US Increases Biofuel Blending Requirements

The EPA finalized US biofuel blending requirements for 2020, 2021, and 2022, according to Bloomberg sources familiar with the plan.

Laying out what is known as the Renewable Fuel Standard, or RFS, the EPA will require refiners and importers to mix in 20.63 billion gallons of renewable fuel into gasoline and diesel in 2022—15 billion gallons can be filled with ethanol, but 5.63 billion gallons of the standard must come from advanced biofuels.

For 2021, the standards will match actual consumption, while the retroactive standards for 2020 were lowered.

The EPA also rejected tens of small refinery requests for exemption from previous year quotas.

The EPA proposed at the end of 2021 a reduction in the amount of biofuels that refiners were required to add to gasoline and diesel, in order to cut the refining industry a break after a couple of years of serious demand destruction during the pandemic. As is often the case, both the corn lobby and the oil industry lobby were disgruntled with the proposal—the corn lobby for not sticking to campaign promises with regards to renewable fuels, and the oil lobby for not cutting the RFS enough.

At the time, the EPA had proposed a reduction to 17.13 billion gallons for 2020, from 20.09 gallons set in 2019. For 2021, the EPA had proposed 18.52 billion gallons, and for 2022, the EPA proposed an increase, to 20.77 billion gallons.

But as of January, President Biden was considering a cut to the 2022 mandate. Meanwhile, the oil lobby continued to argue that there simply wasn’t enough ethanol to meet the suggested requirement.

Typically, the RFS isn’t set after the fact. But first, the pandemic, and now high crude oil and gasoline prices and the tight market for commodities such as corn and soybeans, have muddied the waters, delaying the decision.

By Julianne Geiger for Oilprice.com

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