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

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Given the additional uncertainty and complexity caused by this alternative approach, we believe that our proposed 20 percent cap provides the greatest degree of simplicity and flexibility while still addressing the RIN rollover issue. However, we request comment on any alternative approaches to addressing the RIN rollover issue. d. Deficit Carryovers The Energy Act also contains a provision allowing an obligated party to carry a deficit forward from one year into the next if it cannot generate or purchase sufficient credits to meet its RVO. However, deficits cannot be carried over two years in a row. Deficit carryovers are measured in gallons of renewable fuel, just as for RINs and RVOs. If an obligated party has not acquired sufficient RINs to meet its RVO in a given year, the deficit is calculated by subtracting the total number of RINs an obligated party has acquired from its RVO. There are no volume penalties, discounts, or other factors included when calculating a deficit carryover. As described in Section III.D.1, the deficit is then added to the RVO for the next year. The calculation of the RVO as described in Section III.A.4 shows how a deficit would be carried over into the next year: where RVOi = Stdi x GVi + Di-1 RVOi = The Renewable Volume Obligation for the obligated party for year i, in gallons Stdi = The RFS program standard for year i, in percent GVi = The non-renewable gasoline volume produced by an obligated party in year i, in gallons Di-1 = Renewable fuel deficit carryover from the previous year, in gallons If an obligated party does acquire sufficient RINs to meet its RVO in year i-1, the obligated party must procure sufficient RINs to cover the full RVO for year i including the deficit. There are no provisions allowing for another year of carryover. If the obligated party does not acquire sufficient RINs to meet its RVO for that year plus the deficit carryover from the previous year, it would be in noncompliance. The Act indicates that deficit carryovers are to occur due to "inability" to generate or purchase sufficient credits. We believe that obligated parties will make a determined effort to satisfy their RVO on an annual basis, and that a deficit will demonstrate that they were unable to do so. Thus, we are not proposing that any particular demonstration of "inability" be a prerequisite to the ability of obligated parties to carry deficits forward. However, we request comment on this issue. - 80 -
4. Provisions For Exporters Of Renewable Fuel As described in Section III.D.2.a, we believe that U.S. consumption of renewable fuel as motor vehicle fuel can be measured with considerable accuracy through the tracking of renewable fuel production and importing records. This is the basis for our proposed RIN-based system of compliance. However, exports of renewable fuel must be accounted for under this approach. For instance, if a gallon of ethanol is produced in the U.S. but consumed outside of the U.S., the RIN associated with that gallon should not be valid for RFS compliance purposes since the RFS program is intended to require a specific volume of renewable fuel to be consumed in the U.S. Exports of renewable fuel currently represent about 5 percent of U.S. production. To ensure that renewable fuels exported from the U.S. cannot be used by an obligated party for RFS compliance purposes, the RINs associated with that exported renewable fuel must be removed from circulation. Ideally the producer of the exported renewable fuel would simply not create RINs for those batches. However, in the fungible distribution system it is common for exportation of fuel to occur without the knowledge of the producer. As a result, we cannot rely on the producers to know which batches will be exported and to not generate RINs for those batches. Another approach would be to increase the obligation placed on refiners, importers, and blenders of gasoline based on the volume of renewable fuel exported. Obligated parties would thus acquire RINs to meet the standard described in Section III.A, and would also be required to acquire RINs to cover the volume of renewable fuel exported. However, this approach would not only require an estimate of the volume of renewable fuel exported in the next year, but would also mean that every obligated party would share in accumulating RINs to cover the exports. Given these drawbacks, we believe that these two approaches would be unworkable. As a result, we believe that it should be the exporter's responsibility to account for exported renewable fuel. The most straightforward mechanism to accomplish this would be to assign an RVO to each exporter that is equal to the annual volume of renewable fuel it exported. Just as for obligated parties, then, the exporter would be required to acquire sufficient gallon-RINs to meet its RVO. If the exporter purchased renewable fuel directly from a producer, that renewable fuel would come with associated gallon-RINs which could then be applied to its RVO under our proposed program. In this circumstance, the exporter would not need to acquire RINs from any other source. If, however, the exporter received renewable fuel without the associated RINs, it would need to acquire RINs from some other source in order to meet its RVO. As discussed in Section III.D.2.c, it may be possible to eliminate the need for RINs altogether in specific circumstances involving exports of renewable fuels. For instance, if the exporter was wholly owned by a renewable fuel producer, there would be no need to generate RINs for the exported product. Likewise if a renewable fuel producer specifically and explicitly earmarked a batch of renewable fuel for export, there would be no need for a RIN to be generated. However, in both of these cases the - 81 -
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The Administrator signed the follow
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Ave., NW, Washington DC. This Docke
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Table of contents: I. Background A.
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C. Requirements for Producers and I
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G. Executive Order 13045: Protectio
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The increased use of renewable fuel
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establish the applicable national v
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Today's proposal outlines the full
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enewable fuel feedstock market pric
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Unlike VOC and NOx, emissions of CO
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These renewable feedstocks are then
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5. Potential Water Quality Impacts
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enewable fuel volume which each par
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certain volume of renewable fuel. E
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: equirements by roughly 10 to 30 per
Page 83 and 84: Previous-year RINs: RINs that came
Page 85 and 86: a. Responsibilities Of Renewable Fu
Page 87 and 88: another, in electronic or paper for
Page 89 and 90: e a one-to-one correspondence betwe
Page 91 and 92: Parent batch Actual volume (gal) Ba
Page 93 and 94: should also have the right to separ
Page 95 and 96: 3. Distribution Of Separated RINs O
Page 97 and 98: obligated parties to exercise marke
Page 99 and 100: 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
Page 105 and 106: B. Requirements for Obligated Parti
Page 107 and 108: 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
Page 113 and 114: The refiner or importer would be li
Page 115 and 116: Plant Feedstock Corn a Table VI.A.1
Page 117 and 118: Leading the Midwest in ethanol prod
Page 119 and 120: EPA forecasts ethanol production to
Page 121 and 122: As shown in Table VI.A.2-1 and Figu
Page 123 and 124: 3. Current Ethanol and MTBE Consump
Page 125 and 126: Oxygenate Use (Bgal) 4.5 4.0 3.5 3.
Page 127 and 128: change from the 2004 base case. 53
Page 129 and 130: 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
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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
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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
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(iv) Determine the date and time th
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(ii) Be licensed as a Certified Pub
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