RFS Finalizes New Volume Targets
The EPA released final Renewable Fuel Standard (RFS) volume targets for 2023-25 on June 21, 2023. These final targets came after EPA released its proposed targets late November and then took public comment on its proposed targets. The new targets were a surprise to many in the biofuels industry as they were lower than many had expected.
The Renewable Fuel Standard (RFS) mandates a minimum volume of renewable fuel must enter U.S. fuel supply each year. The program is regulated by the EPA. Originally, Congress set volume targets by statute, but each year EPA had the authority to adjust these requirements if they were not feasible. Congress’s original volume targets in statute ran through 2022. After 2022, the EPA is directed to set volume targets itself and is starting by setting targets for 2023-25. The significance of this change is not all that great as the EPA has had to make significant adjustments to the original requirements set by Congress for most biofuels besides ethanol as volumes set in the original statute became or were deemed unrealistic.
These RFS volume targets are an important piece of policy for the biofuels industry. The mandates can force consumption of biofuels that otherwise would not be consumed, and, therefore, forces additional demand for the industry. EPA’s analysis shows, in most cases, the RFS forces more consumption of biofuels, including higher blends of ethanol and biofuel and renewable diesel. Economic theory also...
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