Compliance With The RFS Program Requirements for Renewable Fuel

NPRA, SIGMA, NACS SIGMA, NACS , PMAA, DOE, , PMAA, DOE, USDA, USDA, States States , , Enviros Enviros , etc. , etc. 200520062007 JFMAMJJASONDJFMAMJJASONDJFMAMJJASOND EPAct 2006 Default Rule RFS proposal RFS final rule Program Startup RFS1 RFS1 3 3 The Program Basics The Program Basics Ethanol Equivalent Volumes Required Ethanol Equivalent Volumes Required 2006: 4.0 billion gallons/yr 2006: 4.0 billion gallons/yr 2012: 7.5 2012: 7.5 2013+: Constant %, 0.25 2013+: Constant %, 0.25 bill gal bill gal cellulosic cellulosic requirement requirement c c Equivalence Value Equivalence Value d d for various for various renewables renewables based on based on volumetric energy content in comparison to ethanol: volumetric energy content in comparison to ethanol: Corn Corn - - ethanol: ethanol: 1.0 1.0 Biodiesel Biodiesel (alkyl esters): (alkyl esters): 1.5 1.5 Renewable diesel: Renewable diesel: 1.7 1.7 Butanol Butanol : : 1.3 1.3 Cellulosic Cellulosic biomass ethanol: biomass ethanol: 2.5 2.5 (Mandated by EPActthru 2012) RIN Compliance/Trading System RIN Compliance/Trading System 38 digit RIN serial numbers are assigned 38 digit RIN serial numbers are assigned By renewable fuel By renewable fuel producers and importers producers and importers To each gallon/batch of renewable fuel produced To each gallon/batch of renewable fuel produced Contains Contains Company registration ID Company registration ID Facility registration ID Facility registration ID Year of production Year of production Batch serial number Batch serial number Batch volume Batch volume Equivalence Equivalence Value Value Toggle for cellulosic ethanol Toggle for cellulosic ethanol RIN Compliance/Trading System RIN Compliance/Trading System These RINs are the currency for the credit These RINs are the currency for the credit trading trading program program Obligated parties acquire RINs in order to Obligated parties acquire RINs in order to show show compliance with the standard compliance with the standard Compliance is assured thru reporting to Compliance is assured thru reporting to EPA EPA 9 9 s Central Data Exchange s Central Data Exchange RIN Compliance/Trading System RIN Compliance/Trading System RINs must be transferred along with renewable RINs must be transferred along with renewable fuel through the distribution fuel through the distribution system system RINs cannot RINs cannot be be c c separated separated d d from the renewable fuel from the renewable fuel by marketers by marketers RINs can RINs can only be only be c c separated separated d d by obligated parties or by obligated parties or renewable fuel renewable fuel blenders blenders Once separated, no restrictions on who can buy, Once separated, no restrictions on who can buy, sell, or trade RINs or how many times sell, or trade RINs or how many times RINs RINs are valid for compliance in the calendar are valid for compliance in the calendar year year generated, generated, or the following year up to a cap or the following year up to a cap of of 20% of that year's volume requirement 20% of that year's volume requirement RFS2: RFS2: Deja Deja Vu Vu Another rule required on an even shorter Another rule required on an even shorter schedule schedule Required by EISA December 19, 2007 Required by EISA December 19, 2007 Final Rule required by December 19, 2008 Final Rule required by December 19, 2008 Required to be effective January 1, 2009 Required to be effective January 1, 2009 Currently evaluating options Currently evaluating options EISA also increases volume under RFS1 for EISA also increases volume under RFS1 for 2008 2008 Volume changed from 5.4 to 9.0 bill Volume changed from 5.4 to 9.0 bill gal gal Federal Register notice published Feb.<br><br> 13 Federal Register notice published Feb. 13 RFS2 RFS2 Can build off of the foundation of RFS1 Can build off of the foundation of RFS1 RIN system should be able to remain virtually intact RIN system should be able to remain virtually intact Still 38 digits Still 38 digits But still working through what EISA will really But still working through what EISA will really mean mean Several new challenging provisions Several new challenging provisions High volumes make every key issue very serious High volumes make every key issue very serious Picking up where we left off from RFS1 with our Picking up where we left off from RFS1 with our stakeholders stakeholders Want a proposal with broad stakeholder support Want a proposal with broad stakeholder support RFS2: Much Higher Volumes RFS2: Much Higher Volumes 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 2 006 2007 2 008 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 2 015 2016 2 017 2 018 2 019 2 020 2021 2 022 Billion gallons RFS1 RFS2 RFS2: 4 Nested RFS2: 4 Nested Standards Standards Total Renewable F Total Renewable F uel uel Total Advanced Total Advanced Biofuel Biofuel Year Year Biomass Biomass - - Based Based Diesel Diesel Cellulosic Cellulosic Biofuel Biofuel 2007 2007 4.7 4.7 2008 2008 9.0 9.0 2009 2009 0.5 0.5 0.6 0.6 11.1 11.1 2010 2010 0.65 0.65 0.1 0.1 0.95 0.95 12.95 12.95 2011 2011 0.80 0.80 0.25 0.25 1.35 1.35 13.95 13.95 2012 2012 1.0 1.0 0.5 0.5 2.0 2.0 15.2 15.2 2013 2013 1.0 1.0 1.0 1.0 2.75 2.75 16.55 16.55 2014 2014 1.0 1.0 1.75 1.75 3.75 3.75 18.15 18.15 2015 2015 1.0 1.0 3.0 3.0 5.5 5.5 20.5 20.5 2016 2016 1.0 1.0 4.25 4.25 7.25 7.25 22.25 22.25 2017 2017 1.0 1.0 5.5 5.5 9.0 9.0 24.0 24.0 2018 2018 1.0 1.0 7.0 7.0 11.0 11.0 26.0 26.0 2019 2019 1.0 1.0 8.5 8.5 13.0 13.0 28.0 28.0 2020 2020 1.0 1.0 10.5 10.5 15.0 15.0 30.0 30.0 2021 2021 1.0 1.0 13.5 13.5 18.0 18.0 33.0 33.0 2022 2022 1.0 1.0 16.0 16.0 21.0 21.0 36.0 36.0 How Many Different Types of How Many Different Types of Ethanol Will There Be? Ethanol Will There Be?<br><br> While there may be many different feedstocks While there may be many different feedstocks and/or processes...for example and/or processes...for example Corn Corn - - ethanol from dry mill plant with dried DGs ethanol from dry mill plant with dried DGs Corn Corn - - ethanol from wet mill plant ethanol from wet mill plant Cellulosic ethanol from corn stover Cellulosic ethanol from corn stover Cellulosic ethanol from forestry residue Cellulosic ethanol from forestry residue ...there are only three possible categories of ...there are only three possible categories of ethanol under RFS2 ethanol under RFS2 "Cellulosic biofuel" "Cellulosic biofuel" "Advanced biofuel" "Advanced biofuel" "Renewable fuel" "Renewable fuel" New Renewable Fuel Definitions New Renewable Fuel Definitions EISA creates EISA creates new categories new categories Eliminates Eliminates the 2.5:1 credit for cellulosic the 2.5:1 credit for cellulosic biomass ethanol and waste biomass ethanol and waste - - derived derived ethanol ethanol Definitions now include new elements Definitions now include new elements c c Existing cropland Existing cropland d d criterion criterion Lifecycle GHG reduction thresholds Lifecycle GHG reduction thresholds New New c c Existing Cropland Existing Cropland d d Criteria Criteria Renewable fuels must now be produced from Renewable fuels must now be produced from renewable biomass harvested from renewable biomass harvested from c c agricultural land agricultural land cleared or cultivated cleared or cultivated d d c c at any time at any time d d prior to EISA prior to EISA Active or fallow Active or fallow For crops, non For crops, non - - forested lands forested lands For trees, not from Federal lands For trees, not from Federal lands Development of this provision will require extensive Development of this provision will require extensive stakeholder interaction stakeholder interaction How do renewable fuel producers track and certify their How do renewable fuel producers track and certify their feedstocks feedstocks 3 3 how enforce? how enforce? How far back could it have been cleared or cultivated How far back could it have been cleared or cultivated 3 3 the the Anasazi Anasazi ?<br><br> ? How apply/enforce internationally? How apply/enforce internationally?<br><br> How prevent a shell game? How prevent a shell game? New Lifecycle GHG Criteria New Lifecycle GHG Criteria Lifecycle greenhouse gases now play an explicit Lifecycle greenhouse gases now play an explicit role in the RFS2 program role in the RFS2 program But only as a means of categorizing each But only as a means of categorizing each renewable fuel type/feedstock/process into one renewable fuel type/feedstock/process into one of the four standards of the four standards Lifecycle analyses require a consideration of Lifecycle analyses require a consideration of land use changes, including internationally land use changes, including internationally New Renewable Fuel New Renewable Fuel Definitions Definitions Cellulosic Biofuel Cellulosic Biofuel Renewable fuel produced from cellulose, hemicellulose, Renewable fuel produced from cellulose, hemicellulose, or lignen or lignen May include cellulosic ethanol, biomass May include cellulosic ethanol, biomass - - to to - - liquids diesel liquids diesel Lifecycle threshold: 60% reduction in GHGs w.r.t Lifecycle threshold: 60% reduction in GHGs w.r.t gasoline/diesel gasoline/diesel Biomass Biomass - - Based Diesel Based Diesel May include biodiesel (FAME), May include biodiesel (FAME), c c renewable diesel renewable diesel d d if if fats/oils not co fats/oils not co - - processed with petroleum processed with petroleum Lifecycle threshold: 50% reduction in GHGs w.r.t Lifecycle threshold: 50% reduction in GHGs w.r.t gasoline/diesel gasoline/diesel New Renewable Fuel Definitions New Renewable Fuel Definitions Advanced Biofuel Advanced Biofuel Essentially anything but corn starch ethanol Essentially anything but corn starch ethanol Includes "Cellulosic Biofuel" and "Biomass Includes "Cellulosic Biofuel" and "Biomass - - Based Based Diesel" Diesel" Lifecycle threshold: 50% reduction in GHGs w.r.t Lifecycle threshold: 50% reduction in GHGs w.r.t gasoline/diesel gasoline/diesel (other) Renewable fuel (other) Renewable fuel Corn Corn - - starch ethanol and other fuels not meeting the starch ethanol and other fuels not meeting the criteria for the other categories criteria for the other categories Lifecycle threshold: 20% reduction in GHGs w.r.t Lifecycle threshold: 20% reduction in GHGs w.r.t gasoline/diesel gasoline/diesel Facility Grandfathering Facility Grandfathering Facilities that Facilities that c c commenced construction commenced construction d d prior to prior to EISA are grandfathered EISA are grandfathered Means they are automatically deemed to meet the Means they are automatically deemed to meet the 20% GHG threshold for "renewable fuel" 20% GHG threshold for "renewable fuel" Development of this provision will require Development of this provision will require extensive stakeholder interaction extensive stakeholder interaction How define How define c c commenced construction commenced construction d d ?<br><br> ? How apply to future expansions, changes in How apply to future expansions, changes in feedstock, changes in energy source? feedstock, changes in energy source?<br><br> How apply internationally? How apply internationally? Waivers Waivers There are three basic types of waivers that There are three basic types of waivers that could result in the required volumes being could result in the required volumes being reduced reduced General waivers General waivers Cellulosic biofuel waivers Cellulosic biofuel waivers Biomass Biomass - - based diesel waivers based diesel waivers General Waiver Authority General Waiver Authority Anyone subject to the requirements (not just States) can Anyone subject to the requirements (not just States) can now petition for a waiver or relaxation of any of the four now petition for a waiver or relaxation of any of the four standards, including the Administrator standards, including the Administrator Severe harm to the Severe harm to the economy or environment economy or environment Inadequate supply Inadequate supply EPA must approve or disapprove EPA must approve or disapprove a petition within a petition within 90 90 days days But requires opportunity for notice and comment But requires opportunity for notice and comment Any approved waiver is limited Any approved waiver is limited to one year, but can be to one year, but can be renewed renewed Cellulosic Cellulosic Biofuel Biofuel c c Waiver Waiver d d Irrespective of the volumes required in the Act Irrespective of the volumes required in the Act The Administrator must set the The Administrator must set the cellulosic cellulosic standard standard Each November for the following year Each November for the following year c c Based on" Based on" volume volume projections from EIA projections from EIA If the If the cellulosic cellulosic standard is set less than the volume standard is set less than the volume required in the Act, required in the A ct, EPA EPA may may reduce the standards for advanced reduce the standards for advanced biofuel biofuel and and total renewable fuel accordingly total renewable fuel accordingly EPA EPA must must make EPA make EPA - - credits credits (RINs) available (RINs) available for sale at for sale at the greater of the greater of 25 25 ¢ ¢ /gallon /gallon $3.00 per gallon less the wholesale price of gasoline (at today $3.00 per gallon less the wholesale price of gasoline (at today 9 9 s s prices this equates to ~70 prices this equates to ~70 ¢ ¢ /gal) /gal) Anticipate extensive interaction with stakeholders Anticipate extensive interaction with stakeholders Biomass Biomass - - Based Diesel Waivers Based Diesel Waivers EPA can lower the standard in the Act EPA can lower the standard in the Act If significant supply or other market If significant supply or other market circumstances lead to high prices circumstances lead to high prices Up to 15% Up to 15% 30% if renewed 30% if renewed May May reduce advanced reduce advanced biofuel biofuel and total and total renewable fuel standards accordingly renewable fuel standards accordingly Next Steps Next Steps 2008 2008 standard standard is in place is in place Turning focus to the 2009+ regulations Turning focus to the 2009+ regulations Stakeholder outreach is already underway Stakeholder outreach is already underway For More Information...<br><br> For More Information... Web page: Web page: www.epa.gov/otaq/renewablefuels www.epa.gov/otaq/renewablefuels David David Korotney Korotney (734) 214 (734) 214 - - 4507 4507 korotney.david@epa.gov korotney.david@epa.gov

less