Dec 19, 2019
The Environmental Protection Agency (EPA) has issued its final rule for the 2020-21 Renewable Fuel Standard (RFS). ASA has advocated for weeks through formal comments, press releases, letters, social media, and more both as ASA and in conjunction with our allied industry partners, yet to our disappointment, the final rule uses a three-year average of the Department of Energy (DOE) recommended waivers rather than an average of actual gallons waived by the EPA.
The rule maintains the 2021 biomass-based diesel volume at the same levels as the current year, which provides no RFS growth for the biodiesel industry. The rule also finalizes a method that underestimates future small refinery exemptions and counts only half of the exempted volumes actually granted over the past three years.
EPA has set the overall advanced biofuel volume for 2020 at 5.09 billion gallons, providing growth only for cellulosic biofuel. Other advanced biofuels, including biodiesel and renewable diesel, received no additional market space. EPA maintains the 2021 biomass-based diesel volume at 2.43 billion gallons, the same volume as for 2020.
ASA is extremely disappointed that EPA’s final rule for the 2020 RFS volumes does not align with Congressional intent and President Trump’s promises. This week, Congress and the President are extending the biodiesel tax incentive through 2022 and sending a signal that they support continued growth of biodiesel and renewable diesel. EPA's actions do not mirror this support.
This final rule leaves significant uncertainty in the process by using a three-year rolling average of SREs recommended by the Department of Energy (DoE) rather than the amount actually approved by EPA. EPA is under no obligation to follow the DoE recommendations. In fact, EPA has not followed DoE recommendations in the past, and there is no guarantee that the recommendations would be followed in the future or that the full 15 billion gallons of RFS volumes would be fulfilled, as EPA has indicated is the intent. From 2015 through 2017, the average amount of SREs granted by EPA exceeded the amount recommended by DoE by 384 million RINs. From 2016-2018, the average amount of SREs granted by EPA exceeded the amount recommended by DoE by 580 million RINs.
The lack of growth in RFS volumes combined with the large number of SREs granted by EPA has sent biodiesel backwards when it should be moving forward. The waivers significantly reduce biodiesel demand resulting in an estimated $2 billion in economic harm each year to the U.S. biodiesel industry, including soybean farmers.