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EPA Raises RFS Volume Requirements

DES MOINES, Iowa (—On Monday, the Environmental Protection Agency announced it was raising the Renewable Fuels Standard, opening the window for more corn to be used for ethanol production. 

However, representatives of the renewable fuels industry remain unsettled with the EPA's decision today.

EPA finalized the volume requirements and associated percentage standards under the RFS program in calendar years 2014, 2015, and 2016 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. EPA also finalized the volume requirement for biomass-based diesel for 2017.

For 2016 renewable fuels, the EPA finalized a ruling for 18.11 billion gallons to be blended into U.S. gasoline, more than 16.93 billion in 2015, and 16.28 in billion in 2014.

Janet McCabe, acting assistant administrator for EPA's Office of Air and Radiation, told a group of reporters via a teleconference that this new rule boosts the use of biofuels.

“The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success — cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development,” said McCabe. “With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.”

“We must go beyond the blend wall,” McCabe says.

The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35% higher than the actual 2014 volumes, while the total renewable standard requires growth from 2014 to 2016 of over 1.8 billion gallons of biofuel, or 11% higher than 2014 actual volumes. Biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017.

Trade & Renewable Fuel Industry Reaction

Renewable Fuel Association president and CEO Bob Dinneen says that the EPA's decision leaves the industry with uncertainty.

“EPA’s decision today turns our nation’s most successful energy policy on its head," Dineen stated in a press release. "When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that."

Dineen added, "It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies, and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry."

Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.

Sal Gilbertie, Teucrium Trading owner, says that on the surface, the new rules look supportive to demand for both corn and beans. 

“Corn use looks to be almost 300 million gallons, or about 100 million bushels of implied corn demand higher than trade expectations prior to the final release. That seems like good news for corn farmers. Biodiesel numbers were almost exactly as the trade expected. Deeper analysis with regard to RINs and other factors, plus how the USDA will adjust its demand numbers in upcoming grain reports will set the final tone,” Gilbertie says.

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