EPA Proposes Comprehensive Set of Biofuels Program Updates and Improvements

Proposals aim to reinforce the foundation of the program, provide for future growth

December 7, 2021

WASHINGTON (Dec. 7, 2021) — Today, to strengthen the role of the Renewable Fuel Standard (RFS) in advancing greater use of low-carbon renewable fuels, the Environmental Protection Agency (EPA) proposed a package of actions setting biofuels volumes for years 2022, 2021, and 2020, and introducing regulatory changes intended to enhance the program’s objectives. In addition, EPA is seeking public comment on a proposed decision to deny petitions to exempt small refineries from their obligations under the RFS on the grounds that petitioners failed to show that EPA has a basis under the Clean Air Act (CAA) and recent federal case law to approve them. Together, these actions reflect the Biden Administration’s commitment to reset and strengthen the RFS program following years of mismanagement by the previous administration and disruptions to the fuels market stemming from the COVID-19 pandemic.

“Despite multiple challenging dynamics affecting the RFS program in recent years, EPA remains committed to the growth of biofuels in America as a critical strategy to secure a clean, zero-carbon energy future,” said EPA Administrator Michael S. Regan. “This package of actions will enable us to get the RFS program back in growth mode by setting ambitious levels for 2022, and by reinforcing the foundation of the program so that it’s rooted in science and the law.”

For 2022, EPA is proposing the highest total volumes in history, putting the program on a stable trajectory that provides for significant growth. The proposed volumes for 2022 are over 3.5 billion gallons higher than the volume of renewable fuel used in 2020. The proposed volume of advanced biofuel for 2022 is over 1 billion gallons greater than the volume used in 2020. EPA is also proposing to add a 250-million-gallon “supplemental obligation” to the volumes proposed for 2022 and stating its intent to add another 250 million gallons in 2023. This would address the remand of the 2014-2016 annual rule by the DC Circuit Court of Appeals in Americans for Clean Energy v. EPA. Spreading this obligation over two years would provide the market time to respond to this supplemental obligation. The last Administration failed to act on the Agency’s outstanding obligation to address the court’s remand.

EPA is proposing 2021 volumes at the level that it projects the market will use by the end of the year. EPA is proposing to revise the 2020 standards to account for challenges the program and the market faced that year, including from the COVID-19 pandemic. 

Proposed Volume Requirements for 2020-2022 (billion gallons)

^{*All values are ethanol-equivalent on an energy consult basis, except for BBD which is biodiesel-equivalent}  

To promote efficiency and opportunity in producing biofuels, this action also proposes a regulatory framework to allow biointermediates to be included in the RFS program, while ensuring environmental and programmatic safeguards are in place. Biointermediates are feedstocks that have been partially converted at one facility but are then sent to a separate facility for final processing into an RFS-qualified biofuel.  Providing a way for producers to utilize biointermediates could reduce biofuel production costs in some cases, and potentially expand opportunities for more cost-effective biomass-based diesel, and advanced, and cellulosic biofuels.

Small Refinery Exemptions
Today’s proposed action denying 65 pending applications for small refinery exemptions (SREs) responds to the decision from the U.S. Court of Appeals for the Tenth Circuit in Renewable Fuels Association et al. v. EPA. This decision, issued in 2020, narrowed the situations in which EPA can grant SREs. EPA is sharing a proposed adjudication of pending SRE petitions that presents EPA’s approach in applying the direction from the Court. The proposed decision document articulates the Agency’s updated interpretation of its CAA statutory authority to grant SREs, and our analysis of the available data on RFS costs and market dynamics that compel the proposed denial.

Because today’s proposed SRE action is highly consequential to impacted parties, reflects an updated interpretation of the CAA, and is a change from previous EPA practice, we are implementing a public notice-and-comment process and seeking input from stakeholders, the public, and from individual petitioning refineries. We encourage all interested parties to share information, data, and legal interpretations.

USDA Actions
Simultaneous with EPA’s announcement today, the U.S. Department of Agriculture (USDA) is announcing $800 million to support biofuel producers and infrastructure.  This includes up to $700 million to provide economic relief to biofuel producers and restore renewable fuel markets affected by the pandemic. In the coming months, the Department will also make an additional $100 million available to increase significantly the sales and use of higher blends of bioethanol and biodiesel by expanding the infrastructure for renewable fuels derived from U.S. agricultural products.  Each agency’s actions align with President Biden’s commitment to promoting and advancing biofuels to help rural America and our nation’s farmers, and to honor the leadership role American agriculture plays in our fight against climate change. 

Background
The Clean Air Act requires EPA to set annual RFS volumes of biofuels that must be used for transportation fuel for four categories of biofuels: total, advanced, cellulosic, and biomass-based diesel. EPA implements the RFS program in consultation with the U.S. Department of Agriculture, the U.S. Department of Energy, and consistent with direction from Congress. 

For more information on the proposed volume requirements, please visit: https://www.epa.gov/renewable-fuel-standard-program/proposed-volume-standards-2020-2021-and-2022

For more information on the small refinery exemption proposed decision, please visit: https://www.epa.gov/renewable-fuel-standard-program/proposal-deny-petitions-small-refinery-exemptions