U.S. expected to announce three-year biofuel blend mandates
segunda-feira, setembro 12, 2022
The Biden administration is expected to soon announce a rule that would detail the annual biofuel blend mandates for the oil refining industry over a three-year period, rather than just one.
According to three sources familiar with the discussions for Reuters, the move to a multi-year goal would aim to provide long-term certainty to the refining and biofuels industries, which have been struggling steadily over annual mandates since they began more than a decade ago under the U.S. Renewable Fuel Standard (RFS).
"They are trying to put together a proposal for 2023, 2024 and 2025, where, once the proposals are put together, they do not need to go back and do not need to change and modify the volumes," said one of the sources, who requested anonymity to Reuters reporters.
The EPA was ordered to propose a regulation for mandates from 2023 through November 16, according to a legal document in July. The Environmental Protection Agency, which manages the RFS, declined to comment.
Under the RFS, oil refineries must mix billions of gallons of ethanol in the country's fuel mix, or buy negotiable credits, known as RINs, from those who do. The policy aims to reduce energy imports, help farmers and reduce greenhouse gas emissions.
Although Congress sets specific targets by 2022, the law expands the EPA's authority to change the way rfs are administered. Starting next year, the agency will have scope to define multi-annual mandates and make other changes. Earlier, sources told Reuters that the EPA is studying ways to use rfs to support electric vehicles, sustainable aviation fuel and hydrogen. The EPA did not share its plans.
The annual regulatory process had created an unbroken lobbying battle over the mandates of the powerful oil and corn lobbies. The oil industry says the demands are expensive and threaten refinery jobs. Agroindustry likes the mandates that drive demand for products such as corn-based ethanol.
Both sectors welcome multi-year regulation to increase market certainty, but some fear the move could unintentionally distort markets if long-term mandates exceed actual demand or not.
An unexpected drop in energy demand in 2020 due to the COVID pandemic, for example, led the EPA to reduce biofuel blending mandates for that year. Meanwhile, biofuel advocates say increasing public subsidies to the industry can also increase production in unexpected ways.
The Inflation Reduction Act, a massive climate legislation agreement, included extended biodiesel credits and incentives for sustainable aviation fuel needed to reduce emissions from the airline industry. Both fuels already qualify for credits under the RFS.
Source: RPA news
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