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

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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 -
establish the applicable national volume, based on the criteria contained in the statute, which must require at least the same overall percentage of renewable fuel use as was required in 2012. Renewable fuels are defined in the Act primarily on the basis of the feedstock. In general, renewable fuels must be a motor vehicle fuel that is produced from plant or animal products or wastes, as opposed to fossil fuel sources. The Act specifically identifies several types of motor vehicle fuels as renewable fuels, including cellulosic biomass ethanol, waste-derived ethanol, biogas, biodiesel, and blending components derived from renewable fuel. The standard set annually by EPA is to be a single percentage applicable to refiners, blenders, and importers, as appropriate. The percentage standard is used by obligated parties to determine a volume of renewable fuel that they are responsible for ensuring is introduced into the domestic gasoline pool for the given year. The percentage standard must be adjusted such that it does not apply to multiple parties for the same volume of gasoline. The standard must also take into account the fact that small refineries are exempted from the program until 2011, but must take into account the use of renewable fuel by those small refineries. Under the Act, the required volumes in Table I.B-1 apply to the contiguous 48 states. However, Alaska and Hawaii can opt into the program, in which case the pool of gasoline used to calculate the standard, and the number of regulated parties, would change. In addition, other states can request a waiver of the RFS program under certain conditions, which would affect the national quantity of renewable fuel required under the program. The Act requires the Agency to promulgate a credit trading program for the RFS program whereby an obligated party may generate credits for over complying with their annual obligation. The obligated party can then use these credits or trade them for use by another obligated party. Thus the credit trading program allows obligated parties to comply in the most cost-effective manner by permitting them to generate, transfer, and use credits. The trading program also permits renewable fuels that are not blended into gasoline, such as biodiesel, to participate in the RFS program. The Agency must also determine who can generate credits and under what conditions, how credits may be transferred from one party to another, and in certain cases the appropriate value of credits for different types of renewable fuel. If a party is not able to generate or purchase sufficient credits to meet their annual obligation, they are allowed to carry over the deficit to the next annual compliance period, but must achieve full compliance in that following year. - 13 -
Page 1 and 2: The Administrator signed the follow
Page 3 and 4: Ave., NW, Washington DC. This Docke
Page 5 and 6: Table of contents: I. Background A.
Page 7 and 8: C. Requirements for Producers and I
Page 9 and 10: G. Executive Order 13045: Protectio
Page 11: The increased use of renewable fuel
Page 15 and 16: Today's proposal outlines the full
Page 17 and 18: enewable fuel feedstock market pric
Page 19 and 20: Unlike VOC and NOx, emissions of CO
Page 21 and 22: These renewable feedstocks are then
Page 23 and 24: 5. Potential Water Quality Impacts
Page 25 and 26: enewable fuel volume which each par
Page 27 and 28: certain volume of renewable fuel. E
Page 29 and 30: est practices would have the option
Page 31 and 32: As stated, the renewable fuel stand
Page 33 and 34: enewable fuel volumes in the calcul
Page 35 and 36: For illustrative purposes, we have
Page 37 and 38: These credit provisions have meanin
Page 39 and 40: Stdi = The RFS program standard for
Page 41 and 42: gasoline. The Act is unclear on whe
Page 43 and 44: . Ethanol Made From Any Feedstock I
Page 45 and 46: generate thermal energy used to pro
Page 47 and 48: animal wastes, including poultry fa
Page 49 and 50: limit this program solely to a stra
Page 51 and 52: presence of the denaturant. For ins
Page 53 and 54: First, doing so could create an inc
Page 55 and 56: For purposes of this preamble, the
Page 57 and 58: capability for all of the small ref
Page 59 and 60: trading program, without any per ga
Page 61 and 62: obligated parties. However, there i
Page 63 and 64:
particular importance for 2013 and
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have to significantly change their
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The D code would identify cellulosi
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Another case in which a RIN may not
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Section IV. In the context of demon
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equired volumes shown in Table I.B-
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We request comment on the valid lif
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e used for current year compliance.
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equirements by roughly 10 to 30 per
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4. Provisions For Exporters Of Rene
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Previous-year RINs: RINs that came
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a. Responsibilities Of Renewable Fu
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another, in electronic or paper for
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e a one-to-one correspondence betwe
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Parent batch Actual volume (gal) Ba
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should also have the right to separ
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3. Distribution Of Separated RINs O
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obligated parties to exercise marke
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Our proposed program is designed to
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As discussed in Section III.D, it i
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additional enforcement burdens plac
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B. Requirements for Obligated Parti
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fuel and containing identifying inf
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We request comment on our proposed
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We also request comment on our prop
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The refiner or importer would be li
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Plant Feedstock Corn a Table VI.A.1
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Leading the Midwest in ethanol prod
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EPA forecasts ethanol production to
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As shown in Table VI.A.2-1 and Figu
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3. Current Ethanol and MTBE Consump
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Oxygenate Use (Bgal) 4.5 4.0 3.5 3.
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change from the 2004 base case. 53
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per gallon to biodiesel produced fr
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ased on the assumption that the ble
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Modifications to the rail, barge, t
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other waste materials as discussed
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elatively small fraction of the tot
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production costs using prices for s
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the capital cost of making the nece
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information on biodiesel freight co
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For further details on RVP reductio
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assuming only that blending of etha
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costs). At a $70 per barrel crude o
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gasoline use scenarios will cost th
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the incentive to blend in ethanol b
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supporting this rulemaking. We hope
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We base our estimates of fuel quali
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Table VIII.A.1.b-2 Effect of MTBE a
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pre-1998 model year onroad diesel e
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1. Primary Analysis The national em
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Table VIII.B.1-4 Annual Emissions N
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RFG due to the absence of an RVP wa
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increase in ambient ozone levels is
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developing a model of secondary org
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IX. Impacts On Fossil Fuel Consumpt
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intended to help fuel producers est
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efficiency and to reduce air emissi
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combined those displacement indexes
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3. Displacement Indexes (DI) The di
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Table IX.C.1-1 Fossil fuel impacts
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as on the exports of agricultural p
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which may change in response to an
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X. Agricultural Sector Economic Imp
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XI. Public Participation We request
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ways to comply with any previously
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small refiner under this proposal.
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meet these criteria to be considere
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“economically significant” as d
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40 CFR Part 80 is proposed to be am
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(b) Renewable Fuel Standard for 200
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(2) The term “Renewable fuel” i
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RFStdi = Renewable Fuel Standard in
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a party’s renewable volume obliga
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(a) YYYY is the calendar year in wh
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(ii) The value for EEEEEE in an ext
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(2) A deficit is calculated accordi
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(a) (1) Any party that exports any
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(e) If a refiner is complying on an
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calendar year; however, disqualific
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§80.76, if such information has no
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(1) A summary report of the annual
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(4) Reports shall be submitted on f
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(1) Fail to acquire sufficient RINs
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(b) The following attest procedures
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(B) That the RFS-FRGAS remained seg
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EPA employees or EPA contractors, f
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(iv) Determine the date and time th
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(ii) Be licensed as a Certified Pub
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