• Jul 13th 2010 at 11:05AM
  • 13
The U.S. Environmental Protection Agency (EPA) has announced what it thinks the 2011 percentage standards for the Renewable Fuel Standard program (aka RFS2) should be. The EPA proposed that the overall volumes and standards for the four fuels categories in the program should be:
  • Biomass-based diesel (0.80 billion gallons; 0.68 percent)
  • Advanced biofuels (1.35 billion gallons; 0.77 percent)
  • Cellulosic biofuels (5 – 17.1 million gallons; 0.004 – 0.015 percent)
  • Total renewable fuels (13.95 billion gallons; 7.95 percent)
The EPA needs to set these annual limits in order to help the U.S. reach the Congressionally-mandated level of 36 billion gallons of renewable fuel in 2022 as established in the Energy Independence and Security Act of 2007 (EISA). In 2009, the EPA set the overall renewable fuels level at 11.1 billion gallons.

Right now, the cellulosic ethanol target is lower that EISA asks for, but the EPA said in a statement it "remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead." We'll see.

[Source: EPA]

PRESS RELEASE

EPA Proposes 2011 Renewable Fuel Standards

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) today proposed the 2011 percentage standards for the four fuels categories under the agency's Renewable Fuel Standard program, known as RFS2.

The Energy Independence and Security Act of 2007 (EISA) established the annual renewable fuel volume targets, reaching an overall level of 36 billion gallons in 2022. To achieve these volumes, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner, importer and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

The proposed 2011 overall volumes and standards are:

· Biomass-based diesel (0.80 billion gallons; 0.68 percent)
· Advanced biofuels (1.35 billion gallons; 0.77 percent)
· Cellulosic biofuels (5 – 17.1 million gallons; 0.004 – 0.015 percent)
· Total renewable fuels (13.95 billion gallons; 7.95 percent)

Based on analysis of market availability, EPA is proposing a 2011 cellulosic volume that is lower than the EISA target. EPA will continue to evaluate the market as it works to finalize the cellulosic standard in the coming months. Overall, EPA remains optimistic that the commercial availability of cellulosic biofuel will continue to grow in the years ahead.

EPA is also proposing changes to the RFS2 regulations that would potentially apply to renewable fuel producers who use canola oil, grain sorghum, pulpwood, or palm oil as a feedstock. This program rule would allow the fuel produced by those feedstocks dating back to July 1, 2010 be used for compliance should EPA determine in a future rulemaking that such fuels meet certain greenhouse gas reduction thresholds.

The second change would set criteria for foreign feedstocks to be treated like domestic feedstocks in terms of the documentation needed to prove that they can be used to make qualifying renewable fuel under the RFS2 program.

EPA is seeking public comment on the renewable fuel standards and the proposed changes to the RFS2 regulations, which are due 30 days following publication of the proposed rule in the Federal Register.

July 1, 2010, was the deadline that major refiners, blenders, and importers had to meet for reporting, registration, and other key compliance requirements under EPA's expanded renewable fuels standard program.

More information on the standards and regulations: http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm

More information on renewable fuels: http://www.epa.gov/otaq/fuels/renewablefuels/index.htm


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  • 13 Comments
      • 5 Years Ago
      This is silly. Who gets in trouble and what are the consequences if these targets are not met? Who gets paid or incented to make sure the targets ARE met?

      So this is magically going to happen because someone at EPA said it "should happen"?

      Whatever. A waste of tax payer money to have these guys sit in a room and come up with these numbers then.
        • 5 Years Ago
        Well, you clearly know more about the liquid renewables food chain than I do so I'll take your word for the RIN numbers and all that. However, I still think this is punishing the wrong people when there is not enough of a market to consume all the capacity we could produce today. And then we punish them for not producing more?

        As for increasing the blend wall, that is a losing argument. There are too many people that are scared it will damage their car and you won't convince them to believe any different. It is much easier to simply require all new vehicles be FFV enabled.

        You can give retailers a tax break for offering e85 pumps and it would start to take off without offending anyone. Well, there will always be someone screaming about corn ethanol or whatever, but I'm not going to worry about that right now. I just want us off frigging oil.

        • 5 Years Ago
        CP,
        Ok, then who pays these $10 million in fines? Some $Multi-MULTI-billion oil company who didn't add enough to their E10 blends? That's a Friday night of drinking for Wall Street types throwing a "little party". $10 Million??? LOL

        And did I say ANYTHING about who the people were in the room or their qualifications? That was your assertion so you run with that.

        I'm asking a simple question: How is this going to change anyone's behavior. You didn't answer that question at all. If you know, then I'd love to hear. But that puny fine you mention won't matter to anyone in a big company or group.

        I asked the question because I don't know the answer and from what I see here, there is no way to enforce these edicts. And I've seen that question asked before with no answer.

        Since you claim to know how this will work, then share with us here.
        • 5 Years Ago
        Well, these intelligent people weren't forced to work on this. They see it as their time well spent. And you're dead wrong about a lack of enforcement mechanism. We can debate whether it will be effective, but an enforcement mechanism certainly exist.


        "I completely disagree with you about who will pay for these. You can't enforce these in any practical way. A small company that distributes petrol....do you run around and measure exactly how much petrol they deliver, how much ethanol, how much cellulosic ethanol, etc?"

        Actually that's exactly what they do and have been doing for tax and environmental purposes for years. There is also a tracking mechanism (Renewable Identification Number, aka RINs) for renewable fuels, to figure out if the obligated parties are fulfilling their obligations. It gets very complicated here, as the RINs exist in a marketplace and are traded around. Basically, you produce a batch of renewable fuel, and it's given a RIN and at the end of the year, obligated parties have to show that they've purchased their allotment of RINs. Your biofuel producer wont get fined, ever. They produce whatever they want. However, the obligated parties are required to show they've purchased the RINs (by extension the fuel). If they don't, they get fined.


        "There is a huge push from the ethanol lobby right now to approve E15. Why? Because they can produce more corn ethanol than the market can currently use. What good does it do to also force them to produce additional bio-fuels that are just from different sources?"

        Yes, they are pushing for E15 because they've come up against the E10 blend-wall. That means there is a ceiling to how much ethanol the market will allow, due to manufacturer concerns. They are try to raise the ceiling. This doesn't have very much to do with the other fuels. Nobody denies that the RFS-1 was a giant give away to the corn industry(aside from politicians and the corn lobby). Nobody argues that corn ethanol can replace all of our transport fuels, hence the need for other alternatives. Also, corn is not the best source for ethanol, so the RFS-2 was about exploring other options.

        In this program we also see other fuel types mandated. Ethanol wont work in diesels, and Cellulosic is a better cleaner option, if they could ever get it right. Advanced is a versatile carve out, and could count for a lot of things; it's based off of it's ghg reduction, but I'm not sure who, outside of certain biodiesel producers, would qualify. It's a bit of a spill over category.

        Back to E15: Another issue that arose and why they are asking for a higher blend wall is that with this program increasing the amount of ethanol required to be purchased by obligated parties, they are going to run out of a market. Pretty much all of our gas is saturated to the 10% level this day, so unless E85 market explodes, the obligated parties are not going to have any room for the excess ethanol. You are correct about them not having a market. However if you can convince engine manufacturers to increase the blend-wall, you give the market more room. But, really, Flex fuels would solve it. It's just at this point we have millions more cars, which manufactures will only allow to run on 10% ethanol, than FFVs. The ethanol lobby is trying to persuade them a 15% blend (or 12%) would be fine too.
        • 5 Years Ago
        I was talking about how there is no way to enforce this and so therefore it is a waste of these people's time for them to sit in a room and come up with these rules. Moreso because they are intelligent people who could better spend their time somewhere else.

        I completely disagree with you about who will pay for these. You can't enforce these in any practical way. A small company that distributes petrol....do you run around and measure exactly how much petrol they deliver, how much ethanol, how much cellulosic ethanol, etc? Are they going to be penalized because they are a small mom and pop operation in Iowa who owns two trucks and they deliver corn ethanol for a local producer? So they essentially can't be in business because they don't somehow deliver all the right ratios across the board?

        A corn ethanol producer gets fined because they own one facility that only does corn ethanol? So you drive them out of business? Some marketing firm that .... you get the point.

        My problem is there is no "them" to fine here. The only companies broad enough to hold accountable, without driving them out of business, are the huge, diversified energy companies...like Exxon or BP. And they sure as hell don't care about a $10M fine. It's not even a rounding error for them.

        There is a huge push from the ethanol lobby right now to approve E15. Why? Because they can produce more corn ethanol than the market can currently use. What good does it do to also force them to produce additional bio-fuels that are just from different sources?

        The problem is the market is not there yet. That is why I agree so strongly with Carney's post below. You can't punish "them", whoever "them" is...if there is no market for them to sell their products.

        The very obvious and simple solution is to create demand by flex fuel enabling every vehicle sold in America. Then you have options. You can wait for oil prices to go back up, you can require higher blends and/or subsidize alt fuels, you can make e85 cheaper or b85, you can tax oil imports, you can do at least SOMETHING that has a direct affect on people using it.

        Right now, we don't even have an option.
        • 5 Years Ago
        Hey Dave, nice to criticize without having any knowledge of how the program works. "I'm not educated on how this works, so it must suck!"

        To answer your question. "Obligated parties" get in trouble if they don't purchase the required volumes. The penalty is a fine based on how many days and how off the target they are. I believe it caps in the in the $10million range ($13mil, i think, but I'll have to go double check, not certain on the exact number).

        It will magically happen, because it's law (EISA 2007), and the EPA is enforcing it as ordered by congress. Magic isn't a good word. Policy, or law is more apt.

        Also, the guys who sat in the room and came up with the numbers tended to be policy and industry experts, from a wide range of industries. There have been tens of thousands of comments into the program. Do you have someone better in mind?
        • 5 Years Ago
        Dave
        Obligated parties pay the fines. Obligated parties are everybody and anybody who are responsible for getting fuel to the fuel station. Petrol manufacturers, blender, distributors, marketers. Multi-billion dollar oil companies do count as obligated parties and I wont disagree that they won't give a crap about the fines, but they are not the only ones. There are hundreds of smaller companies that would take this fine quite seriously. So, while there may be a degree of injustice, in that big oil companies can't get screwed hard, it's because those companies are huge, and not because the fine is small. This could be improved.


        "And did I say ANYTHING about who the people were in the room or their qualifications?"
        Yes...
        "Whatever. A waste of tax payer money to have these guys sit in a room and come up with these numbers then."
        Were you talking about, coming up with the fine or with the required volumes and ghg reductions? I may have misinterpreted you, but I only responded to what I inferred from that sentence. That is, people sat in a room and came up with numbers, but I fail to see how that waste tax payer money as the numbers they came up with came from experts in multiple inputs in multiple industries...people who know what they are talking about.

        I'm not sure how to go about answering your question on behavior. Are you assuming paying the fine is cheaper than buying the fuel? That's not the case, so I would imagine that the obligated parties would purchase the fuel because it's cheaper than the fine. The idea behind the program is to provide a floor for the market place, so that there are minimum quantities of fuel which come from renewable sources represented in the market. These volumes will increase year to year. It's not really aimed at end consumers, but the guys in the distribution chain.

        There was also and RFS-1 created in 2005 that only dealt with Corn ethanol. It seems to have worked pretty well (as far as increasing the amount of Corn ethanol produced). The obligated parties have been purchasing the required volumes, so I don't see why they would ignore this.
      • 5 Years Ago
      total silliness.

      It is an example of bureaucracy gone mad, and work expanding to fill the time available. Who cares what the mix "ought to be"? Only empire building bureaucrats, who get more direct reports and higher pay, to count the equivalent of belly button lint.

      • 5 Years Ago
      You can encourage and mandate all the alternative fuel you want, but if the cars don't use it, it won't sell and it won't do any good.

      What we're ignoring is that each year we passively allow millions more new cars to enter the marketplace that are unnecssarily locked in to being able to use only petroleum fuel, and thus by definition are locked out of being able to use alternatives.

      THAT's the key roadblock to alt-fuel growth. That's what we need to change. Mandate that all new gasoline cars sold in America be also able to run on alternate fuel as well. The cheapest, easiest, and fastest way to accomplish that is to make them fully flex-fueled, able to run on methanol, ethanol, and other alcohols - a mere $130 per car expense for automakers.

      Why can't our policymakers see the blindingly obvious??

      At least some do - the sponsors and co-sponsors of the Open Fuel Standards Act (S. 835 and H. R. 1476). Republicans and Democrats; conservatives and liberals alike. Not only that but both McCain and Obama endorsed a flex-fuel mandate in the 2008 campaign. It's a shame this has been forgotten while irrelevancies like RFS2 and backlash-causers like E15 are hogging the spotlight. Let's ask our elected officials whether they support giving us fuel choice, and if not, why they want us to continue to be stuck, year after year, with cars that can only burn petroleum.
        • 5 Years Ago
        Dave-

        "I've seen plenty of e85 pumps, but they are all in the mid-west where there is a larger proportion of people who buy FFV vehicles because they know ethanol is part of their state's economy and they want to support it. Therefore, the local retailers supply it on some of their pumps."

        What you are seeing in the midwest is not due to demand from consumers for E85. Many midwestern states offer six figure incentives to install gasoline pumps with E85 capability (in addition to the $50k from the federal government). These incentives are used to cover "mixed" systems-- paying for gasoline pumping capacity in addition to e85 capacity. Basically they will pay for part of the cost of a station's gas pumps if you let them pay you to install e85 capacity. Even with the production, blending and consumption subsidies, e85 still isn't profitable for filling stations.

        Essentially, you are subsidizing gasoline pumps to provide some increase in availability of agricultural products that sell to a limited number of consumers that desire it. In addition, through CAFE exceptions, you let carmakers create thirstier cars (which rarely use E85, despite the capability), increasing gasoline consumption. The majority of ethanol is now and always has been for the handful of large counties throughout America who use it in RFG-- bans on MTBE would make that increase significantly. However, if you didn't have RFG, those counties would have to find other ways to reduce emissions in order to comply with the Clean Air Act-- like reducing gasoline consumption. Ethanol is a suppliment for gasoline, not a replacement. If all of the subsidies and spending on ethaniol were used for real alternative energy (like electric vehicles), we could truly cut petroleum consumption.
        • 5 Years Ago
        CP, I think you're right about this being a chicken and egg situation to some degree, but it's also an economic decision by the retailers. They can't afford to dedicate pumps to e85 unless there are enough customers who will buy it.

        I've seen plenty of e85 pumps, but they are all in the mid-west where there is a larger proportion of people who buy FFV vehicles because they know ethanol is part of their state's economy and they want to support it. Therefore, the local retailers supply it on some of their pumps.

        If there were a larger supply of FFVs nationwide, then I think you'd start to see stations drop the middle grade gas and start offering e85 instead for at least some of their pumps.
        • 5 Years Ago
        Exactly!

        Some artificial mandate with no where to sell the damn stuff does us no good. The ethanol lobby is pushing for E15 because they don't have a big enough market today! What good is yet another mandate to produce more?

        We need vehicles that are capable of running on the stuff.

        • 5 Years Ago
        I don't really disagree, but I feel there should be some corrections. There are millions of flex-fuel vehicles on the roads these days. Most are made by GM and Ford. This was due to some government encouragement, but not really the sort that you're looking for or need. Basically, flex fuels get extra credit in CAFE calculations, so GM and Ford make a crap load of FFVs to get better CAFE scores. This hasn't resulted in the increased use of E85 as E85 isn't prevalent in the market place. It has allowed Ford and GM to continue making trucks and SUVs, despite CAFE's purpose. Similarly, there's an executive order that states that gov't vehicles have to use alternative fuel if possible. The gov't has a crap load of flex fuels throughout the country, but since there isn't a pump nearby, therefore no way to get to the alternatives, they are exempted. This is applies to most federal vehicles. So the problem is that there isn't enough fuel in any of the right places.

        It's a bit chicken and egg. However, FFVs can exist without an alternative fuel, but alternative fuels can exist without a vehicle to use it. We do need the gov't to push more FFVs, but that alone isn't going to increase alternative fuel use. This has been well demonstrated with the large amounts of FFVs on the road that don't use E85, ever.

        @Dave
        There is a place to sell the stuff, but those guys don't want to buy it. This program is the government telling them they have to buy something.
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