EPA reverses cut to biofuel mandates

US refiners and fuel importers will blend slightly higher volumes of renewable fuels into the domestic transportation supply next year under final standards released today by the Environmental Protection Agency (EPA).

The final volumes keep blending requirements under the Renewable Fuel Standard almost flat, at 19.29bn USG, instead of delivering a cut to 19.24bn USG the administration proposed in July. The mandates include 288mn USG of cellulosic biofuel and 4.29bn USG of advanced biofuels. EPA also proposed holding biodiesel requirements steady into 2019, at 2.1bn USG.

"Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the agency by upholding the rule of law," EPA administrator Scott Pruitt said in a statement.

Biofuels groups said the volumes were better than July proposals but fell short of mandates necessary to support growth. Refining groups said the volumes perpetuated a broken program.

EPA sets minimum volumes each year of the cellulosic, advanced, biodiesel and total renewable fuels that refiners, importers and certain other companies must ensure enter the US transportation supply each year. Obligated companies collect markers generated for every gallon of biofuel blended into the supply, called renewable identification numbers (RINs), to prove compliance.

EPA proposed volumes in July that for the first time reduced overall blending mandates because of struggling production of the most advanced renewable fuels.

The agency in years past increased requirements for other fuels to offset shortfalls in production of cellulosic fuels made from non-food sources.

The agency at the time seemed inclined to reduce volumes even more. EPA pondered the coming consequence of a still-running trade case raising the prices of biodiesel from Indonesia and Argentina, the largest exporter of biodiesel to the US last year. Federal authorities have agreed with the domestic biodiesel industry, which accused exporters of dumping subsidized product on the US market. A final decision may come next week.

EPA under administrator Pruitt more broadly questioned what imports were doing in a program meant to enhance US energy security in the first place.

"Due to their origin outside the United States, imported renewable fuels may not have the same impact on energy independence as those produced domestically," the agency wrote in July.

The agency went further in September, opening comment on whether to reduce mandates by hundreds of millions of gallons due to the trade cases. Pruitt later confirmed the agency also considered allowing US renewable fuel exports to generate RINs. Both changes would slash prices for the credits.

The administration instead was quickly challenged by the legislative strength of the program's supporters. A blitz by state and federal political leaders aligned with agribusiness culminated in a legislative block on the nominee to run the powerful EPA air office in charge of the RFS. Even before public comment on the September posting closed, Pruitt wrote assurances to midwestern, agriculture-focused senators pledging to maintain — or raise — the blending levels proposed in July.