Federal Bioenergy Policy NDSU Ag Policy February 25, 2019 David Ripplinger

The Renewable Fuel Standard

What year is it?

Energy security Environmental concerns Rural economics vitality

The real reason?

The RFS The Renewable Fuel Standard (RFS) mandates minimum use of biofuel by type and year. There are four categories: advanced, biodiesel, cellulosic, and conventional. There is a nested structure so advanced, biodiesel, and cellulosic can satisfy the conventional mandate…

The nested structure of the RFS Total Advanced Biodiesel Cellulosic

Mandate Table

Fuel definitions

How is the system managed? EPA is the regulator. Approve new biofuel pathways Change the mandate Oversee compliance

When can mandates be changed? Inadequate supply Significant economic harm EPA has regularly cut cellulosic mandates EPA turned down a request after the 2012 drought

RINS & RVOs Created an accounting mechanism – renewable identification numbers (RINS) – to track compliance. 38 digit number initially assigned to physical biofuel. Blenders and others are required to meet their annual renewable volume obligation (RVO).

The Life of a RIN RIN Generated RIN Separated RIN Retired Biofuel Imported or Produced Biofuel Blended or Used Submitted by Obligated Party to EPA

How much? Changes each year Can be modified by EPA

How does it work? Each year blenders are told the amount of each type of fuel they need to blend based on the amount of fuel they used the previous year

Phantom Fuel The Blend Wall Two snags Phantom Fuel The Blend Wall

Two reasons to change mandates - Economic harm - Inadequate domestic supply Case in point: cellulosic ethanol

2012 Drought In 2012, blenders requested a waiver. EPA denied the request.

Breaking down the blend wall Biodiesel E15 and E85

Waivers

E15

What are the five largest US ethanol destinations (Jan-May 2018)? Brazil (40%) Canada (16%) India (6%) South Korea (5%) UAE (4%)

Hardship Waivers The Renewable Fuel Standard (RFS) allows the EPA to waive the Renewable Volume Obligation (RVO) of small refiners (<75,000 bbls/day) enduring severe hardship due to the policy. The EPA under Scott Pruitt waived 19 of 20, 2016 waivers – 790 million gallons 29 of 33, 2017 waivers – 1.46 billion gallons