Reports have surfaced that South American biofuels are the reason why the Environmental Protection Agency (EPA) pulled an announcement of Renewable Fuel Standard (RFS) volume requirements. Concerns that refiners will import ethanol from Brazil and biodiesel from Argentina to fulfill RFS volume requirements helped lead EPA Administrator Scott Pruitt to reconsider quotas for those fuels, according to several reports and sources. A coming announcement may include lowering the targets so refiners can rely mostly on U.S.-made biodiesel and corn ethanol.
Until the pullback, EPA had sent the White House Office of Management and Budget (OMB) proposed quotas that would have required the use of 15 billion gallons of conventional corn-based renewable fuel. But some reports indicate the new concerns are causing the agency to rethink that approach.
Meanwhile, biodiesel producers have filed a trade complaint against imports from Argentina and Indonesia, asking the government to impose tariffs to counter what they say are unfair subsidies and dumping. However, the U.S. trade decision will take a while to be announced and that could delay EPA’s RFS announcement longer than initially thought.
Should the U.S. government announce measures to restrict imports, the price of credits tracking compliance with RFS mandates would “drive up consumer cost significantly,” said Mike McAdams, president of the Advanced Biofuels Association. “If you want to stick it to the consumer, Mr. Administrator, just roll back the number for imported fuels with your misguided America-first policy,” McAdams, whose members include Brazilian-based producers, said in an interview with Bloomberg BNA. “You need imports to satisfy targets.”
The RFS allows refiners to use imports to help satisfy mandates and make up for domestic shortfalls. The U.S. imported 36 million gallons of ethanol from Brazil last year, down from more than 400 million gallons in 2012, according to the Energy Information Administration (EIA). U.S. distillers produced a record 15.3 billion gallons of ethanol in 2016, it noted.