Biden administration inherits RFS uncertainty

The Biden administration is launching its agenda for the next four years with climate concerns and economic recovery as top priorities. NBB will work to open opportunities for the biodiesel industry within that agenda. However, NBB will also join the entire biofuel industry in asking the administration to address some unfinished business with the Renewable Fuel Standard (RFS).

For the first time in five years, the Environmental Protection Agency missed the annual November 30 deadline for finalizing RFS obligations (RVOs) for the upcoming year. In fact, the agency did not even propose a 2021 RFS rule before the end of the year.

The annual rule is crucial to all stakeholders because it sets market expectations. EPA is required to set biodiesel volumes a full 14 months in advance to give the industry and other stakeholders the proper signals. The biodiesel industry is currently waiting on EPA to set 2022 volumes for the biomass-based diesel RFS category. And the industry is expecting an increase in 2022, after being denied growth for 2021.

The delay is disruptive as the RFS program heads into the next phase. In 2021, EPA will have to both establish the annual 2022 RFS obligations and set all RFS volumes for 2023. Just like it does for biodiesel, EPA will have to provide 14 months’ lead time to all of the RFS categories for 2023 and future years. So, this is absolutely the wrong time for EPA to leave the 2021 RFS rule to write itself.

NBB has also worked to address EPA’s misuse of small refinery exemptions (SREs). NBB estimates biodiesel producers lost 550 million gallons of market demand over three years because of these waivers.
“What the SREs did was take away the certainty from biodiesel producers, soybean growers and others, ultimately costing them value, costing biodiesel markets and ultimately returning less to the soybean grower in the value of that soybean oil,” says NBB Vice President of Federal Affairs Kurt Kovarik.

In late summer 2020, NBB launched a series of radio ads in six Midwestern states, highlighting the impact of SREs on farmers. Shortly after, in September, EPA Administrator Andrew Wheeler rejected more than 50 “gap-filling” exemption petitions. But EPA is still considering 60 petitions, including 32 for the 2019 compliance year. The compliance deadline for 2019 passed in March 2020. If EPA granted these retroactive exemptions, it would destroy demand for several hundred million additional gallons of biodiesel and renewable diesel over the coming year.

NBB also joined with six other biofuel and agriculture trade associations to ask the U.S. Court of Appeals for the D.C. Circuit to set a timeline for EPA to settle a court order from 2017. In the case, biofuel groups challenged EPA’s misuse of the general waiver to lower RFS volumes by 500 million gallons. EPA could have restored those gallons in any of the three most recent RFS rules but failed to do so. The groups are now asking the court to direct EPA to issue a separate rule to restore the lost gallons within a short time, rather than wait for another annual rule.

NBB will make the case that addressing unfinished business with the RFS program is a good first step for the Biden administration to launch its carbon reduction strategy. The RFS has achieved measurable carbon reductions over the past decade and will continue to contribute to national goals into the future. Moreover, low-carbon fuel programs like California’s and Oregon’s are demonstrating that biodiesel and renewable diesel are the best tools available today for reducing carbon in transportation.