Friday, November 15, 2019

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RFS in Distress


Last month, the National Biodiesel Board submitted comments on the Environmental Protection Agency’s annual proposed Renewable Fuel Standard (RFS) rule. NBB argued that EPA must increase advanced biofuel volumes for 2020 and biomass-based diesel volumes for 2021 to accommodate domestic biodiesel and renewable diesel producers’ proven ability to increase output. Further, NBB argued, the agency must properly account for small refinery exemptions, which are actively rolling back biodiesel volumes, and the 500 million gallons of biofuel waived in 2016.

Kurt Kovarik, NBB Vice President of Federal Affairs, said, “The RFS is intended to increase production and use of advanced biofuels such as biodiesel and renewable diesel. EPA’s proposal to flat-line both biomass-based diesel and advanced biofuels —combined with its small refinery exemption spree — will roll back growth of our industry.

“EPA’s small refinery exemptions are turning the RFS upside down and blocking our industry’s progress. By handing out waivers to everyone that asks, EPA is destroying demand for hundreds of millions of gallons of biodiesel and renewable diesel and forcing U.S. producers to close up shop and lay off workers. EPA cannot continue to pretend it isn’t harming biodiesel producers.”

EPA’s recent grant of 31 small refinery exemptions for 2018 destroyed demand for as much as 250 million gallons of biodiesel and renewable diesel. Following the decision, one of the largest U.S. producers of biodiesel and renewable diesel closed three facilities, impacting more than 100 workers. NBB asked EPA to restore the lost volumes in the 2020 rule and adjust its renewable volume obligation (RVO) formula to include a reasonable estimate of future small refinery exemptions.

Earlier this past summer, NBB testified on the RFS and SREs at a field hearing in Ypsilanti, Michigan. There, they were joined by other industry leaders including REG, North America’s largest biodiesel producer, represented by Director of Government Affairs Lindsay Fitzgerald, who actually helped implement the RFS during her time with the EPA. “Flat-lining the biodiesel industry, which provides significant greenhouse gas reductions, is not what the RFS intended to do,” Fitzgerald testified.

The Advanced Biofuels Association (ABFA) also spoke out this summer. “EPA is misusing [the SRE] provision, stretching the definition of ‘disproportionate economic hardship’ in order to lower RIN prices for the benefit of a small number of merchant refiners that have refused to invest in RFS compliance over the last ten years,” said ABFA President Michael McAdams. “Congress must make explicit its intent to protect only those small, independent refineries experiencing verifiable, disproportionate, and significant economic hardship, and not to further augment the results of highly profitable refiners.”


Heating Oil Associations Stand Up

NEFI also submitted comments to the EPA on its RFS rule and the SRE issue. The association called for EPA to issue fewer small-refinery waivers by tightening its waiver process, to increase biofuel volumes under this year’s RFS, and to account for waived volumes proactively by issuing SREs before RVOs are calculated or retroactively by adding lost volumes to the next year’s RVOs.

Exactly one week after NBB and NEFI submitted their separate RFS comments to the EPA, 16 associations representing heating oil dealers and service professionals at the local, state, regional and national level sent a joint letter to Congress expressing support for the RFS Integrity Act, which would reform the process by which EPA issues SREs (see summary on page 7).

The letters’ signees include the American Energy Coalition, Berks-Schuylkill Oil Heat Association, Better Home Heat Council of Lehigh Valley, Connecticut Energy Marketers Association, Delaware Valley Fuel Dealers Association, Energy Marketers Association of New Hampshire, Maine Energy Marketers Association, Massachusetts Energy Marketers Association, National Association of Oil & Energy Service Professionals, New England Fuel Institute, New York Oil Heating Association, Northeast Pennsylvania Energy Marketers Association, Oil Heat Institute of Long Island, Oil Heat Institute of Rhode Island, South Central Pennsylvania Energy Association, and Vermont Fuel Dealers Association.

“Biodiesel and other advanced biofuels are helping to reduce emissions for millions of homes that rely on heating oil for daily warmth and comfort,” the letter reads. “These renewable liquid heating fuels provide policymakers in cold weather states an immediate option for reducing greenhouse gas emissions while also supporting small businesses, local economic growth, and America’s farmers and environmental entrepreneurs. As mentioned, robust and effective federal policies are essential in achieving these goals.”

White House Proposes Action

Just before this issue went to print, on October 4, President Trump directed the EPA to propose a supplemental RFS rule that aims to expand biofuel use and mitigate the damage from the 31 small refinery exemptions. The proposed supplemental rule was expected to be out within a week’s time, with a hearing and comment period to follow. EPA intends to take final action by the end of the year.

The White House plan instructs EPA to account for anticipated small refinery exemptions in the annual RVO formula, beginning with the 2020 RFS rule. The directive also seeks to ensure that biomass-based diesel volumes under the RFS are met.

According to the directive: EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol are blended, beginning in 2020; EPA will also seek comment on actions to ensure that the volume obligation for biomass-based diesel is met; the Trump administration will continue to work to address ethanol and biodiesel trade issues; the U.S. Department of Agriculture (USDA) will seek opportunities to facilitate higher biofuel blends through infrastructure projects; and EPA will begin a rulemaking process to remove barriers and streamline labeling for E15.

The details for implementing these actions are left to EPA and USDA to finalize. Biofuel and heating oil stakeholders are expected to weigh in strongly during the supplemental rulemaking process.


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