Biofuels Stakeholders Rejoice with RFS Bulletins and Passage of the Inflation Discount Act
Following a number of quarters of rollercoaster exercise on the federal stage associated to the Renewable Fuels Customary (“RFS”), there are actually a number of causes for biofuel market individuals to have a good time. First, close to the RFS, the Environmental Safety Company (“EPA”), as a part of a consent decree, has agreed to suggest 2023 renewable quantity obligations (“RVOs”) by November 16, 2022 and closing RVOs by June 14, 2023. The consent decree would settle litigation introduced by Progress Power, which sued the Company for repeatedly lacking deadlines on issuing annual RVO mandates. The consent decree was submitted to the U.S. District Court docket for the District of Columbia on July 22, 2022, and the courtroom is anticipated to log out on the decree within the coming weeks. The biofuels business has lengthy referred to as for the EPA to offer RVOs in a well timed style because the missed and delayed deadlines trigger market uncertainty and negatively impression funding choices. This decree is one step in the proper route; extra importantly, with the EPA setting volumes in 2023, the Company will be capable of set attainable volumes within the first place, streamlining the method significantly.
Because the EPA considers upcoming RVOs, there’s a robust push from Midwest states for EPA to extend RVO mandates. In a July 19, 2022, bipartisan letter submitted to EPA Administrator Michael Regan, Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) together with 22 of their colleagues, inspired EPA to contemplate larger RVOs. They cited the power of biofuels to cut back gas costs and greenhouse fuel emissions as driving components for elevated mandates. For comparable causes, on July 29, 2022, Senators Klobuchar and Grassley launched a Senate companion to the Home’s Subsequent Technology Fuels Act (H.R. 5089), which might enable the sale of fuels with larger octane ranges and better quantities of ethanol. The laws is much like what was launched within the Home in 2021.
“Relating to ethanol and different renewable fuels, this invoice represents probably the most important federal dedication to low-carbon biofuels because the Renewable Gas Customary was expanded by Congress in 2007.” Geoff Cooper, President and CEO, The Renewable Fuels Affiliation
Whereas there may be nonetheless a lot to be clarified about how the local weather and clear power incentives within the Inflation Discount Act (“IRA”) will probably be deployed, the regulation is one more reason for biofuels stakeholders to cheer. Roughly $500 million in funding is allotted to assist buildout of biofuel infrastructure whereas $18 billion in funding is put aside for climate-smart agriculture, which may assist biofuel producers via the manufacturing of lower-carbon feedstocks. Different swimming pools of funding may additionally be out there via the IRA’s initiatives focusing on rural America. The IRA additionally extends a number of key tax credit for the sector (such because the $1/gallon blenders tax credit score for biodiesel and renewable diesel, which is prolonged via 2024) and introduces new ones (such because the technology-neutral Clear Gas Manufacturing Tax Credit score for transportation gas produced and offered in 2025, 2026, and 2027).
Biofuels stakeholders will not be the one ones getting ready to ramp up transportation decarbonization. EV and hydrogen stakeholders are additionally going to see funding and incentives from the IRA to construct out infrastructure – notably EV charging – and enhance EV adoption throughout all car courses. Whereas a lot stays as much as the energy of implementation, one factor is for sure – this historic regulation is establishing the U.S. for an exponential clear power progress trajectory.
This text was featured within the August 2022 version of the Sol Customary, a quarterly e-newsletter that gives up-to-date pricing knowledge, market evaluation, and coverage traits to maintain purchasers in control on the nation’s rising low carbon and clear fuels applications. To subscribe and entry previous editions of the The Sol Customary, fill out our subscribe type right here.
