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

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III.B provides more details on the renewable fuels that would be allowed to be used for compliance with the standard under our proposal. 4. Equivalence Values Of Different Renewable Fuels One question that EPA faced in developing the program was what value to place on different renewable fuels and on what basis should that value be determined. The Act specifies that each gallon of cellulosic ethanol be treated as if it were 2.5 gallons of renewable fuel, but does not specify the values for other renewable fuels. As discussed in Section III.B.4., we considered and are seeking comment on a range of options including straight volume, energy content, and life cycle energy or greenhouse gas emissions. However, we are proposing that the “Equivalence Values” for the different renewable fuels be based on their energy content in comparison to the energy content of ethanol, and adjusted as necessary for their renewable content. The result is an Equivalence Value for corn ethanol of 1.0, for biobutanol of 1.3, for biodiesel (mono alkyl ester) of 1.5, for nonester renewable diesel of 1.7, and for cellulosic ethanol of 2.5. The proposed methodology can be used to determine the appropriate Equivalence Value for any other potential renewable fuel as well. 5. How Will Compliance Be Determined? Under our proposed program, every gallon of renewable fuel produced or imported into the U.S. would be assigned a unique renewable identification number (RIN). A block of RINs could be assigned to any batch of renewable fuel that is valid for compliance purposes under the RFS program. These RINs would be placed on product transfer documents (PTD) as a batch of renewable fuel is transferred through the distribution system. Once the renewable fuel is obtained by an obligated party or actually blended into a motor vehicle fuel, the RIN could be separated from the batch of renewable fuel to which it had been assigned, and then either used for compliance purposes or traded. For excess RINs resulting from the production of renewable fuels with Equivalence Values greater than 1.0, the producer of the renewable fuel could retain them for marketing separately (they need not be assigned to a batch of renewable fuel and placed on PTDs). RINs would represent proof of production which is then taken as proof of consumption as well, since all renewable fuel produced or imported will be either consumed as fuel or exported. For instance, ethanol produced for use as motor vehicle fuel is denatured specifically so that it can only be used as fuel. Similarly, biodiesel is produced only for use as fuel and has no other potential uses. An obligated party would demonstrate compliance with the renewable fuel standard by accumulating sufficient RINs to cover their individual renewable fuel volume obligation. It would not matter whether the obligated party used the renewable fuel themselves. A party's obligation would be to ensure that a certain amount of renewable fuel was used, whether by themselves or by someone else, and the RIN would be evidence that this occurred for a - 26 -
certain volume of renewable fuel. Exporters of renewable fuel would also be required to retire RINs in sufficient quantities to cover the volume of renewable fuel exported. RINs claimed for compliance purposes would thus represent renewable fuel actually consumed as motor vehicle fuel in the U.S. RINs would be valid for compliance purposes for the calendar year in which they were generated, or the following calendar year. This approach to RIN life would be consistent with the Act's prescription that credits be valid for compliance purposes for 12 months as of the date of generation. An obligated party could either use RINs to demonstrate compliance, or could transfer RINs to any other party. If an obligated party was not able to accumulate sufficient RINs for compliance in a given year, it could carry a deficit over to the next year so long as the full deficit and obligation were covered in the next year. In order to ensure that previous year RINs are not used preferentially for compliance purposes in a manner that would effectively circumvent the limitation that RINs be valid for only 12 months after the year generated, we are proposing to place a cap on the use of RINs generated the previous year when demonstrating compliance with the renewable volume obligation for the current year. The cap would mean that no more than 20% of the current year obligation could be satisfied using RINs from the previous year. In this manner there is no ability for excess renewable fuel use in successive years to cause an accumulation of RINs from excess compliance in prior years to significantly depress renewable fuel demand in any future year. In keeping with the Act, excess RINs not used would expire. Section III.D provides more details on how obligated parties would use RINs for compliance purposes. 6. How Would The Trading Program Work? Renewable fuel producers and importers would be required to generate RINs when they produce or import a batch of renewable fuel. They would then be required to transfer those RINs along with the renewable fuel batches that they represent whenever they transfer the batch to another person. Likewise any other party that takes ownership or custody of the batch would be required to transfer the RIN with the batch. The RIN could be separated from the batch only by obligated parties (at the point when they take ownership of the batch) or a party that converts the renewable fuel into motor vehicle fuel (such as through blending with conventional gasoline or diesel). Once a RIN is separated from the batch of renewable fuel that it represents, it can be used for compliance purposes, banked, or traded to another party. Separated RINs could be transferred to any party any number of times. Recordkeeping and reporting requirements would apply to any party that holds RINs, whether through the ownership or custody of a batch of renewable fuel or through the transfer of separated RINs. - 27 -
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 and 12: The increased use of renewable fuel
Page 13 and 14: establish the applicable national v
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: enewable fuel volume which each par
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
Page 65 and 66: have to significantly change their
Page 67 and 68: The D code would identify cellulosi
Page 69 and 70: Another case in which a RIN may not
Page 71 and 72: Section IV. In the context of demon
Page 73 and 74: equired volumes shown in Table I.B-
Page 75 and 76: We request comment on the valid lif
Page 77 and 78:
e used for current year compliance.
Page 79 and 80:
equirements by roughly 10 to 30 per
Page 81 and 82:
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
Page 101 and 102:
As discussed in Section III.D, it i
Page 103 and 104:
additional enforcement burdens plac
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B. Requirements for Obligated Parti
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fuel and containing identifying inf
Page 109 and 110:
We request comment on our proposed
Page 111 and 112:
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
Page 135 and 136:
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
Page 145 and 146:
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
Page 237 and 238:
(iv) Determine the date and time th
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(ii) Be licensed as a Certified Pub
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