The U.S. EPA’s 2014 renewable fuel standard (RFS) volume obligation proposal is under review by the Office of Management and Budget, according to David Korotney with U.S. EPA. While EPA has not released a draft of the proposal, Biodiesel Magazine obtained an early copy of the draft and confirms that, in the document, the agency proposes stalling the biomass-based diesel renewable volume obligation (RVO) at 1.28 billion gallons for both 2014 and 2015, while lowering the 2014 volumes for ethanol and cellulosic biofuel well below statutory requirements. In the case of advanced biofuels, however, the agency proposes not only reducing the category’s 2014 statutory volume of 3.75 billion ethanol-equivalent gallons, as it said it may earlier this year, but in fact pushing it far below this year’s highly achievable volume of 2.75 billion ethanol-equivalent gallons, to just 2.21 billion gallons.

The early draft proposal, which may be different than the proposal EPA will eventually publish, lists total renewable fuel at 15.21 billion gallons for next year, while the statutory requirement under the Clean Air Act is 18.15 billion gallons. This indicates the proposal would seek a 2014 ethanol RVO at 13 billion gallons, down from this year’s volume by 800 million gallons, and down by 1.4 billion gallons from the statutory requirement of 14.4 billion gallons for next year. Cellulosic biofuel RVO is proposed in the draft at a mere 23 million ethanol-equivalent gallons.

While EPA’s 2013 biomass-based diesel RVO was nearly 30 percent higher than 2012’s, the National Biodiesel Board projects U.S. biodiesel producers will outpace this year’s 1.28 billion gallon RVO by as much as 33 percent. This equates to 2.55 billion ethanol-equivalent gallons under the advanced biofuel RVO. A mix of sugarcane ethanol and other emerging advanced biofuels could easily make up the balance.

EPA is using a combination of two authorities in the statute to reduce volumes of both advanced biofuels and total renewable fuels, the agency states, “to address two important realities: Limitations in the volume of ethanol that can be consumed in gasoline given practical constraints on the supply of higher ethanol blends to the vehicles that can use them and other limits on ethanol blend levels in gasoline, a set of factors commonly referred to as the ethanol ‘blend wall;’ [and] limitations in the ability of the industry to produce sufficient volumes of qualifying renewable fuel.”

“The EPA has made clear this isn’t a final proposal,” said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “But just looking hypothetically at this draft, and considering whether there is adequate capacity out there, these numbers don’t even reflect current actual market production for advanced biofuels. Biodiesel alone is poised to reach at least 1.7 billion gallons this year, which, because of its higher energy content, counts as more than 2.5 billion gallons under the RFS. There’s no question we can build on that in 2014, and importantly, biodiesel goes into the diesel pool, so it does not impact these [ethanol] ‘blend wall’ concerns. So clearly there is proven domestic supply of biodiesel to exceed these numbers, and it’s difficult to see why [EPA] would back off the success in the advanced category so much when there is such clear, bipartisan support for growing advanced production.”

On EPA’s proposal to stall the biomass-based diesel RVO for two additional years in a row at 1.28 billion gallons, the agency states in the early draft, “This proposal is based on a consideration of the factors specified in the statute, including biodiesel production, consumption, infrastructure, climate change, energy security, the agricultural sector, air quality, and others.”

What has biodiesel industry stakeholders scratching their heads is, if the agency did in fact base its 2014-’15 biomass-based diesel RVO on biodiesel production, consumption, climate change, energy security, the agricultural sector and air quality, a reasonable observer would expect an entirely different outlook given this year’s production and consumption rates, and biodiesel’s positive impacts on the environment, energy security and the agriculture sector.

“These recent draft EPA rollbacks are appalling and only make sense in view of the need to provide more places to put the new, on-the-scene shale oil, tar sands, frack-sands and other toxic wastes that are now being pumped into the EPA's domain from Alberta and other places,” said Peter Brown, co-founder of biodiesel equipment provider International Procurement Tools. “I am sitting on four projects to install biodiesel production centers, and none of them have even bothered to try working with the U.S. federal government because, as bankers from Germany to Melbourne have told me, there is no interest in your country for either biofuels or a cleaner environment. Personally, it would have been most encouraging if the EPA had applied those same cutbacks to tar sand projects, deep-well drilling and transcontinental pipelines in order to meet their mandate to protect the environment rather than support those industries working directly to circumvent every ethic and principle for which we pay their salaries. My advice to those of us on the front lines of this battle was given to me by an XL Pipeline fanatic: build them strong and keep on building them—biofuels facilities, not sewer lines from Alberta to Texas.”

If EPA’s final rule on 2014 RVOs—which won’t be issued until biodiesel industry stakeholders and experts have ample time to provide comments to EPA once the proposed rule is published, potentially affecting big changes—looks anything like the agency’s early draft proposal, some say, as troubling as this would be to the U.S. biodiesel sector, those most impacted would be marginal producers.

“One of the things we look at as the industry matures is, the more efficient plants are going to be able to stay near or at near capacity of 80 to 90 percent,” said Steve Bond with Blue Sun Biodiesel. “So the impact will hit some plants that have been simply hanging on for the past few years, those that are either single feedstock or just less efficient—most of the impact will be felt by these plants. In our Blue Sun Biodiesel plant in St. Joseph, Mo., we’ve invested a lot to make it efficient. But, it’s still a concerning issue. It’s clear the biodiesel industry can do more.”