The US Environmental Protection Agency (EPA) issued its final ‘Set Rule’ on June 21, 2023, laying out the blend requirements for 2023 through 2025. The historic ruling sets the demand curve for renewable fuel use during crucial expansion years for the rapidly growing renewable diesel (RD) and sustainable aviation fuel (SAF) industry. This report will provide an interpretation of the EPA’s ruling and intent, as well as an analysis of its impact on the affected industries with a focus on the outsized impact for renewable diesel and SAF producers.
In short, the ‘Set Rule’ greatly underestimated the impact of surging renewable diesel growth, with the decision driven primarily by concerns over feedstock supply. The EPA slashed the cellulosic requirements after cutting the eRIN program from the final rules, yet in doing so, still carved out multi-year expansions for cellulosic fuels. The EPA will continue to pursue the eRIN program and is seeking further comment. In a glimmer of hope for the renewable diesel industry, the EPA left the door open for adjustments to the final ruling by taking into consideration a list of indicators.