Volume 24, Issue 2, 2014
Renewable Fuel Standards for 2014 Proposed
O
n November 29, 2013 (78 FR
71732–71784), EPA proposed
percentage standards for
cellulosic biofuel, biomass-based diesel,
advanced biofuel, and renewable fuels
applicable to all gasoline and diesel
produced or imported in 2014. Under
CAA Section 211(o), EPA is required
to annually determine a renewable
fuel standard, which is applicable to
refiners, importers, and certain blenders
of gasoline. An affected entity is required
to determine the volume of renewable
fuel that it must ensure is consumed
as motor vehicle fuel. The renewable
fuel program, as revised by the Energy
Independence and Security Act of 2007,
mandates the use of 36 billion gallons
of renewable fuel by 2022. The Energy
Independence and Security Act also
establishes four separate categories of
renewable fuels, each with a separate
volume mandate and specific lifecycle
greenhouse gas emission threshold.
The categories are: 1) cellulosic biofuel,
2) biomass-based diesel, 3) advanced
biofuel, and 4) renewable fuel.
The proposed rule would also rescind
the cellulosic biofuel standard for 2011. In
January 2013, the U.S. Court of Appeals
for the District of Columbia Circuit (DC
Circuit Court) vacated EPA’s cellulosic
biofuel standard for 2012. Because the
2011 cellulosic biofuel standard was
developed using the same methodology
the court found unacceptable, the
agency has determined that it would be
appropriate to rescind the 2011 standard.
The November 29, 2013 proposed rule
affects 40 CFR Part 80, Subpart M.
Additional References
The following articles from the Air
Pollution Consultant may be helpful
when reviewing the November 29, 2013
proposed rule:
“Regulations Issued to Implement
Renewable Fuels Standard Program”
(75 FR 14670; March 26, 2010),
Air Pollution Consultant
©
2014 Aspen Publishers, Inc.
Volume 20, Issue 4, page 2.45; and
“EPA’s Projection of Cellulosic
Biofuel Production for 2012 Vacated”
(January 25, 2013), Volume 23,
Issue 3, page 3.13.
Background
The renewable fuel standard program
began in 2006 pursuant to the
requirements in CAA Section 211(o),
which were added through the Energy
Policy Act of 2005, and subsequently
amended by the Energy Independence
and Security Act of 2007. The Energy
Independence and Security Act made
three primary changes to the volume
requirements of the renewable fuel
standard program. First, it substantially
increases the required volumes and
extends the time frame over which the
volumes ramp up through at least 2022.
Second, it divides the total renewable
fuel requirement into four separate
categories, each with its own volume
requirement. The four categories are:
1) cellulosic biofuel, 2) biomass-based
diesel, 3) advanced biofuel, and 4) total
renewable fuel.
Cellulosic biofuel is renewable fuel
derived from any cellulose, hemicellulose,
or lignin that is derived from renewable
biomass. Biodiesel is a diesel fuel
substitute produced from nonpetroleum
renewable resources. Advanced biofuel
is renewable fuel, other than ethanol
derived from corn starch. Advanced
biofuel includes ethanol derived from
cellulose, hemicellulose, or lignin; ethanol
derived from sugar or starch (other
than corn starch); ethanol derived from
waste material, including crop residue,
other vegetative waste material, animal
waste, and food waste and yard waste;
biomass-based diesel; biogas (including
landfill gas and sewage waste treatment
gas) produced through the conversion of
organic matter from renewable biomass;
butanol or other alcohols produced
through the conversion of organic matter
Regulations / Permitting
from renewable biomass; and other fuel
derived from cellulosic biomass.
The Energy Independence and Security
Act requires that each of the mandated
volumes of renewable fuels achieve certain
minimum thresholds of greenhouse gas
emission performance. The evaluation of
renewable fuel greenhouse gas emission
performance must include the full lifecycle
emission impacts of fuel production,
including significant emissions from
land use changes. The minimum lifecycle
greenhouse gas emission performance,
measured as a percent reduction from
baseline, are:
Renewable fuel—20%,
Advanced biofuel—50%,
Biomass-based diesel—50%, and
Cellulosic biodiesel—60%.
The 20% criterion for renewable fuels
generally applies only to renewable fuel
from new facilities that commenced
construction after December 19, 2007.
Lifecycle greenhouse gas emissions
means the aggregate quantity of
greenhouse gases related to the full fuel
cycle, including all stages of fuel and
feedstock production and distribution,
from feedstock generation and extraction
through distribution, delivery, and
use of the finished fuel. The Energy
Independence and Security Act establishes
specific greenhouse gas emission
thresholds for each of the four categories
of renewable fuels, requiring a percentage
improvement compared to a baseline of
the gasoline and diesel used in 2005.
EPA must conduct a lifecycle analysis to
determine whether or not renewable fuels
produced under varying conditions will
meet the greenhouse gas thresholds for
the different fuel categories.
On March 26, 2010 (75 FR 14670),
EPA issued new regulations implementing
changes to the national renewable fuel
standard program, as required by the
Energy Independence and Security Act.
As indicated above, CAA Section 211(o)
requires EPA to annually determine
a renewable fuel standard, which is
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Regulations / Permitting
applicable to refiners, importers, and
certain blenders of gasoline. An affected
entity is required to determine the volume
of renewable fuel that it must ensure is
consumed as motor vehicle fuel.
Proposed 2014 Renewable
Fuel Standards
While CAA Section 211(o)(2)(B)
s p e c i f i e s re n e w a b l e f u e l vo l u m e
requirements through 2022, the statute
also requires EPA to set standards based
on these volumes each November for
Proposed Renewable Fuel Standards for 2014
Percentage of fuel required
Fuel category
to be renewable
Cellulosic biofuel
Biomass-based diesel
Advanced biofuel
Renewable fuel
a
Ethanol-equivalent volume.
b
Actual volume.
Source: 78 FR 71734 and 78 FR 71738.
For cellulosic biofuel, EPA is required
to project the volume of production
and must base the cellulosic biofuel
standard on projected available volume
if it is less than the applicable volume set
forth CAA 211(o)(2)(B). As indicated
in Table 1, the agency has proposed a
cellulosic biofuel volume for 2014 that
is well below the statutory level. EPA
indicates that the cellulosic biofuel
industry continues to transition from
research and development and pilot
scale to commercial scale facilities, For
biomass-based diesel, the agency has
proposed to maintain the same volume for
biomass-based diesel for 2014 and 2015
as was adopted for 2013.
Based on the availability of qualifying
renewable fuels and factors that in some
cases limit supplying those fuels to
vehicles and equipment that can consume
them, EPA has proposed adjustments
to the volumes of advanced biofuel and
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the following year. The standards for
each year are to be based, in part,
on information provided by the
U.S. Department of Energy’s Energy
Information Administration (EIA).
In the case of cellulosic biofuel, the
standard is to be based on the volume
projected to be available during the
following year. If the projected volume
of cellulosic biofuel is lower than the
level specified in CAA Section 211(o)(2)
(B), then EPA can also lower the volume
standards for advanced biofuel and total
renewable fuel accordingly.
TABLE 1
Proposed volume of
renewable fuel
(billion gallons)
0.010% 0.017
1.16% 1.28
1.33% 2.20
9.20% 15.21
total renewable fuel required under
CAA Section 211(o)(2)(B). Among the
factors leading the agency to propose
adjustments to the applicable volumes
of advanced biofuel and total renewable
fuel are limitations in the volume of
ethanol that can be consumed in gasoline.
Since the enactment of the Energy
Independence and Security Act in 2007,
gasoline consumption has decreased.
The total demand for gasoline has
decreased due to the recent greenhouse
gas emission and corporate average fuel
economy (CAFE) standards for vehicles,
fuel prices, and broader factors affecting
the economy. In addition, there are
constraints on the supply of higher
ethanol blends (e.g., E85) to the vehicles
that can use them (flex fuel vehicles). The
factors limiting how much ethanol can be
introduced into the transportation fuel
supply are commonly referred to as the
ethanol “blendwall.”
Volume 24, Issue 2, 2014
Table 1 summarizes the proposed
renewable fuel volume requirements for
2014. The renewable fuel standards are
expressed as a volume percentage, and are
used by each refiner, blender, or importer
to determine their renewable fuel volume
obligations. The applicable percentages are
set so that, if each regulated party meets
the percentages, and if the EIA projections
of gasoline and diesel use are accurate,
then the amount of renewable fuel,
cellulosic biofuel, biomass-based diesel,
and advanced biofuel used will meet the
volumes required on a nationwide basis.
Statutory volume of
renewable fuel
(billion gallons)
1.75a
≥1.0b
3.75a
18.15a
2011 Cellulosic Biofuel Standard
EPA has also proposed to rescind the
cellulosic biofuel standard for 2011. In
a January 25, 2013 decision, the DC
Circuit Court vacated EPA’s projection
of how much cellulosic biofuel would be
produced in 2012 (American Petroleum
Institute v. EPA, No. 12-1139 [D.C.
Cir. Jan. 25, 2013]). The American
Petroleum Institute sued the agency over
its 2012 projection of cellulosic biofuel
production. In the January 25, 2013
decision, the DC Circuit Court found
that EPA’s methodology for making the
2012 cellulosic biofuel projection was not
neutral, and was an unreasonable exercise
of agency discretion.
In making a projection for cellulosic
biofuel production for 2012, EPA based
its projection on: 1) the EIA’s projected
production volume of 6.9 million gallons
for 2012; 2) progress being made by
Air Pollution Consultant
©
2014 Aspen Publishers, Inc.
Volume 24, Issue 2, 2014
the cellulosic biofuel industry; 3) EPA’s
own assessment of the cellulosic biofuel
industry’s projected volumes for 2012;
and 4) comments the agency received on
the proposed rule (76 FR 38844; July 1,
2011). Uncertainty over what actual
volumes might be produced meant that a
range of possible cellulosic biofuel volume
standards were possible. The agency
intentionally set the standard for 2012 at
the value it did, rather than at the low end
of the range, in order to promote growth
of the cellulosic biofuel industry.
Air Pollution Consultant
©
2014 Aspen Publishers, Inc.
The DC Circuit Court found that
EPA’s decision to adopt a methodology
that was intentionally more likely to
overestimate the production volume,
rather than underestimate it, was
inconsistent with CAA requirements.
The court found no basis in the
argument that the agency should project
a high estimate of cellulosic biofuel
production so as to promote the growth
of the industry.
Because EPA used essentially the
same methodology to develop the
Regulations / Permitting
2011 cellulosic biofuel standard
as was used to develop the 2012
standard, the agency has proposed to
rescind the 2011 cellulosic biofuel
standard. The agency indicates that
money paid by obligated parties to
purchase cellulosic waiver credits
to comply with the 2011 cellulosic
biofuel standard would be refunded
if the proposal is finalized. In 2011,
obligated parties purchased 4,248,388
cellulosic biofuel waiver credits at a
total cost of $4,800,678.
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