The Environmental Protection Agency is still working to finalize overdue Renewable Fuel Standard rules for 2021 and 2022, trying to get the rulemaking process back on its annual track. By the end of November, the agency will have missed the statutory deadline for three consecutive years, since rules for 2023 and beyond are supposed to be set a full year in advance.
The EPA recently took a small step to meet its commitment to reduce the number of waivers issued under the program. Under the previous administration, EPA granted dozens of exemptions that undercut biofuel volumes – particularly for advanced biofuels like biodiesel and renewable diesel. The agency must end the flood of exemptions to ensure the integrity of the volumes it sets and the market signals they send.
However, if press reports are accurate, the agency is also considering a redo of the 2020 rule, which would be a major mistake and would hurt the biofuels industry.
Last year was hard for everyone. As people worked from home and avoided unnecessary travel, demand for both gasoline and ethanol dropped. Even with all the economic turmoil that arrived with the pandemic, it’s a huge mistake for EPA to now change the rules for renewable fuels after the fact.
The RFS did not cause last year’s economic emergency and didn’t contribute to the decline in transportation demand. Moreover, the changes in fuel use and biofuel production don’t compel EPA to recalculate the rule it established prior to the pandemic.
Under the RFS, biofuel requirements are set as percentages of gasoline and on-road diesel use. So, as fuel demand dropped in 2020, the required biofuel volumes also fell proportionally. Because EPA set the 2020 rule in a timely manner, the RFS automatically distributed the year’s economic fallout between refiners and biofuel producers.
As a result, refiners can meet the 2020 RFS obligations as EPA originally set them. But if EPA recalculates the fuel percentages, the agency risks its credibility.
Even if EPA resets the percentages, it cannot change the outcome. Refiners still have to comply using the available mix of ethanol and biodiesel credits. EPA should stop wasting time and stop doing things that would hurt the renewable fuels industry.
Moreover, some refiners and exporters are already fulfilling their 2020 compliance requirements, even though EPA provided them a deadline extension. Those compliance reports are already changing the balance of available credits in ways that EPA cannot control or even predict.
The longer the agency delays finalizing new rules, the more it undercuts future biofuel availability. Business uncertainty could put a stop to some of the new biodiesel and renewable diesel projects underway, which would sacrifice thousands of jobs and new economic opportunities. It could even force many small producers out of business.
As hardworking families struggle to regain footing following the pandemic and small businesses work to overcome supply chain issues, it makes no sense to cut off supplies of clean fuels. That will only increase the costs of delivered goods and hit American households in the wallet.
If EPA rewrites the 2020 rule now – even with the COVID emergency as justification – the agency will establish a precedent allowing them to retroactively change future rules. Refiners claim every year that the RFS program causes them economic calamity. EPA will be less able to stand up to those claims in the future or raise biofuel volumes if it gives in right now. Plainly, biofuel producers would not be able to rely on EPA’s rules from year to year.
The fact is the RFS rulemaking process triggers an all-out battle between refiners and biofuel producers over the volumes and percentages every single year. Redoing the 2020 rule now would represent an overt political boon for refiners and a loss for the biofuel industry. That will simply increase the ferocity of the annual battles.
EPA should not put itself at the center of a political battle. It should stand behind the rule set in 2020, allow the program to work as it was designed, and protect its credibility and stability for the future.
Byron Dorgan served as a Democratic senator and congressman from North Dakota for 30 years and was one of the authors of the Renewable Fuels Standard. He is now a co-chair of Arent Fox’s government relations practice and a Senior Fellow at the Bipartisan Policy Center.
Former Congressman John Shimkus represented Illinois’ 15th District in the United States House of Representatives from 1997 to 2021. He served as Chairman and then Republican Leader of the House Energy and Commerce Environment and Climate Change Subcommittee. Shimkus is now a principal with KBS Group.
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