Increased Ethanol Blending Still Required for 2010, Even in Absence of EPA Renewable Volume Obligations for 2010

(December 22, 2009)  Washington – Late last week, the Environmental Protection Agency (EPA) submitted its final rule for the expanded Renewable Fuels Standard (RFS2) to the Office of Management and Budget (OMB) - the final step before it takes effect. However, with just one week left before the new year, EPA has yet to issue the 2010 renewable volume obligations (RVOs) which specify the percentage of an obligated party’s transportation fuel that must be comprised of renewable fuels. In 2009, the law called for 11.1 billion gallons of renewable fuel use. In 2010, the law calls for the blending and sale of 12.95 billion gallons of renewable fuel.

EPA has signaled that the 2010 RVOs will be specified in the final rule and that the obligations will be retroactive to Jan. 1, 2010. However, to avoid disruptions in the ethanol blending market, obligated parties would benefit from knowing now what the RVOs will be for the coming year. EPA was required to issue volume requirements for 2010 blending by December 1. In both 2008 and 2009, EPA issued these requirements in the absence of full RFS implementation. Despite the lack of published RVOs, obligated parties under the RFS are still required to increasingly blend renewable fuels.

“America’s ethanol industry is prepared to continue to meet the growing ethanol needs of gasoline refiners and suppliers,” said Renewable Fuels Association President Bob Dinneen. “Even though EPA has yet to issue percent volume requirements, refiners are still required to meet the increased ethanol blend requirements under the RFS statute. Our industry stands ready to deliver product as needed, where needed, anywhere in the country.”

“In order to provide clarity to the market, we are encouraging EPA to issue these percent volume requirements prior to January 1, 2010, so both gasoline refiners and ethanol producers can operate with certainty,” said Dinneen. “It is our expectation that the review process for the final rule will be complete by mid-January, but implementation will take a bit longer. In the meantime, issuing the RVOs would help move us forward with the goals of reducing oil consumption by increasing renewable fuel use.”

According to EPA public statements, the RFS is likely to be approved in the mid-January timeframe. It takes an additional 60 days for the approved rule to take effect.