LINCOLN, Neb. (DTN) -- Biofuels interest groups expressed disappointment Wednesday after the EPA finalized a multi-year Renewable Fuel Standard that reduces volumes from proposed levels for both advanced biofuels and corn ethanol.
EPA final numbers show a 250-million-gallon reduction in total corn-ethanol volumes for 2024 and 2025 from the original proposal, setting those volumes at 15 billion gallons for both years.
In addition, EPA set the corn-ethanol volumes at 15.25 billion gallons for 2023. EPA reinstated the other 250 million gallons of a total of 500 million in 2022 illegally waived in 2016.
The final RFS advanced biofuels cuts come even after the industry made a case for the Biden administration to set higher volumes.
EPA's final rule set the 2023 volumes for advanced biofuels at 5.94 billion gallons, a slight bump up from the proposed 5.82 billion gallons.
However, advanced biofuel volumes for 2024 were finalized at 6.54 billion gallons -- down from 6.62 billion gallons proposed. For 2025, the agency also trimmed advanced volumes from a proposed 7.43 billion gallons to 7.33 billion.
The rule also sets the biomass-based diesel mandate at 2.82 billion gallons in 2023, from a proposed 2.89 billion to 3.04 billion in 2024 and from 2.95 billion to 3.35 billion in 2025.
Leading up to the release of the final volumes, biofuels groups pressed the Biden administration to raise the volumes to match expected production.
The numbers were leaked to Reuters on Tuesday, setting off a market reaction Tuesday evening. July bean oil was down 4 cents per pound Wednesday at 8:40 a.m. CDT.
INDUSTRY DISAPPOINTMENT
Michael McAdams, president of the Advanced Biofuels Association, said EPA's final numbers are a "missed opportunity" to invest in advanced biofuels.
He said EPA doesn't seem to account for "surging advanced biofuel production capacity" and "underestimates the existing and planned capacities" of advanced biofuels by hundreds of millions of gallons per year.
"By choosing not to reflect the available and growing supply of advanced biofuels in this three-year rule, the EPA is overlooking a chance to reduce 7 trillion pounds of CO2 from our atmosphere," McAdams said in a statement.
"This rule reneges on the Biden administration's proclaimed vision for carbon reduction."
McAdams said the multi-year RFS could "discourage continued investment" in sustainable fuels that deliver up to an 80% reduction in emissions versus traditional fossil fuels.
"It is disappointing that the Biden administration's EPA chose not to recognize the projected growth of the biomass-based diesel pool in this rule, despite the groundbreaking carbon reductions being delivered by renewable diesel plants coming online today," he said.
"Although our request for a 500-million-gallon yearly increase in the biomass-based diesel pool was not met, our industry is appreciative that the rule ramps up to 460 million gallons in the D4 (biomass-based diesel) pool by 2025."
Kurt Kovarik, vice president of federal affairs at Clean Fuels Alliance America, said EPA was "undercutting the certainty" the industry had sought.
"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," he said in a statement.
"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."
ETHANOL DISAPPOINTMENT
Renewable Fuels Association President and CEO Geoff Cooper said EPA's reduction in the corn-ethanol category of the RFS was "inexplicable and unwarranted.
"The RFS was intended to drive continual growth in all categories of renewable fuels well beyond 2022," Cooper said in a statement.
"Instead, today's final rule flatlines conventional renewable fuels at 15 billion gallons and misses a valuable opportunity to accelerate the energy sector's transition to low- and zero-carbon fuels. By removing half a billion gallons of lower-carbon, lower-cost fuel, today's rule needlessly forfeits an opportunity to further enhance U.S. energy security and provide more affordable options at the pump for American drivers."
Growth Energy CEO Emily Skor said the agency missed an opportunity to reduce carbon emissions in fuels by ignoring corn ethanol's role.
"The RFS remains one of America's most successful clean energy policies, but, yet again, its full potential as a climate solution remains untapped," Skor said in a statement.
"EPA's decision to lower its ambitions for conventional biofuels runs counter to the direction set by Congress and will needlessly slow progress toward this administration's climate goals. We should be expanding market opportunities for higher blends like E15, not leaving carbon reductions on the table."
Although biofuels groups expressed disappointment in the final rule, EPA on Wednesday reiterated the importance of biofuels in reducing carbon.
"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," EPA Administrator Michael Regan said in a news release.
"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."
OVERALL VOLUMES DROPPED FROM PROPOSAL
As a result of the changes, overall biofuels volumes were set at 20.94 billion gallons for 2023. The original EPA proposal was for 20.82 billion.
The overall volume for 2024 was set at 21.54 billion gallons, a drop from the proposed 21.87 billion.
For 2025, overall RFS volumes are set at 22.33 billion gallons, a drop from 22.68 billion proposed.
When it comes to cellulosic ethanol, EPA finalized 840 million gallons for 2023, 1.09 billion in 2024 and 1.38 billion in 2025. In addition, the EPA removed from the final rule a plan to launch an electric renewable identification number scheme to promote the expansion of electric vehicles.
To put the cellulosic-ethanol volumes into perspective, gasoline blenders originally were required to blend 22 billion gallons of cellulosic ethanol by 2022.
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @DTNeeley
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