Landmark EPA Rule Adds Renewable Volume Obligations, ID Numbers to Renewable Fuel Standard

The U.S. Environmental Protection Agency (EPA) in December 2022 proposed a landmark rule to make a variety of changes to the Renewable Fuel Standard (RFS). Most notably, EPA has proposed Renewable Volume Obligations (RVOs) for all categories of renewable fuel for a period of three years and has proposed rules that would, for the first time, allow it to approve pathways to generate Renewable Identification Numbers (RINs) on electricity produced from biogas. Comments on the proposed rule are due by Feb. 10, 2023.

Pursuant to a consent decree, EPA must finalize the 2023 RVO no later than June 14, 2023, although it is possible more controversial portions of the rule may be delayed beyond that date. A high-level summary of the most impactful parts of the proposed rule can be found below, and more detailed information and analysis is available in our linked podcast.

Proposed 2023-2025 RVOs

EPA proposed the following RVO obligations for 2023, 2024 and 2025 and is also seeking comment on whether it should extend the rulemaking to four years or reduce it to two years. The final 2023 volumes will be adjusted for actual data that is available as of early June 2023.

All volumes are ethanol-equivalent on an energy content basis, except for biomass-based diesel, which is in physical gallons.

eRIN Generation and Pathway

EPA proposed rules that would allow parties to generate RINs on electricity produced from biogas (eRINs) beginning Jan. 1, 2024. The proposal would mandate that only electric vehicle manufacturers can generate eRINs, while biogas producers, renewable natural gas (RNG) producers and electricity generators would also be obligated parties. While not expressly mandated, EPA assumes that the value of eRINs would be shared among all obligated parties. EPA is also taking comment on alternative approaches, including those that include electric vehicle charging stations as obligated parties. Significant questions have been raised regarding whether electric vehicle manufacturers are allowed to generate RINs under the Clean Air Act and whether parties can legally generate eRINs on electricity for which a separate credit, such as a Renewable Energy Certificate, has already been generated and sold.

Biogas/RNG RIN Generation Changes

To reduce burden on EPA staff, the proposed rule would also change requirements for the generation of RINs on compressed natural gas (CNG) and liquefied natural gas (LNG) produced from biogas and RNG. Under the current rule, parties in the CNG/LNG supply chain can appoint any party in the chain to be the RIN generator by contract. Under the proposed rule, only the RNG producer could generate the RIN, which would then travel with the gas until being separated by a party that is able to verify transportation use, likely the dispenser in most cases. If finalized, this rule would require amendments to most CNG/LNG RIN generation contracts.

Separated Food Waste Recordkeeping

EPA also is requesting comment on the separated food waste recordkeeping requirement. The agency has proposed a rule in which separated food waste aggregators would not need to provide their supplier lists to renewable fuel producers if the aggregator registers in the RFS program and participates in the Quality Assurance Plan (QAP) using the same QAP provider as the renewable fuel producer to which it sells aggregated food waste.