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EPA Releases Proposed 2018 Renewable Volume Obligation

Corn ethanol blending requirements would be set at 15 billion gallons for 2018, but overall biofuel blending obligations would be slightly lower overall, based on a Renewable Fuel Standard proposal released by the U.S. Environmental Protection Agency (EPA) on Wednesday.

EPA proposed the overall total Renewable Volume Obligation (RVO) for 2018 would drop from 19.28 billion gallons to 19.24 billion gallons.

The proposal calls for reducing advanced biofuels blend volumes, including biomass-based biodiesel, of the RFS from 4.28 billion gallons to 4.24 billion gallons.

EPA would set biodiesel’s RVO at 2.1 billion gallons for 2019. The blend requirement for cellulosic ethanol is proposed at 238 million gallons, a 73-million gallon decline from last year’s level.

The latest proposal is the first RVOs set by President Donald Trump’s administration. There had been concern when the president appointed EPA Administrator Scott Pruitt to head the EPA that he wouldn’t be friendly to ethanol because of his opposition to the industry when he was Oklahoma’s attorney general.

In a statement on Wednesday, Pruitt said the proposal would continue to grow the biofuels industry.

“Increased fuel security is an important component of the path toward American energy dominance,” Pruitt said. He added, “We are proposing new volumes consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace. Timely implementation provides certainty to American refiners, the agriculture community and broader fuels industry, all of which play an important role in the RFS program.”

DTN Market Analyst Todd Hultman said the numbers do little or nothing to move the corn and soybean markets.

“I would say no, especially with corn-based ethanol and biodiesel looking virtually unchanged,” Hultman said. “Given the current focus on weather, I think it would take a substantial change to make traders look up from their weather maps.”

MIXED BAG

The EPA announcement was a mixed bag for the biofuels industry as a whole.

Although the agency proposal is to set blend requirements for advanced biofuels, including biodiesel at a level the industry said underestimates production potential, the EPA also announced it would conduct a number of biofuels market-related inquiries.

“EPA is also taking comment on addressing concerns that some RFS obligations are increasingly met with imported fuel from Brazil, Argentina and Indonesia,” the agency said in a statement.

“Additionally, the agency is assessing higher levels of ethanol-free gasoline and bolstering an existing memorandum of understanding with the U.S. Commodity Futures Trading Commission to analyze and address a host of market concerns, including the need for increased transparency.”

The U.S. government currently is conducting an anti-dumping investigation into biodiesel imports from Argentina and Indonesia. In addition, the Brazilian government had been considering a 17% tariff on ethanol imports from the United States, but announced on Wednesday that it had delayed that decision.

In addition, there has been calls by biofuels groups for the Commodity Futures Trade Commission, or CFTC, to investigate potential market manipulation of the market for renewable identification numbers, or RINs.

ETHANOL CERTAINTY

Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said in a statement to DTN that in leaving the corn-ethanol number as-is, the EPA has provided certainty to the ethanol market. Dinneen said the proposal would continue to drive more investment in infrastructure that would lead to higher ethanol blend levels.

“By staying the course and maintaining a strong RFS, consumers will continue to benefit from the policy, including a greater choice at the pump, while breathing cleaner air and seeing a boost to local economies,” Dinneen said.

The following is a statement from Texas farmer Wesley Spurlock, president of the National Corn Growers Association, in response to today’s announcement by the U.S. Environmental Protection Agency (EPA) of the proposed 2018 renewable volume obligation (RVO) under the Renewable Fuel Standard (RFS).

“We are pleased to see EPA pick up where last year’s RFS rulemaking left off and propose a rule that keeps the RFS on track for conventional ethanol production. EPA’s proposal is good for farmers who are facing tough economic times and good for consumers who want affordable fuel choices that give us a cleaner environment.

“The Renewable Fuel Standard has been a resounding success: cleaner air, greater energy independence, and stronger rural communities. We call on the EPA to keep the RFS moving forward in line with the law and in a timely manner. Doing so will bring greater stability and certainty to the marketplace and spur increased investment in renewable fuels.

“NCGA will continue working with both public and private sector partners to grow our national fuel infrastructure so that consumers around the world will have greater access to cleaner-burning renewable fuels.

“In the coming weeks, EPA needs to hear from all of us. If you want cleaner air, a stronger farm economy and vibrant rural communities, and greater energy independence, stand up for the Renewable Fuel Standard. Tell EPA thank you for proposing the RVO at the statutory level for conventional fuels, and ask EPA to support a growing biofuels sector and stronger RFS when issuing the final rule in the fall.”

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