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1. @jendlouhyhc and team over at Bloomberg do an excellent job with their biofuels reporting. But, unfortunately, they make a statement at the end of this article that is not correct and feeds into a great misunderstanding about the RFS. https://www.bloomberg.com/news/articles/2021-01-12/epa-readies-biofuel-waivers-and-delays-for-trump-s-final-days?sref=4tHCqAJ8
2. Here is the key text: "If Congress doesn’t reauthorize the RFS and set new annual targets, the EPA will have full discretion to establish quotas after 2022."
3. The RFS does not need to be re-authorized. It does not sunset after 2022. Unless Congress repeals the RFS or modifies it and a President signs off, we will have annual RFS rulemakings forever. Yes, forever.
4. What happens after 2022 is that the volume standards in gallons end. Literally, the table in the RFS statute stops in 2022. Starting in 2022, the "only" thing that changes with the RFS is that the annual RVOs will be set by the EPA, with consultation with USDA and DOC.
5. The RFS statute is quite fuzzy about how the annual RVOs are to be set starting in 2023. Broad criteria are laid out. But this does not mean that the EPA Admin can just do whatever they like, which seems to be conventional wisdom in a lot of places.
6. I think there is a lot of misunderstanding about what is likely to happen in 2023 with the "Big Reset" for the RFS. The first key is that, of course, politics matters. Which way the EPA leans in 2023 will be impacted by a Biden Admin compared to a Trump II Admin.
7. But regardless of the Admin leading the "Big Reset" they should both be constrained by what Jonathan Coppess and I call the "North Star" of the RFS. We lay this out in this #FDD https://farmdocdaily.illinois.edu/2018/03/deal-making-on-the-rfs-follow-the-north-star.html
8. In short, Congress intended the RFS to be a technology forcing and market pressure policy. The guiding principal ("North Star") is ever increasing volumes of renewable fuel. This has now confirmed by two US Federal Appeals Court cases. It is part of case law.
9. An Admin can try to fight the North Star, as the Trump Admin has at every step, but it is out there and a very big legal hammer in the long run for ag and biofuel groups. This is the guiding principle that will has to be taken into account during the Big Reset.
10. So in sum, the Biden EPA will have some flexibility in how it approaches the Big RFS Reset in 2023, but it will be constrained by the overarching Congressional intent that renewable fuel volumes increase over time.
