Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

U.S. during the spring of 2006. In order to accomplish this transition quickly, while still
maintaining gasoline volume, octane, and gasoline air toxics performance standards,
refiners elected to blend ethanol into virtually all reformulated gasoline nationwide. This
caused a second dramatic increase in demand for ethanol, which in the near term has been
met by temporarily shifting large volumes of ethanol out of conventional gasoline and
into the RFG areas. Perhaps the largest impact on renewable fuel demand, however, has
been the dramatic increase in the cost of crude oil. In the last few years, both crude oil
prices and crude oil price forecasts have increased dramatically. This has resulted in a
large economic incentive for the use of ethanol and biodiesel. The Energy Information
Administration (EIA) and others are currently projecting renewable fuel demand to
exceed the minimum volumes required under the RFS program by a substantial margin.
In this context, the statutory goal of the RFS program is to provide an important
foundation for ongoing investment in renewable fuel production. However, market
demand for renewable fuels is expected to exceed the statutory minimums. We believe
we are proposing a program structure that could continue to operate effectively regardless
of the level of renewable fuel use or market conditions in the energy sector.
B. Requirements In The Energy Policy Act
Section 1501 of the Energy Policy Act provides the statutory basis for the RFS
program. This provision was added to the CAA as Section 211(o). It requires EPA to
establish a program to ensure that the pool of gasoline sold in the contiguous 48 states
contains specific volumes of renewable fuel for each calendar year starting with 2006.
The required overall volumes for 2006 through 2012 are shown in Table I.B-1 below.
Table I.B-1
Applicable Volumes of Renewable Fuel Under the RFS Program
Calendar year Billion gallons
2006
2007
2008
2009
2010
2011
2012
In order to ensure the use of the total renewable fuel volume specified for each
year, the Agency must set a standard for each year representing the amount of renewable
fuel that a refiner, blender, or importer must use, expressed as a percentage of gasoline
sold or introduced into commerce. This yearly percentage standard is to be set at a level
that will ensure that the total renewable fuel volumes shown in Table I.B-1 will be used
based on gasoline volume projections provided by the Energy Information
Administration (EIA). The standard for each year must be published in the Federal
Register by November 30 of the previous year. Starting with 2013, EPA is required to
4.0
4.7
5.4
6.1
6.8
7.4
7.5
- 12 -