US biofuel industry reacts to EPA's 'disappointing' final RVO volumes

The US biofuel industry has responded with dismay to the Environmental Protection Agency's final decision for the country’s biofuel blending requirements, which was published on Wednesday.

The 2023-2025 Renewable Fuel Standard (RFS) volumes or renewable volume obligations (RVOs) finalized today by the Environmental Protection Agency were set at 20.94 billion gallons for 2023, 21.54 billion gallons for 2024, and 22.33 billion gallons for 2025.

Volume Targets (billion RINs)*

*One RIN is equivalent to one ethanol-equivalent gallon of renewable fuel
** BBD is given in billion gallons
Source: Environmental Protection Agency, June 21, 2023

Biomass-based diesel volumes meanwhile – of which the majority of feedstock comes from soybean oil – were left unchanged for 2023 from the EPA's proposal in December last year of 2.82 billion gallons.

The final rule differs slightly from the proposed figures in December 2022 that called for an overall blending mandate of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024, and 22.68 billion gallons in 2025.

The final figures were deemed an "unfortunate step backward from the volumes that were originally proposed" by the Renewable Fuels Association.

The final rule, which was delayed by a week after an agreement was reached with ethanol lobby Growth Energy, holds the implied ethanol mandate at 15 billion gallons – cutting out a modest 250-million-gallon increase that some had hoped for.

"If EPA’s goal with the RFS is to maximize reductions in greenhouse gas (GHG) emissions from the transportation sector, today’s final rule falls short by arbitrarily limiting conventional biofuel use to 15 billion gallons in 2024 and 2025 compared [WITH] the Agency’s proposal of 15.25 billion gallons for each of those years," Brian Jennings, CEO of the American Coalition for Ethanol said.

"Higher blending targets would enable fuels such as E15 and E85 to quickly displace carbon pollution from gasoline, but EPA’s proposal will rein in those opportunities," Jennings said - sentiments which were echoed by Growth Energy CEO Emily Skor who said that the US "should be expanding market opportunities for higher blends like E15, not leaving carbon reductions on the table."

“The RFS was intended to drive continual growth in all categories of renewable fuels well beyond 2022; instead, today’s final rule flatlines conventional renewable fuels at 15 billion gallons and misses a valuable opportunity to accelerate the energy sector’s transition to low- and zero-carbon fuels,” RFA President and CEO Geoff Cooper said in a statement.

Cooper added that by removing half a billion gallons of lower-carbon, lower-cost fuel, "today’s rule needlessly forfeits an opportunity to further enhance US energy security and provide more affordable options at the pump for American drivers.”

The EPA's final decision to lower volumes for conventional biofuels, Skor said, "runs counter to the direction set by Congress and will needlessly slow progress toward this administration’s climate goals."

The American Soybean Association called the final rule "a letdown for soy growers," adding that it "threatens the success of the biomass-based diesel industry by significantly dialing back annual increases in volume obligations and failing to account for the progress being made in biofuels investment and growth."

Even the corn sector expressed its disappointment in the final decision, with the sector denied a 250 million gallon increase that many had been expecting

"When it comes to addressing pressing energy, environmental and economic challenges, EPA’s final rule falls short of the emission reductions and cost-saving benefits the higher proposed ethanol volumes would have provided,” National Corn Growers Association President Tom Haag said in a statement.

Meanwhile, as expected, the final EPA rule also dropped a proposal to roll electric vehicles into the biofuel blending program, with the potential loss of 600 million RINs included in the 2024 proposed mandate and 1.2 billion proposed RINs in 2025.

The plan would have required refiners to buy newly classified "e-RINs" from makers of electric cars but was reportedly dropped due to worries over potential lawsuits challenging EPA’s authority.

"NCGA and its members strongly urged EPA to separate its e-RIN proposal from the RFS volumes because the proposal was wholly inconsistent with the way the RFS functions for other fuels and created an unlevel playing field across the RFS," Haag said.

"ACE’s experience with EPA’s oversight of the RFS over time requires us to remain vigilant to ensure mismanagement or unwarranted waivers are not used to undermine the physical blending of ethanol that has required litigation to rectify in previous years," Jennings concluded.

Markets had earlier today reacted to media reports of lower-than-desired changes in the EPA's final RVOs rule, with prices of vegetable oils taking a nosedive.

In Chicago, soybean oil futures traded limit down overnight and again during regular trading hours while in Malaysia, the benchmark September palm oil futures closed at 3,614 ringgit per tonne, down 113 ringgit per tonne, or 3%.