Impact of COVID-19 on Agriculture

EPA Proposes New Renewable Fuel and Biomass-Based Diesel Volume Standards

Market Intel / June 29, 2018

Credit: United Soybean Board / CC BY 2.0 

On June 26, the Environmental Protection Agency released its proposed volume standards for total renewable fuel, total advanced biofuel and cellulosic biofuel for 2019, as well as the proposed biomass-based diesel volume for 2020. The proposed rule would increase volumes in all four categories.


The Renewable Fuel Standard program is a national policy that requires a certain volume of renewable fuel to replace conventional petroleum-based fuel. The RFS contains four renewable fuel categories: total renewable fuel, advanced biofuel, cellulosic biofuel and biomass-based diesel. Under section 211 of the Clean Air Act, EPA is required to set renewable fuel percentage standards every year. EPA has historically released its proposed volume requirements for each of the categories in June or July. This proposed rule is subject to public comments and, potentially, revision based on those comments. EPA is required to release its final version of the rule by November 30.

What is in the Proposed Rule?

The proposed rule would increase total renewable fuel volumes to 19.88 billion gallons, an increase of 590 million gallons from the 2018 final volumes of 19.29 billion gallons. This is somewhat of a contrast from the 2018 increase of 100 million gallons over 2017 volumes. The total advanced biofuel volume would be increased by the same amount, from 4.29 billion gallons in 2018 to 4.88 billion gallons in the proposed rule.

Corn-based ethanol is considered a conventional biofuel, and is counted toward the total renewable fuel category volumes. Due to the way different biofuel categories are nested under each other, total conventional biofuel volumes, i.e. corn-based ethanol, is the difference between total renewable fuels and total advanced biofuels. This proposed rule would set conventional biofuels at 15 billion gallons for the third year in a row.

Biomass-based diesel is getting a substantial increase of 330 million gallons, up to 2.43 billion gallons from 2.1 billion gallons in 2019. Biomass-based diesel volumes must be finalized a year before the other biofuel categories, meaning this proposed rule is setting volumes for 2020. This is the second-largest increase for biomass-based diesel ever and the largest increase since 2014.

Another significant development is within the cellulosic biofuel sector; the new proposed cellulosic volumes represent an increase of 93 million gallons, increasing to 381 million gallons from 288 million gallons in 2018. This is a change of direction from last year, when EPA lowered the 2018 volume to 288 million gallons from 311 million gallons in 2017. This proposed increase could indicate that EPA believes the capacity for producing cellulosic biofuels is expanding at a greater pace than it believed last year.

What Are the Key Takeaways?

Renewable fuels provide a significant and steady market for American growers. In the 2016/17 marketing year, 5.4 billion bushels of corn, or 37 percent of total consumption, were used by ethanol producers. In the 2016/17 marketing year, 6.2 billion pounds of soybean oil, the oil from nearly 550 million bushels of soybeans, were used in biodiesel production (Figure 2).

While increases in the proposed volumes are certainly a step in the right direction, reaction is still somewhat mixed among stakeholders. Some stakeholders and producers indicated that these increases do not amount to much if issues such as the overuse of small refining waivers essentially limit the amount of renewable fuel blending required.

It is critical to American agriculture that a robust RFS remains in place and continues to serve as an important market for farmers.

Michael Nepveux
(202) 406-3623

Share This Article

Credit: iStockPhoto 

New-crop sales of soybeans, corn, sorghum and cotton to China have been getting a lot of attention. These purchases are being closely watched and interpreted as potential signs as to whether China will be fulfilling their Phase 1 commitments, which were finalized in January 2020. Data from USDA’s Foreign Agricultural Service’s U.S. Export Sales Report, released on August 13 and covering sales through August 6, back up the rumors of large sales. However, how do new-crop sales compare to previous years? To find out, we compare new-crop sales (2020/21 marketing year) to the similar week from the last five years.

Full Article
Credit: fdecomite CC BY 2.0 

On the back of COVID-19-related price shocks and a record-high cheese price, the July Class I milk price was nearly $2.60 per hundredweight, or 13%, below where it would have been prior to a 2018 farm bill change, spurring the withholding of 8-plus billion pounds of milk over two months, a 32% reduction from the prior year, from Federal Milk Marketing Order revenue sharing pools across the county. As a result, FMMO revenue sharing pools were short $527 million in June and $667 million in July, for a combined $1.2 billion. This shortfall caused record-low FMMO minimum milk prices across the U.S. that showed up in dairy farmers’ milk checks as negative producer price differentials The PPD in California, for example, amounted to nearly -$10 per hundredweight for July. Put simply, most dairy farmers are not happy. To make matters worse, public and private risk management tools were unable to protect against these record-large milk check deductions.

Full Article