US EPA sets renewable fuel standard for 2019

U.S. environmental regulators have established renewable fuel standards for 2019, calling for a 3% increase in renewable fuel volumes over 2018, but have continued to waive statutory requirements targeting even larger volumes of renewable fuel.

Congress created the Renewable Fuel Standard or RFS program through the Energy Policy Act of 2005, and expanded the program through the Energy Independence and Security Act of 2007. Administered by the U.S. Environmental Protection Agency, the RFS requires a certain volume of renewable fuel to be used in transportation (motor vehicles and jets) and heating. Refiners and importers of gasoline or diesel, along with other market participants like fuel producers and exporters, track and trade renewable fuel credits called Renewable Identification Numbers or RINs.

The RFS includes four categories of renewable fuel: cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. By statute, Congress prescribed specific volumes of these four categories of renewable fuel for each year through 2022, and required the EPA to set RFS volume requirements annually based on these statutory targets. The statute also allows the EPA Administrator to waive these volumetric requirements, based on a determination that implementation of the program is causing severe economic or environmental harm, or based on inadequate domestic supply.

On November 30, 2018, the EPA issued its final rule for the 2019 RFS program. The 2019 final rule sets the total U.S. renewable fuel volume requirements for 2019 at 19.92 billion gallons, including 4.92 billion gallons of advanced biofuel, 2.1 billion gallons of biomass-based diesel, and just 418 million gallons of cellulosic biofuel. The rule also sets a 2020 volume requirement for biomass-based diesel of 2.43 billion gallons.

The EPA noted that "the market has fallen well short of the statutory volumes for cellulosic biofuel, resulting in shortfalls in the advanced biofuel and total renewable fuel volumes." Based on this observation, EPA exercised its waiver authority to finalize the cellulosic biofuel volume requirement at the level EPA projects to be available for 2019. This is consistent with EPA's past practice, through which it has set the cellulosic biofuel requirement lower than the statutory volume for each year since 2010.