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- DTN Headline News
Group Petitions EPA for RFS Increase
By Todd Neeley
Monday, June 24, 2024 5:12PM CDT

LINCOLN, Neb. (DTN) -- Clean Fuels Alliance America is asking the U.S. Environmental Protection Agency to increase biomass-based diesel volumes for 2024 and 2025 in the Renewable Fuel Standard, in a rare petition set to be filed with the agency.

When EPA finalized the so-called set rule one year ago, the biomass-based diesel industry said the volumes were set too low and did not reflect the industry's production capacity and ability to produce.

In a petition to EPA, Clean Fuels said the volumes set by the agency have essentially stunted the industry's growth.

The group is petitioning the EPA to increase 2024 biomass-based diesel volumes to 5.1 billion gallons, which is the actual volume produced in 2023 plus 500 million gallons. In addition, Clean Fuels asked EPA to increase 2025 biomass-based diesel volumes to 5.6 billion gallons.

Clean Fuels also is asking the EPA to make "proportional increases" in the D5 advanced and total volumes for 2024 and 2025.

EPA's set rule sets biomass-based diesel at 3.04 billion gallons in 2024 and 3.35 billion in 2025, https://www.dtnpf.com/….

"Unfortunately, EPA's multiyear projections did not sufficiently consider ongoing and planned industry expansions, resulting in low volumes that fail to meet the RFS program's objectives to increase the volume of renewable fuel that is blended into the nation's transportation fuel supply," Clean Fuels said in its petition to EPA Administrator Michael Regan.

"Indeed, EPA set the volumes -- particularly the volumes for biomass-based diesel and advanced biofuel -- significantly below actual renewable fuel production during the first months of the compliance year, ignoring available data from the EPA Moderated Transaction System and other federal agencies. Those low volumes have discouraged biofuel production and minimized GHG reductions and other benefits of the RFS."

The group said EPA acknowledged that 5.1 billion gallons of renewable diesel capacity has been announced or was already under construction, yet the renewable volume obligations for BBD and advanced are "not even close to the projected capacity."

EIA PROJECTIONS

In February 2023, the U.S. Energy Information Administration projected that domestic renewable diesel capacity could more than double through 2025 to 5.9 billion gallons.

Clean Fuels said "multiple developments" since the set rule was finalized have "made it abundantly clear" that biomass-based diesel and advanced biofuels volumes set weren't enough.

The petition said the EPA's rule has hurt the industry.

"To begin with, numerous oil and gas companies have converted entire petroleum refining facilities to produce renewable diesel," the petition said.

"The production of BBD in 2023 was also far higher than what EPA projected in the set rule, causing obligated parties to accumulate excess RINs (renewable identification numbers) to use in future years. And EPA's concerns about 'feedstock switching' have not materialized. Instead, feedstock imports -- which EPA did not consider in the set rule -- have demonstrated that significantly more BBD could be produced without shifting oils away from food products or other uses."

Clean Fuels said the RFS volumes have "held back the promising potential" of those developments. RIN prices have fallen 45% since the set rule was finalized, the petition said, "driving down margins for BBD producers and reducing or eliminating their ability to generate more BBD."

As a result, biomass-based diesel producers have "shuttered production facilities and scuttled or pared back planned expansions."

Clean Fuels said that prior to the EPA finalizing the set rule, producers generated more than 3 billion gallons of biomass-based diesel in 2021 and 2022 and were poised for more production growth.

The group said the set rule's finalization set off "significant shocks" across the biomass-based diesel industry.

"Many planned and announced renewable diesel and sustainable aviation fuel projects have significantly changed their plans, while existing biodiesel facilities have either idled or closed," the petition said.

Clean Fuels said about 116 million gallons of biodiesel production has been idled with additional production capacity permanently closed.

On the renewable diesel side, a company called Vertex announced it would be converting its renewable diesel facility in Mobile, Alabama, back to petroleum production at the end of 2024, which is a loss of 150 million gallons of renewable diesel production capacity.

"Obligated parties, many of which have entered the renewable diesel space, are also being hurt by the RIN market," the petition said.

"HF Sinclair Corporation reported in their 2024 Q1 earnings call that weakened RINs and LCFS (low-carbon fuel standard) credit prices resulted in a 16% decline in their renewable diesel indicators compared with the fourth quarter of 2023."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on social platform X @DTNeeley


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