Cellulosic Waiver Credit Price Calculation for 2019 United States Environmental Protection tl Agency ------- Cellulosic Waiver Credit Price Calculation for 2019 Assessment and Standards Division Office of Transportation and Air Quality U.S. Environmental Protection Agency United States Environmental Protection tl Agency EPA-420-B-18-052 December 2018 ------- Cellulosic Waiver Credit Price Calculation for 2019 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) 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 2015,2 EPA stated our intention to announce future CWC prices by posting a notice on our "Renewable Fuels: Regulations & Standards" website. This document serves the required notice that the Cellulosic Waiver Credit price for 2019 is $1.77. 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 Energy Information Administration (EIA) that are available as of September 30 of the year preceding the compliance period.3 For 2019, the most recent 12 months for which data were available as of September 30, 2018 covers July 2017 through June 2018. The data can be found at: (https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA EPM.0 PBR NUS PPG &f=MQ and are summarized below in Table 1. Table 1 - Wholesale Gasoline Prices for 2019 CWC Calculation Month Average Price in $ July 2017 1.544 August 2017 1.633 September 2017 1.737 October 2017 1.681 November 2017 1.778 December 2017 1.724 January 2018 1.824 February 2018 1.851 March 2018 1.821 April 2018 1.969 May 2018 2.108 June 2018 2.083 The average of the monthly average wholesale gasoline prices in dollars is $1,813. 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 21 l(o)(7)(D)(ii) 2 80 FR 18136 3 40 CFR 80.1456(d)(2) ------- 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 2018, 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 average wholesale price of gasoline during the most recent twelve months for which available as of September 30 of the year preceding the compliance period (July 2017 - June 2018 for the 2019 CWC price). The greater of these values is the price for the cellulosic waiver credits. Table 2 - Inflation Adjustments Month Unadjusted Index4 January 2009 211.143 June 2018 251.989 Table 3 - Inflation Factors Months Equation Inflation Factor Jan. 2009 - June 2018 1+(251.989-211.143)/211.143 1.193 Table 4 - Cellulosic Waiver Credit Price Calculations Year $0.25 (Inflation Adjusted) $3 (Inflation Adjusted) Minus Wholesale Price of Gasoline CWC Price (Larger of the two values, rounded to the nearest cent) 2019 $0.25*1.193=$0.30 ($3.00* 1.193)-$ 1.813=$ 1.768 $1.77 As shown in Table 4, using the data sources for the inflation adjustment that are specified in this announcement results in a CWC price of $1.77 for 2019. 4 Information available at: https://www.bls.gov/cpi/data.htm ------- |