EPA Blending Proposal Disappoints 

On the same day it cleared the way for canola oil to be used in advanced biofuels in the US, the Environmental Protection Agency (EPA) did not do any favours for overall use requirements. 

In a proposal released Thursday, the EPA raised the biomass-based diesel blending mandate only slightly for the next three years, rising from this year's 2.76 billion gallons to 2.82 billion in 2023, and 2.89 billion in 2024 and 2.95 billion in 2025. The relatively minor annual increases were considered a major disappointment, with soyoil futures – a key leading indicator for the Canadian canola market - down hard in reaction to the news. 

Renewable diesel has become the fastest growing biofuel in the US, with soybean oil the primary feedstock. Indeed, some 46% of the soybean oil produced in the US is projected to go into making renewable diesel and other biofuels in 2022-23, up from 42% last year. 

US renewable diesel production capacity has soared in the last year alone, helping to push soybean crushing margins to a new record and soybean oil futures prices to historically high levels.   

In 2022, the EPA’s volume target included the highest-ever number for total renewable fuels and specifically for biomass-based diesel, since the US Renewable Fuel Standard was initially created. In a release today, US soybean growers said they were hopeful EPA would stay the course on a rising trajectory but were instead left disappointed. 

“This draft rule slams the brakes on progress being made in biofuels investment and growth,” said Brad Doyle, president of the American Soybean Association and soy grower from Arkansas. “Instead of continuing to support available, low-emission plant-based fuel sources, EPA has changed course and seemingly is ignoring the major investments in and consumer demand for biomass-based diesel and other biofuels that exists right now.”   

According to Gro Market Intelligence, US renewable diesel capacity topped 2 billion gallons per year as of August. The US Energy Information Administration (EIA). projects capacity could more than double to 5 billion gallons by 2025 if all projects currently being planned come online. That includes a 470 million-gallon-per-year renewable diesel expansion in Texas that is now starting operations, over six months ahead of the original schedule. 

Meanwhile, the tepid increase in the US mandates came amid other news today the EPA ruled canola oil-derived renewable diesel, sustainable aviation fuel, and other biofuels qualify as “advanced biofuels” under the RFS program in the US. The Canola Council of Canada worked in coordination with the Canadian Oilseed Processors Association on a US Canola Association petition to the EPA in 2020 to approve canola oil as a feedstock for renewable diesel, jet fuel and other biofuels. 

The EPA’s blending mandate proposal is now open for public comment and possible revision before being made final, likely sometime before mid-June 2023. 

Source: DePutter Publishing Ltd.

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