The Environmental Protection Agency (EPA) today issued its final renewable volume obligations (RVOs) for 2022, 2021 and 2020 under the Renewable Fuel Standard (RFS). The agency separately denied 69 petitions for small refinery exemptions (SREs) from 33 small refineries.
EPA will require 20.63 billion gallons of renewable fuel in 2022, just slightly less than the 20.77 billion gallons proposed late last year.
For 2021, the agency set the total volume at 18.84 billion gallons, slightly higher than December’s proposed figure, including 5.05 billion gallons of advanced biofuel (and 13.79 billion gallons of ethanol). These numbers reflect actual gallons blended for that year.
EPA kept the 2020 figures the same as the December proposal, with total renewable fuel volumes at 17.13 billion gallons and 4.63 billion gallons of advanced biofuel.
EPA was obligated to finalize its RVOs by today after the U.S. District Court for the District of Columbia approved a consent decree agreement requiring the agency to finalize the volume obligations by no later than June 3.
In its SRE denial, EPA said it found that all refineries – large and small – face the same costs to acquire Renewable Identification Numbers (RINs) regardless of whether the RINs are created through the act of blending renewable fuels or are purchased on the open market.
“This happens because the market price for these fuels increases to reflect the cost of the RIN, much as it would increase in response to higher crude prices,” EPA said. “In other words, this increased price for gasoline and diesel fuel allows obligated parties to recover their RIN costs through the market price of the fuel they produce. Because the market behaves this way for all parties subject to the RFS program, there is no disproportionate cost to any party, including small refineries, and no hardship given that the costs are recovered.”
The agency announced flexible timelines for small refineries to comply with their RFS obligations, but these flexibilities should have a negligible impact on biofuels markets. This flexibility included an alternative RIN retirement schedule for small refineries under the RFS 2020 compliance year.
EPA in April 2022 overturned 31 small refinery exemptions that were granted by the Trump Administration in August 2019. The effect of those 31 exemptions was to reduce the 2018 RFS requirements by 1.43 billion gallons while increasing the supply of RINs.
NATSO will provide a more in-depth analysis in the coming days.
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