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

As stated, the renewable fuel standard for a given year is basically the ratio of the
amount of renewable fuel specified in the Act for that year to the projected 48-state nonrenewable
gasoline volume for that year. While the required amount of total renewable
fuel for a given year is provided by the Act, EPA is required to use an EIA estimate of
the amount of gasoline that will be sold or introduced into commerce for that year. The
level of the percentage standard would be further reduced if Alaska, Hawaii, or a U.S.
territory chose to participate in the RFS program, as gasoline produced in or imported
into those states or territories would then be subject to the standard. Should any of these
states or territories choose to opt into the RFS program, the projected gasoline volume
would increase above that consumed in the 48 contiguous states. EIA has indicated that
the best estimation of the coming year’s gasoline consumption is found in Table 5a (U.S.
Petroleum Supply and Demand: Base Case) of the October issue of the monthly EIA
publication Short-Term Energy Outlook which publishes quarterly energy projections.
Since the October 2006 document is not currently available for the purpose of proposing
the 2007 standard and projecting the 2008 and later standards, we have used the gasoline
volume projections in EIA’s 2006 Annual Energy Outlook (AEO), Table A2 “Energy
Consumption by Sector and Source.” We intend to use the October 2006 Short-Term
Energy Outlook values for the final rule.
However, these gasoline volumes include renewable fuel use, which in the coming
years is expected to be mostly ethanol. As discussed below in Section III.C.1, the
renewable fuel obligation will not apply to renewable blenders. Thus, the gasoline
volume used to determine the standard must be the non-renewable portion of the gasoline
pool, in order to achieve the volumes of renewables specified in the Act. In order to get a
total non-renewable gasoline volume, the renewable fuel volume must be subtracted from
the total gasoline volume. EIA has indicated that the best estimation of the coming
year’s renewable fuel consumption is found in Table 11 (U.S. Renewable Energy Use by
Sector: Base Case) of the October issue of the monthly EIA publication Short-Term
Energy Outlook. For the purpose of proposing the 2007 standard and projecting the 2008
and later standards, we have used the renewable (ethanol) volume projections in EIA’s
2006 Annual Energy Outlook (AEO), Table 17 “Renewable Energy Consumption by
Sector and Source.” As for the gasoline projections discussed above, we intend to use
the October 2006 renewable fuel values for the final rule.
The Act exempts small refineries 8 from the RFS requirements until the 2011
compliance period. As discussed in Section III.C.3.a, EPA is proposing to also exempt
small refiners 9 from the RFS requirements until 2011, and to treat small refiner gasoline
volumes the same as small refinery gasoline volumes. Since small refineries and small
refiners would be exempt from the program until 2011, EPA is proposing that their
gasoline volumes be excluded from the overall non-renewable gasoline volume used to
8
Under the Act, small refineries are those with 75,000 bbls/day or less average aggregate daily crude oil
throughput.
9
Small refiners are those entities who produced gasoline from crude oil in 2004, and who meet the crude
processing capability (no more than 155,000 barrels per calendar day, bpcd) and employee (no more than
1500 people) criteria as specified in previous EPA fuel regulations.
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