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EPA Cuts Cellulosic Targets In Final Renewable Fuel Volume Standards

EPA Cuts Cellulosic Targets In Final Renewable Fuel Volume Standards
EPA says it will propose a reduction in biofuel volumes in 2014, citing the E10 'blend wall'

The Environmental Protection Agency Tuesday finalized 2013 Renewable Fuel Standard volumes, keeping the total at 16.55 billion gallons, the same overall volume proposed in February, though cutting cellulosic volumes by more than half.

Three categories of fuels make up the total volume of the RFS and a 9.74% share of the fuel market: biomass-based diesel, advanced biofuels and cellulosic biofuels.

Biomass-based diesel will contribute 1.28 billion gallons representing 1.13% of the U.S. fuel supply; advanced biofuels will contribute 2.75 billion gallons at 1.62%; and cellulosic will contribute 6 million gallons at 0.004%.

EPA says it will propose a reduction in biofuel volumes in 2014, citing the E10 'blend wall'

Cellulosic fuel targets were originally proposed at 14 million gallons, though there has been growing concern that the sector has not progressed enough to fulfill the requirement.

Overall targets proposed by the Energy Independence and Security Act, which authorized the RFS, stipulate a final goal of 36 billion gallons of renewable fuels by 2022, but there has also been growing concern about the total volumes of renewable fuels becoming more than the market can handle.

This situation is what some call the "blend wall" – the point at which the market will have more biofuels than can be legally blended into petroleum-based fuels. In response, the agency said it would propose to use flexibilities in the RFS to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal.

EPA is also providing greater lead time and flexibility in complying with the 2013 volume requirements by extending the deadline to comply with the 2013 standards by four months, to June 30, 2014.

After the standards are first proposed, they undergo a 45-day public review period before an official review and final consideration. These standards also reflect EPA's updated production projections, which are informed by an assessment of the biofuels market, the agency said.

Further, EPA said standards announced Tuesday were developed in a manner consistent with the approach outlined in a January 2013 ruling by the U.S. Court of Appeals that required the agency to reevaluate projections for cellulosic biofuel to reflect market conditions.

Despite fear about markets being unable to take higher amounts of biofuels, energy groups such as the National Biodiesel Board and Growth Energy lauded the decision, what they called a "commitment to the RFS."

"Biodiesel is proving that Advanced Biofuels are working today and that they can reduce prices for consumers," said Anne Steckel, NBB vice president of federal affairs. "Today's announcement also demonstrates that the EPA has tremendous flexibility in addressing concerns stemming from the various volume requirements under the RFS, and that it is prepared to use that flexibility in a practical way to ensure that the policy is running smoothly."

Tom Buis, CEO of Growth Energy, said his group looks forward to "closely reviewing the final rule" and they "strongly support increasing levels of renewable fuel into our nation’s fuel supply."

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