The American industry says the Environmental Protection Agency’s proposed new mandates underestimate demand
Proposed new biomass-based diesel mandates in the United States are “woefully” inadequate, according to an industry association.
The U.S. Environmental Protection Agency’s proposed Renewable Fuel Standard (RFS) for the next three years “woefully underestimates” renewable diesel and sustainable aviation fuel demand, said Clean Fuels Alliance America.
The EPA’s proposed biomass-based diesel volume for 2023 is 2.82 billion gallons. In 2024, it increases slightly to 2.89 billion gallons and in 2025 it reaches 2.95 billion gallons.
The problem with those numbers is that the EPA’s own data shows there were 3.1 billion gallons of production in 2021.
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“It simply ignores what’s already in the marketplace,” said Paul Winters, director of public affairs for Clean Fuels.
What’s worse is that it allows for barely any growth potential for a sector that is gearing up for explosive growth, he said.
The EPA also gave final approval for the use of canola oil in renewable diesel, jet fuel, heating oil, naphtha and liquefied petroleum gas.
But Winters wonders how much canola-based fuel will be required to meet the national mandate if the biomass-based diesel volumes for 2023 and beyond are below 2021 levels.
“It means that there simply won’t be enough market space for new fuels to enter the U.S. market,” he said.
“Essentially the EPA is not providing sufficient opportunity for growth.”
The EPA’s proposed volumes are at odds with estimates coming out of the Energy Information Administration (EIA).
The EIA is projecting a 500-million-gallon increase in biodiesel and renewable diesel consumption for 2023, yet the EPA is forecasting a mere 60-million-gallon increase in production.
The EIA is forecasting an additional 2.4 billion gallons of renewable diesel capacity coming online by 2024 and calculated another 1.8 billion gallons in planned future capacity.
But the EPA is forecasting only a 70-million-gallon increase in production in 2024 and another 60-million-gallon jump in 2025.
Winters said the EPA is required by legislation to consult with the EIA prior to releasing its biofuels volumes.
“It appears that that consultation didn’t happen,” he said.
Groups have 60 days to comment on the EPA’s proposed rule and there is a public hearing on Jan. 10, 2023.
Winters encouraged the Canola Council of Canada to weigh in, but he acknowledged that it could be an uphill battle.
“Once (EPA) proposes a rule, it is really reluctant to change it for the final one,” he said.
The canola council declined comment.
Clean Fuels estimates that the soybean and canola industries are investing more than US$4 billion in additional crush capacity to meet the growing demand for renewable diesel and sustainable aviation fuel.
It says the EPA’s proposed rule is undermining that significant investment.
“It has an immediate market impact,” said Winters.
“The share prices of some of those processors took a hit and that will absolutely discourage investment.”
There have been 23 new soybean crush plant announcements in the U.S., which would add 750 million bushels per year in capacity by 2026.
The U.S. currently has 60 plants with total capacity of about 2.2 billion bu. per year, so the planned expansion would amount to a 34 percent increase in crush.
Winters noted that there will still be opportunity for growth in renewable diesel and sustainable aviation fuel at the state level, where California, Oregon and Washington have low carbon fuel standards in place.
