What to Expect from the Renewable Fuel Standards Program in 2021
As the Trump administration raced to roll back or weaken Obama-era regulations and guidance in the latter half of 2020, it opted to punt on the politically charged decision of setting standards for the Renewable Fuel Standards (RFS) program for the 2021 calendar year. The RFS program is codified at Section 211(o) of the Clean Air Act (Act) and establishes minimum volume requirements for four separate categories of renewable fuels: (1) total renewable fuels; (2) advanced biofuels; (3) biomass-based diesel; and (4) cellulosic biofuels. The volume requirements for total renewable fuels, advanced biofuels, and cellulosic biofuels increase each year through 2022, whereas the volume requirements for biomass-based diesel increased each year through 2012. After these years, EPA is responsible for establishing the annual volume requirement through rulemaking.
To ensure that the annual volume requirements are met, EPA is required by the Act to publish annual percentage standards by November 30 of each year. Such standards are to remain in effect for the following compliance year. The annual percentage standards are used by refiners and importers of transportation fuel to determine their individual renewable volume obligation.
In a widely expected move (or more accurately, non-move), EPA missed the November 30, 2020 deadline to establish the RFS standards for 2021 (except for biomass-based diesel where EPA established the 2021 standard in 2019). EPA had sent a proposed RFS rule to the White House Office of Management of Budget (OMB) in mid-May 2020, but the rule has not been released by OMB for public comment. EPA’s Administrator, Andrew Wheeler, noted that the 2021 standards had been largely drafted before the COVID-19 pandemic. The pandemic drastically affected gasoline and ethanol consumption in 2020 and makes EPA’s job of setting RFS standards exceedingly difficult. The challenging task will instead be left to the incoming Biden administration.
In addition to establishing the 2021 annual volume requirements, the Biden administration also will be left with the decision on whether to grant requests made by small refiners for exemptions from the annual volume requirements. During his campaign, Biden criticized the small refinery exemption and signaled that his administration would significantly limit the number of exemptions.