EPA Proposes Reducing Renewable Fuel Mandate, Citing Market Issues and Technical Constraints

Several aspects of the Agency’s proposal raise issues for industry to address in comments and explore in the rulemaking process.

Background and Summary -

On November 29, 2013, the US Environmental Protection Agency (EPA) published notice of its proposed 2014 Renewable Fuel Standard (RFS) in the Federal Register. Unlike previous years, EPA is proposing to lower the quantity of total renewable fuel from that required by statute to address concerns about the “blend wall.” Comments on the proposal are expected to address the reasonableness of EPA’s projections of availability of renewable fuels and whether EPA has permissibly interpreted its authority to reduce required volumes from those mandated by statute.

The US Clean Air Act (CAA) Section 211(o) requires EPA annually to set standards for renewable fuels to be blended into the US transportation fuel supply. There are four categories of renewable fuels: (1) cellulosic biofuel; (2) biomass-based diesel; (3) advanced biofuel; and (4) total renewable fuel. The cellulosic biofuel and biomass-based diesel standards are nested within the advanced biofuel category, which itself is nested within the renewable fuel category. EPA sets volumes for each of the four fuel types and then, based on projected fuel consumption, calculates percentages of renewable fuels to be blended by the obligated parties (refiners and blenders). To determine the volume requirement for each fuel type, EPA used various assumptions to project a range of production in 2014 and then proposed an approach to select a single value within that range. EPA solicits comments on its approaches and assumptions for determining the ranges and selecting a single value from them, and indicates the values will be refined for the final rule. In this overview, we refer to the “preferred approach” volumes EPA proposes.

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