A collection of stakeholder groups representing members of the biofuel, refining, and fuel retail industries offered mixed testimony to the U.S. Environmental Protection Agency (EPA) on Friday over its proposal to waive the 2024 cellulosic biofuel D3 blending volume requirement.
The hearing comes after the agency said on Dec. 5, 2024, that it would partially waive the requirement for blending volumes of cellulosic biofuel and alter the associated percentage standard under the RFS due to lagging production of cellulosic biofuels.
The EPA in 2023 set the 2024 D3 target at 1.09 billion Renewable Identification Number (RIN) credits, and put the Renewable Volume Obligation (RVO) at 0.63%.
However, the agency said earlier this month that it projects only 0.97 billion RINs will be generated this year, which would create a shortfall of 0.12 billion RINs.
To resolve that gap, EPA proposed a partial waiver of the 2024 D3 volume requirement down to 0.88 billion RINs — the sum of projected cellulosic biofuel production in 2024, minus the cellulosic biofuel deficits carried into 2024.
In testimony to the agency on Friday, representatives for the renewable fuels industry offered mixed reactions to the proposal.
Geoff Cooper, president & CEO of the Renewable Fuels Association, said the group believes retroactive actions to lower RVO levels only serve to destabilize the RIN market. “Reopening RVOs long after they have been finalized chills investment and growth in cellulosic biofuel production and causes a loss of confidence in EPA’s standards,” Cooper said.
And while the group understands the challenge faced by the agency in setting cellulosic volumes in line with its own statutory authority, court decisions, and Congressional intent for the program, Cooper said that altering the D3 requirement in the “manner proposed would set a dangerous precedent for future administration of the RFS program.”
Should an alteration of the D3 requirement become necessary, Cooper added that the agency could utilize its cellulosic waiver authority instead of the general waiver to do so.
Joe Jobe, CEO of the Sustainable Advanced Biofuel Refiners, said the group is “concerned that EPA is discounting Congress’s directive to implement a market-forcing policy,” and questioned the basis for reducing the requirement over supply-side concerns.
“There are simply no grounds to reduce volumes that were set too low in the first place and any reduction of the overall advanced biofuel volume would be unlawful,” Jobe said to the agency.
Joe Kakesh, General Counsel at Growth Energy, meanwhile, said the agency’s proposal runs “inconsistent” with its own policies and the program itself.
“Rather than retroactively reducing cellulosic volumes, EPA should instead propose rulemakings that will tap the full potential of the RFS,” Kakesh said.
Paul Winters, Director of Public Affairs for the Clean Fuels Alliance America, implored the agency to pause the proposal until it can release a “full and accurate” accounting of RIN availability for this year “after considering the potential impacts of small refinery exemptions, E15 approval, and annual compliance options.”
“RVO stakeholders cannot evaluate EPA’s estimate of an inadequate supply of cellulosic RINs for 2024 without first knowing the number of RINs that might be returned to the market through small refinery exemptions,” Winters said.
The proposal would also extend the 2024 RFS compliance deadline from March 31, 2025, to the next quarterly compliance reporting deadline after the amendments are finalized.
Kakesh said that extension would only inject “unnecessary uncertainty into the process for bioethanol producers and really the entire fuel supply chain.”
Meanwhile, representatives for the refining industry offered their support for the proposal on Friday.
Geoff Moody, senior vice president of government affairs & policy for the American Fuel & Petrochemical Manufacturers, said the agency action “is necessary to address the significant production shortfalls in 2023 and 2024 that depleted the cellulosic RIN bank.”
The agency “must utilize its cellulosic waiver authority” by making cellulosic waiver credits available, Moody said, as “refiners should not be held liable to purchase fuels or RINs that do not exist.”
Originally shared by OPIS, December 20, 2024. Title updated for purpose.
Notice: The Michigan Advanced Biofuels Coalition (MiABC) does not lobby or influence policy in any way. The policy interests of Michigan soybean farmers and biodiesel producers are supported by the Michigan Soybean Association and Clean Fuels Alliance America, respectively.