EPA Offices, Washington DC

EPA’s New Renewable Fuel Standards Add Biofuel to the Fire

The Environmental Protection Agency issued its final rule establishing biofuel volume requirements for 2023 to 2025 under the Renewable Fuel Standard (RFS) program on June 21. The Rule aims to reduce the United States’ reliance on foreign sources of oil by approximately 130,000 to 140,000 barrels of oil per day by requiring annual volumes of renewable fuels to be used in the fuel supply. While the EPA boasts that the rule reflects its ongoing efforts to “ensure stability of the program for years to come, protect consumers from high fuel costs, strengthen the rural economy, support domestic production of cleaner fuels, and help reduce greenhouse gas emissions,” others argue it falls short of expectations.[1]

On the one hand, proponents of climate change issues state the rule is too generous, arguing that biofuels, which were once thought of as a climate solution, actuality increase emissions and raise food prices. However, many other organizations, including members of the agricultural and biofuel industries, argue the rule does not go far enough.

For example, the EPA’s final rule includes a total volume obligation of 20.94 billion gallons of renewable fuel for 2023 but only includes modest increases for 2024 and 2025. Although the total numbers under the RFS are higher than levels set for 2022 and earlier years, it includes only 15 billion gallons of corn-based ethanol in all three years. Various agricultural groups argue the bioethanol industry has made significant investments in ramping up future production, such as infrastructure, to allow them the ability to meet higher volumes than what has been proposed in the rule. These groups further argue the rule not only undercuts these investments but is also counter to the Biden Administration’s goal of reaching net-zero by 2050.

In addition, other industry groups point to the rule’s absence of a biofuel credit program for electric vehicles. Because the EPA regulates the precise amount of biofuels that must be blended into gasoline and requires refiners which fall short of this requirement to purchase credits to make up the difference, the EPA announced late last year it would offer credits for biofuels used for electric vehicles. However, this final rule does not include electric vehicles in a biofuel credit program. Rather, the EPA stated it will continue to explore “potential paths forward” for the program. Toward that end, the EPA will continue to assess the comments it received on proposed regulations governing the generation of Renewable Identification (RINs), which are RFS compliance credits, for electricity made from renewable biomass that is used for transportation fuel (eRINs).

Regardless of the position one takes regarding the EPA’s final rule, it is clear that the future of biofuels will continue to smolder among the various stakeholders and spark debate in the months to come.

[1] https://www.epa.gov/newsreleases/epa-finalizes-new-renewable-fuel-standards-strengthen-us-energy-security-support-us