On Tuesday, the Environmental Protection Agency (EPA) announced its yearly requirement under the Renewable Fuel Standard (RFS), almost eight months later than expected. According to an article from AgWeb, in “issuing long-overdue final quotas . . . [the EPA] gave refiners an additional four months to reach the goal of using 16.55 billion gallons of renewable fuel for 2013. It also signaled it will cut the 18.15 billion gallon mandate for 2014, a looming requirement that has driving up the price of ethanol credits that refiners can buy to comply.”
According to Julian Hattern of The Hill, the ethanol
“and biofuel groups applauded the new standard, but the oil-and-gas industry
complained that the new requirement was stricter than necessary.”
In 2007, Congress passed the Renewable Fuel Standard,
which required refiners to blend a certain amount of ethanol and other biofuels
into the nation’s gasoline supply each year.
This amount is set to increase each year, requiring a total of 36
billion gallons of biofuel to be blended by 2022. Refiners are concerned that requiring higher
levels of biofuels will lead to a “blend wall,” forcing them to “make a blend
level of gasoline that consumers don’t want and cars cannot handle.” The EPA announced on Tuesday that it will use
“flexibilities” in the “law to reduce the amount of biofuel needed next year
when the wall is projected to be hit.” The Hill article is available here. A Washington Post article is available here.
According to Bloomberg, gasoline
consumption is slowing, “expected to be 133.2 billion gallons this year and
132.9 billion in 2014,” according to a U.S. Energy Information administration
forecast. The EPA stated that it “does
not currently foresee a scenario in which the market could consume enough
ethanol sold in blends greater than E-10, and/or produce sufficient volumes of
non-ethanol biofuels to meet the volumes of total renewable fuel and advanced
biofuel” as required by the law by 2014.
With this announcement, the value of the Renewable Identification
Numbers (RINs) fell to 89 cents from $1.43 on July 17. RINs are “tradable credits tied to each
gallon of ethanol to show compliance with the law.” For a detailed discussion of RINs, please
visit the National Agricultural Law Center website here. For information on the background waiver
provisions of the Renewable Fuel Standards, visit the Center website here.
Requirements for “advanced biofuels” from cellulosic
materials or other sources have also changed as a result of a recent Appeals
Court decision. In January, the U.S.
Court of Appeals for the D.C. Circuit required the EPA to lower certain targets
in a biofuel-blending rule because supplies were not available to meet the
requirements. For a discussion of the
case from The Hill, click here. To read the decision, click here.
