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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These renewable feedstocks are then used as blend fuels in gasoline <strong>and</strong> diesel.<br />
While biodiesel is typically just blended with petroleum diesel, additional efforts are<br />
sometimes necessary <strong>and</strong>/or economically advantageous at the refiner level when adding<br />
ethanol to gasoline. For example, ethanol’s high octane reduces the need for other octane<br />
enhancements by the refiner, whereas <strong>of</strong>fsetting the volatility increase caused by ethanol<br />
may require removal <strong>of</strong> other highly volatile components. Section VII examines these<br />
fuel cost impacts <strong>and</strong> concludes that the net cost to society in 2012 in comparison to the<br />
reference case <strong>of</strong> the increased use <strong>of</strong> renewable fuels <strong>and</strong> their replacement <strong>of</strong> MTBE,<br />
will range from an estimate <strong>of</strong> 0.3 cent to 1 cent per gallon <strong>of</strong> gasoline.<br />
This fuel cost impact does not consider other societal benefits. For example, the<br />
petroleum-based fuel displaced by renewable fuel, largely produced in the United States,<br />
should reduce our use <strong>of</strong> imported oil <strong>and</strong> fuel. We estimate that 95 percent <strong>of</strong> the<br />
lifecycle petroleum reductions resulting from the use <strong>of</strong> renewable fuel will be met<br />
through reductions in net petroleum imports. In Section IX <strong>of</strong> this preamble we estimate<br />
the value <strong>of</strong> the decrease in imported petroleum at about $3.5 billion in 2012 for the 7.5<br />
billion gallon case <strong>and</strong> $5.8 billion for the 9.6 billion gallon case, in comparison to our<br />
2012 reference case. Total petroleum import expenditures in 2012 are projected to be<br />
about $698 billion.<br />
The above numbers only assess those impacts <strong>of</strong> increased production <strong>and</strong> use <strong>of</strong><br />
renewable fuel that we can quantify at this time. The RFS program attempts to spur the<br />
increased use <strong>of</strong> renewable transportation fuels made principally from agricultural crops<br />
produced in the US. As a result, it is important to analyze the consequences <strong>of</strong> the<br />
transition to greater renewable fuel use in the US agricultural sector. To analyze the<br />
impacts on the US agricultural sector, EPA has selected the Forest <strong>and</strong> Agricultural<br />
Sector Optimization Model (FASOM) developed by Pr<strong>of</strong>essor Bruce McCarl, Texas<br />
A&M University <strong>and</strong> others over the past thirty years. FASOM is a dynamic, nonlinear<br />
programming model <strong>of</strong> the agriculture <strong>and</strong> forestry sectors <strong>of</strong> the U.S. (For this analysis,<br />
we will be focusing upon the agriculture portion <strong>of</strong> the model.) The strength <strong>of</strong> this<br />
model is its consideration <strong>of</strong> the full direct <strong>and</strong> indirect impacts <strong>of</strong> a shift in production <strong>of</strong><br />
an agricultural commodity. For example, increased ethanol use will increase the dem<strong>and</strong><br />
for corn. The model assesses not only the impacts <strong>of</strong> increased dem<strong>and</strong> for corn on acres<br />
devoted to corn production but also where the incremental corn will be produced, what<br />
other crops will be displaced <strong>and</strong> how corn is allocated among competing uses. Shifts in<br />
corn production will likely impact the price <strong>of</strong> corn <strong>and</strong> other crop prices. The model can<br />
also estimate the impacts <strong>of</strong> increased renewable fuel use on animal feed costs, animal<br />
production, costs to consumers <strong>and</strong> US agricultural exports. Similarly, FASOM can<br />
estimate effects on US farm employment <strong>and</strong> income (broken down by region, <strong>and</strong> farm<br />
sector such as corn farmers versus soybean producers versus the livestock industry, for<br />
example).<br />
One <strong>of</strong> the effects <strong>of</strong> increased use <strong>of</strong> renewable fuel is that it diversifies the<br />
energy sources used in making transportation fuel. To the extent that diverse sources <strong>of</strong><br />
fuel energy reduce the dependence on any one source, the risks, both financial as well as<br />
strategic, <strong>of</strong> potential disruption in supply or spike in cost <strong>of</strong> a particular energy source is<br />
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