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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would be relatively straightforward to implement, provide the industry with the certainty<br />
they need to comply, <strong>and</strong> give them time to put in place their compliance plans <strong>and</strong><br />
actions. It also would be unlikely to have any negative impacts on renewable fuel use<br />
given the expectations that total volumes in 2007 will exceed the national volume<br />
required for 2007. This is the approach we are proposing today.<br />
This “prospective” approach would not formally apply the st<strong>and</strong>ard to all <strong>of</strong> the<br />
gasoline produced in the 2007 calendar year. As a result, it would not formally ensure<br />
that the total volume <strong>of</strong> renewable fuel required to be used in 2007 would actually be<br />
used. However, given the present circumstances, we believe this is an appropriate way to<br />
implement the Act’s provisions. We are confident that the combined effect <strong>of</strong> the<br />
proposed regulatory requirements for 2007 <strong>and</strong> the expected market dem<strong>and</strong> for<br />
renewable fuels will lead to greater renewable fuel use in 2007 than is called for under<br />
the Act. Furthermore, refiners <strong>and</strong> importers are not required to meet any requirements<br />
under the Act until EPA adopts the regulations, <strong>and</strong> EPA is authorized to consider<br />
appropriate lead time in establishing the regulatory requirements. 12 Under this option we<br />
believe there would be reasonable lead-time for regulated parties to meet their 2007<br />
compliance obligations.<br />
While we are proposing to apply the renewable fuel st<strong>and</strong>ard for 2007<br />
prospectively only from the effective date <strong>of</strong> the final rule, we nevertheless request<br />
comment on all these options for addressing compliance in calendar year 2007.<br />
4. <strong>Renewable</strong> Volume Obligations<br />
In order for an obligated party to demonstrate compliance, the percentage st<strong>and</strong>ards<br />
described in Section III.A.2 which are applicable to all obligated parties must be converted<br />
into the volume <strong>of</strong> renewable fuel each obligated party is required to satisfy. This volume <strong>of</strong><br />
renewable fuel is the volume for which the obligated party is responsible under the RFS<br />
program, <strong>and</strong> is referred to here as its <strong>Renewable</strong> Volume Obligation (RVO).<br />
The calculation <strong>of</strong> the RVO requires that the st<strong>and</strong>ard shown in Table III.A.2-1 for a<br />
particular compliance year be multiplied by the gasoline volume produced by an obligated<br />
party in that year. To the degree that an obligated party did not demonstrate full compliance<br />
with its RVO for the previous year, the shortfall is included as a deficit carryover in the<br />
calculation. The equation used to calculate the RVO for a particular year is shown below:<br />
where<br />
RVOi = Stdi x GVi + Di-1<br />
RVOi = The <strong>Renewable</strong> Volume Obligation for the obligated party for year i, in gallons<br />
12 The statutory default st<strong>and</strong>ard for 2006 is the one exception to this, since it directly establishes a<br />
renewable fuel obligation applicable to refiners <strong>and</strong> importers in the event that EPA does not promulgate<br />
regulations.<br />
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