EPA Finalizes 2018 RFS Volume,Declines Obligated Party Change Proposal

Posted by Ed Burke on Dec 1, 2017 5:22:05 PM

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Yesterday (November 30th) the EPA finalized renewable volume obligations for the RFS for 2018 and the RVO levels for 2019.

Final 2018 levels are 19.29 billion gallons of total renewable fuel, 15 billion of which is conventional biofuel and 4.29 billion of which is advanced biofuels, including cellulosic ethanol. The final volumes are actually very close to those proposed in July.

Additionally, the EPA has finally issued a ruling regarding the obligated party petition. The petition has been pending while the agency sifted through comments from relevant parties on all sides of the issue.

You may recall that starting around June of 2016 some major refiners & other parties petitioned the EPA to redefine obligated parties under the RFS. The obligated party under the RFS as enacted is ““the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system… to a wholesaler, retailer or ultimate consumer.” 

So basically refiners, blenders, and importers are the obligated parties in handling RIN compliance. The argument is that smaller marketers and blenders are subject to compliance costs and purchasing RIN credits in an arena where large refiners have an advantage, and non-blenders (retailers) have no exposure.  

Supporters of changing the obligated party claim that the change would enable the market to more readily respond to the annual renewable volume obligation (RVO) standards, begin to address the structural constraints that EPA identified in its 2015 RFS rulemaking, and eliminate barriers that prevent RIN value from being passed through to consumers.

On the other side of things, retailers & related groups argue that non-manufacturers have no control over the composition of the petroleum products with which renewable fuels must be blended in order to be sold as motor fuels. Manufacturers and importers not only have control over the composition of the products they sell, but also the terms under which they sell them, and thus should remain the obligated parties.

The EPA ultimately denied the proposed change in obligated parties. Their reasoning stated was that the change would not result in improved effectiveness of the RFS as a whole, and would similarly not provide remedy to the major issue within the standard, which remains the issue of cellulosic ethanol and its (lack of) use. There would also be a lack of uniformity in who would be a stake holding and thus obligated party, which the agency felt would result in more confusion with compliance, rather than less.

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Topics: EPA Mandate, RINs, Biofuels, Cellulosic Ethanol, EPA, RFS

EPA's 2017 RFS Volume Proposal Draws Familiar Concerns

Posted by Ed Burke on Jul 20, 2016 8:20:00 AM

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This past May, the EPA released its 2017 RFS volume standards. The 2017 levels are a 3.8% increase over 2016 but are still well below the original levels for the year as proposed in 2007.

In both the stakeholder commentary period and the period immediately following the volumes' release, we saw the usual cast of characters come forward with their concerns about the mandated levels. That included biofuels proponents who see the EPAs levels as a "cave" over the blend wall, and industry members who are concerned about the market and practical feasibility of ever increasing levels and who carries the obligation to meet mandated levels. 

You can read more in depth about the diverse reactions the EPA ruling had in the recent article I wrote for Oil & Energy magazine here: "Proposed RFS Changes Draw Diverse Reactions" 

 

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Topics: EPA Mandate, Biofuels, RFS

RFS Volumes Finally Finalized

Posted by Ed Burke on Jan 8, 2016 11:36:12 AM

Corn kernels in a container labeled, Biofuel

As of November, the EPA finally released its final renewable volume obligations for 2014, 2015, and 2016.

The volumes set are lower than those mandated by Congress in the initial Renewable Fuel Standard, after the EPA took into account a drop in fuel & gasoline demand and usage over the past several years (as compared to the demand and usage projected in 2007). The final volume for 2016 is 18.11 billion gallons, versus the Congressional volume of 22.25 billion gallons.

There were over 600 thousand comments on the proposal before it was finalized, and the feelings on the results are mixed, to put it mildly.

Ag farmers and biofuel industry players had argued the EPA had to stick to the original mandated volumes. Livestock farmers and food producers had argued for the mandate to be scrapped in its entirety, citing the impact it has had on pushing the cost of food and food production skywards. The oil industry fell somewhere in the middle, arguing the EPA ought to use its waiver to greatly reduce volumes to reflect lower fuel usage, the essential lack of cellulosic renewables, and concerns that high mandated volumes of ethanol would force the blend wall issue.

I wrote an in depth piece on the EPA's final ruling for Oil & Energy Magazine - you can read it in full here: "EPA Finalizes RFS Obligations"

 

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Topics: Ethanol, Biofuels, RFS, renewable energy

RFS Battles Continue on Ethanol and E15

Posted by Ed Burke on Apr 21, 2015 3:59:45 PM

Container of corn kernels with a Biofuel sticker affixed

This week, Ethanol activists in Chicago used the 20th anniversary of the BP Oil Spill in the Gulf to push for approval of a pending mandate that would require self-serve stations with over 850,000 gallons in annual sales volumes to carry E15, given they had the proper infrastructure for the blend. They argued that companies will "keep on spilling" and that made it imperative that the push continue towards higher blended, "cleaner" ethanol.

On the flip side, on April 21st, major petroleum groups API and AFPM requested the EPA ban the sale of E15 as a flex fuel. E10 Ethanol has a 1 psi volatility waiver that allows it to be RVP compliant in summer months. E15 is not compliant, however. The argument then is that stations, etc, are using E15 as a flex fuel in the summer months to avoid having to comply with RVP regulations.

The EPA is expected to formally announce the RFS volume requirements any day now, but even prior to the announcement there is action on the RFS in the legislature. House Bill HR 701 would cap ethanol at 10% blends, and rescind the EPA's approval of E15 blends. 

Another part of the bill states that target numbers for cellulosic ethanol goals need to be production based, which obviously makes sense, since one of the major issues with the RFS has been the cellulosic mandate in the face of a complete lack of cellulosic production.

I wrote an article for this months Oil & Energy Magazine detailing the growing dissension between RFS involved groups, impacted industries, the EPA and the Government - you can read that article here:

"Dissension Grows over Biofuels Rules"

 

 

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Topics: Ethanol, EPA Mandate, Cellulosic Ethanol, RFS

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