The U.S. Environmental Protection Agency on Tuesday maintained its overall target for biofuel use in 2013, but said it would use its authority to lower the volume goal for 2014 from the current requirement.
The decision to adjust biofuel targets for 2014 should offer relief to refiners squeezed by rising prices for renewable fuel credits, known as RINs.
More than eight months overdue, the final 2013 rule will require a total of 16.55 billion gallons of biofuels to be blended into the nation’s gasoline and diesel supplies this year, up from last year’s target of 15.2 billion gallons.
But the agency gave oil refiners some breathing room: they will have an additional four months to adhere to the 2013 targets, with the deadline extended to June 30, 2014.
The U.S. Renewable Fuel Standard, last updated in 2007, has faced increasing scrutiny as the nation approaches the so-called blend wall, the point when the law will require the use of more ethanol than can be physically blended into the fuel supply at 10 per cent per gallon.
The RFS calls for renewable fuels use to rise each year until 2022. The current target for 2014 is 18.15 billion gallons, rising to an annual 36 billion gallons by 2022.
The blend wall is projected to occur in 2014, the agency said, adding that it had received comments about the problem during its rulemaking process.
In response the EPA said it intends to “use flexibilities” in the renewable fuel statute by lowering targets for 2014. Those targets are scheduled to be released in September, according to the EPA’s website.
After assessing advanced biofuel production and market constraints for 2014, the agency said it will “then propose to establish volume requirements that are reasonably attainable in light of these considerations.”
The volatile secondary market for RINs suggested traders were taking little relief in signs the EPA would relax next year’s mandate.
After dropping as much as 20 per cent earlier in the day, prices for ethanol 2013 RINs pared those losses following the EPA statement, trading at US89 cents, versus around $1 a day ago.
— Ayesha Rascoe reports on U.S. energy policy for Reuters from Washington, D.C.
Congress eyes change to U.S. biofuels mandate, July 30, 2013