December 01, 2015

EPA Finalizes Renewable Fuel Volumes

On November 30, 2015, the Environmental Protection Agency (EPA) announced final volume requirements for fuels under the Renewable Fuel Standard Program (RFS) for 2014, 2015 and 2016, and also for biomass-based diesel for 2017. The levels were a little higher than proposed levels issued last June, but well below the statutory levels originally set by the Congress in the Energy Independence and Security Act (EISA) of 2007.

EPA final levels for 2014 and 2015 reflect the amount of biofuels actually used. Levels set in 2016 reflect a return to some growth in fuel volume, but short of the levels set in statute. The total biofuel mandate was set at 18.11 billion gallons compared to 22.25 billion gallons in statute. The total advanced biofuel mandate was set at 3.61 billion gallons compared to 7.25 billion gallons in the statute and the conventional (corn starch) mandate was established at 14.5 billion gallons compared to 15 billion gallons in the statute.

Biomass-based diesel producers should be somewhat pleased with the announcement as the levels reflect growth from about 1.6 billion gallons in 2014 to 1.9 billion gallons in 2016 growing to 2 billion gallons in 2017.

Corn ethanol producers on the other hand will likely not be pleased that the 2016 level was finalized below the statutory level of 15 billion gallons. However, the 14.5 billion gallons is likely set above the expected blend wall for E-10 fuel blends (10 percent ethanol) since gasoline consumption is not expected to grow to 145 billion gallons in 2016. The petroleum industry will likely view this as a mandate from EPA to blend more E-15 and E-85 fuel in 2016.

Cellulosic fuel mandates for 2016 were set well above current production levels, apparently anticipating increased production from the multiple plants just now starting up production.

As in previous years, it is likely the EPA decision will be challenged in federal court, possibly this time by both the petroleum and the ethanol industries.

Final Renewable Fuel Volumes

2014 2015 2016 2017
Cellulosic biofuel (million gallons) 33 123 230 n/a
Biomass-based diesel (billion gallons) 1.63 1.73 1.90 2.00
Advanced biofuel (billion gallons) 2.67 2.88 3.61 n/a
Renewable fuel (billion gallons) 16.28 16.93 18.11 n/a
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