• EPA Releases Proposed RFS Obligated Blending Volumes for 2019

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    EPA Releases Proposed RFS Obligated Blending Volumes for 2019
    Yesterday, the U.S. EPA issued a proposed rulemaking setting obligated blending volumes for the Renewable Fuels Standard (RFS) for 2019 and the biodiesel standard for 2020. The proposal calls for a three percent increase in the overall blending volumes which has sparked criticism from both the oil and ethanol industries.

    The EPA is proposing to increase total renewable fuel volume by 590 million gallons from 19.29 billion gallons in 2018 to 19.88 billion gallons for 2019. Cellulosic biofuel will increase by 93 million gallons from 288 million gallons in 2018 to a proposed 381 million gallons in 2019. Under the proposed rule, advanced biofuels will increase from 4.29 billion gallons in 2018 to 4.88 billion gallons in 2019, an increase of 590 million gallons. Conventional biofuels, including corn ethanol, will remain at the 15 billion-gallon statutory maximum set by Congress under the RFS. The rulemaking also proposes to set the 2020 renewable fuel volume for biomass- based diesel at 2.43 billion gallons, up 330 million gallons when compared with 2019 and 2018 2.1 billion gallons requirement.

    Overall, the proposed 2019 renewable fuel volumes are a mixed bag for petroleum marketers. The good news is that the rule did not propose to force large refiners to make up for the lost 1.5 billion gallons of obligated blending volume lost in 2018 due to blending waivers issued by the EPA to small refineries based on financial hardship. Carrying those gallons over to large refiner obligated blending volumes for 2019 would have caused the value of RIN blending credits to soar, leading to higher prices at the pump. The corn ethanol lobby is not pleased with EPA’s move which indirectly reduces the corn ethanol mandate.

    For petroleum marketers, the corn ethanol mandate continues to be put marketers in a precarious situation given UST system incompatibility with E10 plus blends with regard to the seals, glues, gaskets and other components that would force them to break concrete to sell higher ethanol blends.

    Proposed and Final Renewable Fuel Volume Requirements for 2018-2020
    2018 2019 2020
    Cellulosic biofuel (million gallons) 288 381 N/A
    Biomass-based diesel (billion gallons) 2.1 N/A* 2.43
    Advanced biofuel (billion gallons) 4.29 4.88 N/A

    Proposed and Final Renewable Fuel Volume Requirements for 2018-2020
    2018 2019 2020
    Renewable fuel (billion gallons) 19.29 19.88 N/A
    Implied conventional biofuel (billion gallons) 15 15 N/A
    *The biomass-based diesel standard for 2019 was set at 2.1 billion gallons in 2018 and cannot be changed. Source: EPA
     
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