US refiners would be required to blend 19.88 billion gallons of biofuel into gasoline and diesel supplies in 2019, up 3% from this year, under new volume mandates the Environmental Protection Agency proposed Tuesday.
Renewable fuel would make up 10.88% of US transportation fuel supply next year, if the proposed volumes are approved.
The 2019 proposal includes 4.88 billion gallons of advanced biofuel, up from 4.29 billion gallons this year. That means the implied requirement for blending conventional ethanol remains at 15 billion gallons.
The mandate for blending cellulosic biofuel would rise to 381 million gallons in 2019 from 288 million gallons this year.
EPA set the 2020 biodiesel mandate at 2.43 billion gallons, up 16% from 2.1 billion gallons in 2018 and 2019. The biodiesel requirement gets set one year ahead of the other categories.
"I've traveled to numerous states and heard firsthand about the importance of the [Renewable Fuel Standard] to farmers and local communities across the country," EPA Administrator Scott Pruitt said in a statement. "Issuing the proposed rule on time meets Congress' statutory deadlines, which the previous administration failed to do, and provides regulatory certainty to all impacted stakeholders."
The proposals were the latest development in the ongoing battle between biofuels supporters and critics about the country's renewable fuels policy. But the proposals did not answer a key question that both sides were looking to settle -- what would happen to volumes exempted from mandates granted in prior years by the EPA?
The proposals do not include any provision for reallocating those exempted volumes in 2019, an idea that provoked a strong backlash from large refiners.
But market sources said that without a definitive answer to what was the EPA would do about those volumes, uncertainty would plague the market.
"I don't think [the proposed RVOs] mean anything without understanding how the waivers and reallocation will be handled in the future," one broker said.
RIN prices were mixed on the day. S&P Global Platts assessed 2018 D6 ethanol RINs at 26.25 cents/RIN on Thursday, down 3 cents on the day. Platts assessed 2018 D4 biodiesel RINs at 51.75 cents/RIN, up 1.75 cents.
That was far different from recent years, when both the RVO proposal and its finalization would create large changes in price, with swings of 10 cents or more in prices.
EPA will accept comments on the proposed volumes before issuing final numbers by November 30.
The agency said it is also seeking comments on a "host of ways to improve market transparency, including by limiting who can participate in the Renewable Identification Number market and the length of time a RIN can be held."
