EPA Increases Renewable Fuel Volume Requirements for 2017 and 2018 Impacting California Bio-Fuel Industry; Public Comments Due by July 11

On May 18, 2016, the U.S. Environmental Protection Agency (EPA) proposed increases in renewable fuel volume requirements for all four types of biofuels under the Renewable Fuel Standard (RFS) program for the year 2017, and the proposed applicable volume of biomass-based diesel for 2018.

Entities potentially affected by these increases are those involved with the production, distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol, biodiesel, renewable diesel, and biogas. Obligated parties under the RFS program are refiners or importers of gasoline or diesel fuel. Other potentially regulated entities include, but are not limited to, ethyl alcohol manufacturing, petroleum bulk stations and terminals, and manufactured gas production and distribution.

EPA’s increases in the renewable fuel volume requirements are likely to create opportunities for biodiesel in California. California leads the country in the biofuels industry. California currently has 8 biodiesel production plants, with 2 plants under construction, and major expansion underway at several other plants. In 2015, California biodiesel production reached 32 million gallons. There are now more than 80 advanced biofuel companies, refineries and related operations in 27 states, nearly 30 of which are in California.

The RFS program is a national policy that requires a certain volume of renewable biofuel to replace or reduce the quantity of fossil fuel/petroleum-based transportation fuel, heating oil, or jet fuel. Every year, the Clean Air Act requires EPA to set the RFS volume requirements based on the statutory targets for four categories of biofuels:

• Biomass-based diesel;
• Cellulosic biofuel;
• Advanced biofuel; and
• Total renewable fuel.

EPA has stated that this program is a “success story” for the agency because of potential reduction to greenhouse gas emissions and the potential to strengthen energy security.

However, although available volumes of all categories of renewable fuel have been increasing in recent years, the statutory volume targets have been increasing as well. Real-world constraints, such as the slower than expected development of the cellulosic biofuel industry and how individual aspects of the industry might change in the future, have made the renewable fuel timeline laid out by Congress impossible to achieve. Accordingly, EPA is proposing to use the waiver mechanisms provided by Congress to establish volume requirements that would be lower than the statutory targets for fuels other than biomass-based diesel, set at a level that would still provide growth in renewable fuel use, consistent with Congressional intent.

Even though the proposed increases are lower than the statutory targets, they are still intended to boost renewable fuel production and provide for ambitious growth. Between 2016 and 2017, the total renewable fuel volumes would grow by nearly 700 million gallons; advanced renewable fuel would grow by nearly 400 million gallons; and cellulosic biofuel would grow by 82 million gallons. Biomass-based biodiesel would grow by 100 million gallons between 2017 and 2018.

EPA is accepting public comments from now until July 11, 2016 and EPA will hold a public hearing on this proposal on June 9, 2016, in Kansas City, Missouri. Entities or persons wishing to submit comments should visit http://www.regulations.gov and follow the online instructions for submissions using the Docket ID No. EPA-HQ-OAR-2016-0004.