EPA finalizes renewable fuel targets

(Updated 6/22/2023)

The U.S. Environmental Protection Agency (EPA) has issued a final rule under the Renewable Fuel Standard (RFS) program that establishes biofuel volume requirements for 2023 to 2025.

Known as the Set Rule, the final rule establishes biofuel volume requirements and associated percentage standards for cellulosic biofuel, biomass-based diesel (BBD), advanced biofuel and total renewable fuel for 2023–2025. It also completes EPA’s response to a court remand of the 2016 annual rule by establishing a supplemental volume requirement of 250 million gallons of renewable fuel for 2023, EPA noted. Final volume targets for the period are shown at right.

Source: Environmental Protection Agency

‘Set’-ting targets

The Set Rule includes steady growth of biofuels for use in the nation’s fuel supply for the three-year period. Because the Energy Independence and Security Act (EISA) of 2007 does not specify statutory volumes after 2022, the rule establishes final biofuel volume targets for all categories under the “set” authority provided by the Clean Air Act. These targets are based on a variety of factors specified in the statute, including costs, air quality, climate change, implementation of the program to date, energy security, infrastructure issues, commodity prices, water quality and supply.

In addition to setting volume requirements, EPA is finalizing several regulatory changes intended to expand the use of biogas under the program. At the same time, it is putting in place provisions that will improve the operation of the RFS program, it stated.

The final rule reflects comments from a diverse set of stakeholders on the potential economic impacts of the program. EPA said it intends to use all available data and tools to monitor the implementation of the RFS program and its impacts.

In addition, EPA said it has identified a clear set of market indicators – from the costs to consumers of transportation fuel to the stability of fuel supplies and domestic refining assets – that it will continue to monitor in real time to ensure successful implementation.

Ensuring energy security

According to the EPA announcement, the final rule builds on the RFS program’s progress over the previous two years and reflects the Biden-Harris Administration’s commitment to strengthen the nation’s energy independence, advance low-carbon fuels and support agricultural communities. It is estimated that it will increase U.S. energy security by reducing U.S. oil imports by roughly 130,000 to 140,000 barrels of oil per day over the rule’s time frame. The anticipated value of the energy security benefits to the U.S. economy ranges from $173-$192 million per year.

“From day one, EPA has been committed to the growth of renewable fuels that play a critical role in diversifying our country’s energy mix and combatting climate change, all while providing good paying jobs and economic benefits to communities across the country,” said EPA Administrator Michael S. Regan. “Today’s final rule reflects our efforts to ensure stability of the program for years to come, protect consumers from high fuel costs, strengthen the rural economy, support domestic production of cleaner fuels and help reduce greenhouse gas emissions.”

Image by Markus Spiske from Pixabay

Undermining climate progress?

While seen by EPA as a step forward in advancing renewable fuel targets, according to the Diesel Technology Forum (DTF), the final rule doesn’t go nearly far enough.

DTF Executive Director Allen Schaeffer described the Set Rule as establishing “disappointing future volumes” for the RFS, falling well below expectations.

He said the targets included in the Set Rule “will delay the important opportunity for reducing greenhouse gas emissions from the use of low carbon biodiesel and renewable diesel fuels,” adding that biodiesel and renewable diesel fuel are already delivering significant carbon reductions in various application.

“These fuels can be used in any new, or existing, diesel engine. They’re endorsed by engine and equipment makers. Trucking fleets, farmers, contractors and others use these fuels as an affordable way to help reduce greenhouse gas and other emissions by up to 80%. That’s immediately and without investments in new infrastructure, vehicles, or equipment.”

Schaeffer added that the volumes set for 2023 are “misaligned with current conditions.”

“Compared to the same period in 2022, qualifying biomass-based diesel production increased by more than 30%, or 400 million gallons, in the first five months of this year already. The Energy Information Administration’s Short Term Energy Outlook for June 2023 projects increases in U.S. production of biodiesel and renewable diesel of more than 800 million gallons this year and 900 million gallons next year,” he pointed out. “The EPA’s small nudge in biofuel volumes at this time of otherwise progressive climate policies is as confusing as it is inconsistent.”

Clean Fuels Alliance America agreed, expressing “extreme disappointment” in the final rules’ failure to change biomass-based diesel volumes for 2023 despite the rapid increase in production of these fuels during the first months of the year. 

“EPA is undercutting the certainty that our industry hoped for from a three-year RFS rule,” said Kurt Kovarik, vice president of Federal Affairs with Clean Fuels. “U.S. clean fuel producers, oilseed processors, fuel distributors and marketers have all made significant investments to grow the industry rapidly over the next several years. The industry responded to signals from the Biden administration and Congress aiming to rapidly decarbonize U.S. fuel markets, particularly aviation, marine, and heavy-duty transport, and make clean fuels available to more consumers. The volumes EPA finalized today are not high enough to support those goals.

“It is a shame that EPA failed to fully consider the data provided by other federal agencies and industry experts demonstrating the upward trajectory of our industry,” he continued. “Worst of all, EPA ignores the hundreds of millions of gallons of biodiesel, renewable diesel and sustainable aviation fuel generated in the first half of 2023. In past years when EPA set RFS volumes after the statutory deadline and after the compliance year is nearly half over, the agency properly accounted for available gallons and RINs (Renewable Identification Numbers).”

Despite indicating that low-carbon fuels are an important part of reducing greenhouse gas emissions in the transportation sector, and that the RFS program is a key federal policy that will support development, production and use of low-carbon, domestically produced renewable fuels, rather than issuing a robust, growth-oriented final rule that expands the use of renewable diesel and biodiesel fuels, “the EPA touts it primarily as an energy security strategy to reduce 140,000 barrels of foreign oil imports,” said Schaeffer, which DTF believes could actually undermine climate progress.

To learn more about the Set Rule, click here.