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How the EPA’s Renewable Fuel Standard program changes could be a boon for landfill and AD operators

Proposed changes to the federal Renewable Fuel Standard program could be a financial boost for operators generating energy from landfills and anaerobic digesters, depending on how the final details shake out.

The RFS was created in 2005 as part of an amendment to the Clean Air Act, with a goal to reduce transportation emissions by setting targets for the use of renewable fuels to “replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel.” Refiners or importers of gasoline and diesel fuel must obtain credits called renewable identification numbers (RINs) in order to meet annual volume targets set by the U.S. EPA.

Waste facility operators have profited from those RIN credits, but political complications around setting the annual volume targets has led to fluctuating values. Now, for the first time, the EPA — along the Department of Energy and Department of Agriculture — is setting multiyear volume targets through 2025, as opposed to annual updates. EPA’s recent proposal would also establish an eRIN program targeted at electric vehicles, along with other notable changes.

The agency, which aims to finalize plans in June, received numerous suggestions during a recently-closed public comment period.

Volume growth

Compliance in the RFS program is driven by fossil fuel companies either blending renewable fuels into their products or purchasing RINs to meet renewable volume obligation (RVO) targets. The annual RVOs directly affect RIN values.

EPA’s latest calculation projected a 13.1% year-over-year increase in RNG volumes, based on recent market conditions, for RINs derived from cellulosic biofuel for compressed or liquid natural gas used in transportation. Industry groups are pleased to see the EPA expanding the program but feel its targets miss the mark.

“We’re concerned with the fact that the rules only use a growth rate that looks back one year,” said Sam Wade, director of public policy for the RNG Coalition, citing pandemic and supply chain effects. The group, which is generally supportive of the program’s expansion, suggests a 30% growth rate that Wade said is “more realistic and reflects better what the RNG industry could do in this space.”