U.S. proposes cutting total biofuels requirements in 2018

Faith Castro
July 6, 2017

"Acknowledgment of the high cost of compliance has been a long time coming, and we are grateful that this EPA proposal comes closer to reflecting what the market has shown year after year - the mandated levels of advanced, cellulosic, and biodiesel in the RFS are unrealistic". The EPA's proposal would cut the "advanced biofuels" category from 4.28 billion gallons required in 2018 to 4.24 billion gallons, an important category that biodiesel helps fill.

Iowa Gov. Kim Reynolds said the EPA is bringing predictability to the renewable fuel industry, though she added, "I am disappointed biodiesel levels are not higher". The plan would require companies to blend a total of 19.24 billion gallons of renewable fuels in the country's fuel supply next year. The U.S. Renewable Fuel Standard, or RFS, requires increased volumes of renewable fuels each year, but the proposal would keep targets for use of conventional biofuels at current levels.

The proposal is "consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace", Pruitt said in a statement.

The reaction from the ethanol industry was mixed.

The new regulations will likely also draw criticism from oil industry stakeholders, who have argued that the 15 billion gallon ethanol mandate represents a significant manufacturing challenge.

"Unfortunately, a change in administrations did not change the EPA's underappreciation for the potential of US biodiesel production", the trade group told the Washington Examiner.

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Tom Brooks, general manager of Western Dubuque Biodiesel in Farley and chair of the Iowa Biodiesel Board, said: "If these volumes stand, the USA could restrict one of its most powerful opportunities to support American manufacturing of energy".

"Studies show that higher ethanol volumes under the RFS would raise fuel costs for consumers and damage vehicle engines", said API Downstream Group Director Frank Macchiarola.

The agency proposed setting the requirements for cellulosic below the current year's levels at 238 million gallons and kept biomass-based diesel requirements at 2.1 billion gallons for 2019, unchanged from the levels set for 2018 under former President Barack Obama.

The American Petroleum Institute applauded the EPA's announcement but said it didn't go far enough. "Congress must fix this broken, outdated program". "Targets like this ignore reality and the law, inhibiting growth in the industry". They both said they would continue to work to promote the industry. The law was aimed at cutting USA oil imports and boosting the use of renewable fuels. Democratic Congressman Dave Loebsack released a statement today saying, "For all of President Trump's promises to fight for rural America, it appears he once again has turned his back on Iowa's farmers and rural communities".

In its proposed rule, the EPA indicates that it is proposing to reduce the required volume of all the fuel categories except biomass-based diesel due to an anticipated shortfall cellulosic biofuel production.

The EPA also requested comments related to concerns that the biofuels requirements increasingly are being met by supplies from Brazil, Argentina and Indonesia.

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