RIN retirements associated with ethanol exports.
The 2015 final RVOs for cellulosic and biomass-based diesel requirements slightly increased while the requirement for other advanced biofuels decreased. The RVO for conventional renewable fuel increased by more than 600 million gallons. This increase was due to year-to-date RIN data, high U.S. gasoline demand and ethanol blending, and a larger-than-anticipated contribution from non-ethanol conventional biofuels.
For the 2016 RVOs, the EPA rule stated that “…challenges associated with growth in the supply of renewable fuels preclude attainment of the statutory volumes in 2016. Constraints including but not limited to the E10 blendwall, are real and can only be partially overcome by a responsive market in the near term.” The EPA applied a combination of its cellulosic waiver authority and its general waiver authority to lower all RVOs below statutory levels. The EPA justified the decision to lower the conventional renewable fuel total from 15.0 to 14.5 billion gallons, by interpreting the term “inadequate domestic supply” under the general waiver as applying to distribution capacity rather than physical volumes.
In comments and testimony following the initial proposal in May, Novozymes, the Renewable Fuel Association, and many other stakeholders challenged EPA’s interpretation and use of its general waiver authority.
Unlike the May proposal, EPA’s final rule volumes do not trigger the reset authority for total renewable fuels (including conventional).
The final rule, however, does trigger the reset authority for advanced biofuels. The reset provision allows EPA to rewrite the RFS volume requirements if specific volume categories have been waived by at least 20 percent in two consecutive years – or at least 50 percent in one year. It remains unclear from the final rule how (or whether) EPA will apply this reset authority to advanced and cellulosic biofuel requirements.
In a statement on the rule, Novozymes Americas President Adam Monroe said that the EPA’s final rule represented a missed opportunity.
“Today, President Obama told the world that ‘addressing climate change takes all of us, especially the private sector, going all-in on clean energy worldwide.’ However, his administration just refused to play some of its best cards to fight climate change by not utilizing all of the clean transportation fuel capacity we have available,” Monroe said. “We recognize the EPA’s effort to put forth a rule that attempts to move the U.S. towards a cleaner energy future, and that isn’t an easy task. Unfortunately they didn’t go all-in.”
Oregon delays clean fuels plan
The Oregon Environmental Quality Commission this month voted to push back the implementation of its Clean Fuels Program by at least one year.
The program – which mirrors the similar California Air Resources Board effort – was scheduled to be launched on Jan. 1, 2016. According to a state website, “approximately one-third of Oregon’s greenhouse gases come from transportation sources. Providing cleaner fuels such as lower carbon ethanol and biodiesel, electricity, natural gas, biogas and propane will help reduce these emissions.”
The program has been in effect for reporting purposes since 2011, but the 10 percent emissions reduction (implemented over 10 years) is now slated to take effect in 2017.