By: Guest Contributor and NCC Consultant Dave Juday of The Juday Group

The U.S. Environmental Protection Agency (EPA) on Tuesday released for comment its proposed plan to address the 2020 biofuel required volume obligations (RVO) and the anticipated small refinery exemptions (SRE).

The plan was issued as a supplement to the initial proposed rule for the 2020 biofuel volumes released by the agency in July, and is in response to the Trump Administration’s promise to offset any shortfall in ethanol use due to the SREs compared to the 15-billion-gallon baseline provided by the July proposed RVO rule.

EPA is not proposing to increase the 15-billion-gallon ethanol RVO for 2020, but rather is requesting comments on its approach to calculating anticipated SRE volumes to be granted to qualifying refiners after the end of the compliance year 2020.  The agency is suggesting a three-year rolling average of past SRE waiver volumes recommended by the Department of Energy to EPA each year after the Energy Department reviewed the annual SRE applications.  EPA is seeking feedback on whether to use the 2016 to 2018 average, which totaled 4.24 billion gallons of gasoline exempted from ethanol blending requirements, or the 2015-2017 average which amounted to 3.23 billion gallons of gasoline.

According to the proposal, EPA would then reallocate the volume it projects under the anticipated waivers among other refineries by adjusting their mandatory blending requirements to meet a goal of ensuring the net amount of ethanol utilized for the year will be 15 billion gallons.  EPA is basing this reallocation on the forecast that motorists will use 142.49 billion gallons of gasoline in 2020.

The proposal has been heavily criticized by the biofuels industry for falling short of its expectations and the petroleum industry for placing a new burden on refiners.

A public hearing on the proposal will be held on 30 October, and a public comment period will be open until November 29, 2019.  This means that the final 2020 RVO will not be issued by the statutory deadline of November 30th but the Administration does intend to have the final blending requirements issued before the end of the 2019 calendar year.

 

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