The Biden administration proposed Thursday to increase over three years the amount of biofuel that’s mixed into the nation’s transportation fuel supply and to expand the renewable fuel program for electric vehicles, handing the ethanol industry a victory and sparking criticism from petroleum companies.
EPA proposed 20.82 billion gallons of total renewable fuel in 2023, up from 20.63 billion gallons in 2022. Totals would climb to 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025 under the rule, which is subject to public comment and public hearings in January.
This year’s annual announcement marks the first time EPA has proposed biofuel volumes without a specific mandate from Congress under the renewable fuel standard. While the RFS remains in place, the volumes dictated by Congress run out next year, leaving the environmental agency free to set the levels based on its own conclusions about markets, adhering to the spirit of the law to make renewables a significant part of the supply.
The proposal also includes a long-anticipated provision allowing for electricity generated through biomass to qualify for renewable fuel credits — called eRINs — if it’s used to power electric vehicles. That provision would become effective on Jan. 1, 2024, allowing time for regulated parties to register, EPA said.
Including the eRINs makes the projections for cellulosic ethanol particularly uncertain, the agency said, since those are feedstocks that would be used for the purpose.
“While the production of liquid cellulosic biofuel has remained limited in recent years,” EPA said, “the inclusion of eRINs into the program affords another opportunity for dramatic growth of cellulosic biofuel.”
The eRINs could also complicate matters for the biogas industry, exapanding that commodity’s use for electricity while taking away incentives to use biogas for vehicles that run on liquefied natural gas or compressed natural gas.
The politics of the RFS are still largely focused on ethanol produced from corn, with farm, petroleum and environmental lobbies pulling EPA in conflicting directions.
While the proposal doesn’t set a specific volume for corn-based ethanol, that is the dominant biofuel, and the overall numbers in the proposal imply a minimum of 15 billion or more gallons of ethanol annually through 2025. Increases in that area are modest but welcome, said Geoff Cooper, CEO of the Renewable Fuels Association, representing the biofuel industry.
The agency proposed increases for advanced biofuel, cellulosic biofuel and biomass-based diesel, as well. Cellulosic ethanol, which has long lagged behind the RFS’s goals envisioned in the mid-2000s, would climb from 720 million gallons in 2023 to 1.42 billion gallons in 2024 and 2.13 billion gallons in 2025, EPA said.
EPA said the proposed volumes would reduce U.S. oil imports by roughly 160,000 to 180,000 barrels per year. Administrator Michael Regan said in a news release that the proposal “seeks to provide consumers with more options while diversifying our nation’s energy mix.”
The agency also reiterated its support for biofuels as part of a lower-carbon fuel supply, saying in the proposed rule, “Low-carbon fuels are an important part of reducing greenhouse gas (GHG) emissions in the transportation sector, and the RFS program is a key federal policy that supports the development, production, and use of low-carbon, domestically produced renewable fuels.”
Biofuel groups that have been seeking increases praised the proposal.
“We really look at this proposal as launching the RFS into a new era,” said Cooper, with the Renewable Fuels Association, in a conference call with reporters. He said the growth in biofuels envisioned by EPA could lend support to lifting seasonal limits on the sale of E15 fuel, which is 15 percent ethanol — and to a bill proposed this week in the Senate to accomplish that goal (E&E Daily, Dec. 1).
“We’re grateful to President Biden and EPA Administrator Regan for keeping clean energy on an upward trajectory that will move America closer to a net-zero future,” said Emily Skor, CEO of the ethanol industry group Growth Energy, making the industry’s case that crop-based fuels cut greenhouse gas emissions and can lower overall fuel costs for drivers. “As we saw again this summer, biofuels remain the single best tool available to shield motorists from volatile global oil prices and rapidly decarbonize the transportation sector.”
But the environmental benefits of ethanol have been a point of contention, with groups such as the National Wildlife Federation saying increased biofuel production takes land out of conservation and into production of corn or soybeans, which depend on fertilizer, irrigation and other inputs.
“Billions of gallons of biofuels means millions of acres of additional habitat destroyed, more water pollution and ocean dead zones, and greater harm to endangered species,” said Brett Hartl, government affairs director at the Center for Biological Diversity, in a news release in reaction to EPA’s proposal.
Critics of the RFS said the proposal reinforces points they’ve made about the program’s shortcomings.
“Congress provided EPA the ability to modernize the RFS and set it on a more sustainable course for all stakeholders. Sadly, EPA’s proposal is a missed opportunity,” said Geoff Moody, senior vice president of government relations and policy at the American Fuel & Petrochemical Manufacturers. “It doubles down on some of the program’s most problematic elements without taking meaningful steps to address fundamental RFS design flaws or derive better carbon benefits from the program.”
Moody said EPA should turn away from the eRIN proposal, calling it “another massive regulatory subsidy for electric vehicle manufacturers.”
In addition, advocates for the petroleum industry said consistently high requirements for ethanol could translate to higher prices for the renewable fuel credits that refiners buy to demonstrate compliance with the RFS, putting strain on independent refiners. Companies such as Marathon and Phillips 66 have recently closed or plan to close a handful of refineries, or in some cases converted to renewable diesel, resulting in nearly 5,000 jobs lost, according to industry estimates.
“The consequences of these closures and conversions — a loss of physical fuel production volume and tens of thousands of American jobs — have gone unpublicized,” the Fueling American Jobs Coalition, a refining industry group, said in a recent blog post calling for a reduction in the amount of conventional ethanol under the RFS.