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August 16, 2013
Compliance deadline extended for 2013 RFS

In a final rule that sets the renewal fuel percentages for 2013, the EPA has made one significant concession to the transportation fuel market by providing obligated parties (fuel refiners and importers) with additional time to comply with the volume mandates.

The Agency also states that it is planning to make adjustments to the 2014 volume requirements also because of market-based constraints associated with the E10 blendwall (E10 is a fuel consisting of 10 percent ethanol and 90 percent gasoline).

The Energy Policy Act (EPAct) of 2005 directed the EPA to develop a renewable fuel standards (RFS) program that requires obligated parties to annually produce or import minimum volumes of four types of renewable fuel for blending into transportation fuel.  EPAct’s goal is the use of 36 billion gallons of renewable fuel in the nation’s transportation fuel by 2022.  Obligated parties demonstrate compliance with the RFS by holding renewable identification numbers (RINs), which are issued for each gallon of renewable fuel imported or manufactured and can be traded between obligated parties and carried over from one year for use in next year.

RIN supply

As administered by the EPA, the RFS program has run into problems.  Decreasing use of gasoline in the United States has resulted in the E10 blendwall–basically, the point at which no more conventional gasoline is available into which E10 can be blended.  If the volume mandates cannot be reached because of the blendwall, obligated parties must make use of their excess RINs.

In the current rule, the EPA states that there are a sufficient number of RINs available to obligated parties to meet the new 2013 mandates.  However, that may not be the case for 2014.  Accordingly, the Agency is providing obligated parties with a 4-month extension (from February 28, 2014, to June 30, 2014) to comply with the 2013 requirements.  The EPA says the final 2014 rule should be in place by June 30, 2014.

“Establishing a 2013 compliance deadline on a date that occurs after promulgation of the final rule setting the 2014 standards should allow obligated parties to take their 2014 obligations into consideration as they determine how to utilize RINs for 2013 compliance,” says the EPA.

Two cellulosic fuel manufacturers

The EPA has also come under considerable criticism for the volume requirements it has set for cellulosic biofuel, a type of advanced renewable fuel that has only recently entered the market in small volumes.  In January 2013, a federal appeals court vacated the 2012 cellulosic fuel standard set by the EPA because the EPA had not been realistic in projecting the number of cellulosic biofuel RINs being generated.

In the current action, the EPA continues to be optimistic about the amount of cellulosic biofuel it expects to see in 2013.  Based on the progress of two companies in producing the fuel, the EPA has set a volume standard of 6 million gallons of cellulosic biofuel for 2013, or about 0.004 percent of all fuel used in the nation.

Industry reacts

“It is clear that U.S. EPA has done its homework when it comes to setting the 2013 standard,” said the Renewable Fuels Association.  The commercial cellulosic biofuel facilities that the U.S. EPA projected to start up in 2013 are indeed operational, and the adjusted targets reflect the number of actual gallons expected to be available through the end of the year.”

But EPA’s concession in the final rule did not appease critics of the RFS, who are mainly associated with or supportive of the conventional fuel industry.  “While the administration acknowledges that higher ethanol mandates are unworkable by suggesting a new approach for the 2014 standards, EPA missed an opportunity to fix the problem this year,” said Jack Gerard, president of the American Petroleum Institute.  “Now it’s up to Congress to exercise leadership and move quickly to end this dangerous mandate before it hurts consumers, damages vehicles, and harms our economy.”

Click here for information about the the final 2013 RFS.

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