United States
          Environmental Protection
          Agency
EPA-420-B-15-092
  November 2015
              Cellulosic Waiver Credit Price Calculation for 2016

       For any calendar year for which the projected volume of cellulosic biofuel production is less
than the applicable volume of cellulosic biofuel set forth in Clean Air Act (CAA) 21 l(o)(2)(B)(III),
EPA must reduce the required volume of cellulosic biofuel for that year to the projected volume, and
must provide obligated parties the opportunity to purchase cellulosic waiver credits (CWC). The price
of these credits is determined using a formula specified in the CAA.l The cellulosic waiver credit
price is the greater of $0.25 or $3.00 minus the wholesale price of gasoline, where both the $0.25 and
$3.00 are adjusted for inflation. In a rule published in April 20152, EPA stated our intention to
establish future CWC prices by posting a notice on our "Renewable Fuel  Standard Program" website.
This serves the required notice, and establishes the Cellulosic Waiver Credit price for 2016 at $1.33.

       To determine the CWC price, EPA first determines the average wholesale (refinery gate) price
of gasoline using the most recent twelve monthly values for "U.S. Total Gasoline Bulk Sales Price by
Refiners" as provided by the U.S. Department of Energy's Energy Information Administration (EIA)
that are available as of September 30 of the year preceding the compliance period.3 For 2016, the most
recent 12 months for which data is available covers July 2014 through June 2015.  The data are shown
below in Table 1 for the  calculations for 2016, respectively, and can be found at:
Table 1 - Wholesale Gasoline Prices for
2016 CWC Calculation
Month
July 20 14
August 20 14
September 20 14
October 20 14
November 20 14
December 20 14
January 2015
February 20 15
March 20 15
April 20 15
May 20 15
June 20 15
Average Price ($)
2.848
2.707
2.671
2.423
2.059
1.659
1.317
1.550
1.716
1.765
1.974
2.040
The average monthly price of wholesale gasoline in dollars for the calculation of the 2016 CWC price
is $2.061.
1CAA211(o)(7)(D)(ii)
2 80 FR 18136, April 3, 2015
340CFR80.1456(d)(2)

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       The CAA requires that EPA adjust for inflation the comparison values of twenty-five cents
($0.25) and three dollars ($3.00) in the CWC price formula.  EPA must compare the inflated twenty-
five cent value with the amount the inflated three dollar value exceeds the average wholesale price of
gasoline. EPA is required to use the greater of the two values as the price for the cellulosic biofuel
waiver credits.

       EPA evaluated inflation by using the Unadjusted Index values from the "Consumer Price Index
for All Urban Consumers (CPI-U): U.S. City Average," for the "All Items" expenditure category as
provided by the Bureau of Labor and Statistics, for the months of January 2009 (the first comparable
value after 2008) and June 2015, as  specified in 40 CFR 80.1456(d)(3). These unadjusted indexes are
used to calculate an Inflation Factor for each year, as shown in Table 2 below. Finally, we compare
$0.25 (inflation adjusted) to $3.00 (inflation adjusted) minus the wholesale price of gasoline for each
year. The greater of these values is the price for the cellulosic waiver credits.
Table 2 - Inflation Adjustments
Month
January 2009
June 20 15
Unadjusted Index
211.143
238.638
Source
http://www.bls.gov/cpi/cpid0901 .pdf (Table 1)
http://www.bls.gov/cpi/cpidl506.pdf (Table 1)
Table 3 - Inflation Factors
Months
Jan. 2009 -June 20 15
Equation
l+(238. 638-211. 143)/211. 143
Inflation Factor
1.130
Table 4 - Cellulosic Waiver Credit Price Calculations
Year
2016
$0.25 (Inflation
Adjusted)
$0.25*1. 130=$0.28
$3 - Wholesale Price of
Gasoline (Inflation Adjusted)
($3.00*1. 130)-$2.061=$1.330
CWC Price (Larger
of the two values,
rounded to the
nearest cent)
$1.33
As shown in Table 4, using the data sources for the inflation adjustment that are specified in the April
2015 final rule results in a CWC price of $1.33 for 2016.

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