US EPA mulls over new reduction targets for advanced biofuels as it unveils new NODA

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The US Environmental Protection Agency (EPA) has unveiled a notice of data availability (NODA) concerning potential reductions in renewable volume obligations (RVOs) for 2018 and 2019 under the Renewable Fuel Standard (RFS).

On July 21, 2017, EPA proposed reductions in the statutory volume targets for advanced biofuel and total renewable fuel using the cellulosic waiver authority in Clean Air Act (CAA) section 211(o)(7)(D). The EPA proposed using the maximum reduction permitted under that authority (considering the proposed cellulosic volume requirement) to reduce the 2018 volume targets for advanced biofuel and total renewable fuel to 4.24 and 19.24 billion gallons, respectively, in part by placing a greater emphasis on cost considerations than it had in the past.

EPA also sought comment on possible reductions to the proposed 2019 biomass-based diesel volume requirement.

New proposal

The EPA’s new notice presents additional data on production, imports and cost of renewable fuel and several options for the EPA might consider such data in establishing the final volume requirements using the waiver authorities provide by the statute.

The new NODA states that statute provides EPA with the authority to waive a portion of the biomass-based diesel standard if there is significant feedstock disruption or other market circumstances that would make the price of biomass-based diesel increase significantly.

The statute would also allow the EPA to make related reductions to the advanced biofuel and total renewable fuel RVOs. The EPA said it is seeking comments on whether it would be appropriate to use this waiver authority to set final RVOs for 2018 and the final 2019 RVO for biomass-based diesel in light of recent developments, including those related to cost and supply of advanced biofuel.

According to the EPA, the cost of advanced biofuels is high on a per gallon basis compared to the petroleum fuels they replace. The expiration of the biodiesel tax credit in the US at the end of 2016 has already impacted the effective price of biodiesel to blenders, as well as the price of biodiesel blends to consumers.

While it does not appear that the expiration of the tax credit has had a direct impact on the price of unblended biodiesel (B100) in 2017, the EPA expects that the expiration of the tax credit has had a significant impact on the effective price of biodiesel sold to blenders. This is because the biodiesel tax credit that expired at the end of 2016 was received by biodiesel blenders, rather than biodiesel producers, the EPA stated.

The EPA cites the expiration of the $1 per gallon biodiesel tax credit.

The EPA expects the price of biodiesel used in the US could increase further following a recent preliminary determination by the Department of Commerce that it would be appropriate to place countervailing duties of 41% to 68% on imports of biodiesel from Argentina and Indonesia.

Response

A number of US biofuels trade bodies have criticised the EPA’s new NODA.

Commenting on the EPA’s NODA, Doug Whitehead, chief operating officer at the National Biodiesel Board (NBB), said: “EPA’s proposal earlier this summer was inadequate, underestimating the power of domestic biodiesel production and ignoring the intent of the law. This request for comment is even more disappointing. NBB will be working with EPA to demonstrate the industry’s proven success record, continued growth and impacts to American workers who were promised that this administration had their back.”

The Renewable Fuels Association (RFA) has also criticised the EPA’s move. “There is no rationale for further lowering either the 2018 advanced biofuel volume requirement or the total renewable fuel volume,” said Bob Dinneen, president and CEO of the RFA.

He added: “As we outlined in our recent public comments to EPA on the proposed 2018 RVO, we see no statutory basis whatsoever for attempting to limit biofuel imports through the use of a general waiver. It is also likely that using RFS waiver authorities in an attempt to limit exports would be perceived as a non-tariff trade barrier, which could run afoul of U.S. obligations under World Trade Organization rules.”

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