WASHINGTON — The U.S. Environmental Protection Agency (EPA) is proposing the 2013 percentage standards for four fuel categories that are part of the agency’s Renewable Fuel Standard program (RFS2).
The Energy Independence and Security Act of 2007 (EISA) established the RFS2 program and the annual renewable fuel volume targets, which steadily increase to an overall level of 36 billion gallons in 2022.
The RFS program requires that specified volumes of renewable fuel be used as transportation fuel, home heating oil, and/or jet fuel each year.
To achieve these volumes, EPA calculates a percentage-based standard for the following year.
The proposal waives the cellulosic biofuel requirement from one billion gallons to 14 million gallons, but retains overall advanced biofuel and renewable fuel requirements.
Based on the standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.
“This year’s RFS requirements will necessitate the use of more E15, E85 and other higher-level blends,” said Renewable Fuels Association (RFA) President and CEO Bob Dinneen. “The 2013 RFS requirements will be the catalyst that finally compels oil companies to get serious about breaching the so-called blend wall.”
Domestic ethanol consumption is almost entirely in the form of low level blends with gasoline capped at 10 percent (E10), although small amounts have been consumed in “flex fuel” vehicles as an 85 percent blend (E85) and very small quantities are being consumed as a 15 percent blend (E15).
With blending dominated by E10, the blend wall is reached when the ethanol inclusion rate reaches 10 percent of domestic motor gasoline consumption.
The blend wall can be problematic since the federal Renewable Fuels Standards (RFS) require increasing quantities of renewable (ethanol) biofuels consumption for the next three years. Those requirements exceed the expected E10 blend wall.
Dinneen is worried about imports, saying the proposed advanced biofuel standard might open the door even wider to imports of more Brazilian sugarcane ethanol to the detriment of domestic advanced biofuels, like waste-derived ethanol and biodiesel.
He said EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel RIN that is currently trading at 48 cents, and added EPA’s analysis that suggests sugarcane ethanol reduces greenhouse gas emissions by 52 to 71 percent relative to gasoline is “outdated.”
The proposal announced Jan. 31 will be open for a 45-day public comment period and EPA will consider feedback from a range of stakeholders before the proposal is finalized.
Compliance verification. The EPA is proposing a structured process for buyers of Renewable Identification Numbers (RINs) in order to verify their validity.
Under the proposal, RINs would be verified through a new voluntary quality assurance program that also includes alternative compliance options.
This proposal will be available for a 30-day public comment period.
Quality Assurance Plans (QAPs) would provide a means for independent third parties to audit the production of renewable fuel and verify that RINs have been validly generated.
The proposed rule allows verification of RINs to begin this year.
Renewable fuel producers and importers generate RINs based on the volume of compliant renewable fuel that they make available. RINs can then be traded and used by petroleum refiners and importers to show compliance with their volume obligations.
Following a number of high profile RIN fraud cases, EPA expects its rulemaking to improve the overall liquidity in the RIN market and in particular make it easier for smaller renewable fuel producers to sell their RINs.
EPA worked closely with stakeholders in developing the proposal.
More information on the proposed rule and the RFS program: http://epa.gov/otaq/fuels/renewablefuels/regulations.htm.