LINCOLN, NEB. – The U.S. Environmental Protection Agency (EPA) set the 2018 Renewable Volume Obligation (RVO) under the Renewable Fuel Standard (RFS). The administration will require refiners to mix 19.29 billion gallons of biofuels into the U.S. gasoline and diesel supply next year.
This blending requirement includes conventional biofuels such as corn-based ethanol at 15 billion gallons, advanced biofuels at 4.29 billion gallons and biodiesel at 2.1 billion gallons for 2018. In July, the EPA had proposed an overall 19.25 billion gallon blending target, which included cuts to biodiesel. This final announcement abandons that proposed decrease, and instead upholds the RVO levels relative to 2017.
Although oil refiners pushed the EPA to reduce volume requirements – the amount of biofuels that must be blended with the nation’s fuel supply – the administration kept the levels steady. In an already depressed farm economy, this reflects a positive step forward for the renewable fuels industry.
“Setting the conventional biofuel target consistent with statutory levels helps to ensure that biofuels like corn-based ethanol will continue to play an important role in meeting demand for less-expensive, cleaner-burning transportation fuels,” said Todd Sneller, Nebraska Ethanol Board administrator.
“The RFS is an important floor for biofuel demand in the U.S., but producers also continue efforts to expand domestic and international markets,” Sneller said. “Successfully expanding biofuel demand will generate additional opportunities for investment in new technologies and increased production capacity.”
Many domestic fuel marketers are adding infrastructure that accommodates a growing slate of ethanol products including E15 and higher blends. Biofuel producers are also making headway in international markets with recent announcements from Japan, Mexico and China.
- Mexico announced they would start using 10 percent ethanol blends nationwide excluding three cities – Monterrey, Guadalajara and Mexico City. Ethanol fuels may soon be allowed to expand into these cities pending government approval.
- Japan announced they would allow gasoline blenders to use ethanol sourced from the U.S., which is significantly less expensive than the Brazilian sugarcane ethanol Japan has been using.
- China also announced that it will start using 10 percent ethanol blends, as well as exempt a value-added tax on imports of U.S. dried distillers grains.
Domestically, the Renewable Fuel Standard is an important cornerstone for consumer demand, but industry experts are looking to eliminate barriers like reid vapor pressure on E15 and working with fuel marketers to expand ethanol blend options via additional infrastructure improvements, Sneller added.
“Next-generation biofuels continue to evolve, but the new processes, productions, technology deployment and jobs will not be realized if demand for biofuels stagnates,” Sneller said. “Biofuels make an increasingly important contribution to public health and the environment by displacing toxic compounds and harmful emissions from traditional fossil fuels.”
Many improvements in ethanol feedstocks and production have dramatically reduced ethanol’s carbon intensity. With increasing fuel economy standards, higher-octane gasoline blended with ethanol reduces the carbon impact of fuels while allowing automakers to achieve higher efficiency, further adding to ethanol’s low carbon footprint.
“It is critical that ethanol not only participate in federal programs but also in low carbon fuel standards at the state level,” Sneller said. “Omaha is close to exceeding the EPA’s level of acceptable ground-level ozone, but Nebraskans can take steps now to lower vehicle emissions by simply using more biofuels when they fill their tanks.”