Headlines that hit Friday with reports the Biden administration was prepared to suggest lowering the renewable fuel volume requirements within the renewable Fuels Standard (RFS). The reports said EPA’s proposal is for 2021 levels to drop below 2020 levels, and the news caused grain and oilseed prices to take a nosedive. After the dust settled Monday, renewable fuels groups provided some clarity on what are the facts of the issue today.
Reuters and Bloomberg reported Friday the Environmental Protection Agency (EPA) is expected to recommend to the White House lowering the nation’s biofuel blending mandates, or renewable volume obligations (RVOs), below 2020 levels. Then, the same day, Reuters had another story that said sources say EPA is recommending higher biofuel mandates for 2022 than 2021 and 2020.
Both Growth Energy and Renewable Fuels Association (RFA) said they couldn’t confirm the Reuters or Bloomberg stories, saying the RVO rumors are just rumors at this time, therefore the groups didn’t have comment on the stories published Friday. However, Growth Energy did confirm no official proposal had been sent to the Office of Management & Budget (OMB) as of Monday afternoon.
The conflicting headlines left farmers and Washington watchers confused as the biofuels industry awaited clarity on the Reuters reports.
“It was confusing, because those reports by both of those new services [Reuters and Bloomberg] who are usually pretty good, they brought that policy debate back into focus for commodity markets, and it affected markets,” Pro Farmer Washington Correspondent Jim Wiesmeyer told Chip Flory on “Signal to Noise” podcast. “Both news services issued reports that EPA was poised to send its proposed levels for 2021 biofuels, those are the mandates and they’re called RVOs, and 2022 biofuels levels, which the 2020 part is far more important to me. The reports said EPA was sending it for review by the White House, and they really should have said Office of Management and Budget.”
The reports indicated the proposed levels for 2021 would either be even with 2020 biofuels levels, or slightly below.
“Then Reuters later updated their story to say that the levels for 2022 would be above those for 2021 and 2020, after they had reported the 2021 marks would be below those for the year before. In other words, 2020,” adds Wiesemeyer.
The conflicting headlines not only caused confusion, but Wiesemeyer says the stories also reported on “rumors” from sources close to the matter.
“This is just now we’re not we’re discussing rumors even before it goes over to OMB,” he says. “So the rumors were galore on this one. And it looks like traders are reassessing some of the early reports on Friday because soybean oil was up on Monday.”
“Soybean oil it’s definitely still trading to the upside, and traders should reassess it,” Chip Flory, host of AgriTalk told Wiesemeyer. “They should reevaluate exactly what this might mean where we go from here?”
Meanwhile, on Monday, a group of 17 Republican Senators from oil states sent a letter to EPA Administrator Regan yesterday asking him to “waive or significantly reduce” the RVOs for 2020, 2021, and 2022.
“Yesterday’s letter from oil state GOP senators is par for the course and just rehashes the same tired arguments that have been disproven time and time again,” says RFA CEO Geoff Cooper. “It should come as no surprise to anyone that Senators Cruz, Cornyn, Inhofe, Barrasso and their Republican anti-ethanol colleagues are circling the wagons to protect the status quo for Big Oil and continuing their efforts to undermine cleaner, greener renewable fuels. We expect Administrator Regan and the White House will see right through this charade. Asking EPA to waive the 2020 RFS standards—which were finalized by the previous administration in 2019—is a fool’s errand; EPA has repeatedly stated that it does not have the authority to go back in time and change RFS volumes that have already been finalized. And the Biden administration knows that reducing the 2021 and 2022 RFS volumes would derail the President’s agenda related to clean energy, climate, and domestic manufacturing jobs. It would also mark a big step backward on the path to net zero GHG emissions by 2050. RFA continues to urge EPA to preserve the 2020 RVOs (that were finalized nearly two years ago) and move expeditiously to adopt strong RVOs for 2021 and 2022, including the statutory allotment of 15 billion gallons of conventional renewable fuel annually.”
In July, Reuters also reported the White House was delaying its biofuel mandates over political concerns. President Biden campaigned on supporting renewable fuels, with biofuels groups hopeful the Biden administration would follow through on its campaign promises and restore the integrity of the RFS. However, with the recent push to move toward electric vehicles, and no clear plan on how Biden will use renewable fuels to meet his climate goals, renewable fuels groups haven’t seen the campaign promises come to fruition, yet.
