The US Environmental Protection Agency proposed Wednesday to require refiners and blenders to mix 19.24 billion gallons of renewable fuel into the US transportation fuel supply in 2018, down 40 million gallons from its required level for this year.
The proposed 2018 Renewable Fuel Standard requires that 4.24 billion gallons of the total must be advanced biofuels, including 2.1 billion gallons of biodiesel and 238 million gallons of cellulosic biofuels. The biodiesel volume was set last year.
The proposal, expected to be finalized by the end of November, includes an implied 15 billion gallons of conventional ethanol, the same as 2017 levels.
The EPA on Wednesday also proposed setting 2019 biodiesel requirements at 2.1 billion gallons.
"We are proposing new volumes consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace," EPA Administrator Scott Pruitt said in a statement Wednesday.
During a June 21 rally in Iowa, President Donald Trump said that his administration was "saving" the ethanol industry "just like I promised I would do in my campaign." During his speech, Trump said the US ethanol industry was "under siege."
RINs spiked higher in the late morning after reports of the proposed 2018 blending volumes hit the market, with 2017 ethanol RINs trading up to 75 cents/RIN. They calmed over the day and S&P Global Platts assessed 2017 ethanol RINs at 72.75 cents/RIN, up 1.25 cent on the day.
The proposed volumes were praised by ethanol producers and criticized by the US biodiesel industry.
"This is a missed opportunity for biodiesel," said Anne Steckel, a vice president with the National Biodiesel Board, in a statement. "The EPA should be committed to diversifying the diesel fuel market and prioritizing advanced biofuels. Targets like this ignore reality and the law, inhibiting growth in the industry."
Bob Dinneen, president and CEO of the Renewable Fuels Association, an ethanol trade group, said the proposed volumes will "help to drive more investment in infrastructure to accommodate higher ethanol blends."
"By staying the course and maintaining a strong RFS, consumers will continue to benefit from the policy, including a greater choice at the pump, while breathing cleaner air and seeing a boost to local economies," Dinneen said.
"This proposal would keep the RFS on track and provide regulatory stability for ethanol producers, retailers, and obligated parties alike," said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
Still, Shaw said that keeping biodiesel levels at 2.1 billion gallons "falls short of US industry capabilities, even before imports are considered."
Frank Macchiarola, downstream group director with the American Petroleum Institute, said the proposed lowering of the 2018 biofuel volume was a "small step in the right direction," but more reform was needed. API has called for both lowering and eliminating the ethanol mandate.
"Congress must fix this broken, outdated program," Macchiarola said.
EPA also announced Wednesday that it was looking into "concerns" that RFS obligations were being increasingly met with imported fuel from Brazil, Argentina and Indonesia. In addition, the agency said it was assessing higher levels of ethanol-free gasoline and "bolstering" an agreement with the US Commodity Futures Trading Commission to analyze the ethanol market.
"The Clean Air Act requires EPA to reset volume targets when certain conditions are met," Pruitt said. "We expect those conditions to be met in the near future, so we are conducting technical analysis now, to inform future reset rules."
