Addressing the 2023 EPA’s Renewable Fuel Standard (RFS)

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There's no doubt, fossil fuels, such as coal, oil, and gas, are by far the biggest contributors to climate change, accounting for over 75% of the total greenhouse gas emissions. Replacing fossil fuels with renewable fuels has enormous potential to reduce greenhouse gas emissions, reversing undesirable environmental impacts of global warming and climate change. With this in mind, the U.S. government introduced the Renewable Fuel Standard (RFS) program through the Energy Policy Act of 2005, aimed at growing the nation's renewable fuels sector, reducing greenhouse gas emissions, and cutting reliance on imported oil based on the required use of renewable fuels to meet Renewable Volume Obligations (RVO). Typically, the EPA makes periodic updates of RFS requirements in a bid to enhance efficiency and optimize its overall goals. In June 2023, the EPA finalized its new RFS, which will phase out oil used for airplanes, transportation, and heating in favor of cleaner sources. This blog discusses the new RFS for 2023 to 2025.

The Final Rule: EPA's New RFS for 2023 to 2025

The EPA has issued a final rule under the RFS program stipulating the biofuel volume requirements for 2023, 2024, and 2025. Apart from monitoring the ongoing implementation of the RFS program, the rule sets the biofuel volume requirements and the associated percentage standards for renewable energy categories, such as biomass-based diesel, cellulosic biofuel, and advanced biofuel, as well as the total renewable fuel for 2023 to 2025. Also, the EPA reveals upon full implementation, the final rule will cut U.S. oil imports by between 130,000 to 140,000 barrels of oil per day in the next three years. Let us look at the proposed volume requirement for each of the associated renewable energy categories:
  • Biomass-based diesel: Biomass-based diesel comprises biodiesel, renewable diesel, heating fuel, or jet fuel, meeting the definition of biodiesel. This includes biodiesel and renewable diesel derived from vegetable oils, animal fats, and other biomass sources. The final rule seeks to increase biomass-based diesel RVOs by sixty million gallons to 2.82 billion gallons in 2023, 2.89 billion in 2024, and 2.95 billion in 2025.
  • Advanced biofuels: This category includes cellulosic biofuels, biomass-based diesel, and other advanced biofuels with lower lifecycle greenhouse gas emissions than conventional gasoline. These may include ethanol derived from sugarcane and oil-like hydrocarbons, such as four-carbon alcohol butanol. The final rule increases RVO requirements for advanced biofuels by 190 million gallons in 2023, 800 million in 2024, and 810 million in 2025.
  • Cellulosic biofuels: These come from nonedible plant materials, such as agricultural residue, energy crops, and waste materials. The final rule seeks to increase RVO requirements for cellulosic biofuels by 840 million gallons in 2023, 1.09 billion in 2024, and 1.38 billion in 2025.
  • Renewable or implied conventional fuels: These are biofuel forms like ethanol derived from starch feedstock. EPA's final rule proposes an implied conventional biofuel increase of fifteen billion gallons for 2023, an additional 250 million gallons in 2024, and 15.25 billion gallons in 2025.

What Is the Impact of the EPAs Final Rule on Renewable Identification Numbers?

Renewable Identification Numbers (RINs) function as the currency of the RFS program. Each gallon of renewable energy produced has an RIN. Market stakeholders, including refiners and importers of diesel or gasoline and renewable fuel producers and exporters, trade in RINs. Players can buy, sell, or separate RINs to meet their market needs and meet different RFS requirements efficiently. The EPA rule has added an e-RINS or RIN-generating pathway dedicated to electricity derived from renewable biomass and used as a transportation fuel. The e-RINs generated by manufacturers of light-duty electric vehicles will provide a pathway for qualifying renewable electricity only. This proposal does not include electricity generated from solar or wind.

Monitor Your Emissions With Aegex Solutions

The RFS program is one of the U.S.'s most successful green energy policies. Specific requirements and targets under the RFS can change over time as the EPA evaluates market conditions, technological advancements, and environmental considerations. The latest version of RFS seeks to reduce reliance on imported oil by 130,000 and 140 000 barrels per day in the next two years. This will significantly reduce greenhouse gas emissions and boost the fight against climate change. The recent changes in enforcement reporting requirements to prevent fraud in the market can affect the benefits of transitioning to low-carbon fuel feedstock. Aegex Technologies can solve this problem through its auditable system called Feedstock and Compliance Tracking System (FACTS™). The system tracks waste oils from verifiable sources to producers as per the EPA-defined reporting requirements and assigns Carbon Intensity (CI) scores to batches defined by the Low Carbon Fuel Standard (LCFS) per the California Air Resource Board (CARB). Used cooking oil collectors, aggregators, and processors can use FACTS to optimize their compliance and records management efforts. Contact us today to learn more about the FACTS platform.