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EISA 2007:
Renewable Fuel Standard Program
Office of Transportation and Air Quality
US Environmental Protection Agency
March 2009
E PA-420-K-09-100
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Presentation Overview
¦ Renewable Fuel Standard (RFS) Program
established under Energy Policy Act of 2005
¦ RFS revised under Energy Independence &
Security Act of 2007
~ General rulemaking development and timeline
~ Overview of major RFS2 provisions
¦ Notes on current RFS program
~ Implementation timeline
~ Compliance
~ Lessons learned
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First Successful High Impact Public Policy Set for
Renewable Fuels: EPAct 2005 RFS Program
¦ Program started Sept 1, 2007
¦ EPA converts Congressionally-mandated volumes of
renewable fuel into percent of gasoline production
~ 4.0 bgy in 2006 - growing to 7.5 bgy in 2012
~ Standard applies to refiners, importers, and blenders of gasoline
blendstocks
¦ Major compliance element - trading and banking provisions
~ Program based on Renewable Identification Numbers (RINs), credits that
represent renewable fuel produced or imported to U.S.
~ Allows flexibility for compliance
¦ Renewable fuel volumes translate into RINs through
Equivalence Values, determined based on volumetric energy
content compared to corn ethanol
~ Corn-ethanol: 1.0
~ Biodiesel (alkyl esters): 1.5
~ Cellulosic biomass ethanol: 2.5 (as specified in EPAct)
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EISA & RFS2 - General Rulemaking
Development & Timeline
EISA signed by President Bush on December 19,
2007
Final RFS2 Rule required by December 19, 2008
Requires major modifications to the current RFS
program beginning in 2009
RFS2 - Built off the foundation of RFS1
~ Rule development process similar to RFS 1
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One Important Giant Step? EISA & RFS2
EISA modified RFS1
program beginning in 2008
Volumes increased to 9
bgy in 2008 - escalating to
36 bgy by 2022
Establishes new renewable
fuel categories and
eligibility requirements,
including GHG emission
reduction thresholds!
Provides new waivers and
paper credit provisions
Includes new obligation for
fuels
Includes new studies and
reports
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RFS2: Much Higher Volumes
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Key New Obligations and Definitions
¦ Standard extended from gasoline to gasoline and
diesel - nonroad fuel in addition to highway fuel
~ Jet fuel and heating oil aren't covered, but renewable
fuel sold into these markets can generate RINs
¦ Definitions significantly changed from RFS1 and / or
now include new elements
~ Lifecycle defined and thresholds established
~ Facility grandfathering provisions
~ New renewable biomass definition (qualifying land)
¦ Creates 4 new categories of renewable fuel with
volume standards and green house gas thresholds
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Volume Increase is Almost All
Cellulosic/Advanced Biofuel
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¦ Advanced Biofuel: Unspecified
~ Advanced Biofuel: Biomass-Based Diesel
~ Advanced Biofuel: Cellulosic Biofuel
~ Conventional Biofuel
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Inputs Into Program Development and Analysis for Sustainable
Transportation (Fuels, Vehicles and Engines)
Multiple Interests
Multiple Inputs
Multiple Interests
Multiple Inputs
Multiple Interests
Conventional
Crude Oil
Gasoline
Diesel
Refining
Advanced
ehicle/Engin
Technology
Traditional
Vehicles and
Engines
Clean, Efficient
Transportation
Fuels, Vehicles
& Engines
Waste to Fuel
Or Energy
Food Crops
on Food
ased Ag
Advanced
Cellosic
Feedstocks
Traditional
Renewable
Feedstocks
Multiple Interests
Multiple Inputs
Multiple Interests
Multiple Inputs
Multiple Interests
Multiple Inputs
Multiple Interests
Multiple Inputs
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Critical Element of EISA: Lifecycle Assessment
¦ Each fuel category required to meet mandated GHG performance
thresholds (reduction compared to 2005 baseline petroleum fuel
replaced)
~ Conventional Biofuel (ethanol derived from corn starch)
Must meet 20% lifecycle GHG threshold
¦ Only applies to fuel produced in new facilities
~ Advanced Biofuel
Essentially could be anything but corn starch ethanol
Includes cellulosic biofuels and biomass-based diesel
Must meet a 50% lifecycle GHG threshold
~ Biomass-Based Diesel
¦ E.g., Biodiesel, "renewable diesel" as long as fats and oils are not co-processed with
petroleum
Must meet a 50% lifecycle GHG threshold
~ Cellulosic Biofuel
¦ Renewable fuel produced from cellulose, hemicellulose, or lignin
¦ E.g., cellulosic ethanol, BTL diesel, green gasoline, etc.
Must meet a 60% lifecycle GHG threshold
EISA language permits EPA to lower the lifecycle GHG thresholds by as
much as 10% -- (60% to 50%; 50% to 40%; 20% to 10%)
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Lifecycle Analysis - What's Considered?
¦ Domestic and international agricultural sector
~ Direct GHG emissions from producing feedstock
~ Indirect impacts on other crops (e.g., less rice production), animals
(fewer cattle), land use change
¦ Fuel production
~ Energy use and GHG emissions at production facility
¦ Fuel / feedstock distribution
~ Transporting feedstock to plant
~ Transporting fuel to end use
¦ Tailpipe emissions
~ Vehicle GHG emissions
¦ Baseline petroleum fuel
~ 2005 baseline crude
~ GHG emissions associated with producing gasoline and diesel fuel
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Key Models and Data Sources
¦ Emission factors (GREET, Winrock, Woods Hole)
¦ Agricultural sector models (FASOM, FAPRI, GTAP, BESS)
¦ Land use changes (FASOM, FAPRI, Winrock, GTAP)
¦ Fertilizer N20 modeling (CSU DAYCENT/CENTURY)
¦ Fuel production process models (GREET, USDA & NREL
ASPEN models, BESS)
¦ Tailpipe emissions (MOVES)
¦ Energy sector modeling (NEMS)
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Lifecycle Methodology Overview
CiUCi Enrtajwrs
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GREET Ay Chemical Prod
Biomass Production
Colorado State Univ.
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GREET- The Greenhouse Gases Regulated Emissions and
Energy Use in Transportation
International Ag Sector Models
All Crop Prod
FAPRI
Lwestock Prod
FASOM- Forest and Agricultural Sector Optimization Model
FAPRI- Food and Agricultural Policy Research Institute
MODIS- Moderate Resolution Imaging Spectoradiameter
NREL- National Renewable Energy Laboratory
USDA- United States Department of Agriculture
rM* EIA - Energy Information Administration
MOVES- Motor Vehicle Emission Simulator
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Overview of What We Need
¦ Need to develop life cycle GHG values for each potential fuel and
production pathway, for example:
~ Corn ethanol (dry mill, wet mill, coal, natural gas, etc.)
~ Biodiesel / Renewable Diesel
¦ Soybean oil
¦ Waste grease
~ Cellulosic Ethanol (enzymatic, thermochemical)
¦ Agricultural residue (e.g., corn stover)
¦ Forest wastes
¦ Switchgrass / other energy crops
~ Imports
¦ Sugarcane ethanol
¦ The components of the analysis are generally the same for all
biofuels, but each has own set of assumptions and issues
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Key Factors in Land Use Assessment
¦ This analysis has revealed which factors have the most
significant impact on the final results
~ What Type of Land is Converted?
¦ Use of historic satellite data to project type of land converted
¦ Alternative approach to use economic models to predict type of land
converted
~ Treatment of Time Related Land Use Changes and Benefits
Land use change results in stream of emissions that are changing over
time
¦ We need to define a life cycle GHG value that is applicable to all
gallons across time
¦ We are looking at a range of approaches for treating this issue
¦ The two main decisions to be made are what time period to consider
and what discount rate (if any) to apply to emissions over time
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LCA - Summary and Next Steps
In developing the lifecycle methodology, our approach has
been to use the best models, tools and resources available
¦ In addition, we are using sensitivity analysis and examining
multiple approaches to address key areas of uncertainty
¦ Uncertainty being framed in the preamble of the NPRM
¦ NPRM provides an important opportunity for EPA to present
our work and to seek comment on proposed approaches and
alternative approaches
¦ This input along with the additional analysis we will be
conducting between now and the final rule will further improve
our methodology
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Regulatory Impact Analyses for Rulemaking
Renewable fuel production and use projections, technology and cost
assessments
¦ GHG Lifecycle Modeling, Inventory, and Benefits
¦ Other Pollutant Inventory, Air Quality and Benefits
¦ Agricultural Sector Impacts
¦ Water and Soil Impacts
¦ Macroeconomic Impacts
¦ Energy Security
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RFS1 Implementation Timeline
¦ 2007
~ Final rule published May 1, 2007 allowing just four months for
implementation
~ Compliance period was for the period September 1 - December 31
~ EPA encountered many data quality issues requiring interaction with
submitters
~ EPA continues to receive corrected data
¦ 2008
~ 2008 standard was revised from 4.66% to 7.76% to comply with EISA
~ End of year reports due to EPA February 28, 2009
~ Overall, data quality is improving, however we still see substantial errors
¦ 2009
~ 2009 standard set at 10.21% to comply with EISA
~ Standard is based on 11.1 billion gallons of renewable fuel including 0.5
billion gallons of biodiesel and renewable diesel
~ 2009 RFS notice suggests acquiring biodiesel RINs in preparation for 2010
compliance
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RFS1 Compliance
¦ For the period September 1 - December 31, 2007,
initial numbers indicate
~ Over % million reports from well over 100,000 submissions
~ 1.6 bgal of renewable fuel represented by 1.7 billion RINs
~ Majority of obligated parties are meeting compliance; well
under 1% are choosing to take a deficit
~ Approximately 1,500 parties are currently regulated under
RFS1
¦ About 1,000 are new submitters
¦ Reporting errors are farther-reaching than anticipated
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RFS1 Lessons Learned
¦ 38-digit RIN is confusing
~ Administrative Errors
¦ Typos and number transposition
Regulated community uses a mix of manual and automated
processing
~ Mishandling
¦ RINs generated incorrectly
¦ Transfer of the same RIN to multiple parties
Improper error correction methods - recalling RINs and substituting
other RINs that may already belong to another party
~ Result is potentially invalid RINs
¦ RFS2 proposal includes changes to reporting system to
alleviate challenges with RIN generation and handling
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Introduction of EPA Monitored Transaction
System (EMTS)
EPA Monitored - creates an
environment to track the universe of
RIN credits; RIN credits are not
permitted to exist outside of this
environment
Two-part continuous reporting system
~ First, screen renewable batches
and the generation of RIN credits
for renewable fuel produced or
imported
~ Second, insert RINs into the
structured RIN environment and
moderate RIN transactions
between the various buyers and
sellers through the enforcement of
business rules
Buy Sell
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^^Sell \™/ Buy
\ Other RIN / J
^ \ Owners / I
^^Producers j Buy _
= Attached RIN
= Separated RIN
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EPA
Screening
RIN
Generator
Registration
Renewable
Production /
Import
Pass
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Rulemaking Status
¦ Proposal is complete and undergoing OMB review
¦ Also continuing to meet with various stakeholders (e.g.
industry, academic experts, CA/EU, environmental
organizations, federal and state agencies), particularly
with regards to lifecycle analyses
¦ Timing matters
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Questions
m
.epa.gov/otaq/renewablefuels
Thank you
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