Cellulosic Waiver Credit

Price Calculation for 2017




4%	United States
Environmental Protection
^1 #% Agency

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Cellulosic Waiver Credit
Price Calculation for 2017
Assessment and Standards Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
United States
Environmental Protection
tl	Agency
EPA-420-B-16-087
November 2016

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Cellulosic Waiver Credit Price Calculation for 2017
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 (C AA) section
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.1 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 2015, EPA stated our intention to establish future CWC prices by posting a notice on our
"Renewable Fuels: Regulations & Standards" website. This document serves the required
notice, and establishes the Cellulosic Waiver Credit prices for 2017 at $2.00.
To determine the CWC price for 2017, 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 Energy Information Administration
(EIA) that are available as of September 30 of the year preceding the compliance period.2 For
the 2017, the most recent 12 months for which data is available covers July 2015 through June
2016. The data are shown below in Table 1 for the calculations for 2017, and can be found at:
(https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA EPMO PBR NUS PPG
&f=MV
Table 1 - Wholesale Gasoline Prices for 2017 CWC Calculation
Month
Average Price in $
July 2015
2.025
August 2015
1.731
September 2015
1.475
October 2015
1.437
November 2015
1.359
December 2015
1.281
January 2016
1.164
February 2016
1.005
March 2016
1.218
April 2016
1.366
May 2016
1.479
June 2016
1.540
The average monthly price of wholesale gasoline in dollars for the calculation of the 2016 CWC
price is $1,423.
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
1	CAA 211(o)(7)(D)(ii)
2	40 CFR 80.1456(d)(2)

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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 2016, 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
Unadjusted Index
Source
January 2009
211.143
http://www.bls.gov/cpi/cpid0901.pdf (Table 1)
June 2016
241.038
http://www.bls.gov/cpi/cpidl606.pdf (Table 1)
Table 3 - Inflation Factors
Months
Equation
Inflation Factor
Jan. 2009 - June 2016
1+(241.038-211.143)/211.143
1.142
Table 4 - Cellulosic Waiver Credit Price Calculations
Year
$0.25 (Inflation
Adjusted)
$3 (Inflation Adjusted) -
Wholesale Price of Gasoline
CWC Price (Larger of
the two values,
rounded to the nearest
cent)
2017
$0.25*1.142=$0.29
($3.00* 1.142)-$1,423=$2.001
$2.00
As shown in Table 4, using the data sources for the inflation adjustment that are specified in this
direct final rule results in a CWC price of $2.00 for 2017.

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