Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...
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enewable fuel feedstock market prices, decreased imports <strong>of</strong> petroleum, <strong>and</strong> effects on<br />
energy security.<br />
To carry out our analyses, we elected to use 2004 as the baseline from which to<br />
compare the impacts <strong>of</strong> exp<strong>and</strong>ed renewable use. We chose 2004 as a baseline primarily<br />
due to the fact that all the necessary refinery production data, renewable production data,<br />
<strong>and</strong> fuel quality data was already in h<strong>and</strong> at the time we needed to begin the analysis. We<br />
did not use 2005 as a baseline year because 2005 may not be an appropriate year for<br />
comparison due to the extraordinary impacts <strong>of</strong> hurricanes Katrina <strong>and</strong> Rita on gasoline<br />
production <strong>and</strong> use. To assess the impacts <strong>of</strong> anticipated increases in renewable fuels, we<br />
elected to look at what they would be in 2012, the year the statutorily-m<strong>and</strong>ated<br />
renewable fuel volumes will be fully phased in. By conducting the analysis in this<br />
manner, the impacts include not just the impact <strong>of</strong> exp<strong>and</strong>ed renewable fuel use by itself,<br />
but also the corresponding decrease in the use <strong>of</strong> MTBE, <strong>and</strong> the potential for oxygenates<br />
to be removed from RFG due to the absence <strong>of</strong> the RFG oxygenate m<strong>and</strong>ate. Since these<br />
three changes are all inextricably linked <strong>and</strong> are occurring simultaneously in the<br />
marketplace, evaluating the impacts in this manner is appropriate.<br />
We evaluated the impacts <strong>of</strong> exp<strong>and</strong>ed renewable use <strong>and</strong> the corresponding<br />
changes to the fuel supply on fuel costs, consumption <strong>of</strong> fossil fuels, <strong>and</strong> some <strong>of</strong> the<br />
economic impacts on the agricultural sector. We also evaluated the impacts on<br />
emissions, including greenhouse gas emissions, <strong>and</strong> the corresponding impacts on<br />
nationwide <strong>and</strong> regional air quality. Our preliminary analyses are summarized in this<br />
section. There are a number <strong>of</strong> uncertainties associated with this preliminary assessment.<br />
The analyses described here will be updated for the final rule including additional<br />
investigation into these uncertainties.<br />
1. <strong>Renewable</strong> <strong>Fuel</strong> Volumes Scenarios Analyzed<br />
As shown in Table I.B-1, the Act stipulates that the nationwide volumes <strong>of</strong><br />
renewable fuel required under the RFS program must be at least 4.0 billion gallons in<br />
2006 <strong>and</strong> increase to 7.5 billion gallons in 2012. However, we expect that the volume <strong>of</strong><br />
renewable fuel will actually exceed the required volumes by a significant margin. Based<br />
on economic modeling, EIA projects renewable dem<strong>and</strong> in 2012 <strong>of</strong> 9.6 billion gallons for<br />
ethanol, <strong>and</strong> 300 million gallons for biodiesel using crude oil prices forecast at $47 per<br />
barrel. Therefore, in assessing the impacts <strong>of</strong> exp<strong>and</strong>ed use <strong>of</strong> renewable fuels, we<br />
evaluated two comparative scenarios, one representing the statutorily required minimum,<br />
<strong>and</strong> one reflecting the higher levels projected by EIA. Although the actual renewable<br />
fuel volumes produced in 2012 may differ from both the required <strong>and</strong> projected volumes,<br />
we believe that these two volume scenarios together represent a reasonable range for<br />
analysis purposes.<br />
The Act also stipulates that at least 250 million gallons out <strong>of</strong> the total volume<br />
required in 2013 <strong>and</strong> beyond must be cellulosic biomass ethanol. Because we anticipate<br />
a ramp-up in production <strong>of</strong> cellulosic biomass ethanol products in the coming years, we<br />
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