Stating that it is concerned about the high cost of advanced biofuels, the EPA is requesting public comment on potential reductions in the 2018 biomass-based diesel (BBD), advanced biofuel, and total renewable fuel volumes and/or the 2019 BBD volume under the Renewable Fuel Standard (RFS) program. These possible reductions would be on top of reductions in the statutory volume targets for advanced biofuel and total renewable fuel for 2018 the Agency proposed in July 2017. The EPA is reopening the RFS volumes to public comment mainly because of the impact it believes biofuel imports will have on the cost of and/or the decrease in the supply of advanced biofuel in the United States.
The Clean Air Act (CAA) and several amendments direct the EPA to require that specific volumes of renewable fuel replace or reduce the quantity of petroleum-based transportation fuel, heating oil, or jet fuel. The four renewable fuel categories under the RFS are BBD, cellulosic biofuel, advanced biofuel, and total renewable fuel. The statutes also contain a general waiver authority that allows the EPA Administrator to waive the RFS volumes, in whole or in part, based on a determination that implementation of the program is causing severe economic or environmental harm, or based on inadequate domestic supply.
BBD nested in advanced biofuel
In its July 2017 notice, the EPA proposed to exercise its waiver authority and use the maximum reduction permitted to reduce the 2018 volume targets for advanced biofuel from 4.28 to 4.24 billion gallons (gal) and total renewable fuel from 19.28 to 19.24 billion gal, “in part by placing a greater emphasis on cost considerations than we have in the past.” The Agency also requested comment on whether it should reduce the 2019 volume requirement for BBD to a level below the proposed level of 2.1 billion gal.
The EPA did not specifically request comment on a possible reduction of the 2018 volume requirement for BBD, which was set at 2.1 billion gal in 2016. However, the Agency did request comment on the use of the general waiver authority to reduce the advanced biofuel requirement for 2018. BBD is not only nested within advanced biofuel but is the predominant source of advanced biofuel. Therefore, considerations leading to a reduction of the advanced biofuel volume may also be relevant in reducing the 2018 BBD volume requirement.
Cost considerations
In the current notice, the EPA states, as it first stated in the July 2017 proposal, that the cost of advanced biofuels is high on a per gallon basis compared to the petroleum fuels they replace. One factor contributing to the high cost was the expiration of the biodiesel tax credit at the end of 2016. Another pricing factor is the level of renewable fuel imports and exports, both of which have varied considerably over the last several years. Commenters have also told the Agency that imports may have an impact on energy independence and security in the United States.
Considering these and other factors, the Agency is requesting comment on possible use of its waiver authority to reduce the 2018 volume requirement for BBD by as much as 315 million gal, and to concurrently reduce the advanced biofuel and total renewable fuel volume requirements by as much as 473 million gal.
“In particular, we seek data on recent BBD price increases and expectations for additional price increases, and we seek comment on the extent to which these price increases should be considered ‘significant’ for purposes of the CAA Section 211(o)(7)(E)(ii) waiver authority and the extent of a waiver (up to 15 percent) that would be necessary to address or avoid a significant price increase.”
In addition, the Agency is requesting comment on how it should consider the costs of biodiesel and the factors that influence those costs in setting the appropriate required volume of BBD for 2019. Comment is further sought on what the volume requirement should be, noting that it could be equal to or greater than the statutory minimum of 1.0 billion gallons.
The request for comment was published in the October 4, 2017, FR.