A Mixed Bag for Biofuels

Dec 10, 2021

Prices at the pump have been an ouchie lately for consumers. The seven-year high in gas prices is felt across the nation, spurred by how little we needed fuel in 2020 (for obvious reasons).

And on the biofuel front, the drop in demand and the increase in cost of ethanol is triggering some pain points for refineries.

Fueling up: As a refresher, the Renewable Fuel Standard (RFS) requires a certain volume of renewable fuel (mostly corn-based ethanol) to be a replacement for petroleum-based fuel. As a measure to help struggling oil refineries, the EPA is proposing a reduction in the amount of ethanol and other renewable fuels that must be blended into gas.

But farmers, and even oil refineries, are saying “pump the brakes.” Farmers are worried this’ll hurt them. The oil guys and gals say, “It’s not enough.”

Da me mas gasolina! In December 2019 B.C. (Before COVID), the RFS volume was set at 20.09B gallons, including 15B gallons of corn-based ethanol.

The EPA’s new proposal includes retroactively lowering RFS volumes for 2020, inching volumes up in 2021, then setting an RFS target of 20.77B gallons for 2022, including the highest-ever target for corn ethanol at 15.25B gallons. Oil industry folks claim the measures aren’t enough, while biofuel industry people say the measures will “slash demand for biofuels” and negatively impact producers.

The EPA is also proposing to reject 65 pending applications for small refineries to be excused from blending mandates for financial reasons.

While we’re here: USDA plans to pump out $700M to biofuel producers hit hard by COVID. Ethanol makers lost $3.8B in sales. And the EPA is looking at regulatory changes to expand next-generation biofuels.