Draft Regulatory Impact Analysis:
RFS Standards for 2023-2025
and Other Changes

&EPA

United States
Environmental Protection
Agency


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Draft Regulatory Impact Analysis:
RFS Standards for 2023-2025
and Other Changes

This technical report does not necessarily represent final EPA decisions
or positions. It is intended to present technical analysis of issues using
data that are currently available. The purpose in the release of such
reports is to facilitate the exchange of technical information and to
inform the public of technical developments.

Assessment and Standards Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency

NOTICE

4>EPA

United States
Environmental Protection
Agency

EPA-420-D-22-003
November 2022


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Table of Contents

Executive Summary	iii

Overview	v

List of Acronyms and Abbreviations	vii

Chapter 1: Review of the Implementation of the Program	1

1.1	Progression of the Fuels Market	1

1.2	In-Use Consumption of Renewable Fuels	3

1.3	2010 Biofuel Projections Versus Reality	10

1.4	Gasoline, Diesel, and Crude Oil	16

1.5	Cellulosic Biofuel	25

1.6	Biodiesel and Renewable Diesel	26

1.7	Ethanol	30

1.8	Other Biofuels	35

1.9	RIN System	37

Chapter 2: Baselines	47

2.1	No RFS Baseline	49

2.2	2022 Baseline	81

Chapter 3: Candidate Volumes and Volume Changes	83

3.1	Mix of Renewable Fuel Types for Candidate Volumes	83

3.2	Volume Changes Analyzed With Respect to the No RFS Baseline	85

3.3	Volume Changes Analyzed with Respect to the 2022 Baseline	88

3.4	2023 Supplemental Volume Requirement	91

Chapter 4: Environmental Impacts	93

4.1	Air Quality	93

4.2	Climate Change	114

4.3	Conversion of Wetlands, Ecosystems, and Wildlife Habitats	240

4.4	Soil and Water Quality	252

4.5	Water Quantity and Availability	267

4.6	Ecosystem Services	282

Chapter 5: Energy Security Impacts	285

5.1	Review of Historical Energy Security Literature	286

5.2	Review of Recent Energy Security Literature	289

5.3	Cost of Existing U.S. Energy Security Policies	296

5.4	Energy Security Impacts	299

Chapter 6: Rate of Production and Consumption of Renewable Fuel	305

6.1	Cellulosic Biofuel	305

6.2	Biomass-Based Diesel	350

6.3	Imported Sugarcane Ethanol	367

6.4	Other Advanced Biofuel	369

6.5	Total Ethanol Consumption	370

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6.6	Corn Ethanol	379

6.7	Conventional Biodiesel and Renewable Diesel	380

Chapter 7: Infrastructure	382

7.1	Biogas	382

7.2	Electricity	383

7.3	Biodiesel	384

7.4	Renewable Diesel	386

7.5	Ethanol	387

7.6	Deliverability of Materials, Goods, and Products Other Than Renewable Fuel	398

Chapter 8: Other Factors	400

8.1	Job Creation	400

8.2	Rural Economic Development	405

8.3	Supply of Agricultural Commodities	406

8.4	Price of Agricultural Commodities	409

8.5	Food Prices	415

Chapter 9: Environmental Justice	419

9.1	Proximity Analysis of Facilities Participating in the RFS Program	420

9.2	Non-GHG Air Quality Impacts	429

9.3	Water & Soil Quality Impacts	430

9.4	Impacts on Fuel and Food Prices	432

9.5	Greenhouse Gas Impacts	434

9.6	Effects on Specific Populations of Concern	435

Chapter 10: Estimated Costs and Fuel Price Impacts	439

10.1	Renewable Fuel Costs	439

10.2	Gasoline, Diesel Fuel, Natural Gas and Electricity Costs	471

10.3	Fuel Energy Density and Fuel Economy Cost	475

10.4	Costs	476

10.5	Estimated Fuel Price Impacts	489

Chapter 11: Screening Analysis	507

11.1	Summary	507

11.2	Background	507

11.3	Screening Analysis Approach	509

11.4	Cost-to-Sales Ratio Result	509

11.5	Conclusion	510

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Executive Summary

The Renewable Fuel Standard (RFS) program began in 2006 pursuant to the requirements
in Clean Air Act (CAA) section 211 (o) that were added through the Energy Policy Act of 2005
(EPAct). The statutory requirements for the RFS program were subsequently amended and
extended through the Energy Independence and Security Act of 2007 (EISA). In addition to
increasing the number of renewable fuel categories from one to four, increasing the volume
targets, and extending those volume targets from 2012 to 2022, EISA also expanded the waiver
provisions in CAA section 211 (o) (7) that authorize EPA to waive the statutory volume targets
under certain conditions.

The statute includes annual, nationally applicable volume targets through 2022 for
cellulosic biofuel, advanced biofuel, and total renewable fuel, and through 2012 for biomass-
based diesel (BBD). For years after those for which the statute specifies volume targets, the
statute directs EPA to establish volume requirements based on a review of implementation of the
program in prior years and an analysis of a set of specified factors. In order to effectuate those
volume requirements, EPA must also translate them into percentage standards that obligated
parties then use to determine the compliance obligations that they must meet every year.

In this action we are proposing to establish the applicable volume targets for all four
categories of renewable fuel for the years 2023, 2024, and 2025, as well as proposing a
supplemental standard for 2023 to address the remand of the 2016 annual rule by the D.C.

Circuit Court of Appeals, in Americans for Clean Energy v. EPA, 864 F.3d 691 (2017)
(hereinafter "ACE"). We are also proposing to establish the annual percentage standards for all
four categories that will apply to gasoline and diesel fuel produced or imported by obligated
parties in 2023-2025, as well as the percentage standard for the 2023 supplemental standard.

This Draft Regulatory Impact Analysis (DRIA) supports our proposed rulemaking in
several ways. First, this DRIA addresses our statutory obligations under CAA section
211 (o) (2) (B) (ii) for determining the applicable volume requirements for cellulosic biofuel, BBD,
advanced biofuel, and total renewable fuel. Specifically, this section of the statute directs us to
establish the applicable volumes based upon a review of the implementation of the program and
an analysis of various environmental, economic, and other factors. We provide this analysis here,
in conjunction with the analysis in the preamble and several technical memoranda to the docket.
Second, this DRIA supports the proposed 2023 supplemental standard in response to the ACE
remand. Among other things, Chapters 3 and 6 describe the availability of renewable fuel to
meet the supplemental standard.

Table ES-1 summarizes certain potential impacts associated with the proposed volumes
in this rule, including both quantified and unquantified impacts. The table is not a comprehensive
listing of all the potential impacts that EPA considered in this rulemaking. The inclusion of an
impact in this table also does not indicate that EPA gave it greater weight than impacts not listed
in this table. A full discussion of each impact, including the uncertainties associated with
estimating the impact, is contained in the DRIA Chapter identified under the "More Information"
column. EPA compiled this table to provide additional information to the public regarding this
rulemaking and to comply with Circular A-4.

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Table ES-1: Potential Quantified and Unquantified Impacts Associated with the Proposed Volumes in this Rule3

Potential impacts associated





Effect

More

with the volumes in this rule

Effect

Effect Quantified

Monetized

Information



Increases in CO, NH3, N0X, PM10, PM2.5, SO2 and VOC emissions associated with biorefinery
production and product transport.

Emission inventory impacts

-

4.1

Impacts on air quality from biofuel
production and use

Higher ambient concentrations of N0X, HCHO and SO2 downwind of production facilities

Emission inventory impacts

-

4.1

Varying emission impacts from vehicles running on ethanol blends

Emission inventory impacts

-

4.1



Decrease for THC, CO, and PM2.5, but increase slightly for N0X emissions from pre-2007 diesels
running on biodiesel

Emission inventory impacts

-

4.1

Impacts on climate change from
biofuel feedstocks production and

Reduced GHG Emissions

Illustrative

Illustrative

4.2

displacement of petroleum fuels











Increased conversion of pasture, grasslands and other habitats to cropland

Qualitative

-

4.3

Impacts on wetlands, ecosystems,
and wildlife habitat from land use

Decreased plant diversity and decreased natural forage for wildlife, particularly for birds and insects

Qualitative

-

4.3

change

Increased use of pesticides and reduced access to natural forage leading to reduced insect
biodiversity, especially in pollinators

Qualitative

-

4.3



Increased erosion, fertilizer and pesticide runoff and/or leachate

Qualitative

-

4.4



Depletion of natural soil organic matter, therebv depleting the soils nutrients

Qualitative

-

4.4

Impacts on soil and water quality
from biofuel feedstock production

Chemical contamination from releases and spills

Qualitative



4.4

Increased erosion from tilling and other land management practices

Qualitative

-

4.4

Increased chance of a cyanobacterium bloom occuring

Qualitative



4.4



Increased turbidity and sedimentation in aquatic ecosystems; Nutrient loading in waterways;
Increased stress on aquatic organisms

Qualitative

-

4.4

Impacts on water quantity and

Aquifer depletion

Qualitative

-

4.5

availability from biofuel and
feedstock production

Use of limited water resources for irrigation instead of meeting human needs

Qualitative

-

4.5

Energy security

Increased energy security

Energy security benefits

$634 million

5

Production and use of renewable
fuels

Increased production and use of renewable fuels

Increased production and use of
renewable fuels

-

6



Increased development of infrastructure of deliver and use renewable fuels

Qualitative



7

Infrastructure

No adverse impact on deliverability of materials, goods, and products other than renewable fuel

Qualitative



7

Jobs

Increased employment

Qualitative

-

8.1

Rural economic development

Support for rural economic development associated with biofuel and feedstock production

Qualitative



8.2

Commodity supply and price
impacts

Increased supply of certain agricultural commodities

Qualitative



8.3

Higher corn, soybean, and soybean oil prices

Commodity price increases

-

8.4

Higher food prices

Food price increases

-

8.5



Increased societal cost

Fuel cost increases

$29.5 billion

10.4

Costs

Changes to costs to consumers of transportation fuel

Cost changes

-

10.5



Increased costs to transport goods

Cost increases

-

10.5

aThis table includes both societal costs and benefits (fuel costs, energy security, GHG emissions) as well as distributional effects or transfers (jobs, rural
economic development, etc.).

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Overview

Chapter 1: Review of the Implementation of the Program

This chapter reviews the implementation of the RFS program, focusing on renewable fuel
production and use in the transportation sector since the RFS program began.

Chapter 2: Baselines

This chapter identifies the appropriate baselines for comparison.

Chapter 3: Volume Scenarios

This chapter identifies the specific biofuel types and associated feedstocks that are projected to
be used to meet the proposed volume requirements.

Chapter 4: Environmental Impacts

This chapter discusses the environmental factors EPA analyzed in developing the proposed
volume requirements.

Chapter 5. Energy Security Impacts

This chapter reviews the literature on energy security impacts associated with petroleum
consumption and imports and summarizes EPA's estimates of the benefits that would result from
the proposed volume requirements.

Chapter 6: Rate of Production of Renewable Fuel

This chapter discusses the expected annual rate of future commercial production of renewable
fuels, including advanced biofuels in each category (cellulosic biofuel and BBD).

Chapter 7: Infrastructure

This chapter analyzes the impact of renewable fuels on the distribution infrastructure of the U.S.
Chapter 8: Other Factors

This chapter provides greater detail on our evaluation of impacts of renewable fuels on job
creation, rural economic development, supply and price of agricultural commodities, and food
prices.

Chapter 9: Environmental Justice

This chapter describes potential environmental justice impacts associated with the production
and use of renewable fuels.

Chapter 10: Estimated Costs and Fuel Price Impacts

This chapter assess the impact of the use of renewable fuels on the social cost, the cost to
consumers of transportation fuel, and on the cost to transport goods.

Chapter 11: Screening Analysis

This chapter discusses EPA's screening analysis evaluating the potential impacts of the proposed
RFS standards on small entities.

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Note: Unless otherwise stated, all documents cited in this document are available in the docket
for this action (EPA-HQ-OAR-2021-0427). We have generally not included in the docket
Federal Register notices, court cases, statutes, or regulations. These materials are easily
accessible to the public via the Internet and other means.

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List of Acronyms and Abbreviations

Numerous acronyms and abbreviations are included in this document. While this may not be an
exhaustive list, to ease the reading of this document and for reference purposes, the following
acronyms and abbreviations are defined here:

AAA	American Automobile Association

ACE	Americans for Clean Energy v. EPA, 864 F.3d 691 (2017)

AEO	Annual Energy Outlook

ASTM	American Society for Testing and Materials

BBD	Biomass-Based Diesel

bbl	Barrel

BOB	Gasoline Before Oxygenate Blending

bpd	Barrels Per Day

CAA	Clean Air Act

CAFE	Corporate Average Fuel Economy

CBI	Confidential Business Information

CBOB	Conventional Gasoline Before Oxygenate Blending

CG	Conventional Gasoline

CI	Carbon Intensity

CNG	Compressed Natural Gas

CO	Carbon Monoxide

CWC	Cellulosic Waiver Credit

DCO	Distillers Corn Oil

DDGS	Dried Distillers Grains with Solubles

DGS	Distillers Grains with Solubles

DOE	U.S. Department of Energy

DRIA	Draft Regulatory Impact Analysis

EIA	U.S. Energy Information Administration

EISA	Energy Independence and Security Act of 2007

EJ	Environmental Justice

EMTS	EPA-Moderated Transaction System

EO	Executive Order

EPA	U.S. Environmental Protection Agency

EPAct	Energy Policy Act of 2005

EV	Electric Vehicle

EVSE	Electric Vehicle Supply Equipment

FFV	Flex-Fuel Vehicle

FOG	Fats, Oils, and Greases

gal	Gallon

GDP	Gross Domestic Product

GHG	Greenhouse Gas

GREET	Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation Model

LCA	Lifecycle Analysis

IEA	International Energy Agency

IEO	International Energy Outlook

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IPCC

Intergovernmental Panel on Climate Change

LCFS

Low Carbon Fuel Standard

LNG

Liquified Natural Gas

MMBD

Million Barrels per Day

MSW

Municipal Solid Waste

MTBE

Methyl Tertiary Butyl Ether

MY

Model Year

NAICS

North American Industry Classification System

NASS

National Agricultural Statistics Service

NEMS

National Energy Modeling System

NGLs

Natural Gas Liquids

NHTSA

National Highway Transportation Administration

NOx

Nitrogen Oxides

NREL

National Renewable Energy Laboratory

OPEC

Organization of Petroleum Exporting Countries

OPIS

Oil Price Information Service

ORNL

Oak Ridge National Laboratory

PADD

Petroleum Administration for Defense District

PHEV

Plug-in Hybrid Electric Vehicle

PM

Particulate Matter

PTD

Product Transfer Document

RBOB

Reformulated Gasoline Before Oxygenate Blending

RFA

Regulatory Flexibility Act

RFF

Resources for the Future

RFG

Reformulated Gasoline

RFRA

Renewable Fuels Reinvestment Act

RFS

Renewable Fuel Standard

RIA

Regulatory Impact Analysis

RIN

Renewable Identification Number

RNG

Renewable Natural Gas

RVO

Renewable Volume Obligation

RVP

Reid Vapor Pressure

SBA

Small Business Administration

SBREFA

Small Business Regulatory Enforcement Fairness Act

SES

Socioeconomic Status

SOx

Sulfur Oxides

SPR

Strategic Petroleum Reserve

SRE

Small Refinery Exemption

STEO

Short Term Energy Outlook

UCO

Used Cooking Oil

ULSD

Ultra-Low-Sulfur Diesel

USDA

U.S. Department of Agriculture

USGCRP

U.S. Global Change Research Program

VEETC

Volumetric Ethanol Excise Tax Credit

VOC

Volatile Organic Compounds

WTI

West Texas Intermediate


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Chapter 1: Review of the Implementation of the Program

The statute directs EPA to establish volumes based on several factors, including "a
review of the implementation of the program during calendar years specified in the tables
This chapter reviews the implementation of the RFS program in previous years, focusing on
renewable fuel production and use in the transportation sector since the beginning of the RFS
program. Of particular interest is a comparison of what the expectations were when the RFS
program was initially designed and implemented to what actually occurred, and an investigation
into the reasons that the renewable fuels market developed as it did. To this end, the focus of this
chapter is on factors related to the production and use of renewable fuels:

•	Feedstock availability, production, and collection

•	Renewable fuel production technology and capacity

•	Distribution, storage, blending, and dispensing of renewable fuels

•	The consumption of renewable fuels in vehicles and engines

1.1 Progression of the Fuels Market

At the time that the RFS program was initially created by EPAct, the transportation fuels
market was already undergoing changes. Multiple state bans on the use of methyl tertiary butyl
ether (MTBE) in gasoline—due to concerns about leaking underground storage tanks and
groundwater contamination—had caused refiners to look for replacement sources of high octane
gasoline blendstocks. Crude oil prices had also begun to rise over the lower levels seen in the
previous decade, improving the relative economic value of alternative fuels. Both of these factors
provided an incentive for the increased use of ethanol in gasoline even before the RFS program
went into effect.

Congressional activity related to MTBE also had an impact on ethanol use in the years
leading up to EPAct. For instance, Congress had considered providing liability protection to
refiners using MTBE under the premise that they had no choice but to use an oxygenate in the
reformulated gasoline (RFG) and oxyfuels programs.1 Congressional consideration of some sort
of liability protection for refiners, as well as the lack of sufficient infrastructure between 2000-
2005 for distributing and blending ethanol, likely contributed to the continued use of MTBE
despite state bans and concerns expressed by EPA and the public about MTBE in the years prior
to and including 2005.2

Ultimately, however, Congress rejected any form of liability protection for MTBE in
EPAct. While EPAct did not include a nationwide ban on the use of MTBE, it did remove the
RFG oxygen mandate, eliminating any argument that MTBE use was necessary to comply with
the statute. In combination with the removal of the RFG oxygen mandate, the creation of the
RFS program, and the increased economic value of ethanol in light of increasing crude oil prices,
refiners now had increased disincentives to continue using MTBE after 2005. In addition,
although the oxygen requirement for RFG was removed in EPAct, the emission standards for

1	"Timeline - A Very Short History of MTBE in the US."

2	"Clinton-Gore Administration Acts To Eliminate MTBE, Boost Ethanol."

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RFG were neither eliminated nor modified.3 Without MTBE, something was quickly needed to
replace the lost volume and octane that had been provided by MTBE while also ensuring that the
RFG emission standards would continue to be met. The net result of these factors is that the
market made a dramatic shift away from MTBE to ethanol in a very short period of time. By the
end of 2006, MTBE use in gasoline had fallen by about 80% in comparison to 2005 levels and
by 2007 was essentially zero, while ethanol replaced MTBE on an almost one-for-one energy-
equivalent basis over those same two years, growing by 56%.4 The sudden demand for ethanol
use in RFG areas, representing about one-third of all gasoline, was so great that its use was
temporarily reduced in much of the rest of the country (conventional gasoline (CG) areas) where
ethanol was not needed to meet state fuel program requirements until additional ethanol supply
could be brought online. This occurred despite the fact that E10 in CG areas benefitted from a 1
psi Reid Vapor Pressure (RVP) waiver, while RFG's emission standards precluded that waiver.

After the RFS program first went into effect in 2006, other factors continued to affect the
biofuels market. Crude oil prices continued to rise, state mandates for ethanol and biodiesel use
expanded, California's Low Carbon Fuel Standard (LCFS) program was implemented, and
foreign demand for biofuels increased. At the same time, the federal ethanol tax subsidy expired
at the end of 2011,5 and the federal oxygenated fuels (oxyfuels) program was largely phased out
as areas came into attainment with ambient wintertime carbon monoxide (CO) standards.
Furthermore, the statutory requirements were amended by the Energy Independence and Security
Act of 2007 (EISA), replacing the single total renewable fuel standard under the RFS1 program
with four nested standards (cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel).
EPA implemented these changes through the RFS2 program, which began in the midst of these
other changes, first with a single but considerably higher total renewable fuel standard in 2009
compared to previous years, and then with the addition of separate standards for cellulosic
biofuel, BBD, and advanced biofuel beginning in 2010. In the following years, cellulosic ethanol
production struggled to develop despite Congressional aspirations, and increases in ethanol use
slowed as the nationwide average ethanol concentration approached 10%.6 BBD volume, in
contrast, expanded beyond the Congressional targets, outcompeting other advanced biofuels with
the help of an ongoing tax incentive, and EPA reflected this by setting higher BBD volume
requirements for years after 2012.

The history of the progression of the fuels market indicates that consumption of
renewable fuels has been a function of many factors, of which the RFS program was only one.
Many of these factors can be expected to contribute to renewable fuel production and
consumption in the future. These factors include other federal and state fuels programs and
incentives, the octane value of ethanol, and foreign demand for renewable fuel.

3	See 40 CFR 80.41(e) and (f).

4	Based on EPA batch data, available at https://www.epa.gov/fue1s-registration-reporting-and-comp1iance-
help/gasoline-properties-over-time (excludes California).

5	The Volumetric Ethanol Excise Tax Credit (VEETC) was instituted through the American Jobs Creation Act of
2004 and the deadline was extended to December 31, 2011, through the Renewable Fuels Reinvestment Act
(RFRA).

6	Here and elsewhere in this DRIA, "ethanol concentration" refers to the concentration of denatured ethanol in
gasoline.

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1.2 In-Use Consumption of Renewable Fuels

There are several reasons why actual renewable use may differ from the renewable fuel
volume targets specified in the statute or even the volumes required through the RFS regulations.
First, the statutory provisions of the RFS program provide EPA with several waiver authorities to
reduce the statutory volumes under particular circumstances.7 The statutory volumes minus
waived volumes equal applicable volumes. In turn, the applicable percentage standards, which
are the mechanism through which the obligations of an individual "obligated party" are
determined under the RFS program, are based on the applicable volumes.8

The "general waiver" authority at CAA section 211 (o) (7) (A) was enacted by EPAct and
maintained in EISA. It permits EPA to reduce any of the four applicable volume targets in the
statute if EPA makes one of the following findings:

(i)	based on a determination by the Administrator, after public notice and opportunity for

comment, that implementation of the requirement would severely harm the economy or

environment of a State, a region, or the United States; or

(ii)	based on a determination by the Administrator, after public notice and opportunity for

comment, that there is an inadequate domestic supply.

The "cellulosic waiver" authority at CAA section 211 (o) (7) (D) was introduced by EISA.
It requires (not merely permits) EPA to reduce the statutory cellulosic volume target to the
projected volume available in years that the projected volume of cellulosic biofuel production is
less than the statutory target. When making such a reduction, EPA may also reduce the statutory
volume targets for total renewable fuel and advanced biofuels by the same or a lesser volume.

The "biomass-based diesel waiver" authority at CAA section 211 (o) (7) (E) was also
introduced by EISA. It requires a reduction from the statutory BBD volume for up to 60 days if
EPA determines that there is a significant renewable feedstock disruption or other market
circumstances that would make the price of BBD increase significantly. When making such a
reduction in BBD volume, EPA may also reduce the statutory volume targets for total renewable
fuel and advanced biofuels by the same or a lesser volume, similar to the cellulosic waiver
authority.

The statute only specifies volume targets for BBD for 2009 through 2012, and EPA did
not reduce the statutory target for any of those years under either the general or BBD waiver
authorities. Under the cellulosic waiver authority, however, EPA has reduced the statutory target
for cellulosic biofuel in every year since 2010 and the statutory targets for advanced biofuel and
total renewable fuel in every year since 2014.

EPA has used the general waiver authority on only one occasion, for the 2016
compliance year based on a finding of inadequate domestic supply.9 However, the D.C. Circuit

7	CAA section 211 (o) (7).

8	Obligated parties are producers and importers of gasoline and diesel. See 40 CFR 80.1406.

9	80 FR 77420 (December 14, 2015).

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vacated EPA's use of this waiver authority in ACE. Specifically, the court found that EPA had
impermissibly considered demand-side factors in its assessment of inadequate domestic supply,
rather than limiting that assessment to supply-side factors. The court remanded the rule back to
EPA for further consideration in light of its ruling. EPA took the first step to respond to that
remand when it established the applicable volume requirements for 2022,10 and is proposing to
complete its response to that remand in this rulemaking.

In addition to the waiver authorities mentioned above, there are at least five other reasons
why actual renewable fuel use may differ from either the statutory or applicable volume
requirements. The first is that the percentage standards are based on projected volumes of
gasoline and diesel consumption, which typically deviate to some degree from what actually
occurs. EPA relies on forecasts provided by the U.S. Energy Information Administration (EIA)
in the Short Term Energy Outlook (STEO).11 In the context of the RFS program, the sum of non-
renewable gasoline and diesel demand is relevant. Since the first percentage standard was
applied in 2007, this forecast has both over- and under-predicted actual consumption, as shown
in Figure 1.2-1.

Figure 1.2-1: Percent Change from Projected to Actual Sum of Non-Renewable Gasoline +
Dieselabc

a From 2007 to 2009, the RFS1 regulatory structure was in effect, and the applicable percentage standards were
based on non-renewable gasoline projections only. Therefore, the values for these three years represent non-
renewable gasoline.

b For purposes of demonstrating the error in forecasts, the blue line uses projected volumes derived from the October
edition of the STEO for the following year. The orange line, in contrast, uses forecasted volumes derived from the
version of the STEO that was actually used to calculate the percentage standards, which in some years was not the
October edition of the preceding year (e.g., the 2014 standards were established in December 2015, well after the
2014 compliance year was over).

c See data and calculations in "Calculation of Percent Change from Projected to Actual Gasoline and Diesel,"
available in the docket for this action.

d Represents the 2020 rulemaking that established the original 2020 standards on February 6, 2020 (85 FR 7016).
The rulemaking that revised those standards on July 1, 2022 (87 FR 39600) based them on actual consumption of
gasoline and diesel in that year. The orange data point for 2020 would thus be at exactly 0%.

In the event that the actual consumption of non-renewable gasoline and diesel is lower
than the projection that EPA used to set the applicable percentage standards (i.e., negative values

4%

October STEO of previous year

-14%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020d2021

10	87 FR 36900 (July 1, 2022).

11	CAA section 211 (o) (3) (A).

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in Figure 1.2-1), the obligations applicable to individual obligated parties are likewise lower and,
all other things being equal, the actual volumes of renewable fuel used as transportation fuel will
fall short of the volumes EPA used in setting the percentage standards. Likewise, if the actual
consumption of non-renewable gasoline and diesel is higher than the projection that EPA used to
set the applicable percentage standards (i.e., positive values in Figure 1.2-1), the actual volumes
of renewable fuel used as transportation fuel will exceed the volumes EPA used in setting the
percentage standards. Despite the fact that the statute directs EPA to set standards that ensure
that transportation fuel sold or introduced into commerce contains the applicable volumes of
renewable fuel, the statute also directs EPA to use projections of gasoline and diesel for this
purpose, and does not mandate that EPA correct the volume requirements based on deviations in
those projections from the volumes actually consumed.

Another reason that the volume requirements may not be reached by the market in a
particular year is related to the credit system that is used to demonstrate compliance with the
RFS program.12 These credits are called Renewable Identification Numbers, or "RINs."
Obligated parties have the flexibility to use RINs representing renewable fuel produced in the
previous year, often called "carryover RINs" or "banked RINs," to demonstrate compliance
rather than by using RINs representing current year renewable fuel production.13,14 The
nationwide total of banked RINs grew dramatically in the early years of the RFS program, and
obligated parties have at times drawn down this bank to help fulfill their obligations. For
instance, consumption of renewable fuels fell more than 500 million ethanol-equivalent gallons
short of the applicable volume requirement in 2013, and obligated parties used banked RINs to
make up the shortfall. Similarly, we estimate that obligated parties used a significant number of
banked RINs in 2019 to make up for a shortfall in actual consumption.15

The third reason that the applicable volume requirements may vary from actual
renewable fuel use is the difficulty in projecting the future market's ability to make available and
consume renewable fuels. For instance, in several cases producers of cellulosic biofuel made
plans that did not come to fruition, such as Cello Energy, Range Fuels, and KiOR.16 In the past,
there was also considerable uncertainty associated with estimating the ability of the RFS
standards to incentivize increases in the consumption of ethanol above the E10 blendwall.17
Other unforeseen circumstances such as the drought in 2012 that adversely affected crops yields
and the impacts of the COVID-19 pandemic in 2020 have also contributed to shortfalls in
renewable fuel production in comparison to the intended volume requirements. By contrast, in
some other years, the market used more renewable fuel than what EPA projected, typically when
the economics of doing so were favorable or as a result of other incentives such as state LCFS
programs.

12	CAA section 211 (o) (5) establishes the provisions for credits under the RFS program. This system is discussed in
more detail in Chapter 1.9.

13	This flexibility is a function of the two-year life of RINs as discussed more fully in Chapter 1.9.

14	The use of previous year RINs for compliance with the applicable standards is limited to 20% of an obligated
party's Renewable Volume Obligation (RVO). See 40 CFR 80.1427(a)(5).

15	"Carryover RIN Bank Calculations for 2023-2025 Proposed Rule," available in the docket for this action.

16	80 FR 77506 (December 14, 2015).

17	80 FR 77457 (December 14, 2015).

5


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A fourth reason that the applicable volume requirements may vary from actual renewable
fuel use is that there are other drivers for renewable fuel use besides the RFS program. For
instance, as discussed in Chapter 1.1, in the early years of the RFS program, renewable fuel use
significantly outpaced the RFS requirements spurred by the transition from MTBE to ethanol as
an oxygenate. We discuss numerous other, non-RFS economic drivers for renewable fuel use
throughout this chapter.

Finally, exemptions for small refineries due to disproportionate economic hardship have
effectively reduced the required volume of renewable fuel for those years in comparison to the
volumes on which the percentage standards were based. These exemptions are permitted under
CAA section 211 (o) (9) (B) and are evaluated on a refinery-by-refineiy basis. In cases where a
small refinery exemption (SRE) was granted after the applicable percentage standards were set,
the percentage standards remained unchanged but were then applicable to a smaller number of
parties, resulting in smaller effective aggregate renewable fuel requirements.

Historically, once the percentage standards were established for a given year, EPA has
not adjusted them to account for SREs that were subsequently granted. Rather, from the start of
the RFS program through the 2019 annual rule, EPA's standard-setting only accounted for SREs
that had been granted at the time of the final annual rule. In essence, this meant that non-exempt
obligated parties did not have to make up for volumes that would not be attained by the exempt
small refineries.18 This approach is consistent with that taken for the projected non-renewable
gasoline and diesel volumes used to calculate the percentage standards, where errors in projected
volumes could likewise result in actual consumption of renewable fuel falling short of the
intended volume requirements.

18 75 FR 76805 (December 9, 2010).

6


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Figure 1.2-2: Volume of SREs Granted After the Applicable Percentage Standards Were
Set, By Compliance Year3



2000



1800



1600



1400

l/l



z

1200

oc



c

o

1000

i

800



600



400



200



0

I Advanced biofuel
I Conventional renewable fuel

2011 2012 2013 2014 2015 2016 2017 2018
Compliance year

a No SREs have been granted after compliance year 2018. This chart shows the impact of certain SREs previously
granted for compliance years 2016, 2017, and 2018 that have since been remanded, reconsidered, and denied.

As shown in Figure 1.2-2, SREs granted after the standards were set varied significantly
by compliance year. However, these SREs did not necessarily translate into an equivalent
reduction in actual consumption. Other factors also played a role in determining whether and
when actual consumption was affected by SREs. For instance, the combination of the economic
attractiveness of marketing ethanol to consumers as E10 and the infrastructure to blend,
distribute, and dispense E10, along with longer-term contracts for ethanol blending, meant that
the nationwide average ethanol concentration remained very near 10.00% ethanol even when
large numbers of SREs were granted. With regard to the timing of the impacts, SREs generally
affected the demand for RINs in the calendar year in which they were granted and/or the
following years, rather than in the compliance year to which they applied, as shown in Figure
1.2-3. This was often due to EPA granting the SREs after the compliance year had passed.

7


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Figure 1.2-3: Volume of SREs Granted After the Applicable Percentage Standards Were
Set, By Calendar Year When Exemptions Were Granted3

2000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Calendar year

a No SREs have been granted after calendar year 2019. This chart shows the impact of certain SREs previously
granted for compliance years 2016, 2017, and 2018 in calendar year 2019 that have since been remanded,
reconsidered, and denied.

However, it was not always the case that SREs affected the demand for RINs only in the
calendar year in which they were granted and/or the following years. For instance, some small
refineries adjusted their RIN acquisition efforts to reflect anticipated grants of their SRE
petitions, effectively resulting in SREs having a market impact before they were actually
granted. In all or almost all cases, a small refinery that was granted an exemption continued to
blend renewable fuel into its own gasoline and/or diesel due to the economic attractiveness of
doing so. In such cases, the total number of RINs generated may not have been reduced by the
SRE, but the carryover RIN bank may have increased. Finally, as discussed above, higher-than-
projected gasoline and diesel demand could offset the effect of SREs to some degree.

In the final rule that established the original 2020 standards, EPA revised the RFS
regulations to account for a projection of exempt small refinery volumes, increasing the 2020
percentage standards applicable to non-exempt refineries.19 Given that EPA subsequently made a
decision not to exempt any volumes of gasoline or diesel for 2020 (i.e., no SREs were granted),
the original 2020 percentage standards were applicable to a larger volume of gasoline and diesel,
effectively increasing the total requirement for renewable fuel.20

In sum, due to the many factors that affect renewable fuel consumption, actual
consumption has been both higher and lower than the volumes that EPA originally intended to be
achieved in setting the percentage standards.

19	85 FR 7016 (February 6, 2020).

20	We note, however, that on July 1, 2022, EPA revised the 2020 standards to account for the fact that no SREs were
granted for 2020, as well as to address impacts of the COVID-19 pandemic. See 87 FR 39600.

8


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Figure 1.2-4: Intended3 Versus Actual Consumption of Total Renewable Fuel

20,000
18,000
16,000

1	14,000
ae
c

.9. 12,000

2	10,000

8,000
6,000
4,000

r--oomor-ifMro'tiJ"ivDr*.coCT> ob

OOOrHr-lr-l-Hr-lrHrHrHr-li—

ooooooooooooooo

r>4(N0JrMrMrMfM0J04rM(NrM(N(Nr>i

Source for actual consumption: EPA-Moderated Transaction System (EMTS)

a Intended volumes represent the volumes used to calculate the applicable percentage standards. As such, the
intended volumes do not account for the effects of SREs granted after the percentage standards were established,
errors in projected demand for gasoline and diesel, or the use of carryover RINs for compliance.
b The "intended consumption" for 2020 represents the 2020 rulemaking that established the original 2020 standards
on February 6, 2020 (85 FR 7016), not the rulemaking that revised those standards on July 1, 2022 (87 FR 39600).

The total volume of renewable fuel that was intended to be used between 2007 and 2021
(i.e., the volume that was used to calculate the applicable percentage standards) was about 229
billion ethanol-equivalent gallons. In comparison, actual consumption was about 231 billion
ethanol-equivalent gallons over the same time period. Thus, actual consumption has exceeded
what was intended over the life of the RFS program through 2020. In 2007 and 2008, the
significant oversupply in comparison to the intended volumes was due primarily to the expansion
of E10 when the market as a whole had not yet reached the E10 blendwall and blending ethanol
as E10 was economically attractive relative to gasoline. In years after 2016, the significant
undersupply in comparison to the intended volumes affected all types of renewable fuel more
equitably rather than just ethanol, and was precipitated by a combination of the approval of SREs
after the applicable percentage standards had been set, lower than projected gasoline and diesel
consumption, and other economic factors.

Economic factors impact conventional renewable fuel and non-cellulosic advanced
biofuel differently. These factors include crude oil prices, renewable fuel production costs
(which are in turn a function of feedstock, process heat, and power costs), tax subsidies, and the
market pressures created by the RFS standards to increase ethanol use above the E10 blendwall.
Economic factors are coupled with the use of carryover RINs for compliance, the size of the
carryover RIN bank, and deficit carry-forwards. In 2013, for instance, the implied conventional
renewable fuel standard was 13.8 billion gallons, which was considerably higher than the E10
blendwall. The market responded by producing less conventional renewable fuel but more non-
cellulosic advanced biofuel than required. The net effect of these two outcomes nevertheless still
fell short of the applicable volume requirements, and the market thus relied on some carryover
RINs for compliance. In 2019, the E10 blendwall was again lower than the implied conventional
renewable fuel volume requirement, and the carryover RIN bank was drawn down by 1.6 billion
RINs from 3.43 to 1.83 billion RINs.

Actual consumption
Intended consumption

9


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1.3 2010 Biofuel Projections Versus Reality

In the 2010 rule that established the RFS2 program, EPA projected volumes of each type
of renewable fuel that in the aggregate would meet the applicable volume targets in the statute
for cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel.21 These projections did
not include any consideration of potential future waivers or any other factor that might cause the
statutory volumes not to be met. In reality, actual consumption of renewable fuel typically fell
short of the statutory targets for all renewable fuel categories except for BBD. Moreover, the
specific types of renewable fuel that were projected in 2010 to be used to fulfill the mandates
differed from what was actually used, most notably in regard to the relative amounts of ethanol
and non-ethanol renewable fuels.

This chapter highlights the aspirational nature of the statutory volume targets, especially
for cellulosic biofuel and its carry through impact on advanced biofuel and total renewable fuel.
This chapter also highlights the difficulty in projecting the ability of the market to meet
applicable standards as well as the specific mix of biofuels that will be produced, imported, and
consumed.

1.3.1 Shortfalls in Comparison to Statutory Targets

As explained in Chapter 1.2, there are many reasons why actual use of renewable fuels
fell short of the statutory targets. Figure 1.3.1-1 compares the statutory targets to actual
consumption for the four categories of renewable fuel.

21 75 FR 14670 (March 26, 2010).

10


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Figure 1.3.1-1: Comparison of Statutory Volume Targets to Actual Consumption

Celluioslc Biofuel

Biomass-Based Diesel*

18,0130
IS,COO
14,000
^ 17,000

2

5 10,000
c

M HflOO
?

fi.otm
4,000
2,000
O

— — Statutory targpt

Actual consumption

2010 2011 2012 2013 2014 201S 2015 2017 2018 2019 2020 2021 2022

Advanced Biofuel

25,000
20,000

S 15,000

¦ Stdiulory target
- Actual consumption

4Q000
35,000
:i0,ooo
25,000
20,000
15*000

iaooo

7010 2011 2017 ;01J 2014 701S 2010 201/ 201 fi 7019 2020 2021 2022

Total Renewable Fuel

— —»Statutory targer	^

'Actual consumption	^

2010 2011 2012 2013 2014 2015 2015 2017 2018 2019 2020 2021 2022

2010 2011 2017 7011 7014 701 5 201f. 201/ 701M 7019 7070 7071 2007

Source for actual consumption: EMTS

a The statute specifies BBD volume targets only through 2012. Thereafter, the required BBD volume can be no less
than 1.0 billion gallons, but can be more based on an analysis of specified factors.

The significant shortfalls in advanced biofuel and total renewable fuel for more recent
years are primarily the result of shortfalls in cellulosic biofuel. This fact is more evident in
Figure 1,3.1-2, which shows that consumption is considerably closer to the implied statutory
volume targets for non cellulosic advanced biofuel and conventional renewable fuel.

Figure 1.3.1-2: Comparison of Implied Statutory Volume Targets to Actual Consumption



MXX>



s,oco



4,0ft)

z



c

o

3,000

1

7,DOt>



1,000

Non-Cellolosic Advanced Biofuel"

— —»Implied si	i 	

—— Actual consumption

Conventional Renewable Fuelb

Implied statutory target
Actual consumption

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

7010 7011 2017 701.1 JM4 701f» 2016 201/ 701H 7019 7070 7021 2022

Source for actual consumption: EMTS
a Non-cellulosic advanced biofuel represents D4 and D5 RINs.
b Conventional renewable fuel represents D6 RINs.

The oversupply in non-cellulosic advanced biofuel between 2011 and 2017 partially
offset some of the shortfall in conventional renewable fuel in the same years, and also
contributed to increases in the carryover RIN bank in some years.

11


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A direct comparison of shortfalls in consumption of cellulosic biofuel to shortfalls in the
other categories of renewable fuel makes it clear that consumption of advanced biofuel and total
renewable fuel was directly affected by the shortfall in cellulosic biofuel, while the consumption
of non-cellulosic advanced biofuel and conventional renewable fuel was not. This is to be
expected since the cellulosic biofuel category is nested within advanced biofuel and total
renewable fuel categories, but cellulosic biofuel is independent of non-cellulosic advanced
biofuel and conventional renewable fuel.

Figure 1.3.1-3: Comparative Shortfalls (Statutory Target Minus Actual Consumption)

-Shortfall in cellulosic biofuel
•Shoi (fall in advanced Wofud
¦shortfall In non-celhilttsTt advance d tkKifuti]

= 4,000
5

2,000
0

•2,000
4,000

™S-injil/all in c£ilulnsic hmlual
-Shortfall in total renewable Kief
—Shortfall in conventional renewable fuel

2010 ;on ;oi; mi ?om jois 20H* 201/ 201s 2019 2020 2021

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source for actual consumption: EMTS

1.3.2 Relative Proportions of Ethanol and Non-Ethanol Renewable Fuel

In the RFS2 rule, non-cellulosic advanced biofuel through 2022 was projected to be
composed of biodiesel, renewable diesel, and imported sugarcane ethanol. This has proved
largely true as volumes of renewable jet fuel, biogas, heating oil, domestic advanced ethanol, and
naphtha—the only other eligible advanced biofuels—have represented only a very small fraction
of non-cellulosic advanced biofuel consumption. However, the relative proportions of biodiesel,
renewable diesel, and imported sugarcane ethanol have been far different in actual consumption
than in the projections from the RFS2 rule.

Figure 1.3.2-1: Volumetric Proportions of Each Fuel Type in Non-Cellulosic Advanced
Biofuel

2010 Projection

Actual Consumption

2D13 2014 JOl S 7016 101J 2 Olfl J019 2020 20(71

2013 2014 201S

201/ 2018 2019 2020 2021

Source: "2010 projection" is from Table 1.2-3 of the RIA for the RFS2 rule. "Actual consumption" is from EMTS.

12


-------
Actual consumption of imported sugarcane ethanol has been considerably lower than in
the 2010 projection, and consumption of advanced biodiesel and renewable diesel has been
higher. This outcome for imported sugarcane ethanol is mirrored in the outcome for total
ethanol: actual consumption of ethanol has been lower than the 2010 projection and actual
biodiesel and renewable diesel has been higher.

Figure 1.3.2-2: Actual Versus 2010 Projection of Ethanol Consumption in Non-Cellulosic
Renewable Fuel3



18,000





17,000

^^—2010 projection

c
_o

16,000

	Actual

~ro
w>
c

15,000



o





i

14,000
13,000
12,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: "2010 projection" is from Table 1.2-3 of the RIA for the RFS2 rule. "Actual consumption" is from EMTS.
a The 2010 projection of ethanol shown here represents the "primary control case" from the RFS2 rule. EPA also
analyzed a "low ethanol control case" and a "high ethanol control case".

13


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Figure 1.3.2-3: Actual Versus 2010 Projection of Biodiesel + Renewable Diesel
Consumption in Non-Cellulosic Renewable Fuel

5,000

1,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: "2010 projection" is from Table 1.2-3 of the RIA for the RFS2 rule. "Actual consumption" is from EMTS.

This pattern of lower ethanol and higher non -ethanol volumes in comparison to
expectations appears to be linked to the E10 blendwall and the difficulty that the market has had
in increasing sales of higher-level ethanol blends (e.g., El 5 and E85). The 2010 projections
included a significant volume of E85 that did not materialize. The result is that, rather than being
met entirely with corn ethanol as projected in 2010, the implied conventional renewable fuel
volume requirement has included volumes of ethanol up to and just slightly greater than the E10
blendwall, while biodiesel and renewable diesel have made up the difference.

14


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Figure 1.3.2-4: Actual Versus 2010 Projection of Ethanol Consumption in Conventional
Renewable Fuel

18,000
17,000

^^—2010 projection

w 16,000 ^—Actual

c

o

75

Source: "2010 projection" is from Table 1.2-3 of the RIA for the RFS2 rule. "Actual consumption" is from EMTS.

The expectation at the time that EISA was enacted in 2007 was that the implied
conventional renewable fuel volume requirement could be met entirely with ethanol as E10
without the nation as a whole exceeding an average ethanol content of 10.00%, and without the
need for El 5 or E85. This expectation was based on the assumption that gasoline demand would
continue to increase in the future, as had been projected by EIA since 2000. By the time RFS2
regulations were finalized in 2010, however, EIA's Annual Energy Outlook (AEO) projected
that future gasoline demand was likely to decrease rather than increase.

Figure 1.3.2-5: EIA Projections of Future Gasoline Demand

15.0000

Ot-lOrHr>4
OOOOOOOOOOrH*—It—

OOOOOOOOOOOOOOOOQOOOOOO

PJ(N(NN
-------
While EPA's projections in the 2010 rule for how the statutory targets through 2022
might be met included significant volumes of drop-in renewable diesel, it also included total
ethanol volumes in excess of the implied statutory conventional renewable fuel volume targets;
EPA's projections assumed that substantial volumes of ethanol would also be used to meet the
cellulosic biofuel and implied non-cellulosic advanced biofuel volume targets. These projections
were based on what EPA believed at that time was reasonable to expect for production and
consumption of all renewable fuel types under the influence of the RFS standards, as well as the
growth in the flex-fuel vehicle (FFV) fleet and the availability of E85 at retail service stations
that would be needed in order for the projected ethanol volumes to be consumed (El 5 had not
been approved at that time). Based on EPA's projections of total ethanol volume in the RFS2
rule and EIA's projection of gasoline demand in AEO 2010, the nationwide average ethanol
content would have first exceeded 10.00% in 2014 in the primary case and would have continued
upwards to 15.5% by 2022. In reality, the actual increase in the nationwide average ethanol
concentration over time has been considerably slower; the same is true even when ignoring
cellulosic ethanol (i.e., when comparing actual ethanol use to the projected volume of
conventional ethanol and non-cellulosic advanced ethanol such as imported sugarcane ethanol).

Figure 1.3.2-6: 2010 Projected Versus Actual Ethanol Concentration

16%

7%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source for actual ethanol concentration: Gasoline and ethanol consumption from EIA's Monthly Energy Review

The considerably slower-than-projected approach to and exceedance of the E10
blend wall suggests that increasing sales of E85 were more difficult to achieve than either EPA or
ethanol proponents had projected it would be when the RFS program was established.

1.4 Gasoline, Diesel, and Crude Oil

This chapter compares crude oil prices with crude oil price projections, and discusses
observed changes in petroleum imports, refinery margins, and transportation fuel demand prior
to and during the years of the implementation of the RFS program.

16


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1.4.1 Crude Oil Prices vs. Crude Oil Price Projections

Crude oil prices have a significant impact on the economics of increased use of
renewable fuels. When crude oil prices increase, both renewable fuel feedstock prices and
gasoline and diesel prices tend to increase as well, although gasoline and diesel prices generally
increase more relative to renewable fuel feedstock prices. Thus, higher crude oil prices generally
improve the economics of renewable fuels relative to gasoline and diesel. Conversely, lower
crude oil prices tend to hurt the economics of renewable fuels.

When EPA was projecting the cost of future renewable fuels for the RFS2 rule, crude oil
prices were very high compared to historical crude oil prices. For estimating the cost of
rulemakings, EPA uses projections for the future prices of petroleum products. The cost analysis
for the RFS2 rule was based on crude oil, gasoline, and diesel prices projected by EIA in AEO
2008, which projected crude oil prices for decades into the future. Figure 1.4.1-1 shows AEO
2008 projected crude oil prices, as well as actual crude oil prices, for both West Texas
Intermediate (WTI, a light, sweet crude produced in the U.S.) and Brent (a light, sweet European
crude oil).22'23'24,25 When there was separation in Brent and WTI crude oil prices and Brent
prices were higher than WTI, Brent crude oil prices likely represented the marginal price of
crude oils purchased by U.S. refiners and set the marginal price of U.S. refined products, while
WTI tended to reflect crude purchase price for many U.S. refiners.

22	Light crude oils are comprised of more lower temperature boiling, shorter chain hydrocarbons, while heavy crude
oils are comprised of more higher temperature boiling, longer chain hydrocarbons. Sweet crude oils have less sulfur,
while sour crude oils have more sulfur. Increased sulfur in crude oils make them more expensive to refine to meet
gasoline and diesel sulfur specifications; thus, sour crude oils are typically priced lower than sweet crude oils.

23	AEO 2008 - Petroleum Product Prices; Reference Case; EIA; June 2008.

24	AEO 2008 - Petroleum Product Prices; High Price Case; EIA: June 2008.

25	Petroleum and Other Liquids - Spot Prices WTI - Cushing and Brent - Europe; EIA;
https://www.eia.gov/dnav/pet/pet pil spt si a.htm.

17


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Figure 1.4.1-1: AEO 2008 Projected and Actual Crude Oil Prices (2007 dollars)3

120

a Actual crude oil prices have been adjusted to 2007 dollars to be consistent with the value of money used in AEO
2008; 2022 data represents the first 6 months only.



100
80
60
40
20
0

2000

WTI Spot Prices

AEO 2008 High Price Case

2020	2025	2030

2005	2010	2015

Year

Brent Spot Prices
AEO 2008 Reference Case

Figure 1.4.1 1 shows actual crude oil prices beginning to increase in 2004 and reaching
an average price of nearly $100 per barrel in 2008. Furthermore, some reports at that time
projected even higher crude oil prices due to crude oil production not keeping up with demand.26
Nevertheless, EIA crude oil price projections during this time were much lower, and it was
during this time that the RFS2 rule was written. The AEO 2008 reference case projected crude
oil prices decreasing to under $60 per barrel and remaining that low all the way out to 2030.
Because the AEO 2008 reference case projected much lower crude oil prices than actual prices
and many other independent predictions at that time, EPA also analyzed the cost of the RFS2
program based on AEO 2008 high crude oil prices. The AEO 2008 high price case estimated
crude oil prices rising from $70 per barrel to mid-$90s per barrel out to 2030. Actual crude oil
prices decreased in 2014 back down to the $40 to $60 per barrel price range (after adjusting the
prices back to 2007 dollars—the dollar value used in AEO 2008), which were much lower than
the peak prices, but higher than the typical historical crude oil prices prior to 2004. In retrospect,
the reference case and high crude oil price projections of AEO 2008 essentially represented the
range of crude oil prices since the RFS2 program was promulgated.

1.4.2 Petroleum Imports

As discussed further in Chapter 5, energy security is an important goal of the RFS
program. Importing a significant amount of crude oil and finished petroleum products from
abroad creates an energy security concern if the foreign petroleum supply is disrupted. A good

Hirsch, Robert L.; Peaking of World Oil Production: Impacts, Mitigation & Risk Management; Report to the
Department of Energy; February 2005.

18


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example is the oil embargo by the Organization of Petroleum Exporting Countries (OPEC)
against the U.S. in 1973 and 1974, which drove up prices, reduced supply, and is attributed to
causing the U.S. economy to slide into a recession.27 It also led to Congress banning the export
of U.S. oil from 1975 to 2015.28

At the time that Congress passed EPAct and EISA and EPA promulgated the RFS1 and
RFS2 rules, the U.S. was importing a large portion of its crude oil and refined petroleum
products. That trend was expected to continue because the eventual increase in U.S. crude oil
production due to fracking was not known at that time. Below we consider the petroleum trade
imbalance during that time and what has transpired since.

EI A collects data on imports of crude oil and petroleum products, receives data on crude
oil and petroleum product exports from the U.S. Bureau of the Census, and calculates net imports
of petroleum into the U.S.29 The EIA-reported net imports of petroleum values account for
imports and exports of crude oil, petroleum products, and biofuels.30 For the net imports figures
shown in Figure 1.4.2-1, the renewable fuel volumes were removed to only show the U.S. net
imports of petroleum for the years from 2000-2021. Because the production volume of U.S. tight
oil (fracked oil) impacted the net petroleum imports in such a significant way, those volumes are
also shown in the figure, along with the individual net imports of gasoline and diesel.

27	Verrastro, Frank A., The Arab Oil Embargo-40 Years Later; Center for Strategic & International Studies; October
16, 2013.

28	1975 Energy Policy and Conservation Act; Consolidated Appropriations Act of 2016.

29	U.S. Net Imports by Country; Petroleum and Other Liquids; EIA;
https://www.eia.gov/dnav/pet/pet move net! a EP00 IMN mbblpd m.hliii

30	To calculate net petroleum imports, EPA subtracted net biofuel imports from the U.S. Net Imports reported by
EIA.

19


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Figure 1.4.2-1: U.S. Net Petroleum Imports and U.S. Tight Oil Production

Year

Net Crude Imports	Net Gasoline Imports

Net Distillate Imports	Tight Oil Production

Figure 1.4.2-1 shows that net petroleum imports increased from just over 10 million
barrels per day (bpd) in 2000 to a maximum of about 12.5 million bpd in 2005. After peaking in

2005	when EPAct was passed, net petroleum imports started to decrease, very slowly at first, in

2006	and 2007. Starting in 2008, net petroleum imports declined each year by roughly 1 million
bpd.

Increased tight oil production and changes in gasoline and distillate (comprised largely of
diesel) net imports were responsible for reducing net petroleum imports. Figure 1.4.2-1 clearly
shows that tight oil production—which increased from about zero in 2009 to 8 million bpd in
2018—had a very large impact on net petroleum imports. Distillate exports began to increase
starting in 2006 and they continued to increase through 2017. As a result, net distillate imports—
which were somewhat positive at 0.2 million bpd initially—trended downward starting in 2006
to negative 1.1 million bpd in 2017. Gasoline net imports reached a maximum of over 1 million
bpd in 2007. Like distillate, gasoline exports also began to increase, which likewise
corresponded with a reduction in net gasoline imports. By 2017, gasoline net imports were 1.1
million bpd lower than in 2007.

Renewable fuels likely contributed to reducing net petroleum imports by a relatively
modest amount. The volume of corn ethanol increased from about 2 billion gallons in 2000 to
over 14 billion gallons in 2015.31,32 Biodiesel consumption increased from 10 million gallons in
2001 to over 1 billion gallons in 2013, and biodiesel and renewable diesel consumption totaled

31	EI A, Monthly Energy Review, Table 10.3, Fuel Ethanol Review;
https://www.eia.gov/totalenergv/data/monthlv/pdf/seclO 7.pdf

32	Note that "corn ethanol" also includes small amounts of ethanol produced from other sources of starch such as
wheat and grain sorghum.

20


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over 2 billion gallons in 2019.33,34 Assuming that this total renewable fuel volume displaced an
energy-equivalent volume of petroleum imports, corn ethanol and biodiesel/renewable diesel
combined would have displaced about 0.75 million bpd of petroleum equivalent volume in
2019—which is equivalent to 6% of the highest import volume.

Petroleum imports also contributed to a monetary trade imbalance that was of particular
concern prior to the passage of EISA in 2007. What made the continued increase of net
petroleum imports until 2005 of particular concern was that crude oil prices were increasing at
the same time.35 Crude oil spot prices (both WTI and Brent) had doubled in 2005 to over $50/bbl
compared to average crude oil spot prices prior to 2004. Crude oil prices continued to increase,
nearly doubling again in 2008 compared to 2005. Thus, the U.S. imported petroleum trade
imbalance quadrupled in monetary terms. However, petroleum imports have decreased in recent
years.

The total U.S. trade imbalance increased to just under $800 billion in 2005 and increased
further to over $800 billion per year in 2006 through 2008.36 The increasing crude oil prices on
top of the increasing petroleum imports contributed to this increasing trade imbalance. The 12
million bpd net petroleum import volume combined with the approximately $70/bbl crude oil
price in 2006 contributed to about $300 billion of the total U.S. trade imbalance. While
petroleum imports directly comprised a large portion of the increasing trade imbalance, higher
crude oil prices also increased the prices of many other goods that were imported into the U.S.,
which likely indirectly contributed to the trade imbalance.37 In 2009, the U.S. trade imbalance
dropped to $500 billion. Since then, the U.S. trade imbalance increased back into the $600-700
billion per year range until 2018 and 2019, when it increased again back above $800 billion per
year. Then, in 2020, the U.S. trade imbalance further increased above $900 billion. As shown in
Figure 1.4.2-1, the decreasing net imports of petroleum means that petroleum is not a factor for
this increasing trade imbalance.

We recognize that because the U.S. is a participant in the world market for petroleum
products, its economy cannot be shielded from world-wide price shocks.38 However, the
potential for petroleum supply disruptions due to supply shocks has been significantly
diminished due to the increase in tight oil production and, to a lesser extent, renewable fuels,
which has shifted the U.S. to being a modest net petroleum importer in the world petroleum
market in 2023-2025. Nevertheless, the potential for supply disruptions (discussed further in
Chapter 5) has not been eliminated.39

33	Biodiesel consumption data from EIA, Monthly Energy Review, Table 10.4, Biodiesel and Other Renewable
Fuels Overview; https://www.eia.gov/totalenergy/data/monthly/pdf/seclO 8.pdf

34	Renewable consumption data from Public Data for the Renewable Fuel Standard: EPA Moderated Transaction
System: https://www.epa.gov/fuels-registration-reporting-and-compHance-help/public-data-renewable-fuel-standard

35	Spot Prices - Petroleum and Other Liquids: EIA: https://www.eia.gov/dnav/pet/pet pil spt si a.htm

36	U.S. Trade in Goods with World, Seasonally Adjusted: United States Census Bureau:
https://www.census.gov/foreign-trade/balance/c0004.html

37	U.S. Trade Deficit and the Impact of Changing Oil Prices: Congressional Research Service: February 24, 2020:

https://fas.org/sgp/crs/niisc/RS22204.pdf

38	Bordoff, Jason: The Myth of US Energy Independence has Gone Up in Smoke: Foreign Policy: September 18,
2019: https://foreignponcy.com/2019/09/18/the-myth-of-u-s-energy-independence-has-gone-up-in-smoke

39	Foreman, Dean: Why the US must Import and Export Oil: American Petroleum Institute: June 14, 2018:
https://www.api.org/news-policy-and-issues/blog/2018/06/14/why-the-us-niust-import-and-export-oil

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1.4.3 Refinery Margins

Refinery margins reveal the economic health of refineries. The higher the margins for a
refinery, the greater its profitability and economic viability. Over time, refinery margins vary
considerably, but must average at least a certain level in order to remain viable long term.

Publicly available refinery margin data from BP is shown in Figure 1.4.3-1 for three
different types of refineries: (1) A U.S. Gulf Coast coking refinery; (2) A Northwest European
sweet crude oil cracking refinery; and (3) A medium crude oil hydrocracking refinery in
Singapore.40 The refinery margin data is for three refineries owned by BP; thus, it may not
represent the margins of other refineries in the same regions. The margin data is on a semi-
variable basis, accounting for all variable costs and fixed energy costs.

Figure 1.4.3-1: Refinery Margins in Three Different Regions ($/bbl)

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I SINGAPORE MEDIUM SOUR HYDROCRACKING

Figure 1.4.3 1 shows that from 1993-2004, refinery margins were modest, and the
Singapore refinery in particular experienced zero or near-zero margins over much of 1998-2004.
From 2004-2009, crude oil prices were rising and it was a much better period for these
refineries' margins, particularly for the Gulf Coast refinery. The Gulf Coast refinery's margins
were likely much higher due to the heavy sour crude oil processed there being much less
expensive than the crude oils processed at the other two refineries. All three refineries' margins
decreased dramatically after 2008, likely due to the large decrease in refined product demand
associated with the Great Recession. As the world emerged from the Great Recession, the three
refineries' margins started improving in 2010, and in particular, the refinery margins improved
more dramatically for the heavy sour coking refinery in the Gulf Coast. Flowever, refinery
margins for U.S. refineries that refine light, sweet crude oil are not represented in Figure 1.4.3-1.
As shown in Figure 1.4.1-1, but not reflected in Figure 1.4.3-1, light sweet crude oil prices were

40 Oil Refinery Margins - Regional; NASDAQ Data Link; https://data.nasdaq.com/data/BP/OIL REF MARG-oil-
refining margins-regional.

22


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depressed in the U.S. during 2011—2014. Lower prices of sweet crude oil provided high margins
for U.S. refineries that processed sweet crude oil during this time period. The Gulf Coast refinery
margins stayed elevated all the way up to 2020, at which point refinery margins declined steeply
for all three refinery types due to the COV1D 19 pandemic. Refinery margins returned to their
pre-pandemic levels in 2022, but then increased significantly starting in March 2022 due to
geopolitical factors.41

1.4.4 Transportation Fuel Demand

At the time the RFS2 program was being enacted through EIS A in 2007, there had been a
consistent increase in U.S. petroleum demand. However, transportation fuel demand fell short of
historical demand increases starting in 2008 and has remained relatively stable since that time.
Figure 1.4.4 1 shows the actual volume of gasoline, distillate, and jet fuel consumed in the U.S.
from 2000-2018, as well as the projected demand of gasoline and distillate if transportation fuel
demand growth had continued at the historic rate based on AEO 20 08.42,43

Figure 1.4.4-

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41	McGurty, Janet; Refinery Margin Tracker: Russian crude cargoes taper off as margins rise; S&P Global; April 4,
2022.

42	Product Supplied; Petroleum and Other Liquids, Energy Information Administration,
https://www.eia.gOv/dnav/pe.t/pet cons psup dc nus mbbl a.htm.

43	Annual Energy Outlook 2008; Energy Information Administration; June 2008;
https://www. eia. gov/outlooks/archive/aeo08/ index.html.

1: Actual and Projected Transportation Fuel Demand

	Gasoline Supplied

	Projected Gasoline Demand

	Distillate Demand



	Projected Distillate Demand

	Aviation Turbine Fuel Demand

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23


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Figure 1.4.4-1 shows that both gasoline and distillate demand increased up to 2007.
During previous years, gasoline and distillate demand was increasing 1.3% and 1.7% per year on
average, respectively. The dashed lines in Figure 1.4.4-1 show projected gasoline and distillate
demand if they had continued to increase at the same rate as that prior to 2008. The figure clearly
shows that actual gasoline and distillate demand fell far short of projected demand after 2007.
Conversely, jet fuel demand was essentially flat during the entire period.

Several factors led to the decrease of transportation fuel demand after 2007 relative to
projected values:

•	The Great Recession. The Great Recession began in 2008 and officially lasted for
18 months, although employment did not return to pre-recession levels until over 6
years after the onset of the recession. The Great Recession caused a large impact on
economic activity, which reduced transportation fuel demand during these years.

•	Increased crude oil prices. Sustained, higher crude oil prices resulted in increased
transportation fuel prices over this time period, which affected consumer behavior by
impacting the number of miles traveled and vehicle purchase decisions. After 2014,
crude oil prices decreased to the $40-50 price range, which brought gasoline prices
back down and likely reversed some of the consumer behavior changes.

•	Increasing fuel economy of the motor vehicle fleet. EPA and the National
Highway Transportation Administration (NHTSA) finalized standards which reduced
light-duty motor vehicle greenhouse gas (GHG) emissions and increased the
Corporate Average Fuel Economy (CAFE) of motor vehicles. The GHG/CAFE
standards applied to light-duty vehicles sold in 2012-2025 and thereafter.44 EPA and
NHTSA also established GHG/CAFE standards for new heavy-duty vehicles and
their trailers.45 The phase 1 and phase 2 heavy-duty GHG standards began to phase-in
in 2014 and will continue to do so through 20 2 7.46 The GHG standards only affect
new internal combustion vehicles; thus, as consumers purchase new motor vehicles,
these new vehicles consume less gasoline and diesel compared to the vehicles sold in
previous years, reducing overall petroleum demand.

•	Electric vehicle penetration and fuel displacement. Electric vehicles (EVs) and
plug-in hybrid electric vehicles (PHEVs) reduce consumption of petroleum fuel by
either partially displacing petroleum fuels (in the case of PHEVs) or completely
displacing petroleum demand (in the case of EVs). Data on annual electrified vehicle
sales indicates that EVs and PHEVs displaced an estimated 5 million gallons of fuel
in 2011 and that this increased to over 400 million gallons in 2019.47

44	75 FR 25324 (May 7, 2010) and 86 FR 74434 (December 30, 2021).

45	76 FR 57106 (September 15, 2011).

46	81 FR 73478 (October 25, 2016).

47	Transportation Research Center at Argonne National Laboratory, https://www.anl.gov/es/light-duty-electric-drive-
vehicles-monthly-sales-updates

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1.5 Cellulosic Biofuel

Actual production of cellulosic biofuel through 2021 has been significantly less than the
statutory volumes, which reached 16 billion gallons in 2022. Minimal volumes of cellulosic
biofuel were produced through 2013. Since 2013, volumes of the types of liquid cellulosic
biofuels projected in the RFS2 rule have remained limited. There are numerous reasons that
liquid cellulosic biofuel production has not developed as anticipated. In some years, the lower
than anticipated crude oil prices discussed in Chapter 1.4.1 certainly impacted the market's
ability to produce liquid cellulosic biofuels at competitive prices. The relatively low production
costs estimated in the RFS2 rule (generally $1.00-2.50 per gallon of liquid cellulosic biofuel
based on NREL modeling, depending on the production technology and technology year) have
not been realized.48 While the issues associated with each individual company and facility are
unique, and the reasons facilities fail to consistently produce cellulosic biofuel at the expected
volumes are not always publicly disclosed, there appear to be several common challenges across
the liquid cellulosic biofuel industry. These challenges include: (1) Feedstock quality and
handling issues; (2) Higher than anticipated feedstock and capital costs; and (3) Difficulty
scaling up technology to commercial scale. The inability of several first-of-a-kind cellulosic
biofuel production facilities to continue operating has also likely impacted investment in the
commercialization of similar technologies. As we discuss further in Chapter 6.1, the availability
of liquid cellulosic biofuel has historically been very low and has typically fallen short of EPA's
projections.

Although production of liquid cellulosic biofuel from commercial scale production
facilities has been far lower than projected in the RFS2 rule, smaller volumes of qualifying
cellulosic biofuel have been produced using technologies not discussed in that rule. The
production of compressed natural gas and liquified natural gas (CNG/LNG) derived from biogas,
which was not one of the cellulosic biofuel production technologies discussed in the RFS2 rule,
has accounted for the vast majority of the cellulosic biofuel produced since 2010. The RFS2 rule
contained a pathway49 for the production of biogas from landfills, sewage and waste treatment
plants, and manure digesters to generate advanced biofuel (D5) RINs.50 In response to questions
from multiple companies, EPA subsequently evaluated whether biogas from several different
sources could be considered not just an advanced biofuel, but also a cellulosic biofuel. In the
Pathways II rule, EPA added a pathway for CNG/LNG derived from biogas from landfills,
municipal wastewater treatment facility digesters, agricultural digesters, and separated MSW
digesters, as well as biogas from the cellulosic components of biomass processed in other waste
digesters, to generate cellulosic biofuel (D3) RINs when used as a transportation fuel.51
Following this decision, production of CNG/LNG derived from biogas increased rapidly, from
approximately 33 million RINs in 2014 to over 560 million RINs in 2021.52 Through 2021, over

48	Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-006. February 2010.

49	A pathway is a combination of feedstock, production process, and fuel type. EPA has evaluated a number of
different pathways to determine the category of renewable fuel that fuel produced using the various pathway
qualifies for. The list of generally applicable pathways can be found in 40 CFR 80.1426(f).

50	7 5 FR 14872 (March 26, 2010).

51	79 FR 42128 (July 18, 2014).

52	One RIN can be generated for each ethanol-equivalent gallon of renewable fuel. One gallon of ethanol is eligible
to generate one RIN; other types of fuel generate RINs based on their energy content per gallon relative to ethanol.
For CNG/LNG derived from biogas, every 77,000 BTU of qualifying biogas generates one RIN.

25


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98% of all of the cellulosic. RINs generated in the RFS program have been for CNG/LNG
derived from biogas. We anticipate that CNG/LNG derived from biogas will continue to be the
source of the vast majority of cellulosic biofuel in the RFS program through 2023, with
significant volumes of eRINs starting in 2024. Actual cellulosic biofuel production for each year
from 2014-2021 is shown in Figure 1.5-1.

Figure 1.5-1: Cellulosic RINs Generated (2013-2021)

6 DO

2013 2014 2015 2016 2017 2018 2019 2020 2021

¦ CNG/LNG Derived from Biogas ¦ Liquid Cellulosic Biofuel

1.6 Biodiesel and Renewable Diesel

The actual supply of biodiesel and renewable diesel has significantly exceeded the supply
projected by EPA in the RFS2 rule. In that rule, EPA projected that 1.62 billion gallons of
biodiesel and 0.15 billion gallons of renewable diesel would be supplied in 2021, all of which
was projected to be produced in the U.S.5,5 The actual supply of biodiesel and renewable diesel in
2021 was 1.82 billion gallons and 0.99 billion gallons, respectively. While the majority of these
volumes were produced domestically, significant volumes were imported. Further, while the vast
majority of biodiesel and renewable diesel supplied since 2010 has met the requirements for
BED or advanced biofuel, smaller volumes were produced from grandfathered facilities using
renewable biomass that does not qualify for BED or advanced RINs and therefore only qualify to
generate conventional renewable fuel (D6) RINs. The most likely feedstock used to produce
grandfathered biodiesel and renewable diesel is palm oil; however, other types of renewable
biomass that have not been approved to generate advanced or BED RINs could also have been
used.

53 2021 is the most recent year for which data are available for comparison.

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Figure 1.6-1: 2010 Projected vs. Actual Biodiesel and Renewable Diesel Supply (2014-2021)

3.00

2.50

2014 2015 2016 2017 2018 2019 2020 2021

¦	Projected Renewable Diesel n Actual Renewable Diesel

¦	Projected Biodiesel	Actual Biodiesel

Projected volumes are from the RFS2 rule. Actual volumes are from EMTS data.

Figure 1.6-2: Source of Biodiesel and Renewable Diesel Consumed in the U.S. (2014-2021)

3.00

2.50

2014 2015 2016 2017 2015 2019 2020 2021

¦	Biodiesel Net imports	¦ Renewable Diesel Net Imports

¦	Domestic Biodiesel	Domestic Renewable Diesel

The reason that the supply of biodiesel and renewable diesel has been much higher than
projected in the RFS2 rule is primarily related to challenges associated with consuming ethanol
as higher-level blends with gasoline (i.e., greater that 10% ethanol), which we discuss further in
Chapter 1.7. The limited use of higher-level ethanol blends, together with lower than projected
gasoline demand, resulted in total ethanol consumption in 2020 and 2021 (12.70 and 13.88
billion gallons, respectively) that was lower than the projected ethanol consumption volume in
2022 even under the low ethanol case from the RFS2 rule (17.04 billion gallons).0'1 Since the

54 Ethanol consumption volume are from EIA's Monthly Energy Review, while: the ethanol projections are from the
RFS2 rule. Ethanol consumption in 2020 was significantly impacted by the COVID-19 pandemic. Ethanol

27


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primary fuels available to meet the advanced biofuel requirements are biodiesel, renewable
diesel, and sugarcane ethanol, the challenges associated with increasing ethanol consumption is a
significant factor in a much smaller-than-projected supply of sugarcane ethanol. Instead, greater
volumes of biodiesel and renewable diesel have been used to meet the advanced biofuel
requirement and at times even the total renewable fuel requirement, as further discussed in
Chapter 6.

The feedstocks used to produce biodiesel and renewable diesel each year from 2014—
2021 for domestically produced and imported biodiesel and renewable diesel are shown in
Figures 1.6-2 and 1.6-3.

Figure 1.6-2: Domestic Biodiesel and Renewable Diesel Feedstocks (2014-2021)

2.50

2014 2015 2106 2017 2018 2019 2020 2021

¦ FOG ¦ Corn Oil ¦ Soybean Oil Canola Oil ¦ Grandfathered (Unknown)

Source! EMTS

consumption in the U.S. reached a peak of 14.49 billion gallons in 2017, still far short of the volumes projected in
the RFS2 rule.

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Figure 1.6-3: Imported Biodiesel and Renewable Diesel Feedstocks (2014-2021)

1.00'

2014 2015 2106 2017 201S 2013 2020 2021

¦ FOG •Corn Oil ¦Soybean Oil - Canoia Oil ¦ Algal Oil ¦ Grandfathered (Unknown)

Source! 1 All S

There are several notable differences between the quantities of feedstock projected to be
used to produce biodiesel and renewable diesel in the RFS2 rule and the actual feedstocks used
to produce these fuels in 2021. Domestic biodiesel production in 2021 was fairly similar to the
volume of biodiesel projected in the RFS2 rule for that year (all of which was projected to be
produced domestically), but there were significant differences in the feedstocks used to produce
this biodiesel. Relative to the quantities projected in the RFS2 rule, the use of soybean oil, fats,
oils, and greases (FOG), and other sources were all higher than projected, while the use of corn
oil from ethanol plants was lower than projected. These differences largely reflect the greater
than anticipated demand for biodiesel as a result of the limitations on ethanol consumption (see
Chapter 1.7). The lower than expected use of corn oil is likely the result of production of non-
food grade corn oil being a relatively new feedstock at the time of the RFS2 rule, EPA's
projections being over-ambitious, and demand for this feedstock in animal feed and other
sectors.

Domestic renewable diesel production in 2021 was significantly higher than projected in
the RFS2 rule, in which EPA projected that all renewable diesel would be produced domestically
from FOG. While the majority of domestic renewable diesel was produced from FOG in 2021,
significant volumes were also produced from soybean oil and corn oil from ethanol plants. The
U.S. also imported significant volumes of biodiesel and renewable diesel in 2021, as well as in
previous years. By 2021, the majority of the imported biodiesel and renewable diesel was
produced from FOG; however, in earlier years the U.S. also imported large volumes of biodiesel
produced from soybean oil.55

55 Source: EMTS.

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1.7 Ethanol

The predominant form of biofuel used to meet the standards under the RFS program—
and in particular the total renewable fuel standard—has been ethanol. In 2005, just prior to
implementation of the RFS1 program, ethanol accounted for 97% of all biofuel consumed in the
U.S. transportation sector.56 Since then, the total volume of ethanol used in the U.S. has more
than tripled from 5.5 million gallons in 2006 to 14.5 million gallons in 2019."' iK By 2010,
ethanol use in the U.S. was approaching the "E10 blendwall" (as represented by the nationwide
average ethanol concentration) and actually exceeded 10.00% in 2016. By 2021, ethanol
accounted for 80% of the 17.2 billion gallons of biofuel consumed in the U.S.

In all years since ethanol was approved for use in gasoline in 1979, the vast majority of
ethanol consumed in the U.S. has been produced domestically from corn starch with small
amounts from other starches. Cellulosic ethanol has represented at most 0.07% (2019) of all
ethanol consumed in the U.S., while the proportion of imported sugarcane ethanol has been small
but highly variable.

Figure 1.7-1: Proportions of Ethanol Fuel Sources

?a06^(Xr/70(W;LX)9201070ni'01?;0137D14i0lS2016?ai/?0IH^0ri;(»U?0?!	200C: 2007 20C8 2009 20102011 2012 2013 2014 201> 2DI&20JL7 2015 2019 2Q20 2021

Source: EMTS

As shown in Figure 1.7-2, actual consumption of ethanol in the U.S. was very close to
domestic production through 2009. Thereafter, domestic production began exceeding domestic
consumption, indicative of an increase in exports.

56 EIA's Monthly Energy Review, April 2021, Tables 10.3 and 10.4. Comparison is based on ethanol-equivalence.
"Id.

58	In 2020 and 2021, total ethanol consumption dropped significantly as a result of the COVID-19 pandemic.

59	"RIN supply as of 2-17-22," available in the docket for this action.

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Figure 1.7-2: Domestic Production and Consumption of Ethanol

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After E10 was approved for use in all vehicles in 1979, consumers had a choice between
E0 (gasoline without ethanol) and E10. Consumers likely made their choice based on knowledge
of what fuels were available based on pump labeling, relative price, perceptions (or lack thereof)

31


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of impacts on vehicle fuel economy, vehicle operability or longevity, comfort with an unfamiliar
fuel, and perceived benefits to the environment or economy. Since approaching and exceeding
the E10 blendwall between 2010 and 2016, virtually all gasoline nationwide contains 10%
ethanol. As a result, most consumers today have little choice but to use E10. However, with the
expansion of retail service stations offering El 5 and E85, the choice for consumers has now
shifted to between E10 and these higher-level ethanol blends. For higher-level ethanol blends,
consumers likely consider all of the factors they considered when the choice was between E0 and
E10, plus whether the fuel is legally permitted to be used in their vehicle and whether the
manufacturer has warranted their vehicle for its use.

1.7.1 E85

The earliest form of a higher-level ethanol blend was E85. In 1996, the first FFV was
produced that could operate on fuel containing up to 85% denatured ethanol (83% ethanol).60
Starting in 2007, ASTM International limited the maximum ethanol content of E85 to 83% in
specification D5798, with a minimum ethanol content of 51%. EIA assumes that the annual,
nationwide average ethanol concentration of E85 is 74%.61

E85 is not considered gasoline under EPA's regulations, and as such is permitted to be
used only in FFVs. However, FFVs can operate on either gasoline or E85. Under basic economic
theory, and assuming all other factors are equal, FFV owners are more likely to purchase E85 if
they believe that doing so reduces their fuel costs. E85 reduces fuel economy in comparison to
E10, and E85 must sell at a discount to El0 if it is to represent an equivalent value in terms of
energy content. For an average E85 containing 74% ethanol, its volumetric energy content is
approximately 21% less than E10 (or 24% lower than that of E0, though E0 is rarely the point of
comparison as sales volumes of E0 are considerably lower than sales volumes of E10).62,63 In
order for E85 to be priced equivalently to gasoline on an energy-equivalent basis, then, its price
must be on average 21% lower than that of El0. As shown in Figure 1.7.1-1, the nationwide
average price of E85 compared to E10 has only rarely achieved the requisite energy equivalent
pricing needed for FFV owners who are aware of and concerned about the fuel economy impacts
of E85. Furthermore, E85 purchasers generally have no way of knowing whether their fuel
contains 83% ethanol, 51% ethanol, or something in-between.

60	"Alternative Fuel Ford Taurus," available in the docket for this action.

61	"AEO2022 Table 2," available in the docket for this action. See footnote 11.

62	Assumes ethanol energy content is 3.555 mill Btu per barrel and gasoline energy content is 5.222 mill Btu per
barrel. EIA Monthly Energy Review for April 2021, Tables A1 and A3.

63	A comparison to E0 would be more relevant prior to 2010 when there remained significant volumes of E0 for sale
at retail stations.

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Figure 1.7.1-1: Volumetric Price Reduction of E85 Compared to E10a

35%

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Note: While E85prices.com is a decentralized system consisting of voluntary submissions from motorists, the
American Automobile Association (AAA) data is based on a daily collection of credit card swipe and direct feed
price data from up to 130,000 retail stations. Moreover, the data collection by AAA is done in cooperation with the
Oil Price Information Service (OPIS) and Wright Express to ensure reliability of the results.

EPA has estimated the nationwide volume of E85 consumed in recent years using two
different methods.64 The results of those analyses are shown in Figure 1.7.1 2.

Figure 1.7.1-2: Estimated E85 Consumption3



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1.7.2 E15

In 2011, gasoline containing up to 15% ethanol was permitted to be used in model year
(MY) 2001 and newer vehicles.1' ' El 5 has since been offered at an increasing number of retail
service stations.11' However, there is currently no publicly available data on actual nationwide
El 5 sales volumes.

Sales of El5 prior to 2019 were seasonal due to the fact that El5 did not qualify for the
1-psi EVP waiver for summer gasoline in CG areas that has been permitted for E10 since the
summer volatility standards were implemented in 1989.*' As shown in Figure 1.7.2-1, monthly
El 5 sales in Minnesota from 2015-2018 demonstrate that sales volumes of El 5 in summer
months were notably lower than in non-summer months in this time period.

Figure 1.7.2-1: Normalized Monthly E15 Sales per Station in Minnesota3

2.00

0.20
0.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Minnesota Commerce Department

a Normalized values derived by dividing the monthly El 5 sales volume per station by the annual average E15 sales
volume per station.

In 2019, EPA extended the 1-psi waiver to El 5 by regulation.68 EPA estimated that the
annual average El 5 sales per station in Minnesota would have been 16% higher had the 1-psi
waiver been in place from 2015-2018.69 On July 2, 2021, the U.S. Court of Appeals for the D.C.
Circuit ruled that EPA's extension of the 1-psi waiver to E15 was based on an impermissible reading
of the statute and vacated it. Insofar as the regulatory 1-psi waiver for El 5 had an impact on
summer sales of E15, therefore, it did so only for 2019-2021. While EPA issued emergency fuel
waivers throughout the summer of 2022 that allowed El5 to take advantage of the 1-psi waiver
to address issues related to fuel price and supply, we not expect to do so again in the future and
thus do not expect that the 1-psi waiver for El 5 will have an impact in 2023 or later years.

65 76 FR 4662 (January 26, 2011).

56 See Chapter 6.4.3.

67	54 FR 11883(March 22, 1989).

68	84 FR 26980 (June 10, 2019).

69	"Estimating the impacts of the Ipsi waiver for El 5," memorandum from David Korotney to EPA docket EPA
FIQ-OAR-2019-0136.

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1.8 Other Biofuels

Although domestic corn ethanol and BBD have dominated the biofuels landscape since
implementation of the RFS program began in 2006, other biofuels have also contributed to the
total renewable fuel pool, sometimes providing the marginal volumes needed to meet the other
applicable standards. As shown in Figures 1.8-1 and 2, biofuels other than corn ethanol and BBD
represented between 2-5% of total renewable fuel from 2012-2021.'°

Figure 1.8-1: Contribution of Biofuels to Total Renewable Fuel Consumption* h

19,000		J

- Imported conventional ethanol

¦	Imported conventional renewable diesel

¦	Imported conventional biodiesel

¦	Domestic conventional biodiesel

¦	Domestic advanced renewable diesel

¦	Domestic advanced gasoline/naphtha

¦	Domestic advanced heating oil

¦	Imported advanced ethanol

¦	Domestic advanced ethanol

¦	Domestic advanced biogas

15,000 f	¦ Domestic advanced jet fuel

18,000

17,000

14,000

13,000	"

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

I Imported cellulosic ethanol
Domestic cellulosic ethanol
i Imported cellulosic biogas
i Domestic cellulosic biogas
P Domestic com ethanol + BBD

Source: EMTS

a Ignores any biofuels that contributed less than 1 million RINs in aggregate over all years shown. This affects
domestic cellulosic gasoline/naphtha, domestic cellulosic diesel, and domestic conventional butanol.
b Fuel type and D code of exports is known, but whether the exported fuel was originally produced domestically or
was imported is not known. For purposes of this chart, exports were assumed to be distributed to domestic
production and imports in proportion to the relative production volumes of each.

70 Detailed data prior to 2012 on RIN generation, adjustments to account for invalid RINs, and exports is less robust
and is therefore not presented here.

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Figure 1.8-2: Biofuels Other than Corn Ethanol and BBD

1,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Imported conventional ethanol

¦	Imported conventional renewable diesel

¦	Imported conventional biodiesel

¦	Domestic conventional biodiesel

¦	Domestic advanced renewable diesel

¦	Domestic advanced gasoline/naphtha

¦	Domestic advanced heating oil

¦	Imported advanced ethanol

¦	Domestic advanced ethanol

¦	Domestic advanced biogas

¦	Domestic advanced jet fuel

¦	Imported cellulosic ethanol
Domestic cellulosic ethanol

¦	Imported cellulosic biogas

¦	Domestic cellulosic biogas

As illustrated in Figure 1.8-3, advanced biofuel exclusive of cellulosic biofuel or BBD
(i.e., renewable fuel having a D code of 5) has been met with the greatest variety of fuel types
compared to the other statutory categories.

Figure 1.8-3: Advanced Biofuel Types Excluding Cellulosic Biofuel and BBD



700
600 ,
500





















¦ Imported advanced ethanol

(A

z:

400



¦ Domestic advanced renewable diesel

cd
c
o





¦ Domestic advanced gasoline/naphtha

i

300
200
100



¦ Domestic advanced ethanol



¦	Domestic advanced biogas

¦	Domestic advanced heating oil



0







2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: EMTS

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These sources of advanced biofuel varied widely in both their overall contributions to the
advanced biofuel pool from 2012-2021, as well as in each individual year. As the largest overall
contributor, imported advanced ethanol produced from sugarcane in Brazil is discussed
separately in Chapter 6.3. Production of domestic advanced renewable diesel,71
gasoline/naphtha, and ethanol were of approximately similar magnitude and demonstrated no
consistent increasing or decreasing trends between 2012-2021. Domestic advanced biogas fell to
near zero in 2015 after biogas from landfills was recategorized as cellulosic biofuel in 2014.72
Domestic advanced heating oil has grown steadily since 2012 but has never generated more than
3 million RINs in a single year.

As described in Chapter 1.5, cellulosic biofuel has been composed predominately of
biogas-based CNG/LNG. Smaller volumes of cellulosic ethanol and heating oil and very small
volumes of gasoline/naphtha and renewable diesel have also been used.

1.9 RIN System

RINs were created by EPA under CAA section 211 (o) (5) as a flexible mechanism to
enable obligated parties across the country to meet their renewable fuel blending obligations
under the RFS program without having to blend the renewable fuel themselves.73 RINs allow:
(1) Obligated parties (i.e., the refining industry) to comply with the RFS program without
producing, purchasing, or blending the renewable fuel themselves; (2) Non-obligated blenders of
renewable fuel to maintain their preexisting blending operations; and (3) The ethanol and other
biofuel industries to continue to produce biofuels, now with the support of the RIN value.
Obligated parties, of course, can and do produce, purchase, and blend their own renewable fuel,
but the RIN system allows them the option of not doing so and instead relying on the business
practices of other market participants that are already set up to do so. RINs are generated by
renewable fuel producers (or in some cases renewable fuel importers) and are assigned to the
renewable fuel they produce. These RINs are generally sold together with the renewable fuel to
refiners or blenders. RINs can be separated from renewable fuel by obligated parties or when
renewable fuel is blended into transportation fuel. Once separated, RINs can be used by
obligated parties to demonstrate compliance with their RFS obligations or can be traded to other
parties.

Under the RFS program, EPA created five different types of RINs: cellulosic biofuel
(D3) RINs, BBD (D4) RINs, advanced biofuel (D5) RINs, conventional renewable fuel (D6)
RINs, and cellulosic diesel RINs (D7).74 The type of RIN that can be generated for each
renewable fuel depends on a variety of factors, including the feedstock used to produce the fuel,
the type of fuel produced, and the lifecycle GHG reductions relative to petroleum fuel. As shown
in Figure 1.9-1, the obligations under the RFS regulations are nested, such that some RIN types
can be used to satisfy obligations in multiple categories.

71	Small quantities of renewable diesel are not BBD but are nonetheless advanced biofuel.

72	79 FR 42128 (July 18, 2014).

73	The RIN system was created in the RFS1 rule (72 FR 23900, May 1, 2007) and modified in the RFS2 rule (75 FR
14670, March 26, 2010).

74	40 CFR 80.1425(g).

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Figure 1.9-1: Nested Structure of the RFS Program

Total renewable fuel

Advanced biofuel

D3/7

D4

t

Cellulosic

t

B8D

biofuel



D5	D6

.t	t

Other advanced	Conventional

(sugarcane ethanol,	(mostly corn-ethanol)

V KC> J
Y

Non-cellulosic advanced

1.9.1 Carryover RIN Bank

CAA section 211 (o) (5) requires that EPA establish a credit program as part of its RFS
regulations, and that the credits be valid for obligated parties to show compliance for 12 months
as of the date of generation. EPA implemented this requirement through the use of RINs, which
can be used to demonstrate compliance for the year in which they are generated or the
subsequent compliance year. Obligated parties can obtain more RINs than they need in a given
compliance year, allowing them to "carry over" these surplus RINs for use in the subsequent
compliance year. In order to ensure reasonably consistent demand for new renewable fuel use in
the ensuing year, however, our regulations limit the use of these carryover RINs to 20% of an
obligated party's renewable volume obligation (RVO). For the bank of carryover RINs to be
preserved from one year to the next, individual carryover RINs are used for compliance before
they expire and are essentially replaced with newer vintage RINs that are then held for use in the
next year. For example, vintage 2022 carryover RINs must be used for compliance in 2023, or
they will expire. However, vintage 2023 RINs can then be "banked" for use in 2024.

In the context of setting the annual volume standards, the relative number of carryover
RINs projected to be available compared to the projected volume requirement for each category
has helped inform EPA's decisions regarding the extent to which it should exercise its waiver
authorities. During the first several years of the RFS2 program, the total number of RINs
generated far exceeded the total number of RINs needed for obligated parties to demonstrate
compliance. This resulted in a dramatic increase in the carryover RIN bank, up to an estimated
2.67 billion total carryover RINs in 2013, which represented over 16% of the total renewable
fuel volume standard for that year.75 As a result, EPA determined that sufficient carryover RINs
existed such that it was not necessary for EPA to use its cellulosic or general waiver authority to

75 EPA first began projecting the size of the carryover RIN bank in the 2013 RFS annual rule.

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reduce the total or advanced biofuel volume requirements specified in the statute.76 At the time,
EPA recognized that this decision may result in a reduction in the carryover RIN bank, and this
in fact occurred, as the total number of carryover RINs dropped by over 900 million RINs to an
estimated 1.74 billion total carryover RINs in 20 1 4.77 As seen in Table 1.9.1-1, at the time the
annual standards for 2013-2022 compliance years were established (i.e., the information
available to EPA when the standards were finalized for the subsequent year), the relative size of
the projected total carryover RIN bank compared to the projected total renewable fuel volume
requirement ranged from a high of over 16% in 2013 to a low of 8% in 2017. However, the
magnitude of the carryover RIN bank deviated from these projections sometimes significantly
based on the decisions of the market players that only became known after the rule were
finalized. With the benefit of hindsight, EPA can calculate the number of carryover RINs for
each category that were actually available for compliance for a given year. As seen in Table
1.9.1-1, the actual size of the total carryover RIN bank compared to the actual volume obligation
for 2013-2019 has ranged from a high of nearly 17% in 2018 to a low of 9% in 2016.78 In
absolute terms, the carryover RIN bank reached its highest historical levels going into the 2019
compliance year, at 3.43 billion RINs. However, as discussed in Preamble Section IV, the
carryover RIN bank was significantly drawn down after 2019 compliance to 1.83 billion RINs.

76	78 FR 49820-22 (August 15, 2013).

77	80 FR 77482-87 (December 14, 2015).

78	Similar comparisons can also be made for the advanced biofuel, BBD, and cellulosic biofuel categories, and are
presented in Tables 1.9.1-2 through 4.

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Table 1.9.1-1: Total Renewable Fuel Carryover RINs Compared to Total Renewable Fuel
Volume Requirement3			

Compliance
Year

Total Renewable Fuel
Carryover RINs Available
(billion RINs)

Total Renewable Fuel
Volume Requirement
(billion gal)

Carryover RINs as
% of Volume
Requirement

Projectedb

Actual0

Projectedb

Actual0

Projected

Actual

2013

2.67

2.47

16.55

16.92

16.1%

14.6%

2014

1.74

1.58

16.28

16.31

10.7%

9.7%

2015

1.74

1.69

16.93

17.00

10.3%

10.0%

2016

1.74

1.65

18.11

17.93

9.6%

9.2%

2017

1.54

2.48

19.28

18.49

8.0%

13.4%

2018

2.22

3.13

19.29

18.51

11.5%

16.9%

2019

2.59

3.43

19.92

21.03

13.0%

16.3%

2020

1.83

n/a

17.13

n/a

10.7%

n/a

2021

1.83

n/a

18.84

n/a

9.7%

n/a

2022

1.83

n/a

20.63

n/a

8.9%

n/a

2023

1.83

n/a

20.82

n/a

8.8%

n/a

2024

1.83

n/a

21.87

n/a

8.3%

n/a

2025

1.83

n/a

22.68

n/a

8.1%

n/a

a For further discussion of these calculations, see "Carryover RIN Bank Calculations for 2023-2025 Proposed
Rule," available in the docket for this action.

b Projected volume requirements and number of carryover RINs reflect the values projected in the rules establishing
the standards for those years.

c Data current as of March 10, 2022, and compiled from Tables 2 and 3 at https://www.epa.gov/fuels-registration-

repoiting-and-conipliance-help/annual-conipliance-dal:a-obligal:ed-paities-and. Actual Volume Requirement =
Reported Volume Obligation (Table 2) + Total End-of-Year Compliance Deficit (Table 5).

1.9.2 RIN Prices

RIN prices have varied significantly since 2010. There have also been significant and
notable differences between the prices of each of the four major RIN types. A chart of RIN
prices, as reported to EPA through EMTS, is shown in Figure 1.9.2-1.79 While there are a wide
variety of factors that impact RIN prices, including both market-based and regulatory factors, a
review of RIN prices reveals several notable aspects of the RFS program.

79 RIN prices are reported publicly on EPA's website (https://www.epa.gov/fuels-registration-reporting-and-
compliance-help/rin-trades-and-price-information). These prices are reported to EPA by the parties that trade RINs
and are inclusive of all RIN trades (with the exception of RIN prices that appear to be outliers or data entry errors).
Several other services also report daily RIN prices: however, these reports are generally not publicly available.
Further, the prices reported by these services generally represent only spot trades and do not include RINs traded
through long-term contracts.

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Figure 1.9.2-1: RIN Prices

$4.00
$3.50
$3.00

$2.50

	D6 RIN Price 	D5 RIN Price 	D4 RIN Price	D3 RIN Price

Data Source: EMTS Price Data

Prior to 2013, D6 RIN prices were low (less than $0.05 per RIN). These low prices were
likely due to the fact that from 2010-2012 it was cost-effective to blend ethanol into gasoline as
E10 even without the incentives provided by the RFS program. The low RIN prices during this
period also indicate that the RFS requirements were not the driving force behind increased use of
E10.

Beginning in 2013, D6 RIN prices rose sharply. 2013 marked the first time the implied
conventional renewable fuel requirement exceeded the volume of ethanol that could be
consumed as E10.80 While it has generally been cost-effective to blend ethanol as E10, higher-
level ethanol blends (e.g., E.15 and E85) have generally not been cost effective, even with the
incentives provided by the RFS program. This is largely because: (1) Fuel blends that contain
greater than 10% ethanol are currently not able to be optimized to take advantage of the high
octane value of ethanol; (2) The lower energy content of ethanol is more noticeable as the
amount of ethanol increases; and (3) Infrastructure limitations have restricted the availability of
higher-level ethanol blends (see Chapter 6.4).

In subsequent years, D6 RIN prices have varied significantly, but they have never
returned to the low prices observed prior to 2013. It is also notable that, from 2013-2016, D6
RIN prices remained close to, but slightly less than. D4 and D5 RIN prices. During this time,
obligated parties were purchasing D4 and D5 RINs in excess of their BED and advanced biofuel

80 The conventional renewable fuel requirement is the difference between the total renewable fuel requirement and
the advanced biofuel requirement.

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obligations to make up for the shortfall in conventional biofuel volume and used those RINs to
meet their total renewable fuel obligations. Essentially, given the inability to successfully
introduce higher-level ethanol blends into the market in sufficiently large quantities, the market
relied upon biodiesel and renewable diesel (primarily advanced biofuel and BBD, but also some
volume of conventional biodiesel and renewable diesel) as the marginal RFS compliance option
when other sources of conventional biofuel were not available at competitive prices. After 2018,
D6 RIN prices were, for some time, significantly lower than D4 and D5 RIN prices, but still
higher than the D6 RIN prices observed prior to 2013. These lower D6 RIN prices are largely the
result of: (1) SREs granted in 2018, which reduced the total number of D6 RINs needed for
compliance with the RFS obligations to a number that was below the E10 blendwall; and (2) The
large number of carryover RINs available, as discussed in Chapter 1.9.1. More recently, D4, D5,
and D6 RIN prices have risen dramatically, reaching nearly $2 per RIN in the summer of 2021
before decreasing slightly to between $1.00-1.50 by the end of 2021. These prices reflect the
cost of biodiesel and renewable diesel production (the marginal supply) at a time of unusually
high commodity prices for soybean and other oil feedstocks, less the value of other subsidies and
credits (e.g., the $1.00 per gallon federal tax subsidy and state LCFS credits).

While D6 RIN prices have remained relatively high in recent years, these price levels
have not translated into higher ethanol prices for ethanol producers. After examining market
data, EPA found no correlation between D6 RIN prices and ethanol prices from 2010-2022.
Instead, higher D6 RIN prices have resulted in lower effective prices for ethanol after the RINs
have been separated and sold.81 Higher D6 RIN prices have thus served to subsidize fuel blends
that contain higher proportions of conventional biofuel (e.g., E85 and B20 biodiesel/renewable
diesel blends) and increased the cost of fuel blends that contain little or no conventional biofuel
(e.g., E0 and BO).82

81	The effective price is the price of the ethanol after subtracting the RIN value from the price of the ethanol with the
attached RIN.

82	Burkholder, Dallas. "A preliminary Assessment of RIN Market Dynamics, RIN Prices, and Their Effects." U.S.
EPA Office of Transportation and Air Quality. May 2015.

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Figure 1.9.2-2: Ethanol Prices and D6 RIN Prices

$4.00

Ethanol Price	D6 RIN Price

Data Sources;5 Ethanol Price from USDA Weekly Ag Roundup, D6 RIN Price from EMTS data

D5 RINs were priced at a level between D4 and D6 RINs from 2010-2013. However,
since 2013, D5 RIN prices have been nearly identical to D4 RIN prices. This shift in the relative
pricing of D5 and D4 RINs also corresponds with the market reaching the E10 blendwall. This is
because there are two primary fuel types that have been used to satisfy the advanced biofuel
requirements: sugarcane ethanol and BED. From 2010-2012, obligated parties generally met
their implied requirements for "other advanced biofuel" with sugarcane ethanol.83 This is
apparent in the volumes of sugarcane ethanol (which supplied the vast majority of volume
requirement for "other advanced" biofuels) and BED (which did not exceed the volume
requirement for BBD by an appreciable volume) used in the U.S. in these years.84 It is also
indicated by the prices for D5 RINs, which were significantly lower than the price of D4 RINs
during this time, suggesting that it was more cost effective for obligated parties to meet their
compliance obligations with D5 RINs (generated for sugarcane ethanol) than D4 RINs
(generated for biodiesel and renewable diesel). When the El0 blendwall was reached in 2013,
however, it became much more expensive to increase the volume of ethanol blended into the
gasoline pool. While obligated parties could still import sugarcane ethanol to satisfy their
advanced biofuel obligations, doing so would reduce the volume of corn ethanol that could be
used as E10. Available non-ethanol renewable fuels were almost entirely advanced biodiesel and

83	"Other advanced biofuel" is not an RFS standard category, but is the difference between the advanced biofuel
requirement and the sum of the cellulosic biofuel and BBD requirements, both of which are nested within the
advanced biofuel category.

84	See Chapters 6.3 and 6.2 for volumes of sugarcane ethanol and BBD used in the U.S., respectively.

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renewable diesel, so obligated parties generally used these fuels (rather than sugarcane ethanol)
to meet the advanced biofuel requirements so that they could use corn ethanol to satisfy the
remaining total renewable fuel requirements. RIN prices responded, and since 2013 the prices of
D4 and D5 RINs have been nearly identical.

D4 RIN prices, much like all RIN prices, have varied significantly since 2010. The
pricing of these RINs, however, has been fairly straightforward. D4 RINs are generally priced to
account for the price difference between biodiesel and petroleum diesel, which in turn are largely
a function of the pricing of their respective oil supplies. Other factors can also impact this
relationship; most significantly are the presence or absence of the biodiesel tax credit and the
impact of other subsidies and credits (e.g., the $1.00 per gallon federal tax subsidy and state
LCFS credits).85 Most recently, in 2021 and 2022, D4 RIN prices have increased quite
significantly, tracking with an increase in feedstock commodity prices (e.g., soybean oil), which
comprise greater than 80% of the cost of production of BBD. Generally, D4 RIN prices have
increased to a level that allows BBD to be cost-effective with petroleum-based fuels, increasing
BBD production and use. A 2018 paper exploring the relationship between the price of D4 RINs
and economic fundamentals concluded that "movements in D4 biodiesel RIN price at
frequencies of a month or longer are well explained by two economic fundamentals: (a) the
spread between the biodiesel and ULSD prices and (b) whether the $1 per gallon biodiesel tax
credit is in effect."86 This same paper discusses in greater detail the strong correlation between
weekly D4 RIN prices and predicted D4 RIN price values using a model based on economic
fundamentals. As state LCFS programs have come online and increased in stringency, the value
of these credits is now another increasingly important factor.

Data on cellulosic RIN (D3 and D7) prices were not generally available until 2015. This
is likely due to the fact that prior to 2015, the market for cellulosic RINs was too small to support
commercial reporting services; very few cellulosic RINs were generated and traded in years prior
to 2016. From 2015—when D3 RIN prices were first regularly available—through 2018, the
price of these RINs was very closely related to the sum of the D5 RIN price plus the price of the
cellulosic waiver credit (CWC).87 This is as expected, since obligated parties can satisfy their

85	A $1 per gallon biodiesel blenders tax credit has been available to biodiesel blended every year from 2010-2022.
However, at various times this credit has expired and been reinstated retroactively. The biodiesel tax credit expired
at the end of 2009 and was not reinstated until December 2010, applying to all biodiesel blended in 2010 and 2011.
The biodiesel tax credit has since been again reauthorized semi-regularly, including in January 2013 (applying to
biodiesel produced in 2012 and 2013), December 2014 (applying to biodiesel produced in 2014), December 2015
(applying to biodiesel produced in 2015 and 2016), and February 2018 (applying to biodiesel produced in 2017). In
December 2019 the tax credit was retroactively reinstated for 2018 and 2019 and put in place prospectively through
2022. In August 2022, the tax credit was extended through 2024. Beginning in 2025 biodiesel and renewable diesel
could qualify for the clean fuel production credit.

86	Irwin, S.H, K. McCormack, and J. H. Stock (2018). "The price of biodiesel RINs and economic fundamentals."
NBER working paper series, working paper 25341.

87	Pursuant to CAA section 211 (o) (7) (D) (ii), EPA makes CWCs available for sale to obligated parties at a price
determined by a statutory formula in any year in which EPA reduces the required volume of cellulosic biofuel using
the cellulosic waiver authority. A CWC satisfies an obligated party's cellulosic biofuel obligation. However, unlike
a cellulosic RIN, which also helps satisfy an obligated party's advanced biofuel and total renewable fuel obligations,
a CWC does not help satisfy an obligated party's advanced biofuel and total renewable fuel obligations. A cellulosic
RIN (which can be used to meet all 3 obligations) has similar compliance value as a CWC (which can only be used
to satisfy the cellulosic biofuel obligation) and an advanced RIN (which can be used to satisfy the advanced biofuel
and total renewable fuel obligations).

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cellulosic biofuel obligations through the use of either cellulosic RINs or CWCs plus D5 RINs,
The slight discount for D3 RINs (as opposed to the combination of a CWC and a D5 RIN) is also
as expected, as CWCs can be purchased directly from EPA when obligated parties demonstrate
compliance and carry no risk of RIN invalidity.88 This discount tends to be larger at the
beginning of the year, before narrowing near the end of the year as the RFS compliance deadline
nears for obligated parties. Starting in 2019, the D3 RIN price was significantly lower than the
CWC plus D5 RIN price. This is likely due to an over-supply of D3 RINs caused by EPA
granting a relatively large number of SREs for the 2017 and 2018 compliance years, lowering the
effective RFS standards (see Chapter 1.2). The average D3 RIN price fell to near the D5 RIN
price, before slowly increasing relative to the D5 RIN price starting in the second half of 2019.

Figure 1.9.2-3: D3 RIN Prices and D5 RIN Price Plus CWC Price89

$5.00

1/1/15

1/1/16	1/1/17	1/1/18	1/1/19	1/1/20	1/1/21	1/1/22

D3 RIN Price
Source: RIN price data from EMTS

• D5 RIN Price

»D5 + CWC Price

The fact that the price of D3 RINs, with very few exceptions, has not exceeded the CWC
plus D5 RIN price has potentially significant consequences for both the cellulosic biofuel and
petroleum fuel markets. For obligated parties, the CWC price effectively sets a maximum price
for cellulosic RINs and protects these parties from excessively high cellulosic RIN prices. The
CWC price is also informational to potential cellulosic biofuel producers. Potential cellulosic

88	During a few time periods (such as late 2016), the price for D3 RINs was higher than the price for a CWC + D5
RIN. This was likely due to the fact that up to 20% of a previous year's RINs can be used towards compliance in
any given year, while CWCs Can only be used towards Compliance obligations in that year. Obligated parties likely
purchased 2016 D3 RINs at a premium anticipating the sharp increase in the CWC price in 2017.

89	EPA offers cellulosic waiver credits for years in which we reduce the cellulosic biofuel volume from the statutory
target. Cellulosic waiver Credit prices are available at: https://www.epa.gov/renewable-fuel-standard-
program/cellulosic-waiver-credits-under-renewable-fuel-standard-program.

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biofuel producers can use the CWC price, along with the price of the petroleum fuel displaced by
the cellulosic biofuel they produce and any tax credits or other incentives available for the fuel,
as an approximation of the maximum price they can reasonably expect to receive for the
cellulosic biofuel they produce. Knowing this price can help potential cellulosic biofuel
producers determine whether their cellulosic biofuel production processes are economically
viable under both current and likely future market conditions.

At the same time, the relatively high value of the CWC plus D5 RIN price, in conjunction
with EPA's statutory obligation since 2010 to set the required volume of cellulosic biofuel at the
volume expected to be produced each year,90 has resulted in generally high D3 RIN prices.

These RIN prices are realized for all cellulosic RINs, even those generated for biofuels such as
CNG/LNG derived from biogas that can often be produced at a cost that is competitive with the
petroleum fuels they displace even without the RIN value. While some of this excess RIN value
may be passed on to consumers who use CNG/LNG derived from biogas as transportation fuel in
the form of lower cost fuel and/or longer term fixed-price fuel contracts, a significant portion of
the RIN value may remain with the biofuel producer, the parties that dispense CNG/LNG
derived from biogas, and any other parties involved in the production of this type of cellulosic
biofuel.91 Unlike other RIN costs that are generally transfered within the liquid fuel pool (e.g.,
from consumers of fuels with relatively low renewable fuel content such as E0 or BO to
consumers of fuels with relatively high renewable fuel content such as E85 or B20), much of the
RIN value for CNG/LNG derived from biogas may be transferred from consumers who purchase
gasoline and diesel to parties outside of the liquid fuel pool (e.g., landfill owners). For example,
the average cellulosic RIN price was $2.75 in 2021.92 Thus, the total cost associated with the 560
million cellulosic RINs required for compliance in 2021 was approximately $1.54 billion.
Therefore, the cellulosic biofuel requirement likely increased the price of gasoline and diesel
sold in the U.S. in 2021 by approximately $0.01 per gallon.93 These transfers would be expected
to increase significantly through 2025 if the cellulosic biofuel volumes we are proposing in this
rule are finalized. For example, using the average cellulosic RIN price in 2021 of $2.75 and the
proposed cellulosic biofuel volume for 2025 of 2.13 billion gallons, we estimate that the cost
associated with cellulosic RIN purchases would be $5.86 billion, and would be expected to
increase the price of gasoline and diesel in 2025 by approximately $0.03 per gallon.94

90	CAA section 211 (o) (7) (D).

91	EPA currently does not have sufficient data to determine the proportion of the RIN value that is used to discount
the retail price of CNG/LNG derived from biogas when used as transportation fuel.

92	Average D3 RIN price in 2021 according to EMTS RIN price data.

93	In the January 2022 STEO, EIA forecasted gasoline and diesel consumption in 2021 at 8.79 million bpd (134.5
billion gallons per year) and 3.25 million bpd (49.9 billion gallons per year) respectively. Dividing the total cost of
cellulosic RINs in 2021 ($1.54 billion) by the total consumption of gasoline and diesel (184.4 billion gallons) results
in an estimated cost of $0,008 per gallon of gasoline and diesel as a result of the cellulosic biofuel requirement.

94	In the 2022 AEO, EIA forecasted gasoline and diesel consumption in 2021 at 139.1 billion gallons and 52.5
billion gallons respectively. Dividing the total cost of cellulosic RINs in 2025 ($5.86 billion) by the total
consumption of gasoline and diesel (191.6 billion gallons) results in an estimated cost of $0,031 per gallon of
gasoline and diesel as a result of the cellulosic biofuel requirement.

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Chapter 2: Baselines

This DRIA contains a collection of analyses prescribed by the CAA, as well as other
analyses EPA conducted to evaluate the impacts of this rule. The choice of baseline has a first-
order impact on the outcome of those analyses. In Preamble Section III.D, we discuss the fact
that a "No RFS" baseline is the most appropriate among available options for purposes of
evaluating the impacts of the proposed volumes for 2023-2025. This chapter describes our
derivation of the No RFS baseline, as well as an alternative baseline representing the 2022
volume requirements.

The No RFS baseline represents our projection of the world as it would exist if EPA did
not establish volume requirements for 20 2 3-20 2 5.95 Conceptually, the No RFS baseline allows
EPA to directly project the impacts of the candidate volumes for 2023-2025 relative to a
scenario without volume requirements. For the No RFS baseline, we assumed that the RFS
program existed as administered by EPA from its inception through 2022, and that renewable
fuel production developed with the support of the RFS program in these years. We also assumed
that non-RFS federal and state programs that support renewable fuel production and use (e.g., the
BBD tax credit and state LCFS programs), would continue to exist in 2023-2025.

While the No RFS baseline represents the renewable fuel volumes we expect would be
used in the U.S. if EPA did not establish RFS volume requirements, we note that this baseline is
a hypothetical scenario because we have a statutory requirement to establish volume
requirements for each year.96 Moreover, the statute places a few key conditions on the volume
requirements for years after those established in the statute,97 and these conditions would not
permit the volumes to be set equivalent to the No RFS baseline. First, we note that the No RFS
baseline volumes projected in this section would not meet the statutory requirement that the
advanced biofuel volume requirement be at least the same percentage of the total renewable fuel
volume requirement as in calendar year 2022.98 Second, the No RFS baseline volumes projected
in this chapter would not meet the statutory requirement that the BBD volume requirement be at
least 1 billion gallons for every year after 20 1 2.99 Nevertheless, the No RFS baseline is an
appropriate point of reference since it allows us to estimate the impacts of this proposed action
alone.

To project the No RFS baseline, we began by projecting renewable fuel use in the U.S. in
2023-2025 in the absence of volume requirements for these years.100 We assumed that all state
mandates for renewable fuel use would continue, and that additional volumes of renewable fuel
would be used if these fuels could be provided at a lower price than petroleum-based fuels, after
taking into account available federal and state incentives. The differences between the candidate

95	Or, alternatively, if EPA established volume requirements at levels lower than what the market would have
supplied anyway.

96	CAA section 211 (o) (2) (B) (ii).

97	See Preamble Section II.C.3.

98	CAA section 211 (o) (2) (B) (iii). The ratio of advanced to total for the 2022 volume requirements is 0.273, while the
ratio of advanced to total for the No RFS baseline is 0.124 in 2023.

99	CAA section 211 (o) (2) (B) (v). The statutory volume for BBD in 2012 was 1 billion gallons. CAA section
211 (o) (2) (B) (i) (IV).

100	The analyses conducted to make this projection are described in Chapter 2.1.

47


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volumes and the No RFS baseline represent the volume changes that we analyzed for this
proposed rule. These volumes changes, as detailed in Chapter 3, are the starting point for the
analyses presented in this DRIA, except where noted.

In some cases, the volume changes between the No RFS baseline and the candidate
volumes is sufficient to assess the impacts of the various factors enumerated in the statute. For
example, the GHG impacts and the costs are directly dependent on the volume of renewable fuel
used in the U.S. In other cases, however, these volume changes alone are insufficient and
potentially misleading. For example, the candidate volume for total domestic ethanol
consumption is 706-840 million gallons per year higher than under the No RFS baseline. This
projected volume increase could imply that additional ethanol production capacity and
distribution infrastructure would be needed to supply the candidate volumes. But total domestic
ethanol consumption in the candidate volumes for 2023-2025 is lower than total domestic
ethanol consumption achieved in previous years. Thus, no additional ethanol production capacity
or distribution infrastructure are projected to be needed to meet the candidate ethanol volumes
for 2023-2025. Where appropriate, such as in our assessment of infrastructure, we have therefore
considered not only the change in domestic renewable fuel consumption from the No RFS
baseline to the candidate volumes, but also other relevant factors as they exist in 2022.

There are some cases where we have insufficient information to project a No RFS
baseline for 2023-2025, such as U.S. crop production. U.S. crop production has an impact on a
number of the statutory factors, such as the projected conversion of wetlands, ecosystems, and
wildlife habitat, water quality, and water availability. At this time, we have insufficient
information to determine what U.S. crop acreage and production would be under a No RFS
baseline. One potential scenario is that total U.S. crop acreage and production would decrease in
2023-2025 if there was lower demand for crops for biofuel production. But other scenarios are
also possible and may be more likely. If demand for biofuel in the U.S. were lower in 2023-2025
in the absence of the RFS program, it is possible that biofuel exports would increase, and the
market would see little to no change in domestic biofuel production or biofuel feedstock crop
production. For instance, there have been significant exports of ethanol in recent years,101 and
both imports and exports of biodiesel and renewable diesel.102 Foreign markets may be able to
absorb additional renewable fuel exports from the U.S. Alternatively, domestic biofuel
production could decrease with little change in U.S. crop acreage and production if there is
sufficient demand for these crops in other markets, or production of crops used for biofuel
production could decrease and farmers could plant other crops on land previously used for
production of biofuel feedstocks. In cases where we have insufficient information to determine
what would happen under the No RFS baseline, we have used the most recent data available
(generally from 2021 or 2022) as a proxy for the No RFS baseline.

Finally, for our assessment of costs and fuel price impacts we have considered the
impacts of the candidate volumes relative to both the No RFS baseline and a 2022 baseline. We
recognize that the 2022 baseline may be of interest to the public as it gives an indication of
changes in volume requirements over time and how costs and fuel prices may change from
current levels as a result of this proposal. Nevertheless, we believe that the No RFS baseline

101	See Chapter 6.6.

102	See Chapter 6.2.4.

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better represents the overall impacts of taking an action to establish volume requirements for
2023-2025 versus not taking that action.

2.1 No RFS Baseline

The No RFS baseline was derived from the relative economics of biofuels and the
petroleum fuels that those biofuels are blended into. If the blending cost of a biofuel is less than
the petroleum fuel that it is blended into, we assume that the biofuel would be used and displace
the respective petroleum fuel. The blending cost of a biofuel includes the value that the biofuel
has when blending it into the petroleum fuel. There are several components that must be
considered for each fuel:

•	Production cost

•	Distribution cost

•	Blending value to the fuel blender (i.e., octane value and RVP cost of ethanol)

•	Federal and state subsidies

•	Relative energy value of the fuel, which may or not be a factor

•	Cost to upgrade retail stations to enable them to offer the renewable fuel

These various cost components of each renewable fuel are added together to determine
the value of each fuel at the point that it is to be blended into petroleum fuel. For each renewable
fuel, the combination of these various cost components is represented using an equation that will
be described in each case.

There are many similarities between this No RFS baseline analysis and that of the cost
analysis described in Chapter 10, but there are differences as well. Table 2.1-1 summarizes the
various cost components considered for this analysis and provides comments how this analysis
differs from the cost analysis.

49


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Table 2.1-1: Comparison of No RFS Baseline Analysis to Cost Analysis



Included in No RFS
and Cost Analysis

Notes

No RFS

Cost

Production Cost

Yes

Yes

For the No RFS baseline, capital costs are
amortized using higher return on investment with
taxes, while cost analysis uses lower pre-tax return
on investment used for social analyses

Distribution Cost

Yes

Yes

Same

Blending Cost

Yes

Yes

Same

Fuel Economy
Cost

Yes

Yes

The cost analysis always accounts for fuel economy
cost, while the No RFS baseline only does so if it
impacts the value of the renewable fuel to fuel
blenders

Federal and State
Subsidies

Yes

No

The social cost analysis never takes subsidies into
account

Conducted on a
State-by-State,
Fuel Type-by-
Fuel Type Basis

Yes

No

While a national-average cost is sufficient for the
cost analysis, it was necessary to estimate the
economics of blending renewable fuel in individual
states that offer subsidies, and by fuel type, to
assess whether the renewable fuel would be
blended into each fuel in that state

For the No RFS baseline analysis, we use the latest projected feedstock prices (e.g., corn,
vegetable oil) for estimating the production costs for their associated fuels. For some renewable
fuels, the estimated volume under a No RFS scenario is projected to be significantly smaller than
under the RFS program. This result could in turn result in lower market prices for the agricultural
feedstocks, making the renewable fuels made from them more attractive. We did not evaluate
such a feedback mechanism. The various economic factors shown in Table 2.1-1 are further
discussed below for each renewable fuel.103

2.1.1 Ethanol

By far the largest volume of ethanol blended into U.S. gasoline is produced from corn
and is mostly blended into gasoline at 10% (i.e., E10). However, some volume of ethanol is also
blended at higher blend percentages of 15% and 51-83% (i.e., E15 and E85, respectively).104
This chapter discusses the blending economics of ethanol and estimates the No RFS baseline for
all three of these ethanol fuel blends.

103	The spreadsheets used to estimate the No RFS baseline for corn ethanol and biodiesel and renewable diesel are
available in the docket for this action.

104	E85 (Flex Fuel), Alternative Fuels Data Center, https://afdc.eneray.gov/fuels/ethanol e85.html.

50


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2.1.1.1 E10

The cost of blending ethanol into gasoline at 10% was analyzed by EPA in a peer
reviewed technical report.105 That report and its appendix provides both an historical review and
prospective analysis for the economics of blending ethanol into gasoline. The methodology used
in that analysis and its conclusion are summarized here.

A number of key factors were considered when evaluating the relative economics of
blending ethanol into gasoline. These factors depend on the type of gasoline the ethanol is
blended into, the season or year, and tax policies. Since ethanol is blended into gasoline at the
gasoline distribution terminal, it is most straightforward to consider those economic factors that
impact the decision to blend ethanol at that point. From that vantage point, the relative
economics of blending ethanol into gasoline—or the value of replacing ethanol in gasoline with
other components—can be summarized by the following equation:

EBCeio = (ESP + EDC - ERV- FETS - SETS) - GTP

Where:

•	EBCeio is ethanol blending cost for E10

•	ESP is ethanol plant gate spot price

•	EDC is ethanol distribution cost

•	ERV is ethanol replacement value

•	FETS is federal ethanol tax subsidy

•	SETS is state ethanol tax subsidy

•	GTP is gasoline terminal price; all are in dollars per gallon

This equation allows us to break down these factors by year, by state, and by gasoline
type, enabling a detailed assessment of the relative blending economics of ethanol to gasoline
over time and by location. If the resulting ethanol blending cost is negative, it is assumed to be
cost-effective to blend ethanol. Since gasoline is marketed based on volume, not energy content,
the lower energy density of ethanol is not part of the ethanol blending cost equation. E10
contains about 3% less energy content than E0, and the cost of the lower energy content of the
gasoline is paid by consumers through lower fuel economy and more frequent refueling. Since
this small change in energy content is largely imperceptible to consumers and because gasoline
without ethanol is not widely available, refiners are able to price ethanol based on its volume
(unlike E85, for example, which must be priced lower at retail due to its lower energy density).
Thus, energy density is not a factor in this blending cost equation for E10. It is an important part
of assessing the overall social costs of ethanol use, but does not factor into the decision to blend
ethanol as E10.

105 "Economics of Blending 10 Percent Corn Ethanol into Gasoline," EPA-420-R-22-034, November 2022.

51


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Ethanol Plant Gate Spot Price (ESP)

We estimated future ethanol plant gate prices by gathering projected ethanol plant input
information (e.g., future corn prices projected by USDA and utility prices projected by EIA) to
estimate ethanol production costs that we presume represents plant gate prices. This is essentially
the same information used for estimating ethanol production costs for the cost analysis, except
that the capital costs are handled differently. Instead of amortizing the capital costs using a 7%
before tax rate of return on investment, capital costs are amortized using a 10% after tax return
on investment. As shown in Table 2.1.1.1-1, the capital amortization factor increases to 0.16
from 0.11 used for the cost analysis.

Table 2.1.1.1-1: Capital Amortization Factor Used for Estimating Plant Gate Spot Prices
Based on Production Costs

Depreciation
Life

Economic and
Project Life

Federal and
State Tax Rate

Return on
Investment

Resulting Capital
Amortization Factor

10 Years

15 Years

39%

10%

0.16

The year-by-year ethanol plant gate price projections are based on production costs and
are summarized in Table 2.1.1.1-2. There are two sets of ethanol price projections, one made by
the Energy Information Administration (EIA) and the second by the Food and Agricultural
Policy Research Institute (FAPRI), which are also summarized in Table 2.1.1.1-2.

Table 2.1.1.1-2: Projected Ethanol Plant Gate Prices

Year

Price ($/gal)

2023

1.82

2024

1.72

2025

1.66

Ethanol Distribution Cost (EDC)

This factor represents the added cost of moving ethanol from production plants to
gasoline distribution terminals, reflecting its different modes of transport (the gasoline terminal
prices in the equation already includes distribution costs). Because ethanol is primarily produced
in the Midwest and distributed longer distances to the rest of the country, the terminal price of
ethanol is usually lower in the Midwest than in other parts of the U.S. Ethanol distribution costs
were estimated for EPA on a regional basis, but to conduct the analysis on a state-by-state basis,
these costs were interpolated or extrapolated to estimate state-specific costs based on ethanol
spot prices.106 The estimated distribution costs for ethanol ranged from 11 C/gal in the Midwest to
29
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Table 2.1.]

.1-3: Ethanol Distribution Cost by State

Region

States

Average Ethanol
Distribution
Cost (C/gal)

PADD 1

New York, Pennsylvania, West Virginia

28.7

District of Columbia, Connecticut, Delaware, Maryland,
Massachusetts, New Jersey, Rhode Island, Virginia

20.7

Georgia, South Carolina Vermont, New Hampshire,
North Carolina

22.7

Florida, Maine

28.8

PADD 2

Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, Ohio, South Dakota, Wisconsin

11.0

Kentucky, North Dakota, Oklahoma, Tennessee

20.7

PADD 3

Arkansas, Louisiana, Mississippi, Texas

15.5

Alabama, New Mexico

20.7

PADD 4

Colorado, Idaho, Montana, Utah, Wyoming

17.2

PADD 5

Oregon, Washington

21.4

Arizona, California, Nevada

25.4

Alaska, Hawaii

51.0

Ethanol Replacement Value (ERV)

Ethanol has properties that provide value (primarily octane) or cost (vapor pressure
impacts) when it is blended into gasoline. We use the term "ethanol replacement value" to refer
to the sum of the costs due to these properties, including properties that increase and decrease
ethanol's blending value. Depending on where and when the ethanol is used, the ethanol
blending value is an important consideration when gasoline production is modified to take into
account the subsequent addition, or potential removal, of ethanol.

Essentially all E10 blending in the U.S. now occurs by "match-blending," where the base
gasoline ("gasoline before oxygenate blending" or BOB) is modified to account for the
subsequent addition of ethanol, in which the blending value of ethanol is important. In RFG
areas, refiners produce a reformulated gasoline before oxygenate blending (RBOB) that has both
a lower octane value and lower RVP tailored to still meet the RFG standards after the addition of
ethanol. This has been typical for ethanol-blended RFG since the mid-1990s. As the use of
ethanol expanded into CG areas, a similar match-blending process began to be used there as
well, replacing splash-blending. In these areas, a conventional gasoline before oxygenate
blending (CBOB) is produced by refiners for match-blending with ethanol. CG is also adjusted
to account for the octane value of ethanol, but unlike RFG, most CG is not adjusted for RVP due
to a 1-psi RVP waiver provided for E10 in most locations. When RBOB and CBOB are
produced, the refiner makes the decision that ethanol will be blended into their gasoline since the
BOBs cannot be sold as finished gasoline without adding 10% ethanol, but the ethanol is still
blended into the gasoline at the terminal.107 It is likely that refiners make their decision on
producing BOBs based on the economics of producing finished gasoline at terminals. In the case

107 The exception to this is a small amount of premium grade BOB that is sold as regular or midgrade E0.

53


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of such match blends, the economic value of ethanol relative to gasoline includes a consideration
of not only its value on a volumetric basis as a substitute for gasoline, but also the blending value
of ethanol resulting from its higher octane, and in some cases, its impact on volatility.

The full value of ethanol is best reflected by the cost associated with meeting all of the
gasoline standards and requirements through some means other than blending ethanol, including
any capital costs to produce ethanol replacements. To assess this, ICF conducted refinery
modeling for EPA for removing ethanol from the gasoline pool.108 After aggregating the refinery
cost modeling results—which account for the octane value and volatility of ethanol, as well as
replacing its volume—the replacement costs of ethanol in regular grade CG and RFG are
summarized in Table 2.1.1.1-4.

Table 2.1.1.1-4 Ethanol Replacement Value (!

5/gal)

Gasoline Type

Gasoline Grade

Year

2023

2024

2025

Conventional
Gasoline

Summertime Regular

1.44

1.60

1.66

Summertime Premium

1.08

1.20

1.26

Reformulated
Gasoline

Summer Regular

1.24

1.38

1.43

Summer Premium

0.89

0.99

1.03

Conventional and
Reformulated

Winter Regular

0.58

0.65

0.67

Winter Premium

0.44

0.49

0.51

The ethanol replacement costs were estimated based on a certain set of modeling
conditions—projected prices for the year 2020 with crude oil priced $72/bbl. The economics for
replacing ethanol, however, would be expected to vary over time based on changing market
factors, such as the market value for RVP control costs, crude oil prices, and particularly the
market value for octane. The ethanol replacement costs were adjusted for the years analyzed
under the No RFS baseline based on crude oil prices, which likely provides a reasonable estimate
of how refiners would value the octane, RVP, and other replacement costs of ethanol over time.

Federal and State Ethanol Tax Subsidies (FETS and SETS)

The federal ethanol blending tax subsidy expired in 2011, so it did not figure into the No
RFS baseline analysis. Various state tax subsidies, however, have been provided for the use of
ethanol. These tax subsidies incentivize the blending of ethanol into the gasoline pool and
directly impact the decision of whether to use ethanol. Iowa and Illinois offer an ethanol
blending subsidy of 25C/gal and 29
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ethanol use mandates that require the use of ethanol regardless of the economics for doing so.112
These mandates cannot be factored into the ethanol blending cost equation, but are accounted for
in EPA's overall analysis by including the ethanol volume in gasoline in these states regardless
of the blending economics. Other federal and state subsidies—such as ethanol production
subsidies, loan guarantees, grants, and any other subsidies—were not considered by this analysis.

Gasoline Terminal Price (GTP)

Refinery rack price data from 2018—which already included the distribution costs for
moving gasoline to downstream terminals—were used to represent the price of gasoline to
blenders on a state-by-state basis.113 However, these prices were not projected for future years.
Instead, we used projected refinery wholesale price data from AEO 2022 to adjust the 2018
refinery rack price data to represent gasoline rack prices in future years. We used 2018 data
instead of the most recent data to avoid abnormal pricing effects caused by the COVID-19
pandemic or the subsequent supply issues that emerged when the pandemic was subsiding. This
gasoline price data, summarized in Table 2.1.1.1-5, was collected for each states and is assumed
to represent the average gasoline price for all the terminals in each state.114

112	States' Biofuels Statutory Citations; The National Agricultural Law Center; https://nationalaglawcenter.org/state-

c o nip il a I: io ns/b iof u e Is.

113	EIA; Spot Prices; https://www.ela.gov/dnav/pet/pet pil spl: si a.htm.

114	EIA; Prime Supplier Sales Volume; https://www.eia.gov/dnav/pet/pet cons prim dcu nus m.htm.

55


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Table 2.1.1.1-5: Gasoline Terminal Prices in 2019 ($/gal)a



Gasoline Grade





Gasoline Grade

State

Regular

Premium



State

Regular

Premium

Alaska

2.37

2.44



Montana

1.84

2.30

Alabama

1.68

2.11



North Carolina

1.69

2.07

Arkansas

1.70

2.03



North Dakota

1.77

2.18

Arizona

2.00

2.29



Nebraska

1.74

2.55

California

2.37

2.61



New Hampshire

1.80

2.09

Colorado

1.85

2.26



New Jersey

1.72

2.91

Connecticut

1.77

2.09



New Mexico

1.82

2.18

D.C.

1.79

2.01



Nevada

2.11

2.36

Delaware

1.74

2.02



New York

1.78

2.14

Florida

1.72

2.07



Ohio

1.73

2.21

Georgia

1.69

2.10



Oklahoma

1.72

1.94

Hawaii

2.23

2.3f>



Oregon

1.95

2.26

Iowa

1.73

2.06



Pennsylvania

1.72

2.04

Idaho

1.92

2.21



Rhode Island

1.78

2.01

Illinois

1.75

2.17



South Carolina

1.69

2.09

Indiana

1.72

2.16



South Dakota

1.75

2.10

Kansas

1.71

1.97



Tennessee

1.68

2.03

Kentucky

1.75

2.16



Texas

1.72

1.98

Louisiana

1.66

1.92



Utah

1.86

2.13

Massachusetts

1.75

2.00



Virginia

1.73

2.06

Maryland

1.74

2.00



Vermont

1.76

2.13

Maine

1.83

2.17



Washington

1.97

2.30

Michigan

1.74

2.26



Wisconsin

1.75

2.24

Minnesota

1.73

2.01



West Virginia

1.75

2.13

Missouri

1.74

2.08



Wyoming

1.78

2.18

Mississippi

1.69

2.09









a No data was provided by EIA for the values highlighted in grey; they were estimated by EPA.

The AEO 2022 projected national average gasoline price information used to adjust
gasoline prices in future years, and the national average gasoline price in 2018 that the projected
gasoline prices are compared to, are summarized in Table 2.1.1.1-6. The differences in prices are
additive to the state-by-state gasoline prices shown in Table 2.1.1.1-5. For example, the projected
national average gasoline price in 2023 is $1.90 per gallon, which is 8C per gallon less than the
national average gasoline price in 2018; therefore, gasoline prices in 2023 are 8C per gallon
lower than the prices summarized in Table 2.1.1.1-5.

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Table 2.1.1.1-6: National Average Gasoline Prices



Year

Price

Actual National
Average Gasoline Price

2018

$1.98

AEO 2022 Projected
National Average
Gasoline Prices

2023

$1.90

2024

$1.93

2025

$1.95

The No RFS Baseline analysis revealed that it is economic to blend ethanol into the entire
gasoline pool up to 10%. As shown in Figure 2.1.1.1 1. ethanol is over 40
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The economics for using ethanol in E85 is estimated in two steps. First, we estimated the
breakeven price for ethanol blended in E85 based on the price of gasoline price in each state.

This calculation is made for regular and premium grades of both CG and RFG in each state. In
the second step, the estimated ethanol plant gate price, ethanol distribution cost, retail cost, and
E85 subsidies are combined together in the following equation to estimate whether ethanol
blended into E85 is economical:

EBCess = (ESP + EDC - FETS - SETS + RC) - EBBV

Where:

•	EBCess is ethanol breakeven price for ethanol blended as E85

•	ESP is ethanol plant gate spot price

•	EDC is ethanol distribution cost

•	FETS is federal ethanol tax subsidy

•	SETS is state ethanol tax subsidy

•	RC is retail cost (service station revamp to sell E85)

•	EBBVis ethanol breakeven blending value; all are in dollars per gallon

Ethanol Replacement Value (ERV)

Blending ethanol into gasoline for E85 is different than blending for E10 because refiners
do not make a separate E85 BOB; thus, the E10 RBOBs and CBOBs are blended with ethanol to
produce E85 and there is significant octane giveaway. Conversely, there is no risk that the E85
blend will exceed any RVP limits because E85 has a very low RVP. In fact, the resulting E85
blend is so low in vapor pressure that it causes most E85 blends to not meet the RVP minimum
standards. In those cases, E85 is blended with less ethanol—usually 70% in the winter and up to
79% in the summer—and the year-round average is 74%, which allows ethanol to comply with
the ASTM RVP minimum standards.115

Although refiners do not create a lower octane BOB for blending into E85, ethanol
producers nonetheless saw the opportunity to blend natural gas liquids (NGLs) with ethanol to
produce E85. NGLs are a low cost, low octane, higher RVP petroleum blending material that
ethanol producers use to denature their ethanol. Since ethanol plants already have this blendstock
material on hand, they blend E85 on-site using NGLs and then distribute the finished E85 from
there. When blending up E85 with NGLs, the higher RVP of the NGLs allows blending a higher
ethanol content of 83% in the summer. However, the RVP of NGLs is about the same or slightly
higher than winter gasoline, so the winter blend percentage is the same. Because the more
volatile NGLs are smaller hydrocarbons, they contain lower volumetric energy content, which is
a factor in considering their value as well. Because NGLs are used as an E85 blendstock, we also
evaluated the economics of blending E85 blended with NGLs.

115 ASTM D5798-21, Standard Specification for Ethanol Fuel Blends for Flexible-Fuel Automotive Spark-Ignition
Engines.

58


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Federal and State Ethanol Tax Subsidies (FETS and SETS)

There is no federal ethanol blending tax subsidy for E85. Various state tax subsidies,
however, have been provided for the use of ethanol. These tax subsidies incentivize the blending
of ethanol into the gasoline pool and directly impact the decision of whether to use ethanol.
Table 2.1.1.2-1 provides the E85 subsidies offered by different states.

Table 2.1.1.2-1: State E85 Subsidies

State

E85 Subsidy (
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and that NGL-blended E85—which has much lower volumetric energy content—is priced 21%
lower than E10.

Figures 2.1.1.2-1 and 2 show how the breakeven price for ethanol is estimated for E85
when blended with gasoline and NGLs, respectively, using the example of regular grade CG sold
in Pennsylvania and Missouri. At the top of each figure, the pricing of gasoline is shown from
terminal to retail, depicting the price impacts when distribution costs and taxes are added on. At
the bottom of each figure, the pricing of E85 is shown when blended with gasoline and NGLs,
respectively. The E85 prices are then estimated at the terminal after the retail, tax, and
distribution costs are subtracted from the retail prices. Finally, the ethanol breakeven price is
estimated for the ethanol blended into E85 based on the price of gasoline at the terminal and the
fraction of gasoline and ethanol in E85.

Figure 2.1.1.2-1: Example Calculations for Ethanol Breakeven Price for Gasoline-Blended
E85

2023 Gasoline and E85 Pricing, and Ethanol Breakeven Price

Gasoline Blendstock, Two different State Tax Rates - Crude oil Priced $63/bbl

Gasoline Pricing

PA

MO

PA

MO

RETAIL PRICE

279 c/gal
239 c/gal

12 c/gal

RETAIL PRICE

234 c/gal for E85

200 c/gal for E85

279 c/gal
X 0.84 FE effect
= 228 c/gal

12 c/gal

TAX

.jn

76 c/gal

36 c/gal

E85 Pricing
TAX

76 c/gal

36 c/gal

©

10 c/gal



10 c/gal

181 c/gal

181 c/gal

Ethanol

M Breakeven
Pricing

136 c/gal ESS 120 c/gal Ethanol

142 c/gal ESS 128 c/gal Ethanol
136 c/gal= 0.26*181 + 0.74*120

Ethanol would have to be priced at 120/1 2Sc/gal or
less to be attractive to refiners

60


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Figure 2.1.1.2-2: Example Calculations for Ethanol Breakeven Price for NGL-Blended E85

2023 Gasoline and E85 Pricing, and Ethanol Breakeven Price

NGL Blendstock ($1.26/gal), Two different State Tax Rates - Crude oil Priced $63/bbl

Gasoline Pricing

RETAIL PRICE

PA	279 c/gal

MO	239 c/gal

RETAIL PRICE

PA	220 c/gal for E85

MO	188 c/gal for ESS

279 c/gal
X 0.79 FE effect
= 220 c/gal

12 c/gal

12 c/gal

id0™

m

TAX

76 c/gal

36 c/gal

E85 Pricing
TAX

76 c/gal

36 c/gal

10 c/gal

10 c/gal



181 c/gal

181 c/gal

Ethanol

Breakeven

Pricing

122 c/gal E85 121 c/gal Ethanol

130 c/gal £85 131 c/gal Ethanol
122 c/gal = 0,24*126 + 0,76*121

Ethanol would have to ha priced at 121/131 c/gal or
less to be attractive to refiners

Figure 2.1.1.2 1 shows that when the E85 is blended with gasoline, the breakeven price
of ethanol in E85 is 120C/gal and 129C/gal, which is 51 C/gal and 6QC/gal lower than the gasoline
price, depending on whether the state gasoline tax is high (Pennsylvania) or low (Missouri),
respectively. Similarly, Figure 2.1.1.2-2 shows that when the E85 is blended with NGLs, the
breakeven price of ethanol in E85 is 121 C/gal and 131 C/gal, which is SOi/gal and 6()C/gal lower
than the gasoline price, depending on whether the state gasoline tax is high (Pennsylvania) or
low (Missouri), respectively. A list of gasoline tax rates by state (including all federal and state
taxes) is provided in Table 2.1.1.2-2.

61


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Table 2.1.1.2-2: Gasoline l ax Rates by State (Includes Federal

State

Tax Rate



State

Tax Rate

Alaska

27



Montana

51

Alabama

45



North Carolina

55

Arkansas

43



North Dakota

41

Arizona

37



Nebraska

49

California

79



New Hampshire

42

Colorado

40



New Jersey

60

Connecticut

61



New Mexico

37

DC

42



Nevada

52

Delaware

41



New York

63

Florida

61



Ohio

57

Georgia

49



Oklahoma

38

Hawaii

67



Oregon

54

Iowa

49



Pennsylvania

76

Idaho

51



Rhode Island

54

Illinois

58



South Carolina

47

Indiana

65



South Dakota

48

Kansas

49



Tennessee

67

Kentucky

44



Texas

38

Louisiana

38



Utah

50

Massachusetts

45



Virginia

39

Maryland

55



Vermont

49

Maine

48



Washington

68

Michigan

46



Wisconsin

51

Minnesota

47



West Virginia

54

Missouri

36



Wyoming

42

Mississippi

37







and State Taxes; t/gal)

As for El0, if the ethanol blending cost is negative, ethanol is considered economical to
blend into gasoline to produce E85; if it is positive, it is not economical. Figure 2.1.1.2-3
provides some key results of the No RFS baseline analysis for E85, showing a range in blending
values for ethanol in E85, which vary from economic to blend to not economic to blend. For the
highest cost market for E85, ethanol is priced 80-90C/gal higher than its breakeven price. But for
lowest cost market for E85, ethanol is around 5(W/gal lower than its breakeven price. It is
important to understand which gasoline in which states are economically attractive to E85 since
this determines the potential market size.

62


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Figure 2.1.1.2-3: Economics of Blending Ethanol in E85

Range in Ethanol Blending Cost in E85

E85 priced 16% lower than E10

_ 150

— 100

QO
U

QJ
U

c
cu

(D

«4—
<-»—

b

o
u

~o
c
cu

50

-50

LO

!S -100

2023









?		

jk_—_—		





			—•



	—*

7*	*







- High Cost E85
¦ Low Cost E85 exc NY

2024
Year

• Avg Cost E85

» Avg Cost E85 w 1/2 of Retail Cost

2025

» LOW Cost E85

• Low Cost E85, ex NY and Prem

The lowest cost market for E85 is New York, due to its 53
-------
2.1.1.3 E15

The analysis for estimating the El5 baseline has similarities with how both E10 and E85
were estimated. Of the variables in the ethanol blending cost equation in Chapter 2.1.1.1, Ethanol
Plant Gate Spot Price (ESP), Ethanol Distribution Cost (EDC), and Gasoline Terminal Price
(GTP) are again the same. Like for E85, an additional cost applies to El5 to account for the cost
to modify retail stations to carry El 5 and we believe that Ethanol Replacement Value (ERV)
does not apply as well, although we keep as a term and explain the possibility below for how it
could apply.

The economics to determine whether ethanol blended into El 5 is economical is estimated
by combining the ethanol plant gate price, ethanol distribution cost, ethanol replacement cost,
and retail cost in the following equation:

EBCeis = (ESP + EDC - ERV- FETS - SETS + RC) - GTP

Where:

•	EBCeis is ethanol blending cost for El 5

•	ESP is ethanol plant gate spot price

•	EDC is ethanol distribution cost

•	ERV is ethanol replacement value

•	FETS is federal ethanol tax subsidy

•	SETS is state ethanol tax subsidy

•	RC is retail cost (service station revamp to sell El 5)

•	GTP is gasoline terminal price; all are in dollars per gallon

Ethanol Replacement Value (ERV)

Blending ethanol into gasoline for El 5 is different than blending for E10 because we
believe that refiners do not make a separate El5 BOB; thus, E10 BOBs are blended with ethanol
to produce El5, in which case there is octane giveaway and no blending value to refiners for
ethanol. It is possible, though, that some refineries with extra gasoline storage tanks could blend
an El 5 BOB to sell off their refinery racks; however, we have no knowledge of this currently
happening, Similarly, there should be no RVP cost for blending ethanol above that of E10
because ethanol-gasoline blends reach a maximum RVP at 10%.

A larger issue for El5 is that it does not receive a 1-psi waiver like E10 does in the
summer, which means that ethanol cannot be blended into E10 to produce El5 without either
exceeding summer RVP limits or incurring an additional cost. However, as discussed in Chapter
1.7.2, E15 did receive a regulatory 1-psi waiver for 2019-2021 and EPA-issued emergency fuel
waivers throughout the summer of 2022 further allowed El 5 to take advantage of the 1-psi
waiver. Recently, a number of Midwestern states petitioned EPA to remove the 1-psi waiver for
E10. If the 1-psi waiver were to be removed in those states, a new lower RVP, higher-cost BOB
would be required for both E10 and El5.

64


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Federal and State Ethanol Tax Subsidies (FETS and SETS)

There is no federal nor state ethanol blending tax subsidy for El 5. It is important to know
that California does not allow the sale of El 5. Other federal and state subsidies—such as ethanol
production subsidies, loan guarantees, grants, and any other subsidies—were not considered by
this analysis.

Retail Cost (RC)

The retail costs for El 5 are estimated based on the investments needed to offer El 5 at
retail stations and the estimated throughput at El 5 stations.120 We estimated the total cost for a
typical retail station revamp to enable selling El5 to be $108,000, and that these stations sell on
average 147,000 gallons of El 5 per year. When amortizing this capital cost over the gallons of
El 5 sold, the total cost of the revamp adds 249C/gal to the cost of blending ethanol into El 5
(accounting only for the 5% of ethanol in El 5 above the ethanol in E10).

El5 has different properties than E10 that allow it to be priced differently than E10. El5
has higher octane than E10, so the fuels industry could set El5 prices higher on that basis.
Conversely, El 5 has lower energy density than E10, which means that consumers are not able to
drive the same distance on a tankful of El 5. The website e85prices.com, which collects
information on gasoline and ethanol-gasoline blend prices, reported that El5 is priced 8.5C/gal
cheaper than E10. A conversation with a gasoline retail marketer explained that when beginning
to offer El5 for sale, marketers will typically price it lower than E10 as a means to promote El5
to consumers and increase its sales. If E15 is priced 8C/gal lower than E10, it adds 160C/gal
(8/0.05) to the blending cost for blending ethanol into El 5. However, if this is a marketing
strategy, this practice would likely diminish over time. We do not know what the ultimate price
of El 5 will be relative to E10 since many retail station owners only began to offer El 5 in recent
years. To maximize their profit, retail station owners will seek the optimal El5 price that
balances sales volume and pricing. For this analysis, we assumed that El 5 is priced lower than
E10 consistent with how E85 is priced.121 Since El 5 contains 1.8% less energy than E10, we
assumed that El5 is priced 1.2%, or about 3C/gal, less than E10.

Similar to El0, if the ethanol blending cost is negative, then ethanol is considered
economic to blend into gasoline to produce El 5, while it would not be economic if the value is
positive. Figure 2.1.1.3-1 provides some key results of the No RFS baseline analysis for E15,
showing a range in blending values for ethanol in El5, which vary from economic to blend to not
economic to blend.

120	The methodology used and the estimated costs for these revamps are discussed in Chapter 10.1.4.1.2.

121	E85, which contains 74% ethanol and 21% less energy than E10, is typically priced 16% lower than E10.

65


-------
Figure 2.1.1.3-1: Economics of Blending Ethanol in E15

03
ClO

O

u

O
c

¦X
-C
+-»
LU

LO

200
150
100
50
0
-50

Range in Ethanol Blending Costs in E15

E15 priced 1% lower than E10

2023

A High Cost E15 - No Retail Cost
~ Low Cost El5 exc Prem & Summer CG

2024
Year

¦	Avg Cost E15 - No Retail Cost

¦	Avg Cost El5 w/1/2 Retail Cost

2025

- Low Cost E15 - No Retail Cost

It is important to recognize the cost impact due to revamping the retail station to enable it
to sell E15. Assuming a typical retail station revamp cost of $108,000, and that the HBIIP
program subsidized half the cost, the retail station is estimated to need to cover a cost of
$ 1.25/gal for that 5% increment of ethanol in E15. This is shown in Figure 2.1.1.3-1 as the
difference between the dashed blue line and the solid blue line, which represents the average El 5
cost without any retail cost included. None of the solid Lines in the figure include this retail
revamp cost; adding in this retail cost component immediately makes every gasoline market
uneconomic for blending additional ethanol into E10 to produce El5.

Assuming a best-case scenario in which a retail station was able to secure an additional
local subsidy that covered the balance of the El 5 revamp cost, then the lowest cost market for
the additional 5% of ethanol in El 5 would have a -30C/gal blending cost for ethanol. However,
similar to E85, this gasoline market is comprised solely of premium gasoline. Since the premium
gasoline market is very small, it would likely not be sufficiently large to cause retail stations
owners to revamp their stations to sell El 5. The next most economic gasoline market includes
regular grade gasoline, but its ethanol blending cost is about 30C/gal. Thus, the ethanol blending
cost analysis finds this gasoline market uneconomic for El5.

After reviewing the El5 blending economics, we project that without the RFS program in
place, the fuels market would not offer El 5 for sale.

2.1.2 Cellulosic Biofuel

There are two primary types of cellulosic biofuel that we project will generate
appreciable quantities of cellulosic RINs in 2023-2025: CNG/LNG derived from biogas and
biogas-based electricity (eRINs). We also project that small volumes of liquid cellulosic biofuel

66


-------
will be produced in these years. Cellulosic biofuels generally cost more to produce than the fossil
fuels they displace, and therefore generally would not be used absent the incentives provided by
the RFS program. There are, however, state incentive programs (e.g., the California and Oregon
LCFS programs) that we project would be sufficient to incentivize the use of some types of
cellulosic biofuels without the additional incentives provided by the RFS program. This chapter
describes our projections of cellulosic biofuel use for the No RFS baseline.

2.1.2.1 CNG/LNG Derived from Biogas

As described in greater detail in Chapter 10, CNG/LNG derived from biogas is generally
more expensive to produce than natural gas. Because of this higher cost, and because of the
demand for renewable natural gas (RNG) in sectors other than the transportation sector, we
project that without incentives for the use of renewable CNG/LNG in the transportation sector,
very little or none of this fuel would be used in the transportation sector.

There are, however, two state LCFS programs (California and Oregon) that currently
offer incentives for the use of CNG/LNG in the transportation sector. We have assumed that the
incentives provided by these states would be sufficient for some quantity of CNG/LNG to be
used in the transportation sector in the absence of the RFS program. To project the quantity of
CNG/LNG used as transportation fuel in these states (including both fossil natural gas and
RNG), we have used data provided by California and Oregon and extrapolated the use of these
fuels through 2025. Specifically, we calculated a year-over-year growth rate for each year for
California and Oregon separately. We then averaged the observed annual growth rates from
2015-2019 for California and 2017-2019 for Oregon122 to determine an average annual rate of
growth and used this growth rate to project CNG/LNG volumes in California and Oregon
through 2025. This growth rate was applied to the reported use of renewable CNG/LNG in the
transportation sector in 2020, the latest year for which data were available at the time this
analysis for the No RFS baseline was completed. We assumed that all CNG/LNG used as
transportation fuel in these states in 2023-2025 was from renewable sources and did not include
the growth rate in 2020 due to the impacts of the COIVD-19 pandemic. The projected volume of
renewable CNG/LNG used as transportation fuel in California and Oregon under the No RFS
baseline is summarized in Table 2.1.2.1-1.

Table 2.1.2.1-1: CNG/LNG Derived from Biogas in the No RFS Baseline (million ethanol-
equivalent gallons)							

State

Annual Growth Rate

2020

2021

2022

2023

2024

2025

California

7.48%

280

301

324

348

374

402

Oregon

38.7%

3

4

6

8

11

15

Total

N/A

283

305

329

356

385

417

2.1.2.2 Electricity

This rule proposes to enable the generation of RINs for renewable electricity derived
from biogas for the first time. As such, absent this rulemaking there would be zero renewable

122 The Oregon LCFS program began in 2016, and therefore we cannot calculate an annual rate of growth prior to
2017.

67


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electricity under the RFS program. However, as discussed in Chapter 6.1.4, we project that the
existing capacity to generate renewable electricity derived from biogas exceeds the quantity of
electricity that will be used as transportation fuel through 2025. Therefore, this rule is not
anticipated to actually result in any increase in renewable electricity generation through 2025.
Consequently, we are not changing the quantity of renewable electricity in 2024-2025 relative to
the No RFS baseline and have therefore assumed that the No RFS baseline equals the volumes
required in 2024-2025.

2.1.2.3 Liquid Cellulosic Biofuels

In recent years there have been very small quantities of liquid cellulosic biofuels
produced. This is despite the fact that the combination of the RFS program, federal tax credit,
and state incentives (e.g., the California LCFS program) have provided very large financial
incentives for liquid cellulosic biofuels. While the incentives provided by state programs and the
federal tax credit are expected to continue in future years, we do not expect that these incentives
alone will be sufficient to support liquid cellulosic biofuel production in 2023-2025. We are
therefore not projecting any liquid cellulosic biofuel production in 2023-2025 under the No RFS
baseline.

2.1.3 Biomass-Based Diesel
2.1.3.1 Biodiesel

Estimating the economics of blending biodiesel is different than ethanol because, unlike
corn ethanol plants that are almost exclusively located in the Midwest, biodiesel plants are more
scattered around the country. The more diffuse location of biodiesel plants affects how we
estimate distribution costs for using biodiesel. Also, refiners do not change the properties of the
diesel they produce to accommodate the downstream blending of biodiesel, and as such there is
no additional blending value associated with its use like there is for E10. However, blending
biodiesel does often require the addition of additives to accommodate some of its properties. The
blending cost of biodiesel is estimated using the following equation:

BBC = (BSP + BDC - FBTS - SBTS) - DTP

Where:

•	BBC is biodiesel blending cost

•	BSP is biodiesel plant gate spot price

•	BDC is biodiesel distribution cost

•	FBTS is federal biodiesel tax subsidy

•	SBTS is state biodiesel tax subsidy

•	DTP is diesel terminal price; all are in dollars per gallon

68


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Biodiesel Plant Gate Spot Price (BSP)

USDA collects biodiesel plant gate pricing data, which is the price paid to biodiesel
producers when they sell their biodiesel; however, USDA does not project future biodiesel
prices.123 Instead, we assumed that biodiesel production costs reflected plant gate prices and then
estimated biodiesel production costs based on future vegetable oil and utility prices. This is
essentially the same information used for estimating biodiesel production costs for the cost
analysis in Chapter 10, except that the capital costs are amortized using the capital amortization
factor in Table 2.1.1.1-1. Imports are assumed to be half produced from soybean oil and half
from palm oil, and have the same production costs as that produced domestically. The resulting
projected biodiesel plant gate prices are summarized in Table 2.1.3.1-1.

Table 2.1.3.1-1: Projected Biodiesel P

ant Gate Prices

Projected Production Cost

2023

2024

2025

Soybean Oil

4.83

4.58

4.45

Corn Oil

4.34

4.12

4.00

Waste Oil

3.92

3.72

3.62

Palm Oil

4.83

4.58

4.44

FAPRI

4.77

4.55

4.51

Biodiesel Distribution Cost (BDC)

This factor represents the added cost of moving biodiesel from production plants to
terminals where it is blended into diesel. Unlike ethanol, which is almost exclusively produced in
the Midwest and distributed elsewhere from there, biodiesel is predominantly produced in the
Midwest, but there are also biodiesel plants dispersed around the country. For this reason, we
took a very different approach for this analysis. Using 2019 EIA data, we estimated the quantity
of biodiesel produced within each PADD, the movement of biodiesel between PADDs, and the
imports and exports of biodiesel into and out of each PADD, as summarized in Table 2.1.3.1-

2 U4

123	USDA Economic Research Service; US Bioenergy Statistics. 2019. Table 14 Fuel ethanol, corn, and gasoline
prices by month.

124	Petroleum Administration for Defense District (PADD): The 50 U.S. states and the District of Columbia are
divided into five districts. Each PADD comprise a subset of U.S. states; PADD 1; Eastern states; PADD 2; Midwest
states; PADD 3; Gulf Coast; PADD 4; Rocky Mountain States; PADD 5; Pacific Coast states.

69


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Table 2.1.3.1-2: Biodiesel Production, Imports, Export, and Movement Between PADDs
and Consumption in 2019 (million gallons) 				









From

From

Other



PADD

Production

Imports

Exports

PADD 2

PADD 3

Movement

Consumption

PADD 1

88

82

7

103

4

0

271

PADD 2

1,166

42

60

-

0

-363

785

PADD 3

337

12

14

140

-

115

450

PADD 4

0

9

0

21

0

5

35

PADD 5

134

22

32

99

22

-6

239

Total

1,725

168

114

363

26

-249

1,779

ICF estimated the distribution costs for distributing biodiesel both within and between
PADDs, as summarized in Table 2.1.3.1-3.125

Table 2.1.3.1-3: Biodiesel Distribution Costs (
-------
States also provide subsidies to blend biodiesel into diesel. These state subsidies were
enacted in previous years and are presumed to continue through 2025. Table 2.1.3.1-4
summarizes the states that offer such subsidies and their amounts.

Table 2.1.3.1-4: State Biodiesel Subsidies (t/gal)

State

Biodiesel Subsidy

Hawaii

36.5

Iowa

3.5

Illinois

14

North Dakota

100

Rhode Island

30

Texas

20

The California and Oregon LCFS programs do not offer specific subsides per se, but
through the cap-and-trade nature of their programs, they can be equated to subsidies. Oregon also
has a biodiesel blending mandate, which requires that their diesel contain 5% biodiesel. We
assumed that, on average, each state would only blend up to 5% biodiesel, which means that
Oregon's mandate would satisfy its biodiesel volume regardless of its LCFS program. In the case
for California, which does not have a biodiesel mandate, we estimated the equivalent per-gallon
subsidy amount from the incentives offered by its LCFS program. From 2023-2025, biodiesel
produced from soybean oil is estimated to receive an LCFS blending incentive of $ 1,01/gal in
2023 decreasing to $0.96/gal in 2025. Biodiesel produced from non-soybean oil vegetable oils is
expected to receive a blending incentive of $1.84 each year from 2023-2025.

Although different than subsidies, several state have mandates that require that the diesel
within their state contain a minimum quantity of biodiesel. Table 2.1.3.1-5 lists the states that
have such a mandate and the percentage of biodiesel required to be blended into diesel.

Table 2.1.3.1-5: State Biodiesel Mandates

State

Minimum % of Biodiesel

Minnesota

12.5

New Mexico

5

Oregon

5

Pennsylvania

2

Washington

2

Diesel Terminal Price (DTP)

Refinery rack price data from 2019—which already included the distribution costs for
moving diesel to downstream terminals—were used to represent the price of diesel to blenders
on a state-by-state basis. However, these prices were not projected for future years.126 Instead,
we used projected refinery wholesale price data from AEO 2022 to adjust the 2019 refinery rack
price data to represent diesel rack prices in future years. We used 2019 data instead of more

126 EIA; Spot Prices; https://www.eLa.gov/dnav/pet/pet ptl spl: si a.htm.

71


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recent data to avoid abnormal pricing effects caused by the COVID-19 pandemic or the
subsequent supply issues that emerged when the pandemic was subsiding. This diesel price data,
summarized in Table 2.1.3.1-6, was collected by states and is assumed to represent the average
diesel price for all the terminals in each state.127

127 EIA; Prime Supplier Sales Volume; https://www.eia.gov/dnav/pet/pet cons prim dcu nus m.htJii.

72


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Table 2.1.3.1-6: Diesel Terminal Prices ($/gal)

Year

State

2019

2023

2024

2025

2026

Alaska

2.43

2.20

2.32

2.41

2.48

Alabama

1.93

1.74

1.84

1.91

1.97

Arkansas

1.94

1.75

1.85

1.92

1.98

Arizona

2.07

1.87

1.98

2.05

2.12

California

2.20

1.99

2.10

2.18

2.25

Colorado

2.02

1.82

1.92

2.00

2.06

Connecticut

1.96

1.77

1.87

1.94

2.01

DC

1.95

1.76

1.86

1.93

1.99

Delaware

1.95

1.76

1.86

1.93

1.99

Florida

1.98

1.79

1.89

1.96

2.02

Georgia

1.94

1.75

1.85

1.92

1.98

Hawaii

2.17

1.96

2.07

2.15

2.21

Iowa

1.98

1.79

1.89

1.96

2.02

Idaho

2.01

1.81

1.92

1.99

2.05

Illinois

1.88

1.69

1.79

1.86

1.92

Indiana

1.90

1.71

1.81

1.88

1.94

Kansas

1.94

1.75

1.85

1.92

1.98

Kentucky

1.97

1.78

1.88

1.95

2.01

Louisiana

1.88

1.70

1.80

1.86

1.92

Massachusetts

1.98

1.79

1.89

1.96

2.02

Maryland

1.95

1.76

1.86

1.93

1.99

Maine

1.99

1.79

1.90

1.97

2.03

Michigan

1.91

1.73

1.83

1.90

1.96

Minnesota

1.99

1.80

1.90

1.97

2.04

Missouri

1.95

1.77

1.87

1.94

2.00

Mississippi

1.91

1.73

1.82

1.89

1.95

Montana

2.00

1.81

1.91

1.98

2.04

North Carolina

1.95

1.76

1.86

1.93

1.99

North Dakota

1.98

1.79

1.89

1.96

2.02

Nebraska

1.98

1.79

1.89

1.96

2.03

New Hampshire

1.98

1.79

1.89

1.96

2.02

New Jersey

1.93

1.74

1.84

1.91

1.97

New Mexico

2.05

1.85

1.95

2.03

2.09

Nevada

2.08

1.88

1.99

2.06

2.13

New York

2.00

1.81

1.91

1.98

2.04

Ohio

1.91

1.73

1.83

1.89

1.95

Oklahoma

1.91

1.73

1.82

1.89

1.95

Oregon

2.04

1.85

1.95

2.02

2.09

Pennsylvania

1.94

1.75

1.85

1.92

1.98

Rhode Island

1.95

1.76

1.86

1.93

1.99

South Carolina

1.94

1.76

1.86

1.93

1.98

South Dakota

2.00

1.81

1.91

1.98

2.04

Tennessee

1.94

1.76

1.85

1.92

1.98

Texas

1.91

1.73

1.82

1.89

1.95

Utah

2.05

1.86

1.96

2.04

2.10

Virginia

1.95

1.76

1.86

1.93

1.99

Vermont

1.99

1.80

1.90

1.97

2.03

Washington

1.98

1.79

1.89

1.96

2.02

Wisconsin

1.93

1.75

1.85

1.92

1.97

West Virginia

1.97

1.78

1.88

1.95

2.01

Wyoming

2.12

1.92

2.03

2.10

2.17

73


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Because there are state mandates and blending subsidies for biodiesel, each state is
represented in EPA's analysis. Since biodiesel distribution volumes and costs are estimated on a
PADD basis, the states are grouped together within their respective PADDs. We then established
a hierarchy for how biodiesel is consumed. First, state mandates are satisfied by biodiesel
volume that is available to each state within its PADD. Next, biodiesel is allocated to states
based on its blending cost—the state with the lowest biodiesel blending cost in each PADD (e.g.,
states with biodiesel blending subsidies) would receive biodiesel, with any one state assumed to
blend biodiesel only up to 5%.128 Therefore, once a state reaches 5% biodiesel content in its
diesel and more biodiesel is available in the PADD, biodiesel is blended to the next lowest
blending cost state, and so on until the biodiesel available in the PADD is exhausted.

Similar to the other biofuels analyzed for the No RFS baseline, mandates are satisfied
regardless of the blending economics. If the biodiesel blending cost is negative, biodiesel is
considered economical to blend into diesel and additional nonmandated volumes are assumed to
be blended. Conversely, biodiesel is assumed to not be blended into diesel if the biodiesel
blending value is positive. Because of its relative cost, biodiesel consumption without the RFS
program would be driven mostly by the state mandates, but would also occur absent the RFS
program due to state subsidies, mainly the California LCFS program. The volume of biodiesel
estimated to be blended into diesel in each state is determined by the volume of diesel sold in
that state multiplied by the biodiesel blend percentage.129 Table 2.1.3.1-7 lists the states expected
to consume biodiesel under the No RFS baseline and summarizes their volume of biodiesel by
the biogenic oil feedstock types estimated to be used to produce the biodiesel. For the states that
mandate the percentage of biodiesel to be blended into diesel, we apportioned the biogenic oil
feedstock types based on the current mix of these vegetable oils currently being used to produce
biodiesel. For the states that would use biodiesel based on economics, the use is a function of the
biodiesel economics when using the various feedstocks.

128	Minnesota is an exception because it mandates a higher volume. Limiting biodiesel blends to 5% in the
remaining states is appropriate because at least one engine manufacturer does not warranty their truck engines if
operated on diesel containing more than 5% biodiesel. Furthermore, California does not allow biodiesel blends
above 5% in order to avoid increases in NOx emissions.

129	Historical diesel sales volumes from EIA and projected diesel volumes in AEO 2022 were used to project the
volume of diesel sold in each state. EIA; Prime Supplier Sales Volume;
https://www.eia.gov/dnav/pet/pet cons prim dcu nus m.hliii.

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Table 2.1.3.1-7: Biodiesel in No RFS Baseline (mil



State

2023

2024

2025

Soybean
Oil

Corn
Oil

Waste

Soybean
Oil

Corn
Oil

Waste

Soybean
Oil

Corn
Oil

Waste

Mandated
Volumes

Minnesota

97.51

19.59

5.07

98.02

19.69

5.10

98.77

19.84

5.14

New Mexico

29.25

3.80

1.55

29.63

3.82

1.55

29.86

3.85

1.57

Oregon

30.33

5.90

1.53

30.49

5.93

1.54

30.72

5.98

1.55

Pennsylvania

24.70

3.88

1.00

24.83

3.90

1.01

25.02

3.93

1.02

Washington

18.31

3.56

0.92

18.40

3.58

0.93

18.54

3.61

0.93

Economic
Volumes

California

0

0

175

0

66

110

0

67

111

North Dakota

0

0

0

0

0

0

0

0

30

Total

200.1

36.7

185.1

201.4

102.9

120.1

202.9

104.2

151.2

422

424

458

ion gal/yr)

The analysis estimates the No RFS biodiesel baseline volumes to be somewhat more than
400 million gallons per year. Given the level of uncertainty in the projections and to simplify the
use of the No RFS baseline for our analyses, we combined these volumes and used 432 million
gallons of biodiesel per year.

2.1.3.2 Renewable Diesel

While renewable diesel is produced in a much different process than biodiesel, it uses the
same feedstocks and so much of the blending cost analysis is similar. The blending cost of
renewable diesel is estimated using the following equation:

RDBC = (RDSP + RDDC - FRDTS - SRDTS) - DTP

Where:

•	RDBC is renewable diesel blending cost

•	RDSP is renewable diesel plant gate spot price

•	RDDC is renewable diesel distribution cost

•	FRDTS is federal renewable diesel tax subsidy

•	SRDTS is state renewable diesel tax subsidy

•	DTP is diesel terminal price; all are in dollars per gallon

Some of the equation inputs, including the distribution costs (RDDC), federal tax subsidy
(FRDTS), state tax subsidies (SRDTS), and diesel terminal price (DTP) are the same as that
described in Chapter 2.1.3.1 for biodiesel, so they are not discussed further here. However, the
state mandates described in Chapter 2.1.3.1 are assumed to not apply to renewable diesel.

75


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Renewable Diesel Plant Gate Spot Price (RDSP)

Similar to biodiesel, we estimated future renewable diesel plant gate prices by gathering
projected renewable diesel plant input information (e.g., future biogenic oil and utility prices) to
estimate renewable diesel production costs, which we assumed represent plant gate prices. This
is essentially the same information used for estimating renewable diesel production costs for the
cost analysis in Chapter 10, except that the capital costs are amortized using the capital
amortization factor in Table 2.1.1.1-1. Imports are assumed to be half produced from soybean oil
and half from palm oil, and have the same production costs as that produced domestically. The
resulting projected renewable diesel plant gate prices are summarized in Table 2.1.3.2-1.

Table 2.1.3.2-1: Projected Renewable Diesel Plant Gate Prices ($/gal)

Feedstock

2023

2024

2025

Soybean Oil

5.61

5.33

5.20

Corn Oil

5.08

4.84

4.72

Waste Oil

4.63

4.42

4.32

Palm Oil

5.61

5.33

5.19

The methodology for analyzing renewable diesel volumes is structured the same as that
for biodiesel described in Chapter 2.1.3.1. States are grouped together within their respective
PADDs and a hierarchy is established for how renewable diesel is consumed, except that we did
not include any state mandates. The state with the lowest renewable diesel blending cost (e.g.,
states with blending subsidies) would receive renewable diesel first. An important difference
from the analysis for biodiesel, however, is that states are able to displace up to 95% of their
diesel volume with renewable diesel.130

Similar to the other biofuels analyzed for the No RFS baseline, if the renewable diesel
blending cost is negative, renewable diesel is considered economical to blend into diesel.
Conversely, renewable diesel is assumed to not be blended into diesel if the blending value is
positive. Because of its relative cost, renewable diesel consumption without the RFS program
would only be blended into diesel if a state offers a significant subsidy, mainly the California and
Oregon LCFS programs. The volume of renewable diesel estimated to be blended into diesel in
each state is determined by the volume of diesel sold in that state.131

Allowing up to 95% of the diesel in a state to be supplanted with renewable diesel would
allow the results of the analysis to swing wildly from year to year based on even small changes
in the economics of renewable diesel in any given year. In reality, the marketplace is unlikely to
make such swings. To avoid this problem, the following steps were taken to rationalize the
growth and use of renewable diesel:

130	Renewable diesel has properties similar to petroleum diesel, so it can displace petroleum diesel without causing
vehicle compatibility or drivability issues.

131	Historical diesel sales volumes from EIA and projected diesel volumes in AEO 2022 were used to project the
volume of diesel sold in each state. EIA; Prime Supplier Sales Volume;
https://www.eia.gov/dnav/pet/pet cons prim dcu nus m.hliii.

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•	Renewable diesel economics were assessed from 2018-2025 to determine the states
where renewable diesel would be economic to blend, and what the maximum volume
could be.

•	Renewable diesel demand in any one historical year was not allowed to exceed the
demand that occurred in that year under the RFS program. This data was extrapolated to
determine the maximum renewable diesel demand for future years (see Table 2.1.3.2-2).

•	When combined with biodiesel, the demand for the lowest cost biogenic oils (i.e., waste
oils (FOG) and corn oil) was not allowed to exceed the total demand for those oils that
occurred in that year under the RFS program.

•	The maximum demand for renewable diesel in any one year for a given state was then
calculated to be the average of renewable diesel demand for that year and the previous
three years. This step attempted to reflect how potential renewable diesel investors or
banks would seek to assess the economics for investing in expanding renewable diesel
plant capacity.

Table 2.1.3.2-2: Historical and Projected Maximum Renewable Diesel Demand (million





Renewable



Year

Diesel Demand



2018

402

Historical

2019

627



2020

580



2021

716



2022

813

Projected

2023

910



2024

1,007



2025

1,104

Table 2.1.3.2-3 list the states that are economically favorable for blending in renewable
diesel, summarize the potential maximum volume of renewable diesel, and summarize the
allowed volume of renewable diesel based on either the maximum renewable diesel demand (per
Table 2.1.3.2-2) or the maximum volume of biogenic oil.

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Table 2.1.3.2-3: Potential and Allowed Volume of Renewable Diesel





Feedstock





State

Soybean Oil

Corn Oil

Waste Oil

Total

2018



California

0

1,426

2,375

3,801

Potential Demand

North Dakota

0

253

422

675



Oregon

0

278

463

741

Amount Allowed

California

0

151

251

402

2019



California

0

1,322

2,202

3,524

Potential Demand

North Dakota

0

0

652

652



Oregon

0

0

741

741

Amount Allowed

California

0

264

357

621

2020



California

0

1,208

2,012

3,220

Potential Demand

North Dakota

0

0

549

549



Oregon

0

0

22

22

Amount Allowed

California

0

185

395

580

2021



California

0

0

3,326

3,326

Potential Demand

North Dakota

0

0

0

0



Oregon

0

0

0

0

Amount Allowed

California

0

0

716

716

2022



California

0

0

22

22

Potential Demand

North Dakota

0

0

0

0



Oregon

0

0

0

0

Amount Allowed

California

0

0

22

22

2023



California

0

0

22

22

Potential Demand

North Dakota

0

0

0

0



Oregon

0

0

0

0

Amount Allowed

California

0

0

22

22

2024



California

0

0

3,343

3,343

Potential Demand

North Dakota

0

0

0

0



Oregon

0

0

0

0

Amount Allowed

California

0

0

880

880

2025



California

0

0

3,369

3,369

Potential Demand

North Dakota

0

0

0

0



Oregon

0

0

0

0

Amount Allowed

California

0

0

849

849


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As revealed in Table 2.1.3.2-3, California, North Dakota, and Oregon are all
economically attractive for blending renewable diesel into petroleum diesel during at least some
of these years. For all of these years, however, California was the most economically attractive
state to blend renewable diesel, and it alone was able to consume all of the renewable diesel
allowed by the calculations. As a result, all renewable diesel was assigned to California.

Table 2.1.3.2-4 summarizes the total allowed volumes of renewable diesel in Table
2.1.3.2-3, as well as a running four-year average of these volumes. As described above, this step
attempts to reflect how potential renewable diesel investors or banks might determine the
economic market size for investing in expanding renewable diesel plant capacity. There was
significant variability in the year-by-year estimates of four-year averages and the value seemed
to stabilize after 2020. In light of the uncertainty in the analysis, we used a best fit line of the
four-year average values to estimate a renewable diesel volume of 424 million gallons per year
in 2021 and used this as the volume of renewable diesel used under the No RFS baseline, as we
believe that this value best represents the range of four-year average values from 2021-2025.

Table 2.1.3.2-4: Summary of Renewable Diesel Volumes (mil



2018

2019

2020

2021

2022

2023

2024

2025

Allowed Volume

402

621

580

716

22

22

880

849

Four-Year Average

-

-

-

580

485

335

410

443

No RFS Baseline

-

-

-

424

424

424

424

424

ion gallons)

2.1.4 Other Advanced Biofuel

In addition to ethanol, cellulosic biofuel, and BBD, we also estimated volumes of other
advanced biofuel for the No RFS baseline. These biofuels include imported sugarcane ethanol,
domestically produced advanced ethanol, non-cellulosic RNG used in CNG/LNG vehicles,
heating oil, naphtha, and advanced renewable diesel that does not qualify as BBD (coded as D5
rather than as D4). In Chapters 6.3 and 6.4, we present a derivation of the projected volumes of
these other advanced biofuels for 2023-2025 in the context of the candidate volumes that we
analyzed. Here we discuss the deviations from those projections that we believe would apply
under a No RFS baseline.

According to data from EI A, all ethanol imports entered the U.S. through the West Coast
in 2019-2021. We believe that these imports were likely used to help refiners meet the
requirements of the California LCFS program, which provides significant additional incentives
for the use of advanced ethanol beyond that of the RFS program. In the absence of the RFS
program, we believe that these incentives would remain. Thus, we have assumed that the volume
of imported sugarcane ethanol would be the same regardless of whether the RFS program were
in place in 2023-2025. For similar reasons, we believe that domestically produced advanced
ethanol would also continue to find a market in California in the absence of the RFS program.

As discussed in Chapter 6.2.4, a similar situation exists for advanced renewable diesel.
The vast majority of the renewable diesel consumed in the U.S. has been consumed in California
to fulfill the mandates of its LCFS program. Some renewable diesel would continue to be
consumed in California in the absence of the RFS program, particularly that produced from FOG

79


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due to the lower Carbon Intensity (CI) value assigned to it under the LCFS program. We believe
that this would also be the case for advanced renewable diesel that does not qualify as BBD since
the statutory threshold of 50% GHG reduction is the same for advanced biofuel and for BBD,
and because such renewable diesel is generally produced from FOG. Thus, we have assumed that
the volume of advanced renewable diesel that does not qualify as BBD would be the same
regardless of whether the RFS program were in place in 2023-2025.

Remaining forms of other advanced biofuel (i.e., non-cellulosic RNG used in CNG/LNG
vehicles, heating oil, and naphtha) are much less likely to find their way to markets such as the
California LCFS program, where the incentive would be insufficient to continue supporting their
use in the absence of the RFS program. Therefore, we have assumed that consumption of these
biofuels would be zero under the No RFS baseline.

2.1.5 Summary of No RFS Baseline

Following our analysis of individual biofuel types as described above, we estimated the
constituent mix of both renewable fuel types and feedstocks that could be used under a No RFS
baseline, as shown in Table 2.1.5-1.

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Table 2.1.5-1: No RFS Baseline for 2023-2

025 (million RINs)



2023

2024

2025

Cellulosic Biofuel

356

385

417

CNG/LNG from biogas

356

385

417

Diesel/jet fuel from wood waste/MSW

0

0

0

Electricity from biogas

0

0

0

Total Biomass-Based Diesel

1,374

1,374

1,374

Biodiesel

648

648

648

Soybean oil

298

298

298

FOG

220

220

220

Corn oil

130

130

130

Canola oil

0

0

0

Renewable Diesel

721

721

721

Soybean oil

0

0

0

FOG

663

663

663

Corn oil

58

58

58

Canola oil

0

0

0

Jet fuel from FOG

5

5

5

Other Advanced Biofuels

216

216

216

Renewable diesel from FOG

81

81

81

Imported sugarcane ethanol

110

110

110

Domestic ethanol from waste ethanol

25

25

25

Other3

0

0

0

Conventional Renewable Fuel

13,750

13,730

13,693

Ethanol from corn

13,750

13,730

13,693

Renewable diesel from palm oil

0

0

0

a Composed of non-cellulosic biogas, heating oil, and naphtha.

2.2 2022 Baseline

As discussed in Preamble Section III.D.3, while we believe that the No RFS baseline is
preferable as a point of reference for analyzing the impacts of the candidate volumes, we have
also estimated the costs of this rule relative to the 2022 volume requirements as an additional
informational case. These alternative estimated costs allow a comparison to those presented in
recent RFS annual rules and provide an appreciation for what the impacts of the rule may be
relative to the current situation.

As with the No RFS baseline, we needed to estimate the mix of biofuels that could be
used to meet the 2022 volume requirements in order to be able to use those volume requirements
as a point of reference. In the 2020-2022 annual rule, we made just such an estimate of the mix
of biofuels.132 However, that mix included some simplifying assumptions for advanced biodiesel
and renewable diesel. For the purposes of this rule, the more robust cost estimation methodology
that we are using would be better served with a more precise estimate of the individual

132 See Table 2.1-1, Renewable Fuel Standard (RFS) Program: RFS Annual Rules - Regulatory Impact Analysis,
EPA-420-R-22-008, June 2022.

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feedstocks likely to be used to produce advanced biodiesel and renewable diesel in 2022. To that
end, we estimated the mix of feedstocks likely to be used in 2022 to produce these two fuels
using the volume requirements for 2022 and the historical trends in the use of feedstocks to
produce these fuel.133 The results are shown in Table 2.2-1, along with the other biofuel mix
estimates presented in the 2020-2022 annual rule.

Table 2.2-1: Estimated Mix of Biofuels for 2022 (million RINs)

Cellulosic Biofuel

630

CNG/LNG from biogas

630

Diesel/jet fuel from wood waste/MSW

0

Electricity from biogas

0

Total Biomass-Based Diesel

5,555

Biodiesel

2,650

Soybean oil

1,438

FOG

537

Corn oil

308

Canola oil

367

Renewable Diesel

2,900

Soybean oil

1,714

FOG

1,014

Corn oil

172

Canola oil

0

Jet fuel from FOG

5

Other Advanced Biofuels

256

Renewable diesel from FOG

81

Imported sugarcane ethanol

110

Domestic ethanol from waste ethanol

25

Other3

40

Conventional Renewable Fuel

14,439

Ethanol from corn

14,175

Renewable diesel from palm oil

264

a Composed of non-cellulosic biogas, heating oil, and naphtha.

133 See Chapter 6.2 for a description of the methodology used to project biodiesel and renewable diesel feedstocks in
2022.

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Chapter 3: Candidate Volumes and Volume Changes

For analyses in which we have quantified the impacts of the candidate volumes for 2023—
2025 and the 2023 supplemental standard, we have identified the specific biofuel types and
associated feedstocks that are projected to be used to meet those volumes. While we
acknowledge that there is significant uncertainty about the types of renewable fuels that would
be used to meet the candidate volumes, we believe that the mix of biofuel types described in this
chapter are reasonable projections of what could be supplied for the purpose of assessing the
potential impacts. As described in Chapter 2, we also acknowledge that the choice of baseline
affects the estimated impacts of the candidate volumes and the 2023 supplemental standard. This
chapter describes both the methodology for identifying the mix of biofuels that could result from
the candidate volumes and the 2023 supplemental standard and the change in volumes in
comparison to the No RFS and 2022 baselines.

3.1 Mix of Renewable Fuel Types for Candidate Volumes

The candidate volumes that we developed for 2023-2025 (excluding the 2023
supplemental standard) are presented in Preamble Section III.C.5 and are repeated in Tables 3.1-
1 and 2.

Table 3.1-1: Candidate Volume Components (million RINs)a



D Codeb

2023

2024

2025

Cellulosic biofuel

D3 + D7

719

1,419

2,131

Biomass-based diesel

D4

5,389

5,689

5,760

Other advanced biofuel

D5

256

256

256

Conventional renewable fuel

D6

14,455

14,505

14,534

a Does not include RINs used to meet the 2023 supplemental standard.

b The D codes given for each component category are defined in 40 CFR 80.1425(g). D codes are used to identify
the statutory categories that can be fulfilled with each component category according to 40 CFR 80.1427(a) (2).

Table 3.1-2: Candidate Volumes in Statutory Categories (million RINs)a



D Code

2023

2024

2025

Cellulosic biofuel

D3 + D7

719

1,419

2,131

Non-cellulosic advanced biofuelb

D5

5,100

5,200

5,300

Advanced biofuel

D3 + D4 +
D5 + D7

5,819

6,619

7,431

Conventional renewable fuelb

D6

15,000

15,250

15,250

Total renewable fuel

All

20,819

21,869

22,681

a Does not include RINs used to meet the 2023 supplemental standard.
b These are implied volume requirements, not regulatory volume requirements.

83


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We estimated the constituent mix of renewable fuel types and feedstocks that could be
used to meet the candidate volumes (absent the 2023 supplemental standard) as shown in Table
3.1-3.134

Table 3.1-3: Candidate Volumes Assessed for 2023-2025 (million RINs)



2023

2024

2025

Cellulosic Biofuel

719

1,419

2,131

CNG/LNG from biogas

719

814

921

Diesel/jet fuel from wood waste/MSW

0

5

10

Electricity from biogas

0

600

1,200

Total Biomass-Based Diesel3

5,389

5,689

5,760

Biodiesel

2,580

2,530

2,480

Soybean oil

1,390

1,340

1,290

FOG

520

520

520

Corn oil

310

310

310

Canola oil

360

360

360

Renewable Diesel

2,804

3,154

3,275

Soybean oil

1,494

1,744

1,755

FOG

1,120

1,210

1,310

Corn oil

190

200

210

Canola oil

0

0

0

Jet fuel from FOG

5

5

5

Other Advanced Biofuels

256

256

256

Renewable diesel from FOG

81

81

81

Imported sugarcane ethanol

110

110

110

Domestic ethanol from waste ethanol

25

25

25

Otherb

40

40

40

Conventional Renewable Fuel

14,455

14,505

14,534

Ethanol from corn

14,455

14,505

14,534

Renewable diesel from palm oil

0

0

0

a Includes BBD in excess of the candidate volume for advanced biofuel. The excess would be used to help meet the
candidate volume for conventional renewable fuel.
b Composed of non-cellulosic biogas, heating oil, and naphtha.

Unlike for 2022, wherein we projected that some palm-based, imported conventional
renewable diesel would be needed in order to meet the applicable standards and the 2022
supplemental standard,135 we do not believe that any palm-based, imported conventional
renewable diesel would be needed in 2023-2025. Our assessment of BBD, described more fully
in Chapter 6.2, leads us to a provisional conclusion that there would be sufficient volumes
available to meet the candidate volumes for non-cellulosic advanced biofuel and conventional
renewable fuel and, in the case of 2023, the proposed supplemental standard.

134	The analyses leading to the mix of renewable fuel types and feedstocks are presented in Chapter 6. We have also
analyzed the impacts of the 2023 supplemental standard under the assumption that it would be met with soybean oil-
based renewable diesel in Chapter 3.4.

135	8 7 FR 39600 (July 1, 2022).

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3.2 Volume Changes Analyzed With Respect to the No RFS Baseline

For those factors that we quantified the impacts of the candidate volumes for 2023-2025,
the impacts were based on the difference in the volumes of specific renewable fuel types
between the candidate volumes and the No RFS baseline. These differences are shown in Tables
3.2-1 and 2 in terms of RINs and physical volumes, respectively. The values in these tables
reflect the difference between values in Tables 3.1-3 and 2.1.5-1.

Table 3.2-1: Volume Changes for Candidate Volumes Relative to the No RFS Baseline

(million RINs)



2023

2024

2025

Cellulosic Biofuel

363

1,034

1,714

CNG/LNG from biogas

363

429

504

Diesel/jet fuel from wood waste/MSW

0

5

10

Electricity from biogas

0

600

1,200

Total Biomass-Based Diesel

4,015

4,315

4,386

Biodiesel

1,932

1,882

1,832

Soybean oil

1,092

1,042

992

FOG

300

300

300

Corn oil

180

180

180

Canola oil

360

360

360

Renewable Diesel

2,083

2,433

2,554

Soybean oil

1,494

1,744

1,755

FOG

457

547

647

Corn oil

132

142

152

Canola oil

0

0

0

Jet fuel from FOG

0

0

0

Other Advanced Biofuels

40

40

40

Renewable diesel from FOG

0

0

0

Imported sugarcane ethanol

0

0

0

Domestic ethanol from waste ethanol

0

0

0

Other3

40

40

40

Conventional Renewable Fuel

706

776

840

Ethanol from corn

706

776

840

Renewable diesel from palm oil

0

0

0

a Composed of non-cellulosic biogas, heating oil, and naphtha.

85


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Table 3.2-2: Volume Changes for Candidate Volumes Relative to the No RFS Baseline

(million gallons)3



2023

2024

2025

Cellulosic Biofuel

363

1,032

1,710

CNG/LNG from biogas3

363

429

504

Diesel/jet fuel from wood waste/MSW

0

3

6

Electricity from biogas3

0

600

1,200

Total Biomass-Based Diesel

2,513

2,686

2,724

Biodiesel

1,288

1,255

1,221

Soybean oil

728

695

661

FOG

200

200

200

Corn oil

120

120

120

Canola oil

240

240

240

Renewable Diesel

1,225

1,431

1,503

Soybean oil

879

1,026

1,032

FOG

269

322

381

Corn oil

78

84

90

Canola oil

0

0

0

Jet fuel from FOG

0

0

0

Other Advanced Biofuels

31

31

31

Renewable diesel from FOG

0

0

0

Imported sugarcane ethanol

0

0

0

Domestic ethanol from waste ethanol

0

0

0

Otherb

31

31

31

Conventional Renewable Fuel

706

776

840

Ethanol from corn

706

776

840

Renewable diesel from palm oil

0

0

0

a Electricity and CNG/LNG remain in ethanol-equivalent gallons in this table.
b Composed of non-cellulosic biogas, heating oil, and naphtha.

Note that the changes in ethanol from corn shown in Tables 3.2-1 and 2 can be entirely
attributed to ethanol used as El 5 and E85, since under the No RFS baseline we project that there
would not be any El 5 or E85.136

Tables 3.2-1 and 2 represent the change in biofuel use in the transportation sector that
could occur if the candidate volumes were to become the basis for the applicable percentage
standards. For most biofuels, the volume changes in the transportation sector correspond directly
to changes in the production and/or importation of those volumes. However, the same is not true
for cellulosic biofuels produced from biogas. In particular, renewable electricity is currently
being generated from biogas, but that renewable electricity is not currently being used as
transportation fuel. For 2023-2025, we project that there would not be any additional renewable
electricity generated from biogas than would occur in the absence of the RFS program. Instead,
renewable electricity that is already being generated would simply be redirected from non-
transportation uses (e.g., residential and commercial power) to use as a transportation fuel. Thus,

136 See Chapter 2.1.1 for more discussion on El5 and E85.

86


-------
while there would be in increase in renewable electricity used as transportation fuel as shown in
Tables 3.2-1 and 2, there would not in fact be a corresponding change in the generation of that
electricity. For the purposes of analysis of the candidate volumes, therefore, we treated the
volume change in renewable electricity as zero.

In a similar fashion, biogas used to produce RNG for use in CNG/LNG vehicles is also
not expected to change to the same degree that Tables 3.2-1 and 2 would suggest. In the absence
of the RFS program, we project that companies that had already made investments to produce
and distribute RNG through commercial pipelines would redirect this RNG from transportation
uses to non-transportation uses (e.g., commercial or industrial uses) rather than reducing RNG
production. Thus, we project that the actual increase in the production of RNG under the No RFS
baseline would be smaller than the projected increase in RNG used in transportation as shown in
Tables 3.2-1 and 2. For the purposes of analysis of the candidate volumes, therefore, we
estimated the volume change for RNG as the increase from projected use of RNG as
transportation fuel in 2022 in Table 2.2-1 to the candidate volumes shown in Table 3.1-3,
yielding the volume changes shown in Table 3.2-3.

In the 2020-2022 annual rule, we made some simplifications to the projected volume
changes for the purposes of our analyses. Namely, we grouped fuels with very small changes in
volumes with similar fuels having much larger volume changes. We did this because: (1) we had
more limited data on the impacts of those renewable fuel types with smaller volume changes; (2)
the impacts on many of the factors evaluated in Chapter 4 are expected to be similar; and (3) we
expect small volume changes to have little material impact on the overall conclusions of the
analyses. For this rule, we have taken a similar approach. This simplification fell into three areas:

1.	We have treated all liquid cellulosic biofuels as hydrocarbons produced from wood
waste.

2.	We have treated all volume changes in canola oil as if they were changes in soybean
oil.

3.	We have treated all volume changes in "Other" advanced biofuel, which is dominated
by naphtha, as if they were changes in renewable diesel.137

As a result of these adjustments and simplifications, the volume changes that we used in
our analyses were as follows:

137 We assumed that the feedstocks used to produce these "other" advanced biofuels were proportional to the
feedstocks used to produce renewable diesel.

87


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Table 3.2-3: Volume Changes Analyzed for the Candidate Volumes With Respect to the No



2023

2024

2025

CNG/LNG from biogas3

87

182

289

Electricity from biogas3

0

0

0

Diesel/jet fuel from wood waste/MSW

0

3

6

Biodiesel from soybean oil

968

935

901

Biodiesel from FOG

200

200

200

Biodiesel from corn oil

120

120

120

Renewable diesel from soybean oil

901

1,048

1,054

Renewable diesel from FOG

275

329

388

Renewable diesel from corn oil

80

86

91

Ethanol from corn

706

776

840

Renewable diesel from palm oil

0

0

0

a Electricity and CNG/LNG remain in ethanol-equivalent gallons in this table.

For the climate change analyses, we determined that a more robust analysis could be
performed if BBD produced from FOG could be disaggregated into specific types. Therefore,
using data from EIA's Monthly Biofuels Capacity and Feedstocks Update for the 12-month
period of April 2021 through March 2022, we determined that FOG on average consists of about
60% used cooking oil (UCO) and about 40% tallow.138 These fractions were applied to the
volume changes shown in Table 3.2-3 for both biodiesel and renewable diesel produced from
FOG in the context of the climate change analyses.

Table 3.2-4: Disaggregated Biofuels Made From FQi



2023

2024

2025

Biodiesel from FOG

200

200

200

UCO

120

120

120

Tallow

80

80

80

Renewable diesel from FOG

275

329

388

UCO

165

197

233

Tallow

110

131

155

(million gallons)

3.3 Volume Changes Analyzed with Respect to the 2022 Baseline

As described in Chapter 2.2, for cost purposes only, we also analyzed the impacts of
volume changes with respect to the 2022 baseline. These differences are shown in Tables 3.3-1
and 2 in terms of RINs and physical volumes, respectively. The values in these tables reflect the
difference between values in Tables 3.1-3 and 2.2-1.

138 EIA Monthly Biofuels Capacity and Feedstocks Update - Table 2a, https://www.eia.gov/biofuels/update

88


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Table 3.3-1: Volume Changes for Candidate Volumes Relative to 2022 Baseline (million

RINs)



2023

2024

2025

Cellulosic Biofuel

89

789

1,501

CNG/LNG from biogas

89

184

291

Diesel/jet fuel from wood waste/MSW

0

5

10

Electricity from biogas

0

600

1,200

Total Biomass-Based Diesel

-166

134

205

Biodiesel

-70

-120

-170

Soybean oil

-48

-98

-148

FOG

-17

-17

-17

Corn oil

2

2

2

Canola oil

-7

-7

-7

Renewable Diesel

-96

254

375

Soybean oil

-220

30

41

FOG

106

196

296

Corn oil

18

28

38

Canola oil

0

0

0

Jet fuel from FOG

0

0

0

Other Advanced Biofuels

0

0

0

Renewable diesel from FOG

0

0

0

Imported sugarcane ethanol

0

0

0

Domestic ethanol from waste ethanol

0

0

0

Other

0

0

0

Conventional Renewable Fuel

266

316

345

Ethanol from corn

280

330

359

Renewable diesel from palm oil

-14

-14

-14


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Table 3.3-2: Volume Changes for Candidate Volumes Relative to 2022 Baseline (million

gallons)3



2023

2024

2025

Cellulosic Biofuel

89

787

1,497

CNG/LNG from biogas3

89

184

291

Diesel/jet fuel from wood waste/MSW

0

3

6

Electricity from biogas3

0

600

1,200

Total Biomass-Based Diesel

-103

69

107

Biodiesel

-47

-80

-113

Soybean oil

-32

-65

-99

FOG

-11

-11

-11

Corn oil

1

1

1

Canola oil

-5

-5

-5

Renewable Diesel

-57

149

221

Soybean oil

-130

17

24

FOG

62

115

174

Corn oil

11

16

22

Canola oil

0

0

0

Jet fuel from FOG

0

0

0

Other Advanced Biofuels

0

0

0

Renewable diesel from FOG

0

0

0

Imported sugarcane ethanol

0

0

0

Domestic ethanol from waste ethanol

0

0

0

Other

0

0

0

Conventional Renewable Fuel

272

322

351

Ethanol from corn

280

330

359

Renewable diesel from palm oil

-8

-8

-8

a Electricity and CNG/LNG remain in ethanol-equivalent gallons in this table

Unlike for the comparison to the No RFS baseline, the changes in ethanol from corn
shown in Tables 3.3-1 and 2 are a function of both changes in total gasoline demand as well as
changes in the consumption of El 5 and E85. Table 3.3-3 shows the amount of ethanol that can
be attributed to each.

Table 3.3-3: Source of Ethanol Changes in Comparison to the 2022 Baseline (million

gallons)



2023

2024

2025

Changes in ethanol consumption attributable to
changes in gasoline demand

188

259

324

Changes in ethanol consumption attributable to
changes in El5 and E85 consumption

92

71

35

Total

280

330

359

We made the same adjustments and simplifications to the volume changes in comparison
to the 2022 baseline as we made to the volume changes in comparison to the No RFS baseline.
The results are shown in Table 3.3-4.

90


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Table 3.3-4: Volume Changes Analyzed for Candidate Volumes With Respect to the 2022



2023

2024

2025

CNG/LNG from biogas3

87

182

289

Electricity from biogas3

0

0

0

Diesel/jet fuel from wood waste/MSW

0

3

6

Biodiesel from soybean oil

-37

-70

-103

Biodiesel from FOG

-11

-11

-11

Biodiesel from corn oil

1

1

1

Renewable diesel from soybean oil

-130

17

24

Renewable diesel from FOG

62

115

174

Renewable diesel from corn oil

11

16

22

Ethanol from corn

280

330

359

Renewable diesel from palm oil

-8

-8

-8

a Electricity and CNG/LNG remain in ethanol-equivalent gallons in this table

3.4 2023 Supplemental Volume Requirement

As discussed in Preamble Section V, we are proposing a supplemental volume
requirement of 250 million gallons of renewable fuel that would apply in 2023, which would
complete our response to the ACE remand. Although we are proposing to require this
supplemental volume requirement in concert with the candidate volumes for 2023-2025
proposed under CAA section 211 (o) (2) (B) (ii), the 2023 supplemental volume requirement is not
proposed under our "set" authority, but rather our outstanding obligation from 2016 to
promulgate standards under CAA section 211 (o) (3) (B (i). It would in fact be an independent
requirement that is separately justified. For this reason, our analysis of the statutory factors listed
in CAA section 211 (o) (2) (B) (ii) (I) through (VI) has been focused on the candidate volumes
exclusive of the supplemental volume requirement.

The requirements of CAA section 211 (o) (2) (B) (ii) do not apply to the 250-million-gallon
supplemental volume requirement for 2023; we have not conducted an analysis of all of the
factors listed in CAA section 211 (o) (2) (B) (ii) (I) through (VI) as part of our assessment of the
appropriateness of imposing the supplemental volume requirement on obligated parties.
Nevertheless, it is both prudent and consistent with the requirements of Executive Order 12866
and Circular A-4 that we assess the costs, GHG, and energy security impacts of the 250-million-
gallon supplemental volume requirement for 2023.

In our assessment for 2023, we have projected that biodiesel and renewable diesel would
be the fuels most likely to be supplied to satisfy the 250-million-gallon supplemental volume
requirement. We also determined that there would be sufficient quantities of biodiesel and
renewable diesel available to satisfy the supplemental volume requirement beyond the quantity
of these fuels needed to satisfy the BBD, advanced biofuel, and total renewable fuel
requirements for 2023. However, it is difficult to identify the precise mix of biofuel types and
feedstocks that would make up this 250 million gallons since it would not be a segregated and
uniquely categorized pool of renewable fuel. For the purposes of analyzing its impacts, we have

91


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made the simplifying assumption that it would be composed entirely of soybean oil renewable
diesel, as we project that this is the highest cost type of biodiesel or renewable diesel available,
and therefore the fuel type that is likely to make up the marginal gallons used to satisfy the
supplemental volume requirement.

Under the No RFS baseline, there would be no supplemental volume requirement
because there would be no RFS obligations of any kind. However, under the 2022 baseline there
is in fact a supplemental volume requirement.139 As described in the 2020-2022 annual rule, we
projected that the 250-million-gallon supplemental volume requirement for 2022 would be met
with imported palm-based renewable diesel. The net result is that the 250-million-gallon
supplemental volume requirement for 2023 would result in the following changes in fuel types in
comparison to the No RFS and 2022 baselines:

Table 3.3-1: Volume Changes for 2023 Supplemental Volume Requirement (million

In comparison to No RFS baseline
Soybean oil renewable diesel
Palm oil renewable diesel

+ 147
0

In comparison to 2022 baseline
Soybean oil renewable diesel
Palm oil renewable diesel

+147
-147

a The 250-million-allon supplemental volume requirement represents ethanol-equivalent gallons. Values are
presented in physical gallons of renewable diesel, where 1 gallon of renewable diesel has the same amount of energy
as 1.7 gallons of ethanol.

139 87 FR 36900 (July 1, 2022).

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Chapter 4: Environmental Impacts

The statute requires EPA to analyze a number of environmental factors in its determination
of the appropriate volumes to establish under the set authority. This chapter discusses those
environmental factors required by the statute. Due to its close association with water quality,
which is a factor listed in the statute, we also investigated soil quality even though it is not listed
in the statute. In addition to the analysis presented here, we also considered the Second Triennial
Report to Congress on Biofuels, which provides additional information on environmental
impacts.140

4.1 Air Quality

Air quality, as measured by the concentration of air pollutants in the ambient atmosphere,
can be affected by increased production and use of biofuels. Some air pollutants are emitted
directly (e.g., nitrogen oxides (NOx)), other air pollutants are formed secondarily in the
atmosphere (e.g., ozone), and some air pollutants have directly emitted and secondarily formed
components (e.g., particulate matter (PM) and aldehydes). Health and environmental effects of
criteria pollutants and air toxics which can be impacted by biofuel use are discussed in a
memorandum to the docket.141 Air quality can be affected by emissions from combustion of
biofuels in vehicles, as well as emissions from production and transport of feedstocks,
conversion of feedstocks to biofuels, and transport of the finished biofuels. Recent dispersion
modeling has shown elevated pollutant concentrations near corn, soybean, and wood
biorefineries, which were associated with adverse respiratory outcomes.142

In addition to the type of biofuel, other factors affect air quality, including but not limited
to the blend level, the vehicle technology, emissions control technology, and operating
conditions. Overall, the impacts on air quality resulting from the biofuel volume changes due to
this rule are expected to be relatively minor and thus, provide little basis in favor of higher or
lower volumes. First, the largest volume changes are for renewable diesel, primarily produced
from soybean oil, with smaller volumes of biodiesel and renewable diesel from fats, oils, and
greases (FOG), ethanol, and biogas. Much of the increase in renewable diesel is produced at
traditional petroleum refineries that have been converted to renewable fuel production; at such
facilities the emission impact is not likely to be significant because the processes used to produce
renewable diesel are similar to processes used in the production of petroleum-based diesel. In
addition, while data on end use impacts of renewable diesel are limited, the impacts are expected
to be minor. We do not anticipate that this proposal will result in increases in emissions
associated with biogas to electricity given the already available generation capacity. It should
also be noted that, EPA's "anti-backsliding study" (ABS), required under CAA Section

140	EPA. Biofuels and the Environment: Second Triennial Report to Congress (Final Report, 2018). U.S.
Environmental Protection Agency, Washington, DC, EPA/600/R-18/195, 2018.
https://cfpub.epa.gov/si/si public record report. cfm?Lab=IU&dirHntryId=341491

141	EPA (2022). "Health and environmental effects of pollutants discussed in Chapter 4 of Regulatory Impact
Analysis (RIA) supporting proposed RFS standards for 2023-2025." Memorandum from Rich Cook to Docket No.
EPA-HQ-OAR-2021-0427, July 21, 2022.

142	Lee, E. K., Romeiko, X. X., Zhang, W. Feingold, B., Khwaja, H., Zhang, X., and Lin, S. (2021). Residential
proximity to biorefinery sources of air pollution and respiratory diseases in New York State. Environ. Sci., Technol.
55, 10035-10045.

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211 (v) (1), examined the impacts on air quality as a result of changes in vehicle and engine
emissions resulting from required renewable fuel volumes of ethanol under the RFS, relative to
approximately 2005 levels.143 Hoekman et al. (2018) also reviewed available literature on
potential air quality impacts for E10 versus E0 across the entire lifecycle.144 Both studies found
potential increases and decreases in ambient pollutant levels of pollutants, but none of them were
large, even when they considered much greater changes in ethanol volumes than are being
proposed in this rule. Finally, we cannot quantify air quality impacts of potential land use
changes associated with biogas production at this time. As discussed in Section 4.2 in this RIA,
there is considerable uncertainty concerning land use impacts of the volumes changes proposed
in this rule.

Table 3.2-3 summarizes the changes in renewable production volume assessed for this
rule. The discussion below focuses on potential impacts for these fuel/feedstock combinations.

4.1.1 Production Transport Emissions of Liquid Biofuels

Corn Ethanol

Air quality impacts of corn ethanol are associated with each step in the supply chain: (1)
agricultural feedstock production and storage, (2) feedstock transport to the biorefineiy, (3)
ethanol production at the biorefineiy, (4) ethanol distribution, blending and storage, and (5) end
use.

There is little recent literature that addresses cumulative impacts of processes upstream of
emissions from corn ethanol. A 2009 analysis using the GREET model concluded that criteria
pollutant emissions for corn ethanol production are substantially higher than for gasoline on a
mass per gasoline equivalent gallon basis.145 A significant source of upstream emissions from
corn ethanol is production facilities.146,147 Table 4.1.1-1 summarizes corn ethanol plant
emissions, using data from the 2017 National Emissions Inventory (NEI) where available.148 For
facilities not found in the 2017 NEI, we used data from the 2016 emissions modeling platform

143	EPA (2020). Clean Air Act Section 211 (V) (1) Anti-Backsliding Study.
https://nepis.epa. gov/Exe/ZyPDF.cai?Dockey=P 100ZBYl.pdf

144	Hoekman, S. K., Broch, A., & Liu, X. (2018). Environmental implications of higher ethanol production and use
in the U.S. Renewable and Sustainable Energy Reviews, 81, 3140-3158.

145	Hess P, Johnston M, Brown-Steiner B, Holloway T, de Andrade JB, Artaxo P. Chapter 10: air quality issues
associated with biofuel production and use. In: Howarth RW, Bringezu S. editors. Biofuels: environmental
consequences and interactions with changing land use. Gummersbach, Germany: 2009. p. 169-94.
https://ecommons. Cornell, edu/bitstream/handle/1813/46218/scope.l 245782010.pdf?sequence=2

146	146 epa Biofuels and the Environment: Second Triennial Report to Congress (Final Report, 2018). U.S.
Environmental Protection Agency, Washington, DC, EPA/600/R-18/195, 2018.
https://cfpub.epa.gov/si/si_public_record_report.cfm?Lab=IO&dirEntryId=341491

147	de Gouw, J. A., McKeen, S. A., Aikin, K. C., Brock, C. A., ABrown, S. S., Gilman, J. B., Graus, M., AHanisco,
T., Holloway, J. S., Kaiser, J., Keutsch, F. N., Lerner, B. M., Liao, J., Markovic, M. Z., Middlebrook, A. M., Min,
K.-E., Neuman, J. A., Nowak, J. B., Peischl, J., Pollack, I. B., Roberts, J. M., et al. (2015). Airborne measurements
of the atmospheric emissions from a fuel ethanol refinery. Journal of Geophysical Research: Atmospheres, 120(9),
4385-4397. hl:l:ps://doi.org/10.1002/2015ID023138

148	https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data

94


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version 1149 or inventory estimates using facility-level volume data from the EPA moderated
transaction system.150 Only a few plants used coal or coal in combination with other energy
sources, although the small number of wet mill plants contributed disproportionately to
emissions, especially sulfur dioxide.

Table 4.1.1-1: Pollutant Emissions (short tons) From Biodiesel and Corn Ethanol
Biorefineries in U.S. in 2017

Finished
Fuel

Number
of

Facilities

CO

NH3

NOx

PMio

PM25

S02

VOCs

Corn

Ethanol

(total)

176

7362.8

278.7

9045.5

5218.7

4088.5

1854.4

8908.7

Coal: Dry
Mill

2

75.3

0

55.8

20.7

20.0

n.a.

39.7

Coal: Wet
Mill

2

455.9

23.2

603.2

376.5

260.0

547.1

827.9

Natural
Gas: Dry
Mill

160

6389.6

246.4

7880.6

4533.5

3647.2

904.4

7560.3

Natural
Gas: Wet
Mill

3

251.8

9.0

142.2

184.5

102.7

74.7

270.5

Unknown:
Unknown

9

190.1

0.0

363.7

103.4

58.5

327.6

210.3

Biodiesel6

175

960.5

39.7

1277.0

815.7

556.2

3384.1

3987.2

Total

351

8323.2

318.4

10,322.5

6034.4

4644.6

5238.5

12,895.9

Sources: EPA 2017 NEI (https://www.epa.aov/air-eniissions-inventories/201J--national--eniissions-inventory-nei--
data) and EPA 2016 version 1 modeling platform (https://vvvvvv.epa.aov/air---eniissions---niodelina/2018vL-platfonii)

Once the ethanol is produced at biorefineries, it is transported to terminals for blending
and storage. At the blending terminal, ethanol is blended with gasoline for various fuel
combinations such as E10, El 5 or E85. The blended fuel is then sent to retail gasoline outlets
where it is sold to the customer. Primary modes of distributing ethanol to the blending terminal
and the blended fuel to the retail outlets are rail, road, or barges. Emissions come from
combustion and evaporation during transport by mobile sources, as well as evaporative losses
during storage and transport. The largest emission contribution is for VOC due to evaporation.
Table 4.1.1-2 presents emissions associated with transport. Air quality impacts associated with
changes in ethanol production and transport are expected to be primarily in the local area where
the emissions occur.151 Ambient measurements also indicate concentrations of several pollutants,

149	https://vvvvvv.epa.gov/air-eniissions-niodeling/2018vl-platfonn

150	https://www.epa.gov/fuels-registration-reporting-and-compliance-help/reporting-rfs-rin-transactions-epa-
moderated

151	Cook, R., Phillips, S., Houyoux, M., Dolwick, P., Mason, R., Yanca, C., Zawacki, M., Davidson, K.,
Michaels Harvey, C., Somers, J., Luecken, D.. 2011. Air quality impacts of increased use of ethanol under
the United States' Energy Independence and Security Act. Atmospheric Environment, 45: 7714-7724.

https://vvvvvv.sciencedirect.coni/science/article/pii/S1352231010007375

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such as NOx, formaldehyde, and SO2,, are greater directly downwind of production facilities, up
to a distance of 30 kilometers.152

Table 4.1.1-2. Emissions From Transportation of Ethanol (short tons) in 2016

CO

NH3

NOx

PM10

PM2.5

S02

voc

4,225

26

19,270

630

533

340

660,674

Source: EPA 2016 version 1 modeling platform (https://www.epa.gov/air-eniissions-modeling/2C

1.8vl-platfonn)

Using the production and transport emissions data, along with total production in 2017,
we calculated emission rates in grams per gallon for production of and transport of corn ethanol.
We then multiplied the grams per gallon emission rates by the volume impacts for this rule,
relative to the No RFS baseline (from Table 3.2-3), to estimate the impacts associated with
ethanol production and transport (see Table 4.1.1-3). In doing so, we assumed that additional
ethanol use in the U.S. is associated with ethanol production in the U.S. We describe this
assumption further in Chapter 3. However, we note that volumes used domestically could be
sourced from imports. Thus, it is unclear what overall impacts would be on domestic production
and therefore emissions. We note, moreover, that significant quantities of domestically produced
ethanol are exported and thus not used for RFS compliance; the below table does not capture
emissions related to such exports.

152 See, e.g., de Gouw, J. A., McKeen, S. A., Aikin, K. C., Brock, C. A., ABrown, S. S., Gilman, J. B., Graus, M.,
AHanisco, T., Holloway, J. S., Kaiser, J., Keutsch, F. N., Lerner, B. M., Liao, J., Markovic, M. Z., Middlebrook, A.
M., Min, K.-E., Neuman, J. A., Nowak, J. B., Peischl, J., Pollack, I. B., Roberts, J. M., et al. (2015). Airborne
measurements of the atmospheric emissions from a fuel ethanol refinery. Journal of Geophysical Research:
Atmospheres, 120(9), 4385-4397. hl:l:ps://doi.org/10.1002/2015.!D023138

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Table 4.1.1-3: Pollutant Emission Impact Estimates for Production and Transport of Corn



CO

NH3

NOx

PMio

PM2.5

S02

VOC

Biorefineiy
Emissions

7,142

270

8,775

5,062

3,996

1,798

8,643

Transport
Emissions

4,225

26

19,270

630

533

340

660,674

Total
Emissions

11,558

305

28,316

5,849

4,622

2,194

669,583

Impacts per

Million

Gallons

0.75

0.02

1.83

0.38

0.30

0.14

43.45

Ethanol3















2023

Volume

Changes

530

14

1,291

268

211

99

30,676

2024

Volume

Changes

582

16

1,420

295

233

109

33,717

2025

Volume

Changes

630

17

1537

319

252

118

36,498

a Emissions per million gallons ethanol is calculated using total domestic ethanol production in 2017 as reported in
the EIA Monthly Energy Review (15.41 billion gallons)

We also compared emission rates per energy unit produced for production of ethanol
versus gasoline, using emissions data from the 2017 NEI and production for 2017 from the EIA.
The portion of refinery emissions attributable to gasoline production was estimated using data
from GREET.153 As seen in Table 4.1.1-4, emissions per BTU produced are much higher for
ethanol than gasoline.

Table 4.1.1-4: Emissions Per Energy Unit Produced for Ethanol Versus Gasoline

Pollutant

g/mmBTU
EtOH

g/mmBTU
Gasoline

VOC

6.67

0.64

CO

5.51

0.37

NOx

6.77

0.81

PM10

3.90

0.22

PM2.5

3.08

0.20

SO2

1.39

0.09

NHs

0.21

0.04

153 Sun, P., Zhu, L. Emissions Updates for Petroleum Products in GREET 2019,
https://greet.es.anl.gov/files/petro_2019

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Biodiesel/Renewable Diesel

Although biodiesel is sourced from a variety of feedstocks, domestic soybean and
domestic FOGs made up nearly 70% of the biodiesel in 2019, with most of that being domestic
soybean. Data are lacking on emission and air quality impacts of either soybean biodiesel or
FOGs that address the feedstock production (soybean) or collection (FOGs), storage, and
transport stages. In the soybean diesel production phase, emission impacts depend on the oil
extraction method used. Mechanical expelling is the least efficient with the highest emissions of
NOx, VOCs, CO, and PM2.5, followed by hexane extraction and then enzyme assisted aqueous
extraction process (EAEP).154 Hum et al (2016) compared life cycle emissions for low sulfur
diesel (LSD), soybean-based biodiesel, and grease trap waste (GTW) based biodiesel.155 This
study relied on GREET-2014 for soybean-based biodiesel impacts.156 The study found decreases
in PM and CO (5% and 66%), but increases in NOx and SOx (10% and 39%, respectively).
However, the comparison's end use emission estimates included only pre-2007 engines.

A smaller amount of biodiesel is derived from FOG. FOGs are waste products of
processes like animal rendering. Overall, since FOG is a generally a byproduct, farming
emissions are not attributed to it, and the effects from FOGs may be expected to be much lower
than for soybean biodiesel.

Table 4.1.1-1 provides estimated emissions from biodiesel refineries in the U.S. Given
the limited impact of this rule on biodiesel production, national-scale impacts are small.
However, there could be localized impacts.

We also compared emission rates per energy unit produced for production of biodiesel
versus distillate, using emissions data from the 2017 NEI and production for 2017 from the EIA.
As seen in Table 4.1.1-5, emissions per BTU produced are much higher for ethanol than
gasoline.

154	Cheng, M., Sekhon, J. J. K., Rosentrater, K. A., Wang, T., Jung, S., Johnson, L. A. "Environmental Impact
Assessment of Soybean Oil Production: Extruding-Expelling Process, Hexane Extraction and Aqueous Extraction."
Food and Bioproducts Processing 108 (2018): 58-68.
https://www.sciencedirect.coni/science/article/abs/pii/S0960308518300014

155	Hums, M., Cairncross, R., & Spatan, S. (2016). Life-cycle assessment of biodiesel produced from grease trap
waste. Environmental Science & Technology, 50(5), 2718-2726. https://doi.org/10.1021/acs.est.5b02667

156	Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation Model: Argonne National
Laboratory: Argonne, IL, 2014. https://greet.es.anl.gov/

98


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Table 4.1.1-5: Emissions Per Energy Unit Produced for Biodiesel Versus Distillate
(g/mmBTU) in 2017		

Pollutant

g/mmBTU
Biodiesel

g/mmBTU
Distillate

voc

19.21

1.37

CO

4.63

0.84

NOx

6.15

1.49

PMio

3.93

0.44

PM2.5

2.68

0.38

SO2

16.30

0.25

NHs

0.19

0.07

While biodiesel is the predominant advanced biofuel used in diesel engines, renewable
diesel is projected to account for roughly similar increases in biomass-based diesel during the
2023 through 2025 timeframe. Much renewable diesel is produced at traditional petroleum
refineries; at such facilities the emission impact is not likely to be significant because the
processes used to produce renewable diesel are similar to processes used in the production of
petroleum-based diesel. However, there will be emission impacts from new facilities constructed
to produce renewable diesel. Reported emissions data for such facilities are extremely limited
and inadequate to draw any conclusions about potential level of impacts. Furthermore, these
emission increases may be offset by emission decreases resulting from decreased petroleum
distillate refining at other locations. Thus, given the limited research available on renewable
diesel production and end use emissions, we have not been able to quantify the air quality
impacts of the additional renewable diesel use associated with this rule.

4.1.2 End Use Emissions of Liquid Biofuels

Ethanol

After distribution to the retail outlet stations, end use at the vehicle occurs. This step
includes both evaporative losses during dispensing the fuel, and exhaust emissions from
combustion during vehicular use. Impacts of ethanol blends on vehicle exhaust emissions are the
result of complex interactions between fuel properties, vehicle technologies, and emission
control systems. Depending on the pollutant and blend concentration the impacts vary both in
direction and magnitude.

Several test programs in recent years have evaluated the impacts of fuel properties,
including those of certain ethanol blends on emissions from Tier 2 and Tier 3 compliant

99


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vehicles).157,158,159,160 However, because the projected changes in volume of ethanol resulting
from the proposal are much smaller than the total amount of fuel consumed across the country,
and given the magnitude of the changes in emission rates when burning E10 vs EO, the overall
end use impacts are expected to be small. The volume changes we are projecting are largely due
to increased use of E10. We expect only very small increases in El5 and E85 use, as we discuss
in Chapter 6.5, and thus emission changes due to increased use of these fuels are also anticipated
to be very minor.

Biodiesel

Biodiesel consists of straight-chain molecules that boil in the diesel range and typically
contain at least one double bond as well as an oxygen atom incorporated into a methyl ester
group. These chemical features can cause differences in emissions relative to petroleum diesel,
primarily when used in older engines. EPA's MOVES3 model assumes no emission impacts of
biodiesel fuel for engines meeting 2007 and later standards due to their highly efficient emission
controls. However, the model does estimate criteria pollutant emission impacts for pre-2007
engines based on data generated for B20 (20 vol%) blends of soybean-based biodiesel in
petroleum diesel (Table 4.1.2-1; EPA, 2020, Table 8-1).161 The biodiesel effects implemented in
MOVES are obtained from an analysis conducted as part of the 2010 Renewable Fuel Standard
Program.162

Table 4.1.2-1: Emission Impacts on Pre-2007 Heavy-Duty Diesel Engines for All Cycles
Tested on 20 vol% Soybean-Based Biodiesel Fuel Relative to an Average Base Petroleum
Diesel Fuel

Pollutant

Percent Change in Emissions

THC (Total Hydrocarbons)

-14.1

CO

-13.8

NOx

+2.2

PM2.5

-15.6

Renewable Diesel

157	EPA (2013a). Assessing the Effect of Five Gasoline Properties on Exhaust Emissions from Light-Duty Vehicles
Certified to Tier 2 Standards: Analysis of Data from Epact Phase 3 (Epact/V2/E-89).

158	EPA (2013b). Epact/V2/E-89: Assessing the Effect of Five Gasoline Properties on Exhaust Emissions from
Light-Duty Vehicles Certified to Tier 2 Standards - Final Report on Program Design and Data Collection.

159	Morgan, P., Lobato, P., Premnath, V., Kroll, S., Brunner, K.. Impacts of Splash-Blending on Particulate
Emissions for Sidi Engines. Coordinating Research Council (2018). http://crcsite.wpengine.coni/wp-

conl:enl:/uploads/2019/05/CRC-E-94-3 Final-Report 2018-08-28.pdf

160	Morgan, P., Smith, I., Premnath, V., Kroll, S., Crawford, R.. Evaluation and Investigation of Fuel Effects on
Gaseous and Particulate Emissions on Sidi in-Use Vehicles. Coordinating Research Council (2017).
http://crcsite.wpengine.coni/wp-content/uploads/2019/05/CRC 2017-3-21 03-20955 E94-2FinalReport-Revlb.pdf

161	EPA. Fuel Effects on Exhaust Emissions from Onroad Vehicles in MOVES3. U. S. Environmental Protection
Agency, Ann Arbor, MI, EPA-420-R-20-016. https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1010M6C.pdf

162	USEPA Office of Transportation and Air Quality. Regulatory Impact Analysis: Renewable Fuel Standard
Program (RFS2). EPA-420-R-10-006. Assessment and Standards Division, Ann Arbor, MI. February, 2010.
(Appendix A).

100


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Renewable diesel (RD) is made by hydrotreating vegetable oils or other fats or greases, a
process that removes oxygen and double bonds and produces paraffins in the diesel boiling
range. As a result, it has very high cetane and essentially zero aromatics or sulfur content.163
Given the paucity of data at the time MOVES3 was released, and the fact that RD is chemically
identical to material that already makes up a significant portion of petroleum diesel, we did not
include any emission impacts for RD blends in the model. Since we are now forecasting a
significant increase in the use of RD, it seems appropriate to include here a brief review of recent
studies looking at its emission impacts.

In 2020, McCaffery et al. compared ULSD (ultra-low sulfur petroleum diesel) to a 98.5%
RD-ULSD blend in a 2012 Chevrolet Silverado with Duramax engine.164 The study sampled
engine-out emissions to focus on the effects of the fuel itself, and ran the LA92 test cycle to
represent real-world driving as well as eight steady-state speed-load combinations for additional
data. Results for the LA92 cycle showed reductions in particulate mass and number,
hydrocarbons, and NOx for RD compared to ULSD, while the steady-state tests showed lower
hydrocarbons at all points, lower PM for six of the eight points (higher PM at two), and no
change in NOx at seven of the eight points (higher NOx at one).

In a 2015 study, Na, et al., compared RD to California ULSD and two intermediate
blends at 20% and 50% RD using a model year 2000 Freightliner truck with Caterpillar CI5
engine.165 Test conditions included the EPA Urban Dynamometer Driving Schedule (UDDS) and
the California Heavy Heavy-Duty Diesel Truck (HHDDT) cruise procedure. Results showed
reductions or no statistically significant differences in PM, hydrocarbon, and NOx across both
test conditions for RD and its blends.

Singh, et al., in a 2018 literature review, concluded that RD blends consistently reduced
particulate mass and number emissions relative to petroleum diesel.166 They observed that NOx
emission impacts were less consistent across test cycles and engine and injection technologies,
but that the majority of studies that measured NOx found a trend of reductions with RD.

A 2015 multimedia evaluation of renewable diesel prepared by staff of the California Air
Resources Board concluded that RD reduced emissions of PM, NOx, hydrocarbons, and CO in

163	Coordinating Research Council, "Combustion and Engine-Out Emissions Characteristics of a Light Duty Vehicle
Operating on a Hydrogenated Vegetable Oil Renewable Diesel", Project CRC E l 17, July 2022.

164	McCaffery, C., Karavalakis, G., Durbin, T. Johnson, K. (2020) Engine-Out Emission Charactristics of a Light
Duty Vehicle Operating on a Hydrogenated Vegetable Oil Renewable Diesel. SAE Paper 2020-01-0337.

165	Na, K., Biswas, S., Robertson, W., Sahay, K., Okamoto, R., Mitchell, A., & S., L. (2015). Impact of biodiesel
and renewable diesel on emissions of regulated pollutants and greenhouse gases on a 2000 heavy duty diesel truck.
Atmospheric Environment, 107, 307-314.

166	Singh, D., Subramanian, K.A., Garg, M.O. (2018). Comprehensive review of combustion, performance and
emissions characteristics of a compression ignition engine fueled with hydroprocessed renewable diesel. Renewable
and Sustainable Energy Reviews, 81, 2947-2954.

101


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diesel engine exhaust compared to petroleum diesel.167 They also observed that RD is likely to
reduce exhaust PAHs, a conclusion supported by Singer, et al., in a 2015 study.168

Overall, these studies suggest that emission increases of NOx are not expected with
additional RD use, while emission reductions of PM and hydrocarbons are likely. We will
continue to evaluate the need to include emissions impacts of RD in future MOVES updates as
more data becomes available on RD volumes and blend-levels in the fuel supply.

4.1.3 Biogas Electricity Emissions

As discussed in Chapter 6.1.4.1, we are projecting large increases in the use of biogas
under the RFS program in 2024 and 2025 in order to meet the proposed cellulosic biofuel
standard. However, as also discussed in Chapter 6.1.4.2, we do not anticipate that this will
require new growth in biogas to electricity until sometime after 2025. Therefore, we do not
anticipate that this proposal will result in increases in emissions associated with biogas to
electricity. Nevertheless, since we anticipate biogas to electricity will be an important aspect of
the program going forward, we believe it is important to discuss its emission impacts.

Biogas fueled electricity generation facilities (EGUs) in general are susceptible to
significant fugitive emissions, often from methane,169 though some facilities emit high levels of
other pollutants as well, as shown in Figures 4.1.3-1 through 4. Shown on a log-log plot, most
biogas EGUs may compare to coal or natural gas in terms of annual electricity production,
however they do so by producing a far greater rate of nitrogen oxide per megawatt-hour, while
generally falling below their coal and natural gas counterparts in other categories. However, their
emissions vary wildly. Their typically low electrical generation capacity typically falls below
state and federal air permitting requirements, allowing for higher emission rates, and lack of
reporting requirements. Currently, 97% of RINs generated from biogas as a feedstock come from
mostly small facilities such as landfills, agricultural digesters, or wastewater treatment plants.
We expect a similar pattern in biogas to electricity projects.

167	California EPA (2015). Staff report: Multimedia evaluation of renewable diesel.

https://ww2.arb.ca.gov/sites/default/files/2018-Q8/Renewable Diesel Multimedia Evaluation 5-21-15.pdf

168	Singer, A., Schroder, O., Pabst, C., Munack, A., Biinger, J., Ruck, W., Krahl, J. (2015). Aging studies of
biodiesel and HVO and their testing as neat fuel and blends for exhaust emissions in heavy-duty engines and
passenger cars. Fuel, 153, 595-603.

169	Inventory of U.S. Greenhouse Gas Emissions and Sinks, 2020.

102


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Figure 4.1.3-1: eGRID NOx Emissions By Source Type, 2020

>**./





'7 . »y

•1>V

¦ V \ l

v\ /'/1

.1

vj

. _*r, • k

1,0(10.8



' • 'V».	'*f "•

Annual Production (MWh)
~ Natural Gas • Coal • Biogas

Figure 4.1.3-2: eGRID SO2 Emissions By Source Type, 2020

w *"

...
V ••• •



10000



1000



100



10


-------
Figure 4.1.3-3: eGRID Methane Emissions By Source Type, 2020

100000 f

10000

100

-C

5
5

10

v «•:;

"• * • —• %•••*"/•

0.1

l|0	10.0 100.0 1,000.0 10,000.0 100,000.0 1,000,000.010,000,000.000,000,000.0

• • * ¦»

Annual Production (MWh)

• Biogas • Coal • Natural Gas

Figure 4.1.3-4: eGRID N2O Emissions By Source Type, 2020

10000

o

fNi

1000

100

10

i ••

" " • «•
»• . r * •
. • %•**••••

* **#/

* Vc•• . • - .'.r

.. >?*: ¦¦•¦•-•r.v-yifMfi-r."- •

1.0

0.1

10,0 100.0 1,000.0 JO,OOD.QLOO,OOOigOOO,OQ£CtaOO,QDI]OpDOO;000.0

0.01

0.001

Annual Production (MWh)

• Biogas • Coai • Natural Gas

The lack of data on these many small facilities makes it difficult to quantify the emission
impacts of biogas EGUs. However, they can be characterized by category using a mixture of
modelled and estimated data. We used data from the 2020 Emissions and Generation Resource
Integrated Database (eGRID), prepared by the Clean Air Markets Division of the Office of
Atmospheric Programs in the EPA. We also obtained some data from stakeholders that represent
monitored projects within the US. In California, where biogas electricity generators have been
earning credit under the LCFS since 2018, engines using biogas emit a variety of criteria
pollutants, and offer some of the best available data on emissions from EGUs powered by

104


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biogas.170 It is important to note that EGUs often contain multiple engines and/or turbines, and
that the numbers displayed in Table 4.1.3-1 represent a single turbine. Facilities can have
between 1-48 turbines or engines on site\

Table 4.1.3

Pollutant

Average
(lb/MWh)

voc

2.23

CO

6.96

NOx

1.67

SO2

0.07

PM10

0.14

CO2

1,441

: California Biogas EGU Individual Turbine Modelled Emissions3

a Results from CA GREET Model

Figure 4.1.3-5: NOx Emissions From Biogas EGUs

I BO ^

140

*

170
£ 100

J 80

0.0	50,000.0	100,000.0	150,000.0	200,000,0	250,000.0

Annual Production (MWh)

300,000,0

170 LCFS Guidance 19-06: Determining Carbon Intensity of Dairy and Swine Manure Biogas to Electricity
Pathways, https://ww2.arb.ca.gov/sites/default/files/classic/fuels/lcfs/guidance/lcfsguidance 19-06.pdf

105


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Figure 4.1.3-6: SOx Emissions From Biogas EGUs

•























•

- *











tfim'

«<% *

• •
». .

•

•	

-Jk	

•

0.0	50,000.0	100,000.0	150,000.0	200,000.0	250,000.0	300,000.0

Annual Production (MWhf

Figure 4.1.3-7: Methane Emissions From Biogas EGUs













•











p











•



































	*

•• * # %

0

I

m

0,0	50,000 0	lOG/JOO.O	150.000.0	200,000.0	250,0000	300,000,0

Annual Production {MWii)

106


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Figure 4.1.3-8: N2O Emission From Biogas EGUs













•











a











•























•

•

> >







'	¦*			

• ~

• • * V

#

#

•

0.0	SO,GOO.0	100,000.0	150,000.0	200,000.0	250,000.0	300,0000

Annual Production (MWh)

As shown in Figures 4.1.3-1 through 4, we estimate emission rates per kWh of electricity
produced for key pollutants for various biogas to electricity facilities in comparison to the rates
for natural gas and coal fired EGUs. While for the largest biogas EGUs the rates are similar, for
the vast majority of biogas EGUs, the rates are considerably higher. When it comes to overall
facility emissions, however, these higher emission rates tend to be offset by the smaller size of
biogas EGUs. Data shown in Table Figures 4.1.3-5 through 8 displays weighted averages of
natural gas, coal, and biogas EGUs against their nameplate capacity. Some of these EGUs
compare favorably against coal and natural gas plants,171 while others exceed emissions from
those plants, which can be seen in Figures 4.1.3-1 through 4.

4.1.3.1 Landfills

Landfill gas (LFG) is estimated to be 50% methane and 50% carbon dioxide and water
vapor. However, it also contains less than 1% of non-methane organic components, including
hazardous air pollutants, volatile organic compounds, and nearly 30 other hazardous air
pollutants.172 Using this gas to power gensets in turn causes the release of a variety of pollutants,
including some criteria pollutants. Some pollutants, such as sulfur dioxide, are solely based on
the sulfur content of the raw LFG, while others are based on gas usage and genset configuration.
Table 4.1.3.1-1 shows data of emissions from three different landfill biogas EGUs.173 While this
is a small sample, it nevertheless provides both an indication of the magnitude of the emissions
and the variability depending on the landfill and EGU configuration.

171	eGRID Database, Clean Air Markets Division EPA.

172	https://www.epa.gov/lmop/basic-information-about-landfill gasfmethane

173	Data derived from a CBI source provided to us by a biogas developer/electric utility company.

107


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Table 4.1.:

1.1-1: Landfill Biogas E

ataset







Annual















Annual

Power















Landfill

Production











Facility
Type

Size
(MW)

Gas Usage
(MMscf/yr)

to Grid
(MW/yr)

NOx
(tons)

CO
(tons)

voc

(tons)

S02
(tons)

PM
(tons)

Turbine

24.5

4,038.4

132,228

27.2

10.9

5.1

35.6

3.4

Engine

8

1,271.2

57,627.9

39.8

265.5

6.4

2.9

14.6

Engine

1.6

261.4

11,870.1

8.2

54.6

1.3

0.6

3.3

A broader set of emissions data modelled by the EPA Clean Air Market Division (Figures
4.1.3.1-1 through 4) is illustrative of the broad range of potential nitrogen dioxide, sulfur
dioxide, methane, and nitrous oxide emitted from landfills. The emissions modelling in eGRID
for landfills is adjusted based on the assumption that landfills would flare the gas if they did not
combust it for electricity generation. It is therefore assumed that the gas would have been
combusted in a flare and produced some amount of the pollutants tracked in eGRID.174

Figure

120
100
80

-C

> 60
O
z

40
20
0

0	50,000	100,000	150,000	200,000	250,000	300,000

Annual Production (MWh)

4.1.3.1-1: eGRID Landfill NOx Emissions Data

•















































>j,:



•









.Wis.

f •• •••



•

%

•

174 The Emissions & Generation Resource Integrated Database Technical Guide with Year 2020 Data,
https://www.epa.gov/svstem/files/documents/2022-01/egrid202Q technical guide.pdf

108


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Figure 4.1.3.1-2: eGRID Landfill SO2 Emissions Data

0.0018
0.0016
0.0014
0.0012

.c

^ 0.001

rsl

O 0.0008

-Q

0.0006
0.0004
0.0002
0

r

50,000	100,000	150,000	200,000

Annual Production (MWh)

250,000

300,000

Figure 4.1.3.1-3: eGRID Landfill Methane Emissions Data

0.2
0.18
0.16
0.14

g 0.12

S

^ 0-1

I

U

£ 0.08
0.06
0.04
0.02
0













•



























































1











• ^

> m m 9













%

•

•
•



EMI











0

50,000	100,000	150,000	200,000

Annual Production (MWh)

250,000

300,000

109


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Figure 4.1.3.1-4: eGRID Landfill N2O Emissions Data

0.02

0.018
0.016
0.014
5 0.012
§ 0.01
1 0.008
0.006
0.004
0.002
0

0	50,000	100,000	150,000	200,000	250,000	300,000

Annual Production (MWh)

4.1.3.2 Agricultural Digesters

Agricultural digesters are often under 10 MW and thus are lightly regulated by air permits.
Literature and modeling results from eGRID offer varying estimates of the amount of criteria
pollutant emissions, as seen in Figures 4.1.3.2-1 through 4.

Figure 4.1.3.2-1: eGRID Agricultural Digester NOx Emissions Data

160

140

120

g 100
2

> 80

O

2

_q 60

40
20
0

0























•































4

i















•













•



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•

•





•





•



























.0 5,000.0 10,000.0 15,000.0 20,000.0 25,000.0 30,000.0 35,000.0 40,000.0
Annual Production (MWh)













•



























































~

L «











• W











iW



%

r

•

•
•



•











110


-------
Figure 4.1.3.2-2: eCRID Agricultural Digester SO2 Emissions Data

0.00045

0.0004

0.00035

g 0.0003

2 0.00025

o 0.0002
1/1

£ 0.00015
0.0001
0.00005
0

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Annual Production (MWh)

•















































































































• 1



















• •••

•

•





•

Figure 4.1.3.2-3: eGRID Agricultural Digester Methane Emissions Data

















*















































































m 1
•• •



••••

•

•





•

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Annual Production (MWh)

Figure 4.1.3.2-4: eGRID Agricultural Digester N2O Emissions Data



0.035



0.03



0.025

g



2

0.02

O"



(N

0.015

~Z.



-O





0.01



0.005

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Annual Production (MWh)

111


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4.1.3.3 Wastewater Treatment Plants

Figure 4.1.3.3-1 through 4 contains the EPA Clean Air Market Division's modelled data
on wastewater treatment plants. These facilities have higher nameplate capacities than
agricultural digesters and tend to be located nearer to urban areas, and are therefore more often to
have their emission regulated. These facilities are most likely to also be using CHP/on-site
electricity generation as a cost savings measure as they currently supply their own operational
electricity needs.

Figure 4.1.3.3-1: eGRID Wastewater Treatment Plant NOx Emissions Data

140
120

c 100

X

g 60

-Q

~~ 40

20
0

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Annual Production (MWh)



















•



































•

¦



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tiK

•















¦ % *
••••

• •
•

















•

•









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Figure 4.1.3.3-3: eGRID Wastewater Treatment Plant Methane Emissions Data

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4.1.4 Air Quality Modeling

As mentioned at the beginning of Chapter 4.1, air quality impacts resulting from this
proposal are expected to be relatively minor. Any significant impacts are likely to be highly
localized, and thus, would likely not be captured at the geographic scale used in photochemical
air quality modeling. Thus, no air quality modeling was done. The largest impacts from this
proposal are expected to be increased use of renewable diesel and biogas for electricity.
Available data limit our ability to quantify renewable diesel impacts, and increases in biogas to
electricity emissions are not expected from this proposal. Geographic distribution of emissions
also varies, and a comprehensive evaluation of offsetting impacts is very complex. Furthermore,
to the extent that this rule is associated with reductions in imported refined petroleum products,
those upstream emissions and the adverse impacts they cause would occur in foreign countries.
Such upstream international impacts are typically considered outside the scope of an RIA or
other analysis used to support a rulemaking.

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4.2 Climate Change

CAA section 211 (o) (2) (B) (ii) states that the basis for setting applicable renewable fuel
volumes after 2022 must include, among other things, "an analysis of.. .the impact of the
production and use of renewable fuels on the environment, including on.. .climate change."

While the statute requires that EPA base its determinations, in part, on an analysis of the climate
change impact of renewable fuels, it does not require a specific type of analysis. While the
impacts of climate change include rising temperatures and sea levels, ocean acidification,
increased occurrence and intensity of wildfires and extreme weather events, and other impacts,175
these impacts are driven by changes in greenhouse gas emissions. Since the CAA requires
evaluation of lifecycle greenhouse gas (GHG) emissions as part of the RFS program, we believe
the CAA gives us the discretion to use lifecycle GHG emissions estimates as a reasonable proxy
for climate change impacts.

Our assessment of the climate change impacts of the candidate volumes relies on an
extrapolation of lifecycle analyses (LCA) of GHG emissions.176 As we did in the 2020-2022
RVO rulemaking, this approach involves multiplying LCA emissions of individual fuels by the
change in the consumption of each fuel in the candidate volumes scenario relative to the No RFS
baseline to quantify the GHG impacts. We repeat this process for each fuel (e.g., corn ethanol,
soybean biodiesel, landfill biogas CNG) to estimate the overall GHG impacts of the candidate
volumes. In the 2020-2022 RVO rulemaking, we applied the LCA estimates that we developed
in the March 2010 RFS2 rule (75 FR 14670) and in subsequent agency actions. In this
rulemaking, we are updating our approach to use a range of LCA emissions estimates that are in
the literature. Instead of providing one estimate of the GHG impacts of each candidate volume,
we provide a high and low estimate of the potential GHG impacts, which is inclusive of the
values we estimated in the 2010 RFS final rule and subsequent agency actions. We then use this
range of values for considering the GHG impacts of the candidate renewable fuel volumes that
change relative to the No RFS baseline.

This section of the DRIA discusses our evaluation of the potential effects of the candidate
volumes on GHG emissions. We start with background on our LCA of the GHG emissions
associated with biofuels since the beginning of the RFS2 program in 2010. We then discuss
advances in the modeling science since 2010, including a brief summary of currently available
models that can be used to estimate biofuel GHG emissions. We then discuss how these models
compare across a number of important characteristics. We review available biofuel LCA
estimates and make observations about why some estimates are higher or lower than others. For
example, we discuss the potential influence of model choice relative to input assumptions. Based

175	Wuebbles, D.J., D.W. Fahey, K.A. Hibbard, B. DeAngelo, S. Doherty, K. Hayhoe, R. Horton, J.P. Kossin, P.C.
Taylor, A.M. Waple, and C.P. Weaver, 2017: Executive summary. In: Climate Science Special Report: Fourth
National Climate Assessment, Volume I [Wuebbles, D.J., D.W. Fahey, K.A. Flibbard, D.J. Dokken, B.C. Stewart,
and T.K. Maycock (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, pp. 12-34, doi:
10.7930/J0DJ5CTG.

176	In this chapter, we use a range of terminology, consistent with the scientific literature, to describe the concept of
lifecycle GHG emissions. We sometimes call lifecycle GHG emissions "LCA emissions," "LCA ranges," LCA
values," "LCA estimates," "carbon intensity (CI)," or some combination of these terms. For purposes of this
discussion, the meaning of these terms is the same, namely the GHG emissions associated with all stages of fuel
production and use, including significant indirect GHG emissions.

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on our literature review, we produce a range of LCA carbon intensity estimates for each biofuel
pathway affected by the candidate volumes. We use these ranges along with the volume
scenarios discussed in Chapter 3 to produce a range of potential GHG emissions impacts.

Finally, we monetize this range of GHG emissions to produce an estimate of the monetized GHG
benefits associated with the candidate volumes.

For the final rule, we intend to conduct a model comparison exercise that will produce
new estimates of crop-based biofuel GHG emissions from multiple models to expand upon what
is already in the literature for the types of volume changes required. By running common
scenarios and aligning results, the model comparison exercise should allow us to compare model
estimates more directly, giving us further understanding of the best available science on the
GHG impacts associated with biofuels. As we consider updates to our LCA methodology, we
will consider the broad range of new science related to biofuel LCA, including the insights from
the model comparison exercise.

As discussed elsewhere in this document, the science associated with the lifecycle
assessment of biofuels is a much discussed topic. Significant analytical work has been
undertaken since EPA laid out its lifecycle methodology in the 2010 RFS rulemaking, with work
in this area continuing. For example, in October 2022, the National Academies of Science,
Engineering and Medicine published a report titled "Current Methods for Life Cycle Analyses of
Low-Carbon Transportation Fuels in the United States (2022)." This report assesses the current
methods of estimating lifecycle GHG emissions associated with transportation fuels used in a
potential national low-carbon fuels program. While this report does not endorse any particular
numerical result or model, it provides useful insights into estimations of GHG emissions over
each part of the lifecycle of a given fuel, indirect GHG emissions, and data quality and quantity.
EPA is carefully reviewing this report as it adds to the feedback EPA received on lifecycle
assessment through its LCA workshop held earlier this year. We also note the Administration, as
part of its SAF Grand Challenge, has created a workgroup between DOE, EPA, FAA, and USDA
to look at LCA methodologies and data needs specifically related to renewable aviation fuel,
which will also be a useful platform in assessing LCA capabilities and uncertainties. As EPA
uses LCA models not just for RFS analysis of program performance and feedstock assessment
but also broader policy analysis, the Agency would benefit from updating its existing set of
analytical methodologies. Data and findings from recent science and the modeling comparison
exercise will help inform EPA's specific next steps on updating its methodology as part of a
separate action.

4.2.1 Background on Renewable Fuel GHG Analysis for the RFS Program

A primary policy goal of the RFS program is to reduce GHG emissions by increasing the
use of renewable fuels such as ethanol and biodiesel. Renewable fuels composed of biogenic
carbon recently sequestered from the atmosphere reduce GHGs and mitigate climate change if
their use displaces petroleum derived fuels, provided that the full lifecycle GHG emissions
associated with biofuels do not exceed those of the displaced petroleum fuels. Depending on the
LCA of the fuel, renewable fuels can provide a substantial GHG emission reduction.

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4.2.1.1	Clean Air Act Requirements

To support the GHG emission reduction goals of EISA, Congress required that biofuels
used to meet the RFS obligations achieve certain lifecycle GHG reductions. To qualify as a
renewable fuel under the RFS program, a fuel must be produced from approved feedstocks and
have lifecycle GHG emission that are at least 20% less than the baseline petroleum-based
gasoline and diesel fuels.177 The CAA specifically defines the term "lifecycle greenhouse gas
emissions" to mean "the aggregate quantity of greenhouse gas emissions (including direct
emissions and significant indirect emissions such as significant emissions from land use
changes), as determined by the Administrator, related to the full fuel lifecycle, including all
stages of fuel and feedstock production and distribution, from feedstock generation or extraction
through the distribution and delivery and use of the finished fuel to the ultimate consumer, where
the mass values for all greenhouse gases are adjusted to account for their relative global warming
potential."178 In the March 2010 RFS2 rule (75 FR 14670), EPA interpreted the provision
"including direct emissions and significant indirect emissions" as requiring our LCA to consider
the consequential, or market-mediated, impacts of increased demand for renewable fuels.

Indirect emissions, by definition, cannot be directly measured in the way that direct emissions
can be calculated. Indirect emissions result from changes in prices (e.g., agricultural
commodities or petroleum prices) that ripple through the economy. For example, if increased
consumption of renewable fuel in the U.S. diverts U.S. exports of corn from the global markets,
the market-mediated impact could be for other countries, such as Argentina, to produce more
corn to supply the global demand for cereal grains. While all of the corn used to produce ethanol
in the scenario may have been grown in the U.S., the land use changes emissions in Argentina
would be considered "indirect" land use change emissions. Other examples of market-mediated
impacts include changes in livestock production that result from increased production of
renewable fuel co-products such as soybean meal. If the increased production of soybean meal
leads to a decrease in feed prices for cattle, an indirect impact could include the increased
production of beef.

While the term "significant indirect emissions" requires some analytical judgement, prior
modeling work has indicated that the indirect impacts from land use change, livestock, and crop
production can result in emissions that can have a large impact on the lifecycle analysis.
Therefore, to be consistent with the CAA requirements, our lifecycle analysis must take into
account global agricultural and livestock markets, since many biofuel feedstocks use globally
traded commodities. In addition, the increasing interdependence of the energy and agricultural
markets suggests that capturing indirect energy sector impacts could have important implications
for lifecycle analysis. We consider these statutory requirements when describing the differences
in modeling frameworks in Chapter 4.2.2.7.

4.2.1.2	Lifecycle Analysis Under the RFS Program

As part of the March 2010 RFS2 rule, EPA estimated lifecycle GHG emissions of
different biofuel production pathways; that is, the emissions associated with the production and
use of a biofuel, including indirect emissions, on a per-unit energy basis. At the time of the

177	See 42 USC 7545(o)(l), (2)(A)(i).

178	See 42 USC 7545(o)(l)(H).

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analysis for the 2010 RFS2 rule, there were no models available off the shelf that could perform
the type of lifecycle analysis required by EISA. Thus, EPA developed a new modeling
framework to perform the required analysis. The framework we developed used multiple models
and data sources.179 We used the Forest and Agricultural Sector Optimization Model with
Greenhouse Gases model (hereinafter referred to as "FASOM") and the FAPRI-CARD model
(Food and Agricultural Policy Research Institute international model; hereinafter referred to as
"FAPRI") developed at the Center for Agriculture and Rural Development at Iowa State
University. We ran aligned scenarios in both models and used FASOM to estimate domestic
agricultural and forestry sector impacts, and the FAPRI model to estimate international
agricultural sector impacts. Our framework included data from many other sources, including
emissions factors and other data from the GREET model (see below for a description of
GREET). We proposed this new framework for public comment, organized four peer reviews of
different aspects of it and held a public workshop. Based on all of this input we refined the
modeling for the final March 2010 RFS2 rule. We also estimated the uncertainty associated with
the land use change satellite data and emissions factors used in our analysis. The framework we
developed in 2010 used the best science, data and models available at the time.

Since the 2010 RFS2 rule, we have used the RFS2 modeling framework to conduct
numerous (over 140) analyses of new pathways and their lifecycle GHG emissions. Based on
these analyses, we have approved additional pathways for participation in the RFS program.
These pathways rely on novel feedstocks (e.g., canola oil, grain sorghum, camelina oil,180
distillers sorghum oil181) and novel production processes involving existing feedstocks (e.g.,
catalytic pyrolysis and upgrading of cellulosic biomass,182 gasification and upgrading of crop
residues183). EPA maintains a summary of lifecycle greenhouse gas intensities estimated for the
Renewable Fuel Standard program, which are available in spreadsheet form in a document titled
"Summary Lifecycle Analysis Greenhouse Gas Results for the U.S. Renewable Fuels Standard
Program."184 Our lifecycle analyses of various pathways are also published online.185 A list of
pathways that have been approved by regulation can also be found at 40 CFR 80.1426(f)(1).

Depending on the renewable fuel, the feedstocks used to produce it, the amount of fossil
energy used in growing the feedstocks and producing the fuel, land use change and associated
agricultural emissions, and other factors, the GHG emission reductions will vary considerably. In
general, we have found that renewable fuels that are not expected to have significant impacts on

179	EPA (2010). Renewable fuel standard program (RFS2) regulatory impact analysis. Washington, DC, US
Environmental Protection Agency Office of Transportation Air Quality. EPA-420-R-10-006. Chapter 2.4.

180	March 2013 Pathways I rule. 78 FR 14190. ittps://www. epa.gov/renewable-fuel-standard-prograni/final-rule-
additional-qualifying-renewable-fuel-pathways-under

181	August 2018 sorghum oil rule. 83 FR 37735. https://www.gpo.gov/fdsys/pkg/FR-2018-08-02/pdf/2Q18-

18248.pdf

182	March 2013 Pathways I rule. 78 FR 14190. ittps://www. epa.gov/renewable-fuel-standard-prograni/final-rule-
additional-qualifying-renewable-fuel-pathways-under

183	"San Joaquin Renewables Fuel Pathway Determination under the RFS Program." May 11, 2020.
https://www.epa.gov/renewab1e-fue1-standard-prograni/san-joaquin-renewab1es-approva1

184	ThLs document Is available on EPA's website at: https://www.epa.gov/fue1s-registration-reporting-and-
conipliance-help/1 ifecycle-greenhouse-gas-results. This summary is also available in docket EPA-HQ-OAR-2021 -
0324.

185	See https://www.epa.gov/renewab1e-fue1-standard-program/approved-pathways-renewab1e-fue1 and
https://www.epa.gov/renewab1e-fue1-standard-prograni/other-actions-renewab1e-fue1-standard-program

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land use, such as fuels produced from wastes, residues, or by-products, have greater GHG
emission reductions than renewable fuels produced from crops intended to be used as feedstock
for renewable fuel production. For instance, with respect to biodiesel and renewable diesel
production, the use of waste fats, oils, and greases (FOG) as feedstocks typically results in lower
lifecycle GHG emissions compared to use of vegetable oils, such as soybean or canola oil.186 In
addition, most cellulosic biofuels—which are required to meet the highest statutory lifecycle
GHG reduction threshold of 60%—are currently produced from wastes, residues, or by-products,
including landfill biogas.187

Since the existing LCA methodology was developed for the March 2010 RFS2 rule, there
has been more research on the lifecycle GHG emissions associated with transportation fuels in
general and crop-based biofuels in particular. New models have been developed to evaluate
biofuels and more models have been developed for other purposes have been modified to
evaluate the GHG emissions associated with biofuel production and use. There has also been
rapid growth in available data on land use, farming practices, crude oil extraction and many other
relevant factors. While our existing LCA estimates for the RFS program remain within the range
of more recent estimates, we acknowledge that our previously relied on biofuel GHG modeling
framework is comparatively old and an updated framework is needed. Accordingly, EPA has
initiated work to develop a revised modeling framework of the GHG impacts associated with
biofuels. In consultation with our interagency partners at USDA and DOE, we hosted a virtual
public workshop on biofuel GHG modeling on February 28 and March 1, 2022.188 At this
workshop, speakers within and outside of the federal government presented on available data,
models, methods, and uncertainties of assessing the GHG impacts of land-based biofuels.

In response to the public docket we opened for the workshop, we received approximately
30 comments, with the majority coming from industry representatives.189 A large majority of the
comments expressed support for the workshop. Many comments asked EPA to change the way it
models biofuel GHG emissions, with updated data and/or a different model or combination of
models. Most of these latter commenters asked EPA to consider using The Greenhouse Gases,
Regulated Emissions, and Energy Use in Technologies Model (GREET), though at least one
commentor asked EPA to maintain its current model structures. Several other commenters asked
EPA to consider applying a risk-based approach when considering biofuel targets and pathway
approvals. Other commenters pointed to the importance of using real-world data. All of the
commenters supported ongoing engagement with EPA on the topics discussed during the
workshop.

186	According to EPA's assessment biodiesel produced from yellow grease has lifecycle GHG emissions of 13.8 kg
CChe/mmBTU while biodiesel produced from soybean oil and canola oil have lifecycle GHG emissions of 42.2 kg
CChe/mmBTU and 48.1 kg CChe/mmBTU respectively. See https://www.epa.gov/fue1s-registration-reporting-arid-
coiiipliance-help/1 ifecvcle-greenhouse-gas-results.

187	According to data from EMTS in 2020 over 92% of all cellulosic biofuel RINs were produced from biogas from
landfills or biogas from municipal wastewater treatment facilities. An additional 7% of cellulosic biofuel was
produced from agricultural residues or biogas from agricultural digesters.

188	For more information see the Federal Register Notice, "Announcing Upcoming Virtual Meeting on Biofuel
Greenhouse Gas Modeling." 86 FR 73756. December 28, 2021. More information is also available on the workshop
webpage: https://www.epa.gov/renewable-fuel-standard-prograni/workshop-btofuel-greenhouse-gas-modeling.

189	Docket number: EPA-HQ-OAR-2021-0921

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Based on the workshop presentations and public input, it is clear that there continues to
be significant uncertainty and a wide range of estimates on the climate effects of biofuels,
especially when it comes to biofuel-induced land use change emissions. Uncertainties in land use
change emissions estimates stem from both economic modeling of market-mediated effects as
well as biophysical modeling of soil carbon and other biological systems. The workshop
proceedings, including the workshop presentations and the comments submitted to the workshop
docket, touch on a broad and complex set of topics. A general theme that emerged from this
process is that, in support of a better understanding of the lifecycle GHG impacts of biofuels, it
would be helpful to compare available models, identify how and why the model estimates differ,
and evaluate which models and estimates align best with available science and data. The rest of
this section makes progress in this direction by reviewing available models and published LCA
estimates. To further explore the differences between the available models, for the final rule we
intend to conduct new modeling and compare the results.

4.2.2 Review of Available Models for Renewable Fuel GHG Analysis

There are many factors that influence biofuel GHG estimates, including model
framework choice, data inputs and assumptions and other methodological decisions. In this
section we discuss available models. To the extent possible based on available information, we
also discuss how the data and assumptions used in these models influence the biofuel GHG
estimates they produce. The February 2022 biofuel GHG modeling workshop included
presentations on five models (The Greenhouse Gases, Regulated Emissions, and Energy Use in
Technologies Model (GREET), Global Biosphere Management Model (GLOBIOM), Global
Change Analysis Model (GCAM), Global Trade Project (GTAP), and Applied Dynamic
Analysis of the Global Economy (ADAGE) used for biofuel GHG analysis. In this section we
provide a summary of each of these models including their history, sectoral representation,
spatial coverage and resolution, temporal representation, and GHG emissions representation.

This selection of models provides a broad cross-section of the most common types of modeling
frameworks used to assess biofuels, as discussed in the following paragraph. We chose to
highlight these models based on discussions with our partners at USDA and DOE and our
experience reviewing scientific literature on the lifecycle GHG emissions of biofuels. In
addition, our choice to highlight these particular models is also informed by the statutory
requirement to evaluate significant indirect emissions, including indirect land use change
emissions. Furthermore, we are guided by our decision in the 2010 RFS2 rule to include
significant indirect emissions occuring anywhere in the world (i.e., international impacts) given
that GHG emission impacts are global. We also include a brief summary of other models that
have been used for biofuel analysis. Models that exclude indirect emissions or are limited in
geographic scope receive less attention in our review, except insofar as they can inform a broader
analysis that meets the statutory requirements. We then compare the characteristics of all of these
models and make some observations about what may be contributing to the different biofuel
GHG estimates they have produced. Our goal is not to provide a comprehensive accounting of
any one of these models or the differences between them. Rather, our objective is to summarize
each model at a high level and highlight some of the differences between them that we intend to
explore further as part of the model comparison exercise for the final rule.

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There are four general types of models commonly used for biofuel GHG analysis:
lifecycle inventory (LCI) models, partial equilibrium (PE) models, computable general
equilibrium (CGE) models and integrated assessment models (IAM). LCI models, such as
GREET, are designed to estimate in detail the inputs and outputs of a product supply chain, using
rule-based methods (i.e., allocation or displacement) to account for co-products. PE models, such
as GLOBIOM,190 equate supply and demand in one or more markets such that prices stabilize at
their equilibrium level. PE models offer highly detailed representations of one or a few sectors of
the economy, such as the agricultural sector, but lack linkages to other sectors of the economy. In
contrast, CGE models, such as GTAP and ADAGE, are comprehensive in their representation of
the economy, reflecting feedback effects among all economic sectors and factors of production,
such as capital and labor. IAMs, such as GCAM, integrate knowledge from several disciplines,
for example, biogeochemistry, economics, engineering, and atmospheric science, to evaluate
how changes in any of these areas affect the others. While it is hard to state the specific criteria
for identifying an IAM, we might distinguish them from PE and CGE models by their deeper
integration of human economic systems with Earth (biosphere and atmosphere) systems and
GHG emissions into one modelling framework. LCI models, such as GREET, are designed to
estimate in detail the inputs and outputs of a product supply chain, using rule-based methods
(i.e., allocation or displacement) to account for co-products. PE, CGE and IAM models can all be
called economic models. LCI models are categorically different from the other three model types
as they do not simulate economic behavior or prices. Across the four model types there tends to
be a tradeoff between scope and detail, which are discussed in more detail in section 4.2.2.7.

4.2.2.1 The GREET Model

The Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET)
Model is a lifecycle analysis model. It provides well-to-wheels lifecycle energy, water, GHG,
and other air emissions results intended to evaluate the impacts of various vehicle and fuel
combinations. The developer is Argonne National Laboratory (ANL), and the project is
sponsored by the U.S. Department of Energy (DOE). Initially made available in 1995, it was
developed with the purpose of evaluating the energy and emission impacts of new fuels and
vehicles for use in the transportation sector.191

GREET includes a suite of models and tools. It includes a fuel cycle model of vehicle
technologies and transportation fuels (GREET 1) and a vehicle manufacturing model of vehicle
technologies (GREET2). Given that our focus is on renewable fuels, we are primarily concerned
with GREET1. GREET is available in two platforms, a large Excel workbook and a ".net"
version. The Excel version of GREET provides transparency while the .net version offers a
modular user interface with a structured database. There are several derivates of the core GREET
model, such as CA-GREET developed with the California Air Resources Board (CARB) and
used in support of the California Low Carbon Fuels Standard (CA-LCFS), and ICAO-GREET
developed with the International Civil Aviation Organization in support of the Carbon Offsetting
and Reduction Scheme for International Aviation (CORSIA). New versions of GREET are

190	The FASOM and FAPRI models EPA used for the March 2010 RFS2 rule biofuel GF1G analysis are also
categorized as PE models.

191	Elgowainy, A. and Wang, M. (2019) 'Overview of Life Cycle Analysis (LCA) with the GREET Model', p. 21.
Available at: https://gfeet.es.anl.gov/files/workshop 2019 overview.

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released in October of each year, with the latest version as of the time of this writing being
GREET-2021. GREET includes more than 100 fuel production pathways including fuels used in
road, air, rail, and marine transportation. It also examines more than 80 on road vehicle/fuel
systems for both light and heavy-duty vehicles. The model reports lifecycle energy use, air
pollutants, GHGs and water consumption. It includes detailed representations of the petroleum,
electric, natural gas, hydrogen, and renewable energy sectors.

The GREET modeling framework is a process-based LCA approach (sometimes referred
to as attributional LCA).192 GREET can be used to estimate the carbon intensity of individual
supply chains and the benefits of specific supply chain adjustments, such as reducing fertilizer
application rates or switching to more efficient fuel distribution modes. Fundamentally, GREET
is most closely related to other lifecycle inventory (LCI) models such as SimaPro, GaBi, and
OpenLCA. In general, GREET assumes that additional production of a fuel commodity entails a
linear increase in the activities from the associated supply chain with no market-mediated effects
on other supply chains or economic sectors (e.g., diverting certain crops to biofuels may lead to
new or more land area devoted to agriculture, increased use of fertilizers in addition to other
energy inputs, and higher food or feed prices that in turn change what agricultural products are
consumed by both people and livestock). Figure 4.2.2.1-1 provides a schematic overview of how
the biofuel lifecycle is represented in GREET. GREET can be used to estimate the carbon
intensity of individual supply chains and the benefits of specific supply chain adjustments, such
as reducing fertilizer application rates or switching to more efficient fuel distribution modes.

Figure 4.2.2.1-1: Schematic of Biofuel Supply Chain Representation in GREET193

¦*	Fuel Production (Well to Pump)	~

GREET primarily estimates fuel carbon intensities using data for average resource and
energy production in the United States. For example, GREET by default models electricity based

192	Wang, M. (2022). "Biofuel Life-cycle Analysis with the GREET Model." Presentation at the EPA Biofuel
Modeling Workshop. Argonne National Laboratory. March 1, 2022.

https://www.epa.gov/svstem/files/documents/2022-03/biofuel ghg-model-workshop-biofuel-lifecvcle-analvsis-
greet-model-2022-03-01.pdf. Slide 5.

193	Copied from Wang (2022), slide 9.

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on data for average U.S. electricity generation. However, GREET includes some pathways
representing foreign fuel production (e.g., Brazilian sugarcane ethanol) and in some cases users
can choose to model some supply chains located in particular regions of the U.S. (e.g., states or
electricity grid regions). A user with enough data on their supply chain could in certain cases
customize GREET to estimate the carbon intensity of their fuel considering regional details and
particular suppliers of energy and material inputs.

In general, GREET is not a dynamic or temporal model. Specifically, GREET does not
take into account significant indirect emissions associated with increased biofuel demand, such
as through market-mediated impacts on the agriculture, livestock, or energy sectors. GREET
accounts for important biofuel co-products such as distillers grains and soybean meal through
allocation or displacement rules. Furthermore, GREET is designed to estimate the carbon
intensity of a fuel in a particular year, not modeling cascading changes across the economy and
annualizing that stream of associated emission changes over time. However, the input data can
be customized to estimate carbon intensities in any given year. Thus, it can be used to show how
the estimated carbon intensity of a fuel changes over time based on changes in technological
efficiency and other factors. For example, Lee et al. (2021) used data on U.S. ethanol production
efficiencies and corn yields to estimate the carbon intensity of U.S. corn ethanol each year from
2005 to 2019.194

Although GREET does not endogenously estimate indirect emissions such as those
resulting from indirect land use change, GREET incorporates a static module called the Carbon
Calculator for Land Use Change from Biofuels Production (CCLUB) to account for indirect land
use change emissions.195 The opposing terms "static" and "dynamic" are used in different ways
in modeling literature. In this instance, we describe CCLUB as a static module because it
estimates land use area changes for one time period based on simulations with the GTAP-BIO
model (discussed more below). In contrast, dynamic models, such as GCAM and GLOBIOM
(discussed below), simulate land use changes and resulting GHG emissions over multiple
decades. CCLUB relies on a selection of land use change estimates from GTAP-BIO studies
conducted between 2011-2018 (see Table 4.2.2.1-1), combined with emissions factors from
other sources to estimate land use change GHG emissions per unit of biofuel production.196
Thus, the well-to-wheel emissions for crop-based pathways are estimated as the process-based
emissions plus the induced land use change estimates from CCLUB. The data sources and
calculations in CCLUB are summarized in Figure 4.2.2.1-2, reproduced from the CCLUB user
manual.

194	Lee, U., et al. (2021). "Retrospective analysis of the US corn ethanol industry for 2005-2019: implications for
greenhouse gas emission reductions." Biofuels, Bioproducts and Biorefining.

195	Dunn, J. B., et al. (2017). Carbon calculator for land use change from biofuels production (CCLUB) users'
manual and technical documentation, Argonne National Lab, Argonne, IL.

196	Hoyoung Kwon and Uisung Lee (2019) 'Life Cycle Analysis (LCA) of Biofuels and Land Use Change with the
GREET Model'. Available at: https://greet.es.an1.gov/fi1es/workshop 2019 biofuel luc.

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Figure 4.2.2.1-2: Schematic of Data Sources and Calculations in CCLUB197

Models & Data
Sources

Output

CCLUB
Calculations

Results

Domestic &
International

Domestic
Only

Parameterized
CENTURY

GTAP

Biofue) production
scenarios

land transitions by area *r>d
type







Winrock &
Woods Hole
Datasets



Abowigrotmd carbon
stocks (for forest ancfcr
grassland)

lielowground or soil carbon
stocks



Adjust US forest area baseline
with US Forest Service data

Carton emission factors

LUC scenarios

LMC scenarto*

Carbon Online
Estimator





Beiowground or soil carbon

stocks

Abovegrourtd carbon
stocks (only Cot for«st)

IPCC NjO emission factors

IPCC CH« emission factors —

So»l carton emission factors

N,0 emission factors

Carbon tfflltSbn fatlori of
Harvested wood product

<3HG emissions (g CO^e'MJ)
by combining la^d arsa
changes with emissions
factors arid applying
assumptions

Soil carboo emissions

{& C03ertij)

by- applying assumptions

Spatial coverage

County
AEZ
CountTv/Biomc

CCLUB includes land use change area estimates from nine different GTAP-BIO
scenarios: four soy biodiesel shocks, two corn ethanol shocks, and one shock each for ethanol
from corn stover, miscanthus and switchgrass. The corn ethanol and soy biodiesel scenarios
included in CCLUB are described in Table 4.2.2.1-1. The two corn ethanol scenarios are similar
except that the "Corn Ethanol 2013" estimate was produced with a version of GTAP-BIO with
regionally differentiated land transformation elasticities and a modified land nesting structure to
that makes it more costly within the model to convert forest to cropland relative to converting
pasture to cropland.

197 Kwon, Hoyoung, Liu, Xinyu, Dunn, Jennifer B., Mueller, Steffen, Wander, Michelle M., and Wang, Michael.
(2020). Carbon Calculator for Land Use and Land Management Change from Biofuels Production (CCLUB). United
States: N. p., 2020. Web. doi: 10.2172/1670706. Copy of Figure 1.

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Table 4.2.2.1-1: Corn Starch and Soybean Oil Based Biofuel Scenarios Modeled in
CCLUB198

Case Description

Shock Size
(Billion
Gallons)

Source

"Corn Ethanol 2011." An increase in corn ethanol
production from its 2004 level (3.41 billion gallons
[BG]) to 15 BG

11.59

Taheripour et al.

(2011)199

"Corn Ethanol 2013." An increase in corn ethanol
production from its 2004 level (3.41 billion gallons
[BG]) to 15 BG

11.59

Taheripour and
Tyner (2013)200

Increase in soy biodiesel production by 0.812 BG
(CARB case 8)

0.812

Chen et al.
(2018)201

Increase in soy biodiesel production by 0.812 BG
(CARB average proxy)

0.812

Chen et al. (2018)

Increase in soy biodiesel production by 0.8 BG
(GTAP 2004)

0.8

Taheripour et al.
(2017)202

Increase in soy biodiesel production by 0.5 BG
(GTAP 2011)

0.5

Taheripour et al.
(2017)

For each case, the estimates CCLUB uses from GTAP-BIO are the area of changes in
cropland, forest, pasture in each agro-ecological zone (AEZ) and region, and cropland pasture in
the U.S. and Canada. Land use change GHG emissions are estimated based on these land
conversion areas using data from a few different sources. Based upon user selections, CCLUB
ultimately combines a given GTAP scenario's expected land use change impacts with the user-
selected emission factor data to provide domestic and international GHG emissions per
functional unit of analyzed biofuel to GREET as the land use change emissions component for a
given biofuel of interest.

A module called the Feedstock Carbon Intensity Calculator (FD-CIC) was recently added
to GREET.203 FD-CIC is designed to examine carbon intensity variations of different corn,
soybean, sorghum, and rice farming practices at the farm level. The FD-CIC uses county level
data and allows users to input their own farm level data on energy and chemical farming inputs,
tillage, cover cropping and other crop management practices. Based on these input data, the FD-

198	Adapted from Table 1 in Dunn, J. B., et al. (2017). Carbon calculator for land use change from biofuels
production (CCLUB) users' manual and technical documentation, Argonne National Lab.(ANL), Argonne, IL
(United States).

199	Taheripour, F., et al. (2011). Global land use change due to the U.S. cellulosic biofuels program simulated with
the GTAP model, Argonne National Laboratory: 47.

200	Taheripour, F. and W. E. Tyner (2013). "Biofuels and land use change: Applying recent evidence to model
estimates." Applied Sciences 3(1): 14-38.

201	Chen, R., et al. (2018). "Life cycle energy and greenhouse gas emission effects of biodiesel in the United States
with induced land use change impacts." Bioresource Technology 251: 249-258.

202	Taheripour, F., et al. (2017). "The impact of considering land intensification and updated data on biofuels land
use change and emissions estimates." Biotechnology for Biofuels 10(1): 191.

203	Liu, X., et al. (2020). "Shifting agricultural practices to produce sustainable, low carbon intensity feedstocks for
biofuel production." Environmental Research Letters 15(8): 084014.

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CIC estimates the farm level emissions from energy, fertilizers, herbicide, and insecticide, as
well as effects on soil organic carbon relative to the baseline assumptions in GREET. The FD-
CIC may be useful to estimate the soil carbon benefits of reduced tillage and cover cropping, and
to examine regional differences in feedstock carbon intensity.

GREET is used by a variety of academic, commercial, and government users.

California's Low Carbon Fuel Standards (LCFS) program relies in part on a customized version
of GREET called CA-GREET to provide state-specific fuel pathways and carbon intensity
values.204 Oregon uses a similar approach for their LCFS program.205 The International Civil
Aviation Organization (ICAO) used GREET among several models to provide carbon intensities
for specific aviation fuel pathways.206 Most of these programs use the non-land use change GHG
estimates from GREET and add their own land use change estimates instead of those derived
from CCLUB to calculate biofuel carbon intensities. Among other applications, EPA has used
GREET since the inception of the RFS program to provide data for rulemakings and pathway
support as part of our suite of tools in addition to FASOM and FAPRI.

4.2.2.2 The GLOBIOM Model

The Global Biosphere Management Model (GLOBIOM) was developed and continues to
be managed by the International Institute for Applied Systems Analysis (IIASA). The model was
developed in the late 2000s originally to conduct impact assessments of climate change
mitigation policies of biofuels and other land-based efforts.207 It was developed on the basis of
the U.S. Forest and Agricultural Sector Optimization Model (FASOM model).208 There are
several model versions of GLOBIOM available for different contexts. A sample of GLOBIOM
code is available to the public, and an open source version is in the works.209

204	California Air Resources Board. LCFS Life Cycle Analysis Models and Documentation. Available at:
https://ww2.arb.ca.gov/resources/docunients/lcfs-Hfe-cycle-analysis-models-and-documentation (Accessed: 29 April
2022).

205	Oregon Department of Environmental Quality. Carbon Intensity Values: Oregon Clean Fuels Program. Available
at: https://www.oregon.gov/deq/ghgp/cfp/Pages/Clean-Fuel-Pathways.aspx (Accessed: 29 April 2022).

206	ICAO. Models and Databases. Available at: https://www.icao.int/environniental-protection/pages/modeinng-and-
d cUb h ases.a s p x (Accessed: 29 April 2022).

207	International Institute for Applied Systems Analsyis, "GLOBIOM,"
https://previous.iiasa.ac.at/web/home/research/GLUBIUM/GLUBIUM.html.

208	Frank, Stefan, et al. "The Global Biosphere Management Model,"

https://www.epa.gov/systeni/files/docunients/2022-03/biofuel-ghg-niodel-workshop-global-biosphere-nignit-niodel-
2022-03-01.pdf. And, Valin, Hugo et al. The Land Use Change Impact of Biofuels Consumed in the EU:
Quantification of Area Greenhouse Gas Impacts. August 27, 2015, pg. 128.

https://ec.europa.eu/energy/sites/ener/files/docunients/Final%20Report GLOBIOM publication.pdf

209	See, GLOBIUM, "Model Code," https://iiasa.github.io/GLOBIOM/model code.html.

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Figure 4.2.2.3-1: GLOBIOM Regional Mapping"10

GLOBIOM is a PE model that captures the agricultural, forest, and bioenergy sectors.
The model solves recursively dynamic using a spatial equilibrium modeling approach with
detailed grid cell coverage. The model finds market equilibriums that maximize the sum of
producer and consumer surplus subject to resource, technological, demand and policy
constraints. Producer surplus is defined as the difference between market prices at a regional
level and the product's supply curve. The supply curve takes into account labor, land, capital and
other purchased input. Consumer surplus is based on the level of consumption of each market
and is arrived at by integrating the difference between the demand function of a good and its
market price. The model uses linear programming to solve, although it also contains some non-
linear functions that have been linearized using stepwise approximation.211 The global trunk
version of the model features global coverage with 37 regions (see Figure 4.2.2.3-1) and
simulates for the years 2000-2100 using ten-year time-steps. As a PE model, GLOBIOM does
not have feedback from labor, capital, or other parts of the economy, however, the model can be
linked to other models, such as IIASA's energy sector model MESSAGE.

210IIASA. (2020). "GLOBIOM regional and country level modeling." SUPREMA GLOBIOM-MAGNET Training.
December 4, 2020. https://iiasa.github.io/GLOBIOM/training material/GLOBIOM/GLOBIOM
Topic RegionalApplications APalazzo Nov2020.pdf
211 IIASA, "GLOBIOM Documentation_20180604.pdf,"
https://iiasa.github.io/GLOBIOM/GLOBIOM Documentation 20180604.pdf.

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Figure 4.2.2.3-2: Schematic Overview of the GLOBIOM Model212

~D
C
TO

E
o

a}
J*
k.

TO

s

c
o

u
3
T3
O

OJ
1/1

=3

TD
C
TO



Food

Fibers Energy

Industry



1
t

1 - _



MARKET & TRADE: EU + WORLD PRICES

i

ewe

Crop model

RUMINANT

Digestibility model

BIOCNERGY
Processing

G4M
Global Forest model

World wide:
18 crops (FAO *5PAMJ
Management systems:
low/high input® irrigated

EU28:
9 additional crop^
crop rotati-ons.
Management opOons
fertiliser, irrigation & tillage

-> Feed intake
-> Animal production
GHG emissions

7 animate
If AO t  MJ bfofuel
-> MJ bioelectric
-> Coproducts

*4 Harvestabie wood
Harvesting costs

Perennial crop*
Short rotation topples

Conversion technologies
Rrat generation biofuels
Second generation
blofuals

Biamass power plants

Short .rotation

Down scaled F AO FftA at
grid level

Area
Carter stcci
Age
TniasiW
Species

Rotation time
Thinrvng

Grtdded representation of world land use

Managed forest

Natural
forest.

Other
natural land

The detailed grid-cell level coverage for GLOBIOM includes more than 10,000 spatial
units worldwide. The model represents 18 crops globally using FAOSTAT as the primary
database for crop statistics. Crop modeling includes differentiation in management systems and
multi-cropping.

GLOBIOM also features highly detailed livestock representation, based on FAOSTAT
data. The model includes 7 animals, which can be raised on differentiated production systems.
For ruminants there are 8 production system possibilities, including grazing systems in different
climatic locations such as arid and humid, mixed crop-livestock systems, and others. Pigs and
poultry are classified under either small holder or industrial systems. Based on the production
system, animal species, and region, GLOBIOM differentiates diets, yields, and GHG emissions.
For instance, dairy and meat herds are modeled separately and their diets are differentiated.
Poultry in industrial systems is split into laying hens and broilers, again with different dietary
needs.

Apart from monogastrics, livestock production is modeled spatially in GLOBIOM's
gridded cell structure. At the cell level, animal yields for bovine and small ruminants are

212IIASA. GLOBIOM Online Documentation. https://iiasa.github.io/GLOBIOM/introduction.html

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estimated using the GLOBIOM module, RUMINANT. RUMINANT calculates a production
yield that matches plausible feed rations and checks this against regional-level data of livestock
production. Feed for animals is also differentiated in the RUMINANT model and can be
composed of feed crops, grass, stover, and other feed. Monogastric productivities are calculated
based on FAOSTAT and assumptions of potential productivities of smallholder and industrial
systems. Livestock production is allowed to intensify or extensify thereby altering the amount of
feed or grass consumed.213 Since for ruminants this is modeled spatially, any changes in
grassland consumed due to changes in production systems, animal type, yield, and GHGs is
captured in the spatially-relevant areas. Each final livestock product is considered a
differentiated good with its own specific market (apart from bovine and small ruminant milk).

Forestry in GLOBIOM is captured through the G4M module214 and includes detailed
representation of the sector and its supply chain and a differentiation between managed and
unmanaged forest areas. GLOBIOM includes bilateral trade for agricultural and wood products.
These products are assumed to be homogenous and traded based on least expensive production
costs though transportation costs and tariffs are also included.

The model also includes a bioenergy sector with first and second generation biofuels and
biomass power plants. Perennial crops and short-rotation coppice are included as inputs to the
bioenergy sector. In 2014, GLOBIOM added biofuel co-products including distillers grains,
oilseed meals, and sugar beet fibers. These co-products can be traded either in their processed or
whole form. Co-products that can be used for livestock feed are incorporated into the livestock
RUMINANT module and can substitute other forms of feed depending on protein and
metabolizable energy content.215

There are nine land cover types in GLOBIOM, and 6 of these are modeled dynamically:
cropland, grassland, short rotation plantations, managed forests, unmanaged forests, and other
natural vegetation land. The final three land cover categories are represented in the model but
kept constant, they include other agricultural land, wetlands, and not relevant (ice, water bodies
etc). Greenhouse gas emission coverage includes 12 sources of emissions that cover crop
cultivation, livestock, above and below-ground biomass, soil-organic carbon, and peatland.
Although GLOBIOM does not track terrestrial carbon stocks dynamically, carbon fluxes from
land use change are calculated with equations, following IPCC guidelines, that estimate changes
over time and allocate the average annual emissions to the time period in which the land use
change occurs.

Land use in GLOBIOM allows for both intensification and extensification. When land is
converted, this is endogenously determined in the model based on conversion costs, and the
profitability of primary, co-products, and final products. Costs increase as the area converted

213	Intensifying involves increasing livestock output without expanding the area of pasture land by grazing more
livestock per area of land, increasing feed relative to grazing, or using feedlots. Extensifying is the opposite - it
involves expanding pasture area in order to increase livestock production.

214	International Institute for Applied Systems Analysis, "Global Forest Model (G4M)https://iiasa.ac.at/models-
and-data/global-forest-model (accessed May 12, 2022).

215	Valin, Hugo, et al., September 17, 2014, "Improvements to GLOBIOM for Modelling of Biofuels Indirect Land
Use Change," http://www.alobioni-iluc.eu/wp-content/uploads/2014/12/GLUBIUM All improvements Septl4.pdf
pg. 38.

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expands. Additionally, there are biophysical land suitability and production potential restrictions.
Land use change is determined at the grid cell level, aka a one-by-one hectare. There is a land
transition matrix that sets the options for land conversion for each cell and is based on land
conversion patterns specific to that region and conversion costs depending on the type of land
converted.216

In policy settings, GLOBIOM is used for both modeling the European Union's biofuel
mandates and for estimating induced land use change impacts of biofuels for the International
Civil Aviation Organization's Carbon Offsetting and Reduction Scheme for Civil Aviation
(CORSIA). In research contexts, the model has regularly participated in AgMIP, an agricultural
model intercomparison and improvement project.217 One result of this project was an article
published in the journal, Nature, on the key determinants of global land use projections.218
GCAM, discussed in Section 4.2.2.3, was also part of the AgMIP study. GLOBIOM has been
used to assess other topics in the academic literature, publishing work on topics such as reducing
greenhouse gas emissions from the agricultural sector, food security, and climate mitigation of
livestock system transitions.

4.2.2.3 The Global Change Analysis Model (GCAM)

The Global Change Analysis Model (GCAM) is a partial equilibrium, integrated
assessment modeling framework which explores human and earth dynamics. The model includes
representation of energy, economy, land, water, and physical earth systems and interactions
between these systems within a fully integrated computational system. The model includes all
human systems and economic sectors which produce or consume energy, or which emit GHGs.
GCAM operates as a recursive dynamic framework, generally in 5-year time steps. In practice,
the model is often run from a base year in the recent past through the years 2050 or 2100.
However, time step and scenario length are flexible input assumptions to GCAM, and the
framework can support scenario analysis across a wide range of time scales. By default, the
model base year is currently 2015, but other historical base periods may be specified. For each
modeled time period, GCAM iterates until it finds a vector of prices that clears all markets and
satisfies all consistency conditions. The model is designed to explore different "what-if"
scenarios, assessing the implications of different futures on a wide range of outcomes, such as
energy supplies and demands, land allocation, or commodity prices.

216	IIASA, "Spatial Resolution and Land Use Representation,"

https://iiasa.gUhu b.io/GLUBIUM/documentation.html#spatial-resolution-and-land-use-representation. Accessed
May 19, 2022.

217	Several studies have estimated water use and availability impacts associated with future scenarios of increased
cellulosic biofuel production. These studies often project future land use/management for different scenarios of
increased production of cellulosic crops, and then estimate impacts on water use and changes in streamflow for
specific watersheds. See for example: Cibin, R., Trybula, E., Chaubey, I., Brouder, S. M., & Volenec, J. J. (2016).
Watershed-scale impacts of bioenergy crops on hydrology and water quality using improved SWAT model. Gcb
Bioenergy, 8(4), 837-848 or Le, P. V., Kumar, P., & Drewry, D. T. (2011). Implications for the hydrologic cycle
under climate change due to the expansion of bioenergy crops in the Midwestern United States. Proceedings of the
National Academy of Sciences, 108(37), 15085-15090.

218	Liu, X., Hoekman, S.K., and Broch, A. 2017. Potential water requirements of increased ethanol fuel in the USA.
Energy, Sustainability and Society, 7: 18.

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The core GCAM is developed and maintained at the Joint Global Change Research
Institute, a partnership between Pacific Northwest National Lab (PNNL) and the University of
Maryland (UMD) in College Park, Maryland. PNNL is the primary steward of the model, though
members of a larger GCAM Community also contribute to development of the framework.219
GCAM was originally developed in the early 1980s to assess the magnitude of GHG emissions
from fossil fuel C02 through the mid-21st Century. Over time, the model has expanded in scope
to serve a wide set of scientific modeling applications. The model has now been in continuous
development for over 40 years and has been applied in several studies and model inter-
comparison activities, including the IPCC's Representative Concentration Pathways220 and
Shared Socioeconomic Pathways.221 GCAM is an open-source community model that can be
downloaded from a public repository.222 The model documentation is also publicly available223
and includes a partial list of GCAM publications.224

Economic systems in GCAM are divided into sectors and, within each sector, specific
technologies. Figure 4.2.2.4-1 provides an overview of the sectors represented in GCAM, along
with the inputs and outputs of the model. Each sector of GCAM is structured with a multi-level
nesting approach that allows competition between different nodes at each level, and any number
of levels. This nested competition follows a discrete logit225 or modified logit model226,
depending on the object. The market share of each discrete technology is determined by a) a
share-weight parameter that reflects the specific preferences for a particular choice, b) the cost,
which includes fuel and non-fuel costs, and c) an exogenous logit exponent that determines the
price responsiveness of the competition. In most cases the share-weights are derived from base-
year calibration when market shares are known. Technologies that are introduced in future time
periods are assigned exogenous share-weights in each model time period. The market shares are
therefore influenced by a number of endogenous and exogenous parameters, including fuel and
non-fuel costs, efficiency or input-output coefficients, share-weights, and logit exponents. These
parameters are documented and can be consulted in online repository.227

219	For more information, see https://gcinis.pnnl.gov/community.

220	Thomson AM, Calvin KV, Smith SJ, Kyle GP, Volke A, Patel P, et al. RCP4. 5: a pathway for stabilization of
radiative forcing by 2100. Clim Change 2011:109:77.

221	Calvin K, Bond-Lamberty B, Clarke L, Edmonds J, Eom J, Hartin C, et al. The SSP4: A world of deepening
inequality. Glob Environ Change 2017:42:284-96.

222	See https://github.com/IGCRI/gcam-core.

223	See http://jgcri.github.io/gcam-doc/index.html

224	See more specifically http://jgcri.github.io/gcam-doc/references.html

225	McFadden D. Conditional logit analysis of qualitative choice behavior 1973.

226	Clarke JF, Edmonds JA. Modelling energy technologies in a competitive market. Energy Econ 1993:15:123-9.

227	See Calvin et al. 2019. GCAM v5.1: Representing the linkages between energy, water, land, climate, and
economic systems. Geoscientific Model Development 12, 1-22. See also the online documentation
(https://github.com/IGCRI/gcam-doc/blob/gh-pages/ssp.md) for the specific quantification of the inputs and
parameters to the model.

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Figure 4.2.2.4-1: GCAM diagram of model inputs, sectors, and outputs228

INPUTS	GCAM

OUTPUTS

GCAM includes detailed representations of the energy sector, inclusive of liquid biofuels,
and the agriculture and land sectors. The energy sector module in GCAM consists of depletable
and renewable resources229, energy transformation and distribution sectors (electricity, refining,
gas processing, hydrogen production, and district services), and final energy demand sectors
(buildings, industry, and transportation).230 For transportation biofuels specifically (referred to in
the GCAM documentation as "biomass liquids"), by default the model includes a total of 11
biofuel production technologies. These include four "first generation" technologies, representing
ethanols and biodiesels produced from agricultural commodity crops, and seven "second
generation" technologies representing fuels produced from a variety of feedstocks, including
energy crops and residues. By default, the technology assumptions for second generation
represent the inputs and outputs of cellulosic ethanol and Fischer-Tropsch fuels. However, the
input assumptions for these technologies can be modified to represent other fuel production

228	See http://igcri.github.io/gcam-doc/index.htnil.

229	Depletable resources are based on graded supply curves for coal, oil, gas and uranium. Renewable resources
include annual flows of wind, solar, geothermal, hydropower, and biomass.

230	More detailed information on the GCAM energy system can be found in online documentation, see
http://igcri.github.io/gcam-doc/index.html. and also in previous studies (see Clarke L, Eom J, Marten EH, Horowitz
R, Kyle P, Link R, et al. Effects of long-term climate change on global building energy expenditures. Energy Econ
2018:72:667-77: Muratori M, Ledna C, Mcjeon H, Kyle P, Patel P, Kim SH, et al. Cost of power or power of Cost:
A US modeling perspective. Renew Sustain Energy Rev 2017:77:861-74.)

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pathways. Secondary outputs such as dried distillers grains with solubles (DDGS) and electricity
produced from lignin can be considered, as can the potential for carbon capture and storage.
Further description of these technological representations is available in the online GCAM
documentation.231

The agriculture and land use module differentiates 384 land use regions globally,
generated as the intersection of 32 socioeconomic regions with 235 water basins (see Figure
4.2.2.2-2). Within each land use region, up to 25 land use types compete for land share based on
the relative profitability of each use, using a nested land allocator tree structure.232 This
competition follows a similar profit-based logit structure, so economic land use decisions are
based on the relative profitability of using land for competing purposes. Profitability of lands that
are not in commercial production in the historical calibration period are inferred from the
profitability of proximate lands used for agriculture and forestry. Land use types include
exogenous land types (tundra, desert, urban), commercial and non-commercial pasture and forest
lands, grasslands and shrublands, and a detailed set of agricultural crop commodities, including
bioenergy crops, classified by irrigation type and fertilizer use.233 Terrestrial carbon stocks and
flows are modeled for each land type in each water basin.234 The agricultural sector of the model
primarily relies on input data from the UN Food and Agriculture Organization (FAO) historical
data sets, and includes all crops for which FAO reports area and production data for the model
base year of 20 1 5.235 Major global commodity crops, such as corn, rice, soybeans and wheat are
modeled individually, while all other crops are modeled as a series of thematic aggregations.

231	See http ://j gcr L githu bio/gcam- doc/su pply energy .html.

232	See Wise M, Calvin K, Kyle P, Luckow P, Edmonds J. Economic and physical modeling of land use in GCAM
3.0 and an application to agricultural productivity, land, and terrestrial carbon. Clim Change Econ 2014;5:1450003,
and Zhao X, Calvin KV, Wise MA. The critical role of conversion cost and comparative advantage in modeling
agricultural land use change. Clim Change Econ 2020; 11.

233	A complete description of the land use module can be found in the online documentation (see
http://igcrLgithub.io/gcani-doc/toc.html) and in Kyle GP, Luckow P, Calvin KV, Emanuel WR, Nathan M, Zhou Y.
GCAM 3.0 agriculture and land use: data sources and methods. Pacific Northwest National Lab.(PNNL), Richland,
WA (United States): 2011.

234	Input assumptions related to terrestrial carbon and land transitions are documented at http://jgcrL aithu b. io/gcam-

d o c/inp u ts 1 a nd. h I ml.

235	See http://jgcri.github.io/gcam-doc/inputs land.html for further data on land inputs to the model.

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igure 4.2.2.4-2: GCAM Regional Mapping236

Energy/Socioeconomics: 32 regions

Land: 384 regions

y* *,

Water. 235 regions

"X

s' *4;

Climate: 1 global region

In addition to the core GCAM described in this section, there exist several other
subversions and downscaling tools which can be used to examine regions and systems at a finer
grain of resolution. These include, among others, GCAM-USA237, which models each US state
as an individual region, Tethys?:'"s. which allows for the downscaling of modeled GCAM water
impacts, and Demeter239, which allows for the downscaling of modeled land allocation impacts.
Numerous additional tools are in various stages of development at JGCRI and other research
groups which participate in the GCAM Community.240 One of these, GCAM-T, was used in a
recent study of corn ethanol impacts by Plevin et al. The results of that study are discussed in
greater detail later in this chapter.241

4.2.2.4 The Global Trade Project (GTAP) Model

The GTAP model is a multisector, multiregion, general equilibrium model developed at
the Center for Global Trade Analysis, Purdue University (Hertel, 1997 Ed.). It is widely used for
analyzing international trade, agriculture, and environmental policy issues. It offers a framework
to address the complex interactions of biofuels and other sectors of an economy.

Different applications of the GTAP model have resulted in establishing substitution
among energy types,242 and explicit global competition among different land categories
classified at the agro-ecological zone (AEZ) level.243 Based on these applications, a version of

236	See http://jgcri. github.io/gcam- doc/overview.htm 1

237	See http://igcri.github.io/gcam-doc/gcam-usa.html

238	https://github.com/TGCRI/tethvs,

239	https://github.com/TGCRI/demeter

240	For more information, see httus://gcims.pnnl.gov/cominunitv.

241	Plevin, R. J.y et al. (2022). "Choices in land representation materially affect modeled biofuel carbon intensity
estimates." Journal of Cleaner Production: 131477.

242	Burniaux, Jean Marc, andTruong P. Truong. "GTAP-E: an energy-environmental version of the GTAP model."
GTAP Technical Papers (2002): 18

Lee, Huey-Lin. "The GTAP Land Use Data Base and the GTAPE-AEZ Model: incorporating agro-ecologically
zoned land use data and land-based greenhouse gases emissions into the GTAP Framework." (2005).

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the model called GTAP-BIO was developed to assess the economy-wide impact of first-
generation biofuels production,244 and later developments add the capability to model dedicated

?45

energy crops.

Conceptually, the standard GTAP model assumes perfect competition in all markets with
price adjustments to ensure that all markets clear simultaneously. The regional household
collects all the income in its region and spends it over three expenditure types: private household
(consumer), government, and savings, over a Cobb-Douglas utility function. A representative
firm maximizes profits in nested CES functions in a perfectly competitive market for each
industry/sector in each region and pays income to the regional household for using the
endowment commodities (i.e., land, labor, capital, and natural resources). Consequently, firms
sell the final goods produced by combining the endowments with the intermediates to the private
households and the government, and the investment goods to the regional household. In an open
economy, firms also export the tradable commodities and import the intermediate inputs from the
rest of the world. The model follows Armington assumptions to account for product
heterogeneity for outputs produced in different regions.

Figure 4.2.2.2-1: GTAP Standard Model Analytical Framework246

The land endowment in the GTAP model is imperfectly mobile, whereas labor and
capital are perfectly mobile within a region but imperfectly mobile across regions. Government
spending is modeled using a Cobb-Douglas subutility function, which maintains constant

244	Birur D, Hertel T, Tyner WE. Impact of biofuel production on world agricultural markets: a computable general
equilibrium analysis. GTAP Working Paper No. 53. Purdue University; 2008; Hertel TW, Tyner WE, Birur DK. The
global impacts of biofuel mandates. Energy J. 2010;30:75-100.

245	Taheripour F, Tyner WE. Introducing first and second generation biofuels into GTAP data base version 7. In:
GTAP, editor. GTAP Research Memorandum No. 21. Purdue University; 2011.

246	Taheripour, F. (2022). "GTAP-BIO Model and Data Base: Main Components and Improvements." Presentation
for EPA Biofuels Modeling Workshop. March 1, 2022. Slide 7.

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expenditure shares across all the sectors. The private household consumption is modeled by
adopting a nonhomothetic Constant Difference of Elasticity implicit expenditure function, which
allows for differences in income elasticities across commodities. Taxes (and subsidies) go as net
tax revenues (subsidy expenditures) to the regional household from the private households, the
government, and the firms.

The rest of the world gets revenues by exporting to private households, firms, and the
government. These revenues are spent on export taxes and import tariffs, which eventually go to
the regional household. A closure, defining the set of endogenous and exogenous variables in the
model, is a typical GE closure in the GTAP model, which allows for equilibrium in all the
markets, all firms earn zero profits, the regional household is on its budget constraint, global
investment equals global savings, and sum of global exports and imports is zero. The global
trade balance condition determines the world price of a given commodity. The Cobb-Douglas
utility function of the regional household allows for maintaining constant budget shares.

The standard GTAP database does not disaggregate biofuels from other energy products.
The biofuel linkages in the GTAP-BIO model are introduced into the version of the GTAP-E
model to capture the implications of biofuels mandates on global energy and agricultural
markets. The substitution of biofuels is represented by intermediate demand substitution as well
as household substitution, by modifying the production and consumption structures, respectively.
For analyzing the LUCs, GTAP-BIO features the GTAP 9 land use and land cover database
developed by Baldos (2017), which aggregates 108 region-Agro-Ecological Zones (AEZs) into
18 global AEZs. The AEZs characterize the biophysical growing conditions and land use for
crops and forestry.

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Figure 4.2.2.2-2: Comparison of GTAP LULC v.6 and v.9 AEZs24i

One of the key components of the GTAP model is the GTAP database, which is
constructed based on national input-output tables, bilateral trade, protection, and macroeconomic
data to give the consistent representation of the global economy in a given base year. The GTAP-
BIO model was constructed based on the GTAP database version 6 database pertaining to the
base year 2001 and has since been updated with GTAP database version 9, which represents the
world economy in 2011.248 Based on this database, the GTAP I3IO model was enhanced with
three types of biofuels, corn-ethanol, oilseed-based biodiesel, and sugar-based ethanol, along
with the coproducts, DDGS and oil meal.

GTAP-BIO is a static model that simulates scenarios for one time period. GTAP BIO can
currently run simulations using the 2011 GTAP database. Given that GTAP databases are now
available for 2014 and 2017, GTAP-BIO is likely to be able to simulate these time periods in the
near future. Researchers at Purdue have the ability to manually project a GTAP database forward
in time based on macro-economic projections in order to simulate future time periods.249

GTAP-BIO has been updated multiple times to add features that are relevant for biofuel
GHG modeling. Tyner et al. (2010) included marginal lands and productivity estimates for the
potential new cropland based on a biophysical model. Taheripour et al. (2012) used a biophysical
model (TEM) and estimated a set of extensification parameters which represent productivity of

247	Uris, B. L. (2017) Development of GTAP 9 Land Use and Land Cover Data Base for years 2004, 2007 and 2011.
GTAP Research Memorandum No. 30

248	Taheripour, F., et al. (2017). "The impact of considering land intensification and updated data on biofuels land
use change and emissions estimates." Biotechnology for Biofuels 10(1): 191. This study includes a summary of
GTAP-BIO developments over time.

249	Dhoubhadel, S., Taheripour, F. and Stockton, M. (2016) Livestock Demand, Global Land Use Changes, and
Induced Greenhouse Gas Emissions. Journal of Environmental Protection, 7, 985-995. doi: 10.4236/jep.2016.77087.
https://file.scirp.org/Html/2-6702993 67110.htm.

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new cropland versus the existing land by AEZ region.250 Taheripour and Tyner (2013) used a
tuning process to differentiate land transformation elasticities by region based on FAO data.251
Taheripour and Tyner (2013b) modified the land supply tree putting cropland pasture and
dedicated energy crops (e.g., switchgrass) in one nest and all other crops in another nest, "to
make greater use of cropland pasture (a representative for marginal land) to produce dedicated
energy crops."252 Taheripour et al. (2016) altered the land use module of GTAP-BIO to include
cropland intensification due to multiple cropping or returning idled cropland production, defined
a new set of regional intensification parameters and determined, and defined regional yield
responses to price based on analysis of regional changes in crop yields.253 Taheripour et al.
(2017) brought all of these modifications into one version of GTAP-BIO using the GTAP
database representing 2011.254

GTAP-BIO has been used in biofuel GHG analysis to estimate the areas and types of land
use change by region. Given that GTAP-BIO does not endogenously estimate land use change
GHG emissions, they are estimated using either the AEZ-EF tool or the CCLUB module of
GREET, which produce significantly different estimates. The resulting land use change GHG
emissions have been added to direct emissions estimates from LCI models such as GREET.
Given that GTAP-BIO models all sectors of the economy it may be possible to conduct a full
consequential lifecycle GHG analysis with GTAP-BIO, but such an analysis has yet to be
published.

Our focus in this section is on the GTAP-BIO model as that has been the most
extensively applied GTAP model for biofuel analysis, but there are other versions of GTAP that
have been or could potentially be used for biofuel modeling. GDyn-BIO is a recursive-dynamic
version of GTAP that has been used to model U.S. corn ethanol land use change GHG
impacts.255 GTAP-DEPS is another recursive-dynamic version of GTAP that has been used to
simulate corn ethanol effects, though it does not report GHG emissions.256 ENVISAGE is
another dynamic version of GTAP complemented by an emissions and climate module that links
changes in temperature to impacts on economic variables such as agricultural yields. To our
knowledge ENVISAGE has not been used for biofuel GHG analysis.257 Further exploring and

250	Taheripour, F., et al. (2012). "Biofuels, cropland expansion, and the extensive margin." Energy, Sustainability
and Society 2(1): 25.

251	Taheripour, F. and W. E. Tyner (2013). "Biofuels and land use change: Applying recent evidence to model
estimates." Applied Sciences 3(1): 14-38.

252	Taheripour, F. and W. E. Tyner (2013). "Induced Land Use Emissions due to First and Second Generation
Biofuels and Uncertainty in Land Use Emission Factors." Economics Research International 2013: 12.

253	Taheripour, F., et al. (2016). An Exploration of Agricultural Land Use Change at Intensive and Extensive
Margins. Bioenergy and Land Use Change: 19-37.

254	Taheripour, F., et al. (2017). "The impact of considering land intensification and updated data on biofuels land
use change and emissions estimates." Biotechnology for Biofuels 10(1): 191.

255	Golub, A. A., et al. (2017). Global Land Use Impacts of U.S. Ethanol: Revised Analysis Using GDyn-BIO
Framework. Handbook of Bioenergy Economics and Policy: Volume II: Modeling Land Use and Greenhouse Gas
Implications. M. Khanna and D. Zilberman. New York, NY, Springer New York: 183-212.

256	Oladosu, Gbadebo, and Keith Kline. "A dynamic simulation of the ILUC effects of biofuel use in the USA."
Energy policy 61 (2013): 1127-1139.

257	Van der Mensbrugghe, Dominique. "The environmental impact and sustainability applied general equilibrium
(ENVISAGE) model." The World Bank, January (2008): 334934-1193838209522.

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comparing the capabilities of these other GTAP models for biofuel analysis is a potential area for
future research.

4.2.2.5 The ADAGE Model

The Applied Dynamic Analysis of the Global Economy (ADAGE) model is a multi-
region, multi-sector computable general equilibrium (CGE) model developed and maintained by
RTI International. The original ADAGE model was a forward-looking model.258 It was
originally developed to examine impacts of climate change mitigation policies and was used to
analyze economy-wide impacts of the Waxman-Markey climate change bill and the American
Clean Energy and Security Act of 2009. More recently, the ADAGE model has been developed
to have additional sectoral detail, particularly in agriculture, bioenergy, and transportation.259
This version of the ADAGE model (hereinafter referred to as "ADAGE" or "the ADAGE
model") is global, rather than national, and is recursive-dynamic, which means that decisions
about production, consumption, savings, and investment are based on previous and current
economic conditions. There are plans to make ADAGE publicly available.

ADAGE represents the entire economy, including private and public consumption,
production, trade, and investment, and follows the classical Arrow-Debreu general equilibrium
framework.260 The model uses nested constant elasticity of substitution (CES) production
functions. As illustrated in Figure 4.2.2.5-1, ADAGE includes representative households and
firms, and economic flows among households, firms, and government are considered. Bilateral
trade is represented using an Armington approach.261 Dynamics in ADAGE are represented by 1)
growth in the available effective labor supply from population growth and changes in labor
productivity; 2) capital accumulation through savings and investment; 3) changes in stocks of
natural resources; and 4) technological change from improvements in manufacturing, energy
efficiency and land productivity, and advanced technologies that become cost competitive.

258	Ross, M. 2009. Documentation of the Applied Dynamic Analysis of the Global Economy (ADAGE) Model.
Working paper 09 01. Research Triangle Park, NC: RTI International.

259	Cai Y., Beach R., Woollacott J., Daenzer K., 2022. Documentation of the Applied Dynamic Analysis of the
Global Economy (ADAGE) model. Technical Report.

260	Arrow, K.J., and G. Debreu. 1954. Existence of an equilibrium for a competitive economy. Econometrica 22:265
290.

261	Armington, P. S. (1969). A Theory of Demand for Products Distinguished by Place of Production. Staff Papers -
International Monetary Fund, 16(1), 159-178.

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Figure 4.2.2.5-1: Representation of Economic Flows in a CGE model262

Region A	Region B



Primary Factors

Income

Taxes



17

Households Government
#

Social	Govt.

Transfers Purchases

Firms

Itid

¦A.

Expenditures	/ J

14^

Trade
flows

I

I I

Goods & Services

Region C

n



f_J\

I I li



(rid

in

ADAGE includes energy, industry, food, agriculture, and transportation sectors. It runs in
5 year intervals from 2010 through 2050, and includes 8 global regions (Africa, Brazil, China,
EU 27, United States, Rest of Asia, Rest of South America, and Rest of World; Figure 4.2.2.5-2).
ADAGE is built off the GTAP v7.1 database,263 with additional data from other sources such as
the International Energy Agency, U.S. Energy Information Administration, and United Nations
Food and Agriculture Organization. Many CGE models only track inputs and outputs in
monetary units, but ADAGE also tracks physical units (such as energy units of fuel consumption
and area of land).

262	Cai Y., Beach R., Woollacott J., Daenzer K., 2022. Documentation of the Applied Dynamic Analysis of the
Global Economy (ADAGE) model. Technical Report.

263	Narayanan, G. B., and T. L. Walmsley (Eds.). 2008. Global Trade, Assistance, and Production: The GTAP 7
Data Base. West Lafayette, IN: Center for Global Trade Analysis, Purdue University.
http://www.gtap.agecon.purdue.edu/databases/v7/v7 doco.asp

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Figure 4.2.2.5-2: ADAGE Regional Mapping

ADAGE includes several agricultural commodities: wheat, corn, soybean, sugarcane,
sugar beet, rest of cereal grains, rest of oilseeds, and rest of crops, in addition to one livestock
category and one forestry category. The agricultural sector in the underlying GTAP v7.1
database is more aggregated, so creating these commodities in ADAGE required disaggregation
using information on trade shares, consumption shares, cost shares, and own use shares.264 This
disaggregation was done with software called SplilConr(i > and data from the United Nations
Food and Agricultural Organization FAOSTAT database and the United Nations Comtrade
Database.266'267 The "cereal grains" sector in GTAP v7.1 was split into corn and rest of cereal
grains, the oil seeds sector was split into soybean and rest of oilseeds, and the combined
sugarcane and sugar beet sector was split into sugarcane and sugar beet.

Agricultural sector details in ADAGE enable it to model several kinds of biofuels.
ADAGE includes 8 types of first generation biofuels (corn ethanol, wheat ethanol, sugarcane
ethanol, sugar beet ethanol, soy biodiesel, rape-mustard biodiesel, palm kernel biodiesel, and
corn oil biodiesel) and 5 types of advanced biofuels (ethanol from switchgrass, miscanthus,
agricultural residue, forest residue, and forest pulpwood). These biofuels are not included in the
GTAP 7.1 database and were split from GTAP v7.1 sectors using the SplitCom software and
secondary data from USDA's Economic Research Service, DOE's Energy Information

264	Beach, R.I [.. D.K. Birur, L.M. Davis, and M.T. Ross. 2011. A dynamic general equilibrium analysis of U.S.
biofuels production. AAEA & NAREA Joint Annual Meeting, Pittsburgh, PA.
https://ageconsearch.umn.edU/bitstream/103965/2/ADAGE-Biofuels AAEA Conference Paper.pdf

265	Horridge, M., J. Madden, and G. Wittwer. 2005. The impact of the 2002-2003 drought on Australia. Journal of
Policy Modeling 27(3):285-308.

268 Food and Agriculture Organization of the United Nations. 2012. FAOSTAT Database. Rome, Italy: FAO.
http://www.fao.Org/faostat/en/#data

United Nations. 2012. UN Comtrade Database, http://comtrade.un.org

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Administration, and the United Nations Comtrade database.268,269,270 Corn ethanol and wheat
ethanol were split from the "food products sector" in GTAP v7.1, which receives inputs from
corn and wheat. Sugarcane ethanol and sugar beet ethanol were split from the chemicals sector.
Biodiesel from soybean, rapeseed, and palm oil were split from the vegetable oils and fats sector.
Distillers grains with solubles (DGS) and corn oil biodiesel are coproducts of corn ethanol
production. An oil meal byproduct was split from the vegetable oil sector in GTAP v7.1.

Because ADAGE does not explicitly represent rapeseed and palm oil production, the input shares
of "rest of oilseeds" is based on region-specific palm oil and rapeseed biodiesel yields (gallon of
biodiesel per ton of feedstock). Advanced biofuels were not included in the 2010 base year in
ADAGE but are allowed to enter the market in future years.

The energy sectors of the ADAGE model include coal, natural gas, crude oil, and refined
oil, and several categories of electricity generation technologies (conventional coal, conventional
natural gas, conventional oil, combined-cycle natural gas, nuclear, hydropower, geothermal,
wind, solar, and biomass). The supply of fossil fuels is limited by the availability of natural
resources, which is represented as a fixed factor in the model. Crude oil is used as an input for
refined oil and enters the production function in a fixed proportion. Electricity generation
technologies are combined into a single electricity output.

The transportation sector in ADAGE has been developed to include light duty vehicles,
freight trucks, buses, marine, aviation, freight rail and passenger rail. Biofuels can be consumed
in on-road transportation (light duty vehicles, buses, and trucks). Alternative fuel options
(hybrid, battery electric, fuel cell, and natural gas) are available for on-road vehicles. The GTAP
v7.1 database includes three types of transportation (air, water, and rest of transportation) and
was disaggregated using data from several sources.271

ADAGE includes six land types (cropland, pasture, managed forest, natural forest,
natural grassland, and other land272). Land use change is represented using a constant elasticity
of supply. Each land type has its own endowment, land rent, and usage. Willingness to convert
land is represented by an elasticity, and the conversion cost is equal to the difference in land rent
between land types. ADAGE models land in physical as well as monetary quantities. Emissions
from land use change are based on the differences in carbon stocks (vegetative and soil carbon)
between the land types, and emission factors (one for vegetative carbon, and one for soil carbon)
that represent the fraction of the change in carbon stock that would occur over 20 years after land
conversion. Land use change emissions and sequestration are all reported in the model year in

268	U.S. Department of Agriculture (USDA), Economic Research Service (ERS). 2012. U.S. Bioenergy statistics.
Washington, DC: U.S. Department of Agriculture, https://www.ers.usda.gov/data-products/us-bioenergy-statistics/

269	U.S. Department of Energy, Energy Information Administration (EIA). 2012. Petroleum & other liquids.
Washington, DC: U.S. Department of Energy.

https://www.eia.gov/dnav/pet/pet move impcus a2 nus epooxe imO mbbl a.htm

270	United Nations. 2012. UN Comtrade Database, http://comtrade.un.org/

271	Data sources include GCAM 4.2, the Bureau of Economic Analysis, the Bureau of Transportation Statistics, the
International Energy Agency, and the Energy Information Administration. For more details, see Cai Y., Beach R.,
Woollacott J., Daenzer K., 2022. Documentation of the Applied Dynamic Analysis of the Global Economy (ADAGE)
model. Technical Report.

272	"Other land" includes bare ground, wetlands, mangroves, salt marsh, glaciers, and lakes, and is assumed to be
constant over time.

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which the land use change occurs. Vegetative and soil carbon stocks are based on data from
GCAM 3.2, which were aggregated to ADAGE regions using weighted land area.

ADAGE includes six types of greenhouse gases: carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), and sulfur
hexafluoride (SFe). CO2 emissions from fossil fuel combustion are based on emissions factors
(kg CCh/mmBtu) for coal, gas, and oil. The emission factors are differentiated by region and
based on data from EIA's International Energy Statistics. CO2 emission factors from sources
other than fossil fuel combustion and land use change are based on data from the Emissions
Database for Global Atmospheric Research (EDGAR) version 4.2.273 Non-C02 emission factors
are based on data from EPA.274

CGE models typically do not have the sectoral detail available in other types of models.
However, because CGE models capture the entire economy, they can be useful for determining
impacts of environmental policies across sectors and on GDP. In one study, the ADAGE model
was used to analyze projected impacts of the RFS on land use, crop production, crop prices,
fossil energy use, GHG emissions, and GDP.275 ADAGE has also been used to study the impact
of oil prices on biofuel expansion.276 In model comparison studies, ADAGE was used to analyze
the GHG abatement potential in Latin America,277 and the impacts of climate policy and
agriculture, forestry, and land use emissions.278

4.2.2.6 Other Models and Approaches

Other models, besides the ones discussed above, have also been used to estimate land use
change and GHG emissions associated with biofuels. We briefly describe some of these models
here and focus our discussion on models that were used to produce at least one of the estimates
that appear in our literature review. Austin et al. (2022) conducted a literature review of studies
that examined U.S. biofuels and land use change.279 They review studies published before 2019
and, after applying a filtering process, identified 15 economic simulation modeling studies and
14 empirical studies for detailed assessment. In this section, we discuss relevant studies and

273	Joint Research Centre at European Commission. 2013. Emission Database for Global Atmospheric Research.
http://edgar.jrc. ec.europa.eu/overview.php?v=42FT2010

274	U.S. Environmental Protection Agency (EPA). 2012. Global Non-C02 GHG Emissions: 1990-2030.

Washington, DC: EPA. https://www.epa.gov/global-niitigation-non-co2-greenhouse-gases/global-non-co2-ghg-

emissions-1990-2030

275	Cai, Y., D.K. Birur, R.H. Beach, and L.M. Davis. (2013, August). Tradeoff of the U.S. Renewable Fuel Standard,
a General Equilibrium Analysis. Presented at 2013 AAEA & CAES Joint Annual Meeting, Washington, D.C.

276	Cai, Y., R.H. Beach, and Y. Zhang. (2014, March). Exploring the Implications of Oil Prices for Global Biofuels,
Food Security, and GHG Mitigation. Presented at 2014 AAEA Annual Meeting, Minneapolis, MN.

277	Clarke L., McFarland J., Octaviano C., van Ruijven B., Beach R., Daenzer K., Herreras Martinez S., Lucena
A.F.P., Kitous A., Labriet M., Loboguerrero Rodriguez A.M., Mundra A., van der Zwaan B., 2016. Long-term
abatement potential and current policy trajectories in Latin American countries. Energy Econ. 56, 513-525.
http://dx.doi.org/10.1016/i.eneco. 2016.01. Oil

278	Calvin K.V., Beach R., Gurgel A., Labriet M., Loboguerrero Rodriguez A.M., 2016. Agriculture, forestry, and
other land-use emissions in Latin America. Energy Econ. 56, 615-624.

http://dx.doi.org/10.1016/i.eneco. 2015.03.020

279	Austin, K., et al. (2022). "A review of domestic land use change attributable to US biofuel policy." Renewable
and Sustainable Energy Reviews 159: 112181.

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models reviewed by Austin et al. (2022). The purpose of this brief overview is to highlight that
there are other models, besides the five discussed above, that have some capabilities to evaluate
biofuel GHG impacts. We are providing a brief discussion of other models for informational
purposes, but we do not think they meet our statutory requirements under the CAA to evaluate
all significant direct and indirect emissions. For example, some of the models do not have global
coverage, some are not spatially explicit and cannot model land use change emissions, and some
do not include GHG emissions. Furthermore, some of these models are difficult to access given
their proprietary nature (e.g., they are not open source models).

In their literature review, Austin et al. (2022) considered 14 empirical studies that "derive
a statistical relationship between an observed land use conversion response (e.g., non-crop to
crop conversion) and a treatment (e.g., ethanol refinery location or capacity)." All of these
empirical studies were limited in spatial extent to the contiguous U.S. or a subset of U.S. states
(generally the corn belt). Only two of the 14 empirical studies estimated the effects of corn
ethanol production on land use for the contiguous U.S. and considered the effects of corn and
crop prices changes on land use. The other 12 studies were either limited to a subset of U.S.
states, did not consider prices effects, or evaluated price effects in general but not biofuel
induced effects. These limitations make these 12 studies potentially useful for informing our
understanding, but the models and methods have limited relevance for our purposes. We briefly
discuss each of the two studies that met these criteria.

Lark et al. (20 2 2)280 was widely cited by commenters on our biofuel GHG modeling
workshop. This study combines econometric analyses, land use observations, and biophysical
models to estimate the effects of increasing U.S. corn ethanol production by 5.5 billion gallons
since 2007 compared to a counterfactual scenario. Austin et al. (2022) categorized this as an
empirical study as it does not develop an economic simulation model that can be
straightforwardly applied to a wide range of scenarios. For GHG emissions attributable to corn
ethanol, Lark et al. (2022) report net changes in CO2 and N2O emissions from land use and land
management changes in the U.S. The reported CO2 emissions are the result of ecosystem carbon
changes (e.g., plowing grassland to produce corn) and the reported N2O emissions are from
increased fertilizer application. Lark et al. (2022) added their estimates of U.S. land use change
to the corn ethanol LCA estimates from the 2010 RFS2 rule, GREET and the CARB's analysis
for the CA-LCFS. The fact that this study only estimates historical U.S. land use change GHG
emissions means that we can only do a limited comparison with estimates from other models that
evaluate all lifecycle stages and/or project scenarios into the future.

Brandao (2022) uses a consequential approach to estimate the GHG emissions associated
with ramping up U.S. corn ethanol production to 15 billion gallons from 1999 to 2018. This
study estimates market-mediated effects without an economic model. Rather it looks at the
difference in corn supply over this time period and uses a rules based approach to estimate
diversion, direct land use change, and intensification effects of increasing the amount of corn
used for ethanol. It then estimates the resulting crop production and land use change emissions.
We include this study in the range of estimates for corn ethanol presented below as it provides a
full lifecycle estimate.

280 Lark, T. J., et al. (2022). "Environmental outcomes of the US Renewable Fuel Standard." Proceedings of the
National Academy of Sciences 119(9): e2101084119.

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Li et al. (2019) estimated the effects of ethanol capacity, corn prices and crop prices on
corn and cropland area at a county level.281 Unlike Lark et al. (2022), this study did not estimate
the influence of ethanol production on corn and crop prices, nor did they estimate GHG
emissions or other environmental effects. Combined with exogenous estimates of the effects of
ethanol production on corn and crop prices, it is possible to use Li et al. (2019) to estimate corn
and cropland area changes at county-scale resolution for comparison with economic modeling
estimates. Furthermore, Li et al. (2019) estimated corn and crop area elasticities in response to
ethanol capacity and prices, which may be useful as inputs to economic simulation models.

In addition to the economic simulation models discussed above (i.e., GTAP-BIO,
GLOBIOM, GCAM, ADAGE), Austin et al. (2022) identified studies that used models called
REAP, PEEL-Co, BEPAM, AEPE and an unnamed multi-market equilibrium model. All of these
models limit their spatial extent to the U.S., and thus we give them brief treatment. REAP is a
price-endogenous mathematical programming model of the U.S. agricultural sector that can
simulate changes in soil carbon.282 PEEL-Co is a stochastic PE land use change allocation model
that can estimate domestic land use change emissions associated with corn ethanol production.283
BEPAM is a PE model that simulates biofuel effects on Conservation Reserve Program and
cropland pasture acres, and currently excludes GHG emissions.284 AEPA is a PE model that
examines interactions between agricultural and energy markets and evaluates the consequences
of changes in biofuel policies.285

In addition to the models discussed in the Austin et. al. paper, another model has been
used to evaluate biofuels is the Bio-based circular carbon economy Environmentally-extended
Input-Output Model (BEIOM). BEIOM is an economy-wide environmentally extended input-
output model using economic transactions data together with emissions inventories to provide a
high-level snapshot of the U.S. economy at different points in time.286 As such it performs a
"top-down" assessment linking national-level economic transactions with emissions inventories
for specific points in time. However, BEIOM only includes emissions in the U.S., therefore we
do not discuss it in more extensive detail.

Finally, while most studies in the literature focus on estimating indirect/induced land use
change emissions, other studies estimate "direct" land use change emissions (i.e., the emissions
associated with converting the land required for biofuel feedstock production). A relatively early

281	Li, Y., et al. (2019). "Effects of Ethanol Plant Proximity and Crop Prices on Land-Use Change in the United
States." American Journal of Agricultural Economics.

282	Johansson, Robert C. Regional environment and agriculture programming model. (Technical bulletin (United
States. Dept. of Agriculture) ; no. 1916); Malcolm, Scott A., Marcel P. Aillery, and Marca Weinberg. Ethanol and a
changing agricultural landscape. No. 1477-2016-121116. 2009.

283	Elliott, J., et al. (2014). "A Spatial Modeling Framework to Evaluate Domestic Biofuel-Induced Potential Land
Use Changes and Emissions." Environmental Science & Technology 48(4): 2488-2496.

284	Chen, X. and M. Khanna (2018). "Effect of corn ethanol production on Conservation Reserve Program acres in
the US." Applied Energy 225: 124-134.

285	Taheripour, F., et al. (2022). "Economic Impacts of the U.S. Renewable Fuel Standard: An Ex-Post Evaluation."
Frontiers in Energy Research 10.

286	Lamers, P., et al. (2021). "Potential Socioeconomic and Environmental Effects of an Expanding U.S.
Bioeconomy: An Assessment of Near-Commercial Cellulosic Biofuel Pathways." Environmental Science &
Technology.

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study of direct land use change emissions (Fargione et al. 2008) estimated the "land clearing
carbon debt" associated with converting a range of natural ecosystems (rainforests, grasslands,
savannas) to food crop-based biofuel feedstock production.287 ICAO (2022) provides a
methodology for calculating direct land use change emissions for an "event where feedstocks
were sourced from land obtained through land use conversion after 1 January 2008."288 Given
difficulties with measuring direct land use change emissions in cases where the land was
converted many years ago, Searchinger et al. (2022) use an alternate approach called "carbon
opportunity cost" estimated as either: (1) "the global carbon loss from plants and soils generated
by producing each crop to date (the numerator), divided by the global production (the
denominator)", or (2) "the quantity of carbon that could be sequestered annually if the average
productive capacity of land used to produce a kilogram of each food globally were instead
devoted to regenerating forest."289 Direct land use change does not factor into the rest of our
review as it has not been used in recent LCA studies; however, it may deserve additional
consideration in the future as it can be estimated with empirical measurements instead of
counterfactual modeling.

4.2.2.7 Comparison of Model Characteristics

In this section we compare the characteristics of the five models highlighted above in
Chapter 4.2.2.1-5. While there are many models that could potentially be used for biofuel GHG
analysis (see Chapter 4.2.2.8), we focus our discussion on these five models for the reasons
discussed at the beginning of Chapter 4.2.2. We sometimes bring other models and empirical
studies into the discussion as comparison points, but we otherwise set them aside to focus on
models that are designed to evaluate hypothetical scenarios and project future effects. We
compare the models across several characteristics that are important for biofuel analysis. In the
next section (Chapter 4.2.2.8) we also compare published results from these models and discuss
the importance of input assumptions relative to model choice. We then outline the goals of the
model comparison exercise that we intend to conduct for the final rule.

Table 4.2.2.7-1 summarizes some of the key characteristics of the five models featured in
section 4.2.2. Although there are many ways to compare these models, we choose six key
characteristics that we believe will help us determine whether the modeling framework meets the
statutory requirements for evaluating biofuel lifecycle GHG emissions, including direct and
indirect emissions.290 The models that are the most comprehensive across these key
characteristics are more likely to satisfy the statutory requirements, as discussed in Section
4.2.2.1. For example, models that represent all relevant sectors, regions, time periods, GHG
emissions sources, and land categories are most likely to capture significant indirect emissions.
These six characteristics provide a good starting point for understanding the primary differences
across these frameworks. We start our discussion based on these six characteristics before
touching on other key aspects of these models for biofuel GHG analysis. While we are not ruling

287	Fargione, J., et al. (2008). "Land Clearing and the Biofuel Carbon Debt." Science 319(5867): 1235-1238.

288	ICAO (2022). CORSIA Methodology for Calculating Actual Life Cycle Emissions Values, International Civil
Aviation Organization. June 2022.

289	Searchinger, T. D., et al. (2018). "Assessing the efficiency of changes in land use for mitigating climate change."
Nature 564(7735): 249-253.

290	While not explicitly required as part of the CAA, we also note that open access to the models is an important
consideration.

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out consideration or future use of other models, based on the biofuel GHG modeling workshop
and our review of the literature, we believe the models listed in the table are the most likely to
meet our statutory requirements for evaluating lifecycle GHG emissions. In addition, the models
selected provide a broad representation of the types of models that can be used for lifecycle
analysis.

Table 4.2.2.7-1 Comparison of Key Characteristics Across Models

Characteristic

GREET

GLOBIOM

GTAP-BIO

ADAGE

GCAM

Type of Model

Lifecycle
inventory (LCI)

Partial

equilibrium

(PE)

Computable
general
equilibrium
(CGE)

Computable
general
equilibrium
(CGE)

Integrated
assessment model
(IAM)

Sectoral
Coverage

Fuel supply
chains
including
energy resource
and material
inputs

Agriculture,
forestry and
bioenergy

Economy-wide
with 57 sectors

Economy-
wide with 36
sectors

Energy

(conventional and
renewable),
agriculture,
forestry, water

Temporal
Representation

Static

Recursive
dynamic (10-
year time steps)

Comparative
static

Recursive
dynamic (5-
year time
steps)

Recursive
dynamic (5-year
time steps)

Regional
Coverage

Customizable
(typically U.S.
average)

37 economic
regions; 10,000
spatial units
(grid cell)

19 economic
regions; 18
agro-ecological
zones

8 economic
and spatial
regions

32 economic
regions; 235
spatial regions
(water basins)

GHG Emissions
Coverage

Direct supply-
chain emissions
+ indirect land
use change
from CCLUB
module

Crop

production,
livestock and
land use change

Land use
change GHGs
calculated with
CCLUB or
AEZ-EF
modules

Economy-
wide GHGs
including land
use change

Global GHGs
including land
use change

Land

Representation
(Arable land
categories
considered in
biofuel land use
change analysis)

Exogenous
(Land use
change

estimates from
GTAP-BIO and
CCLUB)

Cropland, other
agricultural
land, grassland,
commercial and
non-
commercial
forest,

wetlands, other
natural land

Cropland
(including
cropland-
pasture) ,
livestock
pasture,
"accessible"
forestry land

Cropland,
pasture,
commercial
forest, non-
commercial
forest, natural
grassland,
other land

Cropland,
commercial
pasture and
forest, non-
commercial
pasture and
forest, shrubland,
grassland,
"protected" non-
commercial land

Across the four model types there tends to be a trade-off between scope and detail. The
LCI models have the most detailed technological representations but the most limited scope. For
example, the GREET model includes detailed representations of many biofuel and energy
production processes, but includes no price-induced interactions between supply chains or
economic sectors. PE models also tend to have a high level of detail in the agricultural sector, but
limited interactions with other sectors. For example, the GLOBIOM model has a detailed
representation of crop production, livestock, and land use, but does not include economic
interactions between the agricultural and energy sectors (e.g., fertilizer prices are exogenous).
CGE models are the broadest in economic scope but tend to lack detail in their physical and

146


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technological representations. For example, CGE models are designed to track resources in terms
of their monetary value and require subsequent accounting methods to estimate physical
quantities. IAMs are the broadest in their representation of the interactions between human (e.g.,
economic) and Earth (e.g., biophysical) systems but tend to lack detail in their representation of
particular sectors (e.g., finance, labor) and technologies (e.g., oil refining is represented with one
or two generic technologies).

The modeling frameworks differ substantially in the scope of economic interactions that
they represent. Since the Clean Air Act requires us to consider all significant indirect impacts as
part of our lifecycle analysis, capturing a wide range of economic interactions is important for
understanding the overall GHG impacts of crop-based biofuel production. Based on economic
theory, we expect increased consumption of crop-based biofuels to have complex ripple effects
through the entire world economy. For example, as the demand for feedstocks increase, we
expect the price of these commodities to increase with consequences for food and feed markets
not only in the U.S., but around the world. These interactions are complicated by the fact that the
major crop-based biofuel feedstocks have co-products (e.g., distiller grains, soybean meal) that
are used as livestock feed. Given that producing biofuels requires material (e.g., fertilizer) and
energy (e.g., natural gas), increased biofuel production may affect these input commodity
markets as well. When biofuels displace gasoline or diesel in the U.S., this change may affect
consumer fuel prices and crude oil prices which may in turn affect other sectors of the economy.
LCI models such as GREET ignore most of these economic interactions. However, GREET
includes agricultural sector interactions to a limited extent through the exogenous addition of
land use change GHG estimates. GLOBIOM models economic interactions within and between
the agricultural (including crops and livestock) and forestry sectors. GLOBIOM also includes a
bioenergy sector with limited economic interactions other than through its consumption of
feedstocks from the agricultural and forestry sectors. GCAM models economic interactions
within and between the energy, agriculture, forestry, and water systems. The energy system in
GCAM is highly developed, including energy production from a broad range of technologies and
resources, and energy consumption in the industrial, commercial, residential, transportation,
agriculture, and forestry sectors. As CGE models, GTAP-BIO and ADAGE model interactions
across the entire economy. Thus, CGE models include economic interactions that the other
modeling frameworks take as exogenous or ignore but do so at a highly aggregated level.

Temporal representation, or the treatment of time dynamics, is another important
characteristic that differentiates the modeling frameworks. As a general matter, the ability to
model temporal dynamics is an important feature given that biofuel land use change emissions
occur over time (e.g., soil carbon levels change over multiple decades following land conversion)
and biofuel-induced effects are dependent on factors that change over time, such as crop yields
and overall demands on land to produce food, feed, and fiber. GREET does not represent time as
it is not designed to simulate temporal changes.291 GTAP-BIO is a comparative static model,
meaning it models only one time period and does not project changes over time.292 GLOBIOM,
GCAM and ADAGE are recursive dynamic models whereby production, consumption, and

291	However, as discussed above, if provided with sufficient data, GREET can estimate supply chain emissions for
different time periods

292	GTAP-BIO can model different time periods if the GTAP database is first manually projected forward (or
backward) based on assumptions.

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investment decisions are made on the basis of market conditions in each period with dependence
on previous model periods through capital and/or resource stocks.

Consistent with the statutory definition of lifecycle GHG emissions, we need to consider
significant indirect emissions, and there are many scientific studies showing that such indirect
emissions can occur in many different regions of the globe. Thus, models need to represent all of
the relevant regions in order to satisfy our needs. Furthermore, regional representation is
important due to differing regional conditions related to terrestrial carbon stocks, agricultural
yields, energy resources and other factors. PE, CGE and IAM models often distinguish between
economic regions and spatial regions. These models use algorithms to find market clearing
conditions in, and trade between, each of the economic regions. Spatial regions are often defined
separately to allocate the economic activities to physical locations. GTAP-BIO models 19
economic regions and 18 non-contiguous AEZs (see Figure 4.2.2.2-1). GLOBIOM models 37
economic regions and uses a grid-cell approach to represent 10,000 spatial units worldwide.
GCAM models 32 economic regions and 235 global water basins—the intersection of the
economic regions and water basins produces 384 spatial subregions. A spatial downscaling
model called Demeter is able to present GCAM results at higher spatial resolution
(0.05° x 0.05°).293 ADAGE models 8 economic and spatial regions. In contrast, GREET is not a
spatial or regional model, but it can be customized to represent biofuel production conditions for
particular regions or supply chains. GREET also has modules that are designed to estimate soil
carbon and land use change emissions at a regional level. The FD-CIC module allows users to
estimate feedstock production emissions at county level, and the CCLUB module estimates
indirect land use change emissions based on the spatial regions represented by GTAP-BIO.

There are major differences across the models in their coverage of GHG emissions
sources. As such, the biofuel GHG emissions estimates produced from these models are often
quite different in their scopes. As mentioned previously, GREET estimates direct GHG
emissions from a biofuel production supply chain and ignores indirect market-mediated
emissions from other sources and sectors, with the exception of indirect land use change
emissions which are added exogenously through the CCLUB module. There are versions of
GTAP models that endogenously track GHG emissions from energy and land use. It may be
possible to endogenously track GHG emission in GTAP-BIO, but to our knowledge this
approach has never been used in peer-reviewed studies on biofuel GHG impacts.294 GTAP-BIO
models the entire economy but, at least in terms of peer-reviewed studies on biofuels, changes in
emissions from other sectors of the economy are generally not reported. As discussed above,
land use change GHG emissions are estimated from GTAP-BIO's land use change area estimates
through the application of static land conversion emissions factors. GLOBIOM endogenously
calculates GHG emissions from agriculture, including crop and livestock production, forestry,
and land use change. ADAGE endogenously calculates GHG emissions from the entire
economy, including land use change, while GCAM endogenously calculates global GHG
emissions from the energy, agriculture, forestry and water systems, including from land use
changes. Of the five highlighted models, ADAGE, GCAM, and GTAP are the only models that

293	Chen, M., Vernon, C.R., Graham, N.T. et al. Global land use for 2015-2100 at 0.05° resolution under diverse
socioeconomic and climate scenarios. Sci Data 7, 320 (2020). hi:t:ps://doLorg/10.1038/s41597-020-00889-x

294	See for example: https://www.gtap.agecon.purdue.edu/models/energy/default.asp

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capture GHG emissions from market-mediated changes within the energy system, though energy
sector emissions have not historically been reported in GTAP-BIO LCA calculations.

It is important to note that although GREET, GLOBIOM, ADAGE and GCAM seem to
overlap in their coverage of GHG emissions, they estimate GHG impacts associated with very
different phenomena. For example, GREET and GLOBIOM both estimate GHG emissions from
crop production, but they do so in fundamentally different ways. GREET estimates the GHG
emissions associated with producing the crops that are directly used in the biofuel supply chain
under evaluation. In contrast, GLOBIOM estimates the GHG emissions associated with the
market-mediated marginal changes in crop production stemming from a biofuel shock (i.e., the
difference in crop production emissions from a scenario with a given amount of biofuel relative
to a scenario absent that biofuel). ADAGE and GCAM represent a further departure from the
GREET approach as they include market mediated GHG impacts from yet more economic
sectors. A notable example is the inclusion of GHG emissions from transportation fuel market
effects in ADAGE and GCAM. When these models are shocked to consume more biofuels in a
particular region, they estimate the effects of the shock on transportation fuel prices and
consumption, both in the region where the shock occurs and all other regions around the world.
Thus, instead of assuming that biofuels displace gasoline or diesel on an energy-equivalent basis,
they estimate the global market-mediated changes in gasoline and diesel consumption associated
with the biofuel shock and report the resulting GHG emissions changes.

Representation of land is an important, but often overlooked, consideration for land use
change modeling. By land representation we mean the way that land is categorized and how
much of it is assumed to be unavailable for commercial use. GREET does not explicitly
represent land. The other four models estimate interactions between cropland, pasture, and
forestry. GLOBIOM, ADAGE and GCAM also model the expansion of commercial cropland,
pasture and forestry activities into grassland and forests that are not otherwise used for
commercial production. In contrast, GTAP-BIO only allows managed lands in the U.S. and
around the world to be used for productive uses, excluding the possibility for "unmanaged" land
such as rainforests to be brought into production. As shown in Figure 4.2.2.7-1, this assumption
applies to a relatively large share of arable land and means that GTAP-BIO employs a much
different representation of land than the other models. Additionally, the share of non-commercial
land that is assumed to be protected or unavailable for protected use is also an important
assumption. For example, if the modeling assumes that policies will be implemented and
enforced to protect natural forests with high carbon stocks, this will likely reduce the land use
change GHG estimates by a significant amount.

149


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Figure 4.2.2.7-1: Land available for productive use in five models used to estimate biofuel-
induced land use change295

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There are also significant differences in the data and parameter inputs that are used within
models used for biofuel GHG analysis. There have been very few efforts to compare the many
assumptions across these models or evaluate how they influence the results. As part of the model
comparison exercise that we intend to conduct for the final rule, we will strive, time permitting,
to compare some of the key input assumptions. For now, we can make a limited set of
observations about which assumptions are likely to be important for biofuel GHG modeling and
how they compare across the models.

Assumptions related to crop yields and crop intensification are important for biofuel
GHG modeling. Global crop yield data is readily available from FAO; however, there may be
differences in how the models map this historical data to the crops and regions they represent.
Assumptions about how crop yields may change in the future are also influential and inherently
uncertain. Perhaps even more important for biofuel modeling are assumptions about how crop
yields may change in response to price changes. Plevin et al. (2015) performed a sensitivity
analysis of biophysical and economic inputs to the GTAP-BIO+AEZ-EF modeling framework,
and found the elasticity of crop yield with respect to price (YDEL) to be "by far" the most
influential parameter in terms of its effect on the estimated ILUC emissions associated with corn
ethanol, sugarcane ethanol and soybean oil biodiesel.296 Later studies confirmed that YDEL is
influential in GTAP-BIO and found that other parameters related to crop intensification, such as
the parameters that control multi-cropping (i.e., multiple harvest per year on the same land)
instead of crop expansion to meet demands, also have a significant effect.2' However, a

295	Figure 1 from Plevin, R. J., et al. (2022). "Choices in land representation materially affect modeled biofuel
carbon intensity estimates." Journal of Cleaner Production: 131477. For simplicity, shrubland and some other land
types (e.g., wetlands) are excluded. Note: GREET is not included in this chart since it does not explicitly model land
use change.

296	pieVjn; r j . et al. (2015). "Carbon Accounting and Economic Model Uncertainty of Emissions from Biofuels-
Induced Land Use Change." Environmental Science & Technology 49(5): 2656-2664.

297	Taheripour, F., et al. (2017). "The impact of considering land intensification and updated data on biofuels land
use change and emissions estimates." Biotechnology for Biofuels 10(1): 191

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sensitivity analysis with GCAM did not identify crop yield assumptions to be among the most
influential parameters determining corn ethanol land use change GHG emissions.298 This
suggests that input parameters that are influential in one model might not be very influential in
another model due to structural differences between them. Unfortunately, we do not have
sensitivity analyses from GLOBIOM or ADAGE that estimate the most influential parameters on
biofuel GHG estimates.

The parameters that control land competition and land transitions within the models may
also be important. A sensitivity analysis with GCAM found the parameter controlling ease of
transition between cropland, forest, and grassland to be an influential parameter. A sensitivity
analysis with GTAP-BIO also found that the assumed elasticity of transformation between
managed forest, cropland, and pasture is influential for corn ethanol LUC GHG estimates.299

Sensitivity analysis using GCAM found other assumptions to be influential when
estimating corn ethanol land use change GHG emission, including the soil carbon density of
cropland, ease of transition between crop types, the soil carbon density of grassland and the soil
carbon density of other arable land.300 Other influential assumptions identified through
sensitivity analysis with GTAP-BIO include the relative productivity of newly converted
cropland, trade elasticities (i.e., ease of substitution among products imported from other
countries) and emissions from conversion of cropland pasture.301

Sensitivity analyses have shown that other influential assumptions within GTAP-BIO
include, but are not limited to, tropical peat soil oxidation and the share of palm oil expansion on
peatland for vegetable oil based biofuel modeling, and the share of vegetable oil biofuel
feedstock that is supplied through expanded vegetable oil production versus reduced demand and
substitutions with other products.302

These aspects of vegetable oil market dynamics have led to variation in how different
models capture emission impacts of vegetable oils. Most of the mass and value of soybeans for
instance comes from the plant matter and goes towards livestock feed. Only about 20 percent of
a soybean's mass goes towards oil. This means that modeling the livestock sector and associated
data and parameters are also important considerations for modeling oilseeds. Likewise on the oil
side, the number of vegetable oil substitutes and the degree to which people can or want to
substitute between these oils for both food and fuel is another important consideration in oilseed
modeling. Furthermore, the vegetable oil market dynamics have not been static; over the last

298	Plevin, R. J., et al. (2022). "Choices in land representation materially affect modeled biofuel carbon intensity
estimates." Journal of Cleaner Production: 131477. Figure 7.

299	Plevin, R. J., et al. (2015). "Carbon Accounting and Economic Model Uncertainty of Emissions from Biofuels-
Induced Land Use Change." Environmental Science & Technology 49(5): 2656-2664. Table S9 in the Supplemental
Information.

3°° pievin; R J ; et ai (2022). "Choices in land representation materially affect modeled biofuel carbon intensity
estimates." Journal of Cleaner Production: 131477. Figure 7.

301	Plevin, R. J., et al. (2015). "Carbon Accounting and Economic Model Uncertainty of Emissions from Biofuels-
Induced Land Use Change." Environmental Science & Technology 49(5): 2656-2664. Table S9 in the Supplemental
Information.

302	ICAO (2021). CORSIA Eligible Fuels - Lifecycle Assessment Methodology. CORSIA Supporting Document.
Version 3: 155. Section 6.2

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decade the relative and absolute prices of vegetable oils have grown and changed from their
2010 values. The data and market structure that underlies how these market interactions are
captured differs from model to model.

Another influential assumption in biofuel GHG modeling is the choice of data sets for
soil carbon and biomass carbon stocks, and how these data are mapped to land categories and
regions to determine the GHG emissions from converting an acre of land from one use to
another. The soil and biomass carbon data sources used in each model are discussed in the model
descriptions above. Soil carbon data and analysis are active areas of research, and higher
resolution datasets have recently been produced using statistical methods and remote sensing
data.303 For example, the SoilGrids250m version 2.0 dataset provides soil carbon estimates for
the globe with quantified spatial uncertainty,304 and Spawn et al. (2020) developed global maps
of above and below ground biomass carbon density in the year 20 1 0.305 With few exceptions,306
these newer data sets have not yet been incorporated into published estimates of biofuel land use
change.

4.2.2.8 Review of Land Use Change GHG Estimates

Land use change GHG estimates continues to be a large source of variation between
lifecycle GHG estimates for crop-based fuels. In order to further our understanding of available
models, we reviewed studies that estimate the land use change GHG emissions associated with
corn ethanol and soybean oil biodiesel, which account for the large majority of crop-based
biofuel supply in the U.S. This review included journal articles, major reports and studies that
informed biofuel-related policies. We reviewed studies that were published after the March 2010
RFS2 rule, as that rule considered the available science at the time. In cases where there were
multiple studies that include updates to the same general model and approach, we included only
the most recent study. However, we include older estimates from the GTAP-BIO model that are
still used for the CA-LCFS or the default assumptions in GREET.

We focused our review on estimates of the average type of each fuel produced in the
United States. Many of the studies we reviewed include sensitivity analysis, where many
parameters are varied to produce a large number of estimates. In these cases, we include
representative high and low estimates. For example, when studies report a 95% confidence
interval, we use only the central estimate (usually the default, mean or median estimate) and the
estimates at the top and bottom of the confidence interval. This approach simplifies the
presentation of results relative to including every estimate in between. We intentionally do not
calculate or present any statistics (e.g., mean, median) derived from the estimates, as we do not
believe such statistics would be meaningful or appropriate based on the design and purpose of
our literature review.

303	Spawn-Lee, Seth. (2022). "Carbon: Where is it and how can we know?" Presentation for EPA Biofuel GHG
Modeling Workshop. February 28, 2022. EPA-HQ-OAR-2021-0921-0022

304	Poggio, L., de Sousa, L. M., Batjes, N. H., Heuvelink, G. B. M., Kempen, B., Ribeiro, E., and Rossiter, D.:
SoilGrids 2.0: producing soil information for the globe with quantified spatial uncertainty, SOIL, 7, 217-240, 2021.

305	Spawn, S. A., et al. (2020). "Harmonized global maps of above and belowground biomass carbon density in the
year 2010." Scientific Data 7(1): 112.

306	Lark, T. J., et al. (2022). "Environmental outcomes of the US Renewable Fuel Standard." Proceedings of the
National Academy of Sciences 119(9): e2101084119.

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Figure 4.2.2.8-1 summarizes the land use change GHG estimates from our literature
review for corn ethanol and soybean oil biodiesel.307 All of the estimates in this chart report land
use change GHG estimates as carbon dioxide-equivalent (COze) emissions per megajoule (MJ)
of fuel consumed. All C02e estimates are based on 100-year global warming potential (GWP)
from the IPCC,308 This allows us to compare all of the estimates on a gCCtee/MJ of fuel basis.
However, we stress that many of the studies in this chart do not align in terms of their time
horizon, year of analysis, or other factors. Therefore, the estimates reported in this figure give us
a sense for the range of estimates, but caution is needed when comparing the points in this figure
as the estimates are from evaluations of divergent scenarios and methodologies.

Figure 4.2.2.8-1: Land Use Change GHG Emissions Estimates by Pathway

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307	Details on the sourcing of each estimate from our literature review are available in a memo to the docket for this
proposed rule titled "Notes on Literature Review of Transportation Fuel Greenhouse Gas (GHG) Lifeeycle Analysis
(LCA)."

308	The reviewed estimates use GWP values from the IPCC Second Assessment Report (SAR), Fourth Assessment
Report (AR4) or Fifth Assessment Report (AR5). We did not attempt to harmonize GWP assumptions across studies
as many studies only reported COge results and not emissions by gas.

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Figure 4.2,2.8-1 shows a relatively wide range of land use change GHG estimates,
especially for soybean oil-based biodiesel.3"9 These findings are consistent with the conclusions
of another recent literature review presented at our February 2022 workshop/'1" In order to
highlight the influence of model choice on the land use change estimates, Figure 4.2.2.8-2
arranges the data by model. Once again, caution is needed when comparing the estimates in
Figure 4.2.2.8-2, as the estimates were produced for different scenarios and contexts. With these
qualifications in mind, we can make some general observations from Figure 4.2.2.8-2 about the
effect of model choice on land use change estimates.

Figure 4.2.2.8-2: Land Use Change GHG Emissions Estimates by Model311

Com Starch Ethanol	Soybean Oil Biodiesel

Other -	• • •

MIRAGE-	•	•

• • ¦ •* • •

GTAP-BIO- • • ••«•	• •	••••	••

• •

GLOBIOM •	•	•	•	•	•

GCAM-T	•	•	•

FASOM+GTAP-BIO -
FASOM+FAPRI -
FAPRI -

25	50	75	0	25	50	75

Land Use Change GHG Emissions (gC02e/MJ)

GTAP-BIO is the model with the largest number of estimates in our literature review.
This is partly because GTAP-BIO has been used for multiple publications and purposes. For
example, GTAP-BIO is used to estimate land use change GHG emissions for the CA-LCFS and
the ICAO CORSIA programs. It is also partly due to the way that we filtered and selected
estimates for our review. For example, GLOBIOM recently produced 300 different estimates for
each pathway, but for practical reasons Figure 4.2.2.8-2 includes only the default estimate and
the 2.5% and 97.5% quantile estimates from the Monte Carlo sensitivity analysis.31' As another
example, analysis by Plevin et al (2022) using GCAM-T produced 3,000 estimates of corn

309	Some of the estimates in this figure come from studies that only estimate land use change GHG emissions or do
not conduct full lifecycle estimates for corn ethanol or soybean oil biodiesel and thus do not factor into the LC A
ranges developed below in Chapter 4.2.3. For example, the highest estimate for soybean oil from GLOBIOM does
not factor into the range of LCA estimates for soybean oil biodiesel or renewable diesel summarized in Chapter
4.2.3.12 (see Chapter 4.2.3.4 for more information).

310	Daioglou, V., et al. (2020). "Progress and barriers in understanding and preventing indirect land-use change."
Biofuels, Bioproducts and Biorefining 14(5): 924-934.

311	Details on the sourcing of each estimate from our literature review are available in a memo to the docket for this
proposed rule titled "Notes on Literature Review of Lransportation Fuel Greenhouse Gas (GHG) Lifecycle Analysis
(LCA)."

312	ICAO (2021). CORSIA Eligible Fuels - Lifecycle Assessment Methodology. CORSIA Supporting Document.
Version 3: 155. Lable 67.

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ethanol land use emissions in a recent publication, but Figure 4.2.2.8-3 includes only the mean,
5th and 95th percentile results from the Monte Carlo sensitivity analysis conducted for this
study.313 The FASOM+FAPRI estimates in this figure are from the 2010 RFS2 rule; although
these estimates are over 10 years old, the figure illustrates that they continue to be within the
range of more recent studies. The estimates from the model labeled "Other" in this figure are
from Lark et al. (2022). Lark et al. (2022) developed a new model to estimate U.S. land use
change GHG emissions, and pairs these estimates with estimates of non-U.S. land use change
emissions from other models.

Since Figure 4.2.2.8-2 only reports land use change emissions, we cannot say, based on
the estimates in this figure, which models produce the highest or lowest lifecycle GHG estimates.
Although many of these models can estimate GHG emissions from other sources (and in some
cases all sources), with few exceptions only the land use change GHG emissions have been
reported from these models. As part of our model comparison exercise for the final rule, we
intend to examine a broader range of GHG emissions estimates from these models. For example,
we intend to compare estimates from these models of the GHG emissions associated with
changes in crop production, livestock production, and energy supply and consumption. For now,
we focus our discussion on the land use change results and what factors may explain differences
between estimates.

While there is a large amount of overlap between the range of land use change GHG
estimates from each model, many of the GTAP-BIO estimates are clustered at the relatively low
end of the range of estimates. GCAM tends to have the highest land use change GHG estimates
for corn ethanol, and GLOBIOM tends to have the highest estimates for soybean oil biodiesel
(there are no modeling results from GCAM for soybean oil biodiesel available in the literature).
Without harmonizing scenarios and assumptions it isn't possible to fully explain the source of
the differences. However, based on our current understanding of how these models compare (see
previous section), we can identify some of the potential reasons.

There are three broad elements that contribute to land use change GHG estimates per
gallon of biofuel production: 1) acres of cropland expansion, 2) types of land displaced by
cropland expansion, and 3) GHG emissions per acre of land use change. Comparing these
elements for the published estimates in Figure 4.2.2.8-2 helps us better understand the underlying
differences between the studies. The next two figures compare cropland area impact estimates
across studies for corn ethanol and then soybean oil biodiesel. These studies compared a
reference scenario to a scenario with increased corn ethanol or soybean oil biodiesel production.
The figures show the change in cropland area between these two scenarios. To facilitate
comparison, we normalized the units from all studies to million acres of cropland per billion
gallons of biofuel production (Mac/Bgal). For dynamic models, results are reported for the peak
year of the biofuel shock. We made no other efforts to harmonize these estimates, and we note
that caution is needed when interpreting these figures for many reasons including the divergent
scenarios modeled and differences in the definition of cropland between models.

313 pievin; r j ; (2022). "Choices in land representation materially affect modeled biofuel carbon intensity
estimates." Journal of Cleaner Production: 131477.

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Figure 4.2.2.8-3: Cropland Area Change Estimates by Study for Corn Ethanol

RFS2 rule (aOIOJ/FASOM-FAPRIWIean LUC -











[ 1.3]















Plevin et al (2022)/GCAM-T/Median LUC-



¦T25J

















CARB (2014)/GTAP-BIO+AEZ- E F /Mea ri LUC-



[ 0.78 |









GREET (2021)/GTAP-BIO+CCLUB -

Talieripour et al. (2017)/GTAP-BIO+AEZ-EF/Central LUC-

ICAO (2021 )/GLOSIOM/Central LUC -









[ 0 46 )







Crop Region
World
I Non-USA
F USA

I"1 I

ICAO (2021VGTAP-BIO+AEZ-EF/Centrsl LUC -

Laborde elal (2014VMIRAGE-

0 0	0.5	1.0

Corn Starch Ethanol Crop Area Change (M Acres / Bgal)

Notes: The name on they-axis for each bar/estimate includes multiple descriptors separated by In order, these descriptors are
the author or other name (e.g. , RFS2 rule), the name of the model used to estimate land use change impacts, and a brief descriptor
of the scenario modeled. For studies that did not report disaggregated estimates by USA and Non-USA we only report the World
total. Scenarios modeled and definitions of cropland differ across studies. ICAO (2021) estimates for corn ethanol to jet fuel were
adjusted based on the assumed jet fuel yield.

For corn ethanol, we see relatively wide variation across studies in the amount of
cropland expansion estimated per gallon of biofuel production, ranging from approximately 0.2
to 1.5 Mac/Bgal ethanol. The largest estimate comes from the FASOM-FAPRI modeling for the
2010 RFS2 rule. The next largest estimate comes from GCAM-T (Plevin et al. 2022). Estimates
from GTAP-BIO straddle the most recent estimate from GLOBIOM. The lowest estimate comes
from a 2014 study for the European Commission using the MIRAGE model. Estimates from the
same model also show large variations. The estimates from GTAP-BIO range from 0.25 to 0.8
Mac/Bgal. For studies that report cropland area changes by region, there are also large
differences in how much of the estimated cropland impacts occur in the U.S. versus other
regions. Among these studies, GCAM-T estimates the largest share of cropland impacts in the
U.S. (Plevin et al. 2022) and the GTAP-BIO modeling by Taheripour et al. (2017) estimates the
lowest share of cropland impacts in the U.S.

The empirical studies reviewed in Austin et al. (2021) provide a point of comparison for
the U.S. cropland area estimates in Figure 4.2.2.8-3 which come from economic models. Lark et

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al. (2022) estimates increased cropland area of 0.9 Mac/Bgal of corn ethanol (95% confidence
interval of 0.8 to 1.1). Li et al. (2019) estimates a direct effect of 0.6 Mac/Bgal of corn ethanol
capacity (95% confidence range of 0.4 to 0.8), excluding price effects. If we use the Li et al.
(2019) elasticity of cropland area to crop price estimated (0.07 +/- 0.02) and assume crop prices
increase 1.8% (+/- 0.7%) per Bgal of corn ethanol based on the empirical study by Roberts and
Schlenker (2013)314, we derive an estimate from Li et al. (2019) including crop price effects of
1.0 Mac/Bgal (range of 0.4 to 1.4). This range of 0.4 to 1.4 Mac/Bgal for U.S. cropland
encompasses the Lark et al. (2022) estimate and the four highest of the economic model
estimates in the figure above. Other estimates from the Austin et al. (2021) review include
estimates from a PE model called BEPAM of 0.47 Mac/Bgal (Chen and Khanna 2018),315 and
0.14 Mac/Bgal (Khanna et al. 2020).316 Using an unnamed PE model, Bento et al. (2015)
estimated 0.33 Mac/Bgal for the period from 2009-2012 and 0.49 Mac/Bgal for 2012-2015.
Other estimates reviewed in Austin et al. (2021) either predate the 2010 RFS2 rule analysis or
failed to consider price-induced effects. Overall, our review of estimates from PE, CGE, IAM
and empirical studies includes a range for the effect of corn ethanol on U.S. cropland spanning
from 0.14 to 1.4 Mac/Bgal. There is overlap between empirical and modeled estimates in the
range of 0.4 to 1.0 Mac/Bgal, although this includes only two empirical studies. Below we
discuss some of the modeling assumptions that influence these cropland area estimates and their
implications for land use change GHG estimates.

314	Roberts, M. J. and W. Schlenker (2013). "Identifying Supply and Demand Elasticities of Agricultural
Commodities: Implications for the US Ethanol Mandate." American Economic Review 103(6): 2265-2295.

315	Chen, X. and M. Khanna (2018). "Effect of corn ethanol production on Conservation Reserve Program acres in
the US." Applied Energy 225: 124-134.

316	Khanna, M., et al. (2020). "Assessing the Additional Carbon Savings with Biofuel." BioEnergy Research 13(4):
1082-1094.

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Figure 4.2.2.8-4: Cropland Area Change Estimates by Study for Soy Biodiesel

CARB (2014)/GTAP'BIOAEZ-EF/Meari LUC -

ICAO (2021 yGLOBIOM/Central LUC -









GREET (2021 )/GT AP-B 10+CC LUB/Avg. Proxy-



¦jM3j









GREET (2021 VGTAP-8IO+CCLUB/Case 8 -

Laborde etal. (2014VMIRAGE-

GREET (2021)K3TAP-BIO+CCLUB/GTAP 2011 •

ICAO (2021 VGTAP-BICHAEZ-EF/Ceritral LUC -

Taheripour et al. (2017 )/GT AP-B I O+AEZ-ERCentral LUC -

Crop Region
[ Wold
I Non-USA
I USA

0 0	0.5	1 0	1.5

Soybean Oil Biodiesel Crop Area Change (M Acres / Bgal)

Notes: The name on they-axis for each bar/estimate includes multiple descriptors separated by "if". In order, these descriptors are
the author or other name (e.g., CARB), the name of the model used to estimate land use change impacts, and in some cases a
brief descriptor of the scenario modeled. For studies that did not report disaggregated estimates by USA and Non-USA we only
report the World total. Scenarios modeled and definitions of cropland diffei across studies. ICAO (2021) estimates for soybean
oil to jet fuel were adjusted based on the assumed jet fuel yield relative to biodiesel.

Figure 4.2.2.8-4 summarizes estimated crop area changes associated with soybean oil
biodiesel production. The estimates from the 2010 RFS2 rule are excluded from this chart to
improve legibility as they project a much larger amount of cropland change (6.6 M Acres/Bgal).
As discussed below, the relatively large cropland area impact from FASOM-FAPRI is not
accompanied by similarly large land use change GHG estimates due to the way these models
estimate other land types to shift in response.31. There is a group of estimates between 1.2 and
1.5 million acres per billion gallons, including estimates with GLOBIOM, MIRAGE and the
GTAP-BIO modeling done with CARB for the CA-LCFS. The lowest group of estimates, 0.2 to
0.5 million acres per billion gallons, all come from the GTAP-BIO model. The most recent

317 For example, for the U.S. FASOM projected an increase in cropland of 3.5 M acres.Bgal, but the GHG impacts
were muted because the cropland increases were accompanied by decreases in idle land (-5.7 M aCres/Bgal) and
rangeland ( 5.4 M atres/Bgal) and increases in forest-pasture land (6.9 M acres/Bgal). For the rest of the world,
FAPRI projected a large increase in cropland (3.1 M acres/Bgal) accompanied by a reduction in pasture area
(associated with the market-mediated effects of increased soybean meal supplies on livestock producers) and
accompanying increases in forest area (0.7 M acres/Bgal) especially in Brazil.

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GTAP-BIO estimates are the lowest among the group, at 0.24-0.25 million acres per billion
gallons. Between the GTAP-BIO modeling for CARB and the more recent estimates, a number
of updates were made to the GTAP-BIO model that lowered the cropland area estimates,
including revising the assumptions that determine crop intensification in response to price
changes and multi-cropping (Taheripour et al. 2017). Unlike corn ethanol, we did not identify
any empirical estimates of cropland area changes attributable to soybean oil biodiesel
production. Thus, we do not have any empirical comparisons with the modeled estimates in
Figure 3.2.2.8-4. Below we discuss some of the factors that influence these modeled estimates of
cropland area impacts and their implications for land use change GHG emissions estimates.

The second broad element that contributes to land use change GHG estimates is the type
of land impacted. The next two figures compare area changes in cropland, pasture, forest and
other land types across studies for corn ethanol and then soybean oil biodiesel.318 Similar to the
figures above for cropland area impacts, we normalized the estimates per billion gallons of
biofuel to facilitate comparison. In some cases, we aggregated or slightly modified the categories
of land to facilitate comparison. For example, we aggregated GCAM-T's commercial and non-
commercial forest categories and report them as forest. Once again, caution is needed comparing
results as we made no other efforts to align scenario design or other factors.

318 The MIRAGE estimates from Laborde et al. (2014) are also excluded as that study does not report area changes
by land type.

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Figure 4.2.2.8-5: Land Use Change Estimates by Study for Corn Ethanol

-2	-10	12

Corn Starch Ethanol Area Change (M Acres / Bgal)

Notes: The name on the y-axis for each bar/estimate includes multiple descriptors separated by In order, these descriptors are
the author or other name (e.g.. CARB). the name of the model used to estimate land use change impacts, and in some cases a
brief descriptor of the scenario modeled. In some cases, we have aggregated or relabeled land Categories to facilitate comparison
across estimates. For example, forest pasture in FASOM is reported as forest in this figure. ICAO (2021) estimates for corn
ethanol to jet fuel were adjusted based on the assumed jet fuel yield.

All of the estimates in the above figure reported cropland area increases and decreases in
other land types in response to additional corn starch ethanol production. However, the types of
land displaced by increased cropland differs among the estimates. The estimates with GTAP-
BIO have cropland pasture decreasing more than any other land type. As discussed more below,
cropland pasture plays an important role in land use change modeling both in terms of how it is
represented, and the estimated soil carbon changes associated with its use for crop production.
Pasture is modeled separately from cropland pasture, it decreases in area in all of the estimates,
and it is the land type that decreases the most in the GCAM-T estimate from Plevin et al. (2022).
Most of the estimates include a relatively small amount of forest area decreases, with the
GCAM-T estimate reporting the largest decrease. The GCAM-T and GLOBIOM estimates
include decreases in other natural land types such as grassland, savannah, and shrubland; the
GTAP-BIO estimates do not report decreases in these land types as the model only represents
commercially managed land.

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Figure 4.2.2.8-6: Land Use Change Estimates by Study for Soybean Oil Biodiesel

Taheripourelal. (2017)/GTAP-BIO-

-1	0	1

Soybean Oil Biodiesel Area Change (M Acres / Bgal)

Notes: The name on the y-axis for each bar/estimate includes multiple descriptors separated by In order, these descriptors are
the author or other name (e.g., RFS2 rule), the name of the model used to estimate land use change impacts, and in some cases a
brief descriptor of the scenario modeled. In some cases we have aggregated or relabeled land categories to facilitate comparison
across estimates. ICAO (2021) estimates for soybean oil to jet fuel were adjusted based on the assumed jet fuel yield relative to
biodiesel.

The land use change estimates for soy biodiesel in Figure 4.2.2.8-6 come from GTAP-
B10 and GLOBIOM. There are several estimates from GTAP-BIO as the GREET model gives
users multiple choices of which GTAP-BIO estimates to use when estimating soybean oil
biodiesel land use change GHG emissions. The GTAP-BIO estimates conducted for the CA-
LCES have much larger areas of cropland expansion than the other more recent GTAP-BIO
estimates. However, the pattern of land use change is similar in all the GTAP-BIO estimates,
with cropland pasture decreasing the most followed by pasture and managed forest. In contrast,
the GLOBIOM estimates have other natural land (e.g., grassland, savannah, shrubland) as the
largest category of decline. GLOBIOM does not include cropland pasture as a categoiy, but it
includes "abandoned" land that GTAP-BIO does not represent. In all the estimates in this figure,
forest declines by a relatively small amount, with the most recent GTAP-BIO estimates by
Taheripour et al. (2017) and ICAO (2021) showing very small areas of forest loss. We note once
again that caution is needed interpreting these results as the figure above aggregates land
categories for comparison across models to facilitate comparison. Land categories are defined
and modeled differently across the models.

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The RFS2 (2010) estimates are not included in Figure 4.2.2.8-6 because they are different
in their size and pattern and would reduce legibility. In the RFS2 (2010) estimates, cropland area
increases 6.6 M acres per Bgal, and pasture declines by about the same amount. Although RFS2
(2010) estimates much larger cropland area increases than the other studies, the associated land
use change GHG emissions are more similar in size due to the pattern of other land use changes.
For example, the RFS2 (2010) results include an increase in forest pasture area in the U.S. (6.9
M acres per Bgal) and an increase in forest area (0.7 M acres per Bgal) outside of the U.S.
associated with a reduction in pasture area particular in Brazil. These forest area increases offset
the GHG impacts of expanding cropland in the RFS2 (2010) analysis.

The third broad element that contributes to land use change GHG estimates are the
emissions factors and formulas that are used to convert areas of land use change to GHG
emissions. These emissions factors are developed from data on biomass (above and below
ground) and soil carbon for multiple land categories for regions. We do not have sufficient
information at this time to summarize these emission factors in a figure the directly and
meaningfully compares these inputs assumptions. However, we can make some observations
based on our review of the available studies.

At the most basic level, we can clearly say that the land use change emissions factors are
an influential part of biofuel GHG modeling. For the GTAP-BIO studies reviewed, two different
tools are used to estimate land use change GHG emissions based on the estimated land area
changes: the AEZ-EF model319 and the CCLUB model.320 These tools essentially apply different
emission factors to the land area change outputs from GTAP-BIO. Based on cases where both
tools have been applied to the same GTAP-BIO estimates we can see that they have a relatively
large effect on the resulting land use change GHG estimates. Our literature review includes 12
corn ethanol land use change GHG estimates from GTAP-BIO+AEZ-EF ranging from 12 to 37
gC02e/MJ, and 9 estimates from GTAP-BIO+AEZ-EF ranging from -1 to 9 gC02e/MJ. Chen et
al. (2018) applied both CCLUB and AEZ-EF to four sets of GTAP-BIO results. Using AEZ-EF
the land use change GHG emissions estimates are 22, 26, 17 and 18 gC02e/MJ. Applying
CCLUB to the same GTAP-BIO results gives land use change GHG estimates of 8, 10, 4 and 6.
In these cases, using CCLUB reduced the estimates by 12-16 gC02e/MJ, or about 67% on
average, relative to using AEZ-EF. The data and assumptions within each of these tools are also
important. Plevin et al. (2015) conducted a Monte Carlo simulation and found that varying key
assumptions within AEZ-EF could increase or decrease corn ethanol and soy biodiesel land use
change GHG estimates by about 20% in either direction (95% confidence interval).321

In this section (Chapter 4.2.2), we have reviewed available models for biofuel GHG
analysis, the main characteristics of these models, and GHG estimates they have produced for
corn ethanol and soybean oil biodiesel. Based on this review we have found that there are four
different types of models (PE, CGE, IAM, LCI) with fundamentally different structures. These
models have large differences in the sectors and GHG emission they cover, the way they

319	Plevin, R., et al. (2014). Agro ecological Zone Emission Factor (AEZ EF) Model (v52): A model of greenhouse
gas emissions from land use change for use with AEZ based economic models.

320	Kwon, H., et al. (2020). Carbon Calculator for Land Use and Land Management Change from Biofuels
Production (CCLUB).

321	Based on visual inspection of Figure SI 1.

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represent land and time, and many other differences. Our review shows that land use change is
an important and uncertain aspect of crop-based biofuel GHG modeling. There continues to be a
wide range of available estimates of land use change GHG emission associated with corn
ethanol, soybean oil biodiesel and soybean oil renewable diesel. We have made some
observations about key factors that are contributing to the differences in these estimates, but we
do not have a systematic quantification of which factors are most important across all of the
models. Furthermore, in many areas where the models disagree in their assumptions (e.g., crop
intensification, soil carbon effects, livestock market effects, fuel market effects) there is
disagreement or a lack of information on the most scientifically justifiable values to use for this
type of modeling.

A major challenge in our review is that available estimates come from studies that
evaluated different scenarios and reported results in different formats and units. In order to
provide additional information to inform the final rule, we intend to conduct a model comparison
exercise that will address some of these challenges. For the model comparison exercise, we will
use a common set of scenarios and align model outputs to the extent possible. We will also
attempt to align input assumptions and time permitting conduct sensitivity analyses. We believe
this will give us a much greater level of information about the best available biofuel GHG
modeling to inform the final rule. Given the complexity of crop-based biofuel GHG modeling, it
is likely the model comparison exercise will raise further important questions. While this
exercise will focus on comparing economic and lifecycle simulation models, we will also
continue to review relevant empirical studies (see Chapter 4.2.2.6) and other science to inform
and compare with the modeling.

4.2.3 Range of LCA Estimates by Fuel Pathway for Illustrative Scenario

As discussed at the beginning of Chapter 4.2, our assessment of the climate change
impacts of the proposed rule relies on an extrapolation of lifecycle analyses (LCA) of GHG
emissions. As we did in the 2020-2022 RVO rulemaking, this approach involves multiplying
LCA emissions of individual fuels by the change in the candidate volumes of that fuel to
quantify the GHG impacts. We repeat this process for each fuel (e.g., corn ethanol, soybean
biodiesel, landfill biogas CNG) to estimate the overall GHG impacts of the candidate volumes.
In the 2020-2022 RVO rulemaking, we applied the LCA estimates that we developed in the
March 2010 RFS2 rule (75 FR 14670) and in subsequent agency actions. In this rulemaking, we
are updating our approach to use a range of LCA emissions estimates that are in the literature.
Instead of providing one estimate of the GHG impacts of each candidate volume, we provide a
high and low estimate of the potential GHG impacts, which is inclusive of the values we
estimated in the 2010 RFS final rule and subsequent agency actions. We then use this range of
values for considering the GHG impacts of the candidate renewable fuel volumes that change
relative to the No RFS baseline.

In this chapter we present the range of LCA estimates contained within the published
literature for each fuel pathway.322 We conducted a high-level review of relevant literature for

322 Details on the sourcing of each estimate from our literature compilation are available in a memo to the docket for
this proposed rule titled "Notes on Literature Review of Transportation Fuel Greenhouse Gas (GHG) Lifecycle
Analysis (LCA)."

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the biofuel pathways (combination of biofuel type, feedstock, and production process) that would
be most likely to satisfy the candidate renewable fuel volumes. Our literature review was broad
and includes studies that estimate the lifecycle GHG emissions associated with the relevant
biofuel pathways and the petroleum-based fuels they replace.

We believe the presentation of ranges based on literature review provides important
information for readers about the variety of estimates in the scientific literature and illustrates the
level of uncertainty in these estimates. In Chapter 4.2.4 we describe how the LCA estimates for
each pathway are used to estimate a potential range of GHG impacts associated with the
candidate volumes relative to the No RFS baseline for an illustrative 30-year scenario. The
chapter that follows (Chapter 4.2.5) describes how the GHG estimates are used to estimate the
potential monetized benefits of the GHG impacts associated with the candidate volumes relative
to the No RFS baseline for an illustrative 30-year scenario.

We reviewed relevant literature and identified a range of lifecycle GHG estimates for the
biofuel pathways with increased consumption in the candidate volumes scenario relative to the
No RFS baseline scenario (see Chapter 3 for description of these scenarios). We also identified a
range of lifecycle GHG estimates for the conventional fossil-based fuels that the biofuels are
likely to replace. Our compilation includes journal articles, major reports and studies that inform
biofuel-related policies. We include estimates from the March 2010 RFS2 rule and studies
published after the March 2010 RFS2 rule, as that rule considered the available science at the
time. We do not claim that our compilation is fully comprehensive, but we attempted to include
relevant studies published before Spring 2022. In cases where there were multiple studies that
include updates to the same general model and approach, we included only the most recent
study. However, we include a subset of older estimates that are still used for major regulatory
programs or that continue to be widely cited for other reasons. We focused our compilation on
estimates of the average type of each fuel produced in the United States (e.g., natural gas-fired
corn ethanol plants), though we include a discussion at the end of this section (Chapter 4.2.3.12)
about how advanced technologies could lead to more significant emissions reductions in the
future. In this section (Chapter 4.2.3) we focus on studies that estimate full lifecycle (or "well-to-
wheel") GHG emissions. For crop-based biofuels, there are many studies that only estimate land
use change GHG emissions; these studies are discussed in Chapter 4.2.2.8.

Many of the studies we compiled include sensitivity analysis, where many parameters are
varied to produce a large number of estimates. In these cases, we include representative high and
low estimates. For example, when studies report a 95% confidence interval, we use only the
central estimate (usually the default, mean or median estimate) and the estimates at the top and
bottom of the confidence interval. This approach simplifies the presentation of results relative to
including every estimate in between. We believe this approach is appropriate given that the
primary purpose of our literature review is to produce a range (high and low estimate) for each
pathway. We intentionally do not calculate or present any statistics (e.g., mean, median) derived
from the estimates included in our literature review, as we do not believe such statistics would be
meaningful or appropriate based on the design of our literature compilation. As discussed below,
in some cases we remove outlier estimates in order to form a range that we believe is
representative of the likely upper and lower GHG impacts of each biofuel pathway on a national
average basis. We believe this is appropriate as the purpose of our review is to consider national

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average fuel production, not regional variation or unique conditions that are unlikely to represent
the impacts of the candidate volumes relative to the No RFS baseline.

Figure 4.2.3-1 provides an overview of the lifecycle GHG estimates in our literature
compilation. This chart only includes studies that report the full well-to-wheel emissions
associated with each pathway. All of the pathways in our compilation are included with the
exception of compressed natural gas (CNG) produced from manure digester biogas, as some of
the estimates for this pathway (e.g., 533 gCChe/MJ) are so low that they skew the rest of the
chart. All of the estimates in this chart report lifecycle GHG estimates as carbon dioxide-
equivalent (CChe) emissions per megajoule (MJ) of fuel consumed. All CChe estimates are based
on 100-year global warming potential (GWP) from the IPCC.323 This allows us to compare all of
the estimates on a gCChe/MJ of fuel basis. However, we stress that many of the studies in this
chart do not align in terms of their scope, system boundaries, time horizon, year of analysis, or
other factors. Therefore, the estimates reported in this figure give us a sense for the range of
estimates for each pathway, but we must exercise caution when comparing estimates and
drawing conclusions.

323 The reviewed estimates use GWP values from the IPCC Second Assessment Report (SAR), Fourth Assessment
Report (AR4) or Fifth Assessment Report (AR5). We did not attempt to harmonize GWP assumptions across studies
as many studies only reported C02e results and not emissions by gas.

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Figure 4.2.3-1 Lifecycle GHG Emissions Estimates by Pathway

Petroleum Gasoline -

• •V

Petroleum Diesel -

•V

Natural Gas CNG -

••••*

Corn Starch Ethanol -

Soybean Oil Biodiesel -

Soybean Oil Renewable Diesel-

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• •

• •
• • •

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• • •• •
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• • •

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UCO Biodiesel -

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•	• • •

UCO Renewable Diesel -

• • •« •
» ••• ••

Tallow Biodiesel-



Tallow Renewable Diesel - •

• • •

DCO Biodiesel -

• • •• •

DCO Renewable Diesel -

LFG CNG -

• •

0	40	80	120

Lifecycle GHG Emissions (gC02e/MJ)

Notes: LFG = landfill gas, CNG = compressed natural gas, DCO = distillers corn oil, UCO = used cooking oil.
Other than reporting all estimates in gC02/MJ no effort has been made to harmonize estimates. Corn starch ethanol
and LFG electricity are reported following gasoline as these pathways are more likely to displace gasoline than
diesel. The other pathways are reported after petroleum diesel as they are more likely to displace diesel.

Figure 4.2.3-1 shows that, in general, the CI estimates for biofuel pathways tend to be
lower than those for petroleum gasoline, diesel, and natural gas. GHG emissions for biofuels
produced from corn and soybeans tend to be higher than those produced from used cooking oil,
tallow or landfill gas. However, there are some high estimates for the tallow-based pathways

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when animal production emissions are allocated to the tallow.324 Most lifecycle GHG estimates
are presented as grams of CChe emissions per megajoule (gCChe/MJ) of additional renewable
fuel consumed. These estimates are often called the "carbon intensity" (CI) of the fuel or the
well-to-wheel (WTW) GHG emissions associated with the fuel. Below, we summarize the results
of this literature review for each of the relevant biofuel pathways. For better legibility we provide
a list of references at the end of this section rather than using footnotes.

4.2.3.1 Length of Time Period for Analysis

The time period over which land use change emissions are quantified influences the GHG
estimates for crop-based renewable fuels. If increased demand for biofuels leads to land
conversion, an initial pulse of emissions would likely be released in the first year, and there
would also be foregone sequestration over time based on the carbon that would have been
sequestered through plant growth absent the biofuel induced land use change.325 Over time, if the
biofuel production continues, the GHG benefits of displacing fossil fuels may eventually "pay
back" the initial increase in GHG emissions from the first year. Thus, when increased biofuel
production is expected to result in land conversion, longer analytical time horizons should result
in greater GHG reduction estimates than shorter time horizons, provided other assumptions are
met. The question of the appropriate time horizon over which to evaluate the net emissions can
depend on many factors (e.g., the lifetime of the project, the goals of the program, future
projections of renewable fuels use). After considering public comments and the input of an
expert peer review panel, in the March 2010 RFS2 rule (75 FR 14670), EPA determined that our
lifecycle greenhouse gas emissions analysis for renewable fuels would quantify the GHG
impacts over a 30-year period. One of the reasons for using 30 years as a reasonable time horizon
for analysis is that biofuel production facilities last multiple decades after they are constructed.

EPA continues to believe that 30 years is an appropriate timeframe for evaluating the
lifecycle GHG emissions of renewable fuels for purposes of determining which fuel pathways
satisfy the statutory GHG reduction thresholds for qualification under each of the four categories
of renewable fuel. With respect to estimating the GHG impacts of this rulemaking specifically,
the CAA gives us discretion to choose the appropriate analytical time period. On one hand, this
Set rule is part of the broader RFS program that has been in existence since 2005, so there have
been long-term market impacts of standards that were set in past individual years. Furthermore,
once the cost of clearing and converting land is incurred, and given that global cropland areas are
expected to continue expanding, it seems likely that land will continue to be used for agricultural

324	Seber, G., et al. (2014). "Environmental and economic assessment of producing hydroprocessed jet and diesel
fuel from waste oils and tallow." Biomass and Bioenergy67: 108-118.

325	The initial pulse of emissions may take longer than one year depending on the fate of the biomass cleared from
the land. For example, if the biomass is burned, the emissions will indeed occur in the first year. If it is left on the
ground or landfilled the emissions associated with biomass decay may occur over several years. The lifecycle GHG
analyses for the March 2010 RFS2 rule allocated international biomass clearing emissions to the first year. We said
at the time that this was a simplification that was appropriate for the purposes of the analysis. EPA (2010).
Renewable fuel standard program (RFS2) regulatory impact analysis. Washington, DC, US Environmental
Protection Agency Office of Transportation Air Quality. EPA-420-R-10-006. Section 2.4.4.2.6.8.

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purposes in the future for a period of time.326 On the other hand, the volumes in this rule do not
extend beyond 2025 and making projections about future policies, volume requirements, and
renewable fuel use are inherently uncertain. However, since we have chosen to use LCA GHG
estimates as the proxy for evaluating the climate change impacts of this rule, it is consistent to
use the same 30-year analytical time period for the purposes of estimating the GHG impacts of
this rule. Therefore, in the illustrative GHG scenario presented in Chapter 4.2.4, the analyses
make the assumption that, in each of the 29 years following the introduction of the final
standards, aggregate renewable fuel consumption (and consequent increased demand for
agricultural goods) for each category exceeded baseline levels by the same volume as required
by this rule.

In order to estimate the monetized social cost or benefit of the candidate biofuel volumes
in Chapter 4.2.5, annual streams of emissions are required. In the literature review described
below, all the studies that include land use change annualize these emissions over a time period
of 20 to 30 years. However, many of these studies do not report annual streams of emissions.
Rather, they report average annualized emissions over a 20-30-year period, and it is not possible
to produce a credible annual stream of emissions from these estimates based on the information
provided. Thus, to develop ranges for purposes of estimating the monetized GHG impacts we
must rely on the high and low estimates that report annual streams of emissions. This is
discussed further below for each of the crop-based pathways that involve land use change
emissions.

4.2.3.2 Petroleum Gasoline and Diesel

The net GHG impacts of the production and use of biofuels depends on the GHG
emissions associated with the conventional fuels they displace. For the purposes of conducting
the lifecycle GHG emissions analysis and determining which biofuels meet the GHG
requirements, CAA Section 211 (o) (1) (C) defines baseline lifecycle greenhouse gas emissions as
"the average lifecycle greenhouse gas emissions, as determined by the Administrator, after notice
and opportunity for comment, for gasoline or diesel (whichever is being replaced by the
renewable fuel) sold or distributed as transportation fuel in 2005." As the baseline lifecycle GHG
emissions are used for a specific purpose under the RFS program, we are not required to use it
for evaluating the GHG impacts of this proposed rule. Given that this rule involves biofuel
production and use in 2022 and beyond, we believe it is appropriate to consider LCA estimates
for gasoline and diesel production that occurred more recently than 2005. Furthermore, given
that we are developing a range LCA estimates from literature for biofuels, we believe a similar

326 Globally cropland areas have been expanding, suggesting that once land is put into cultivation it is likely to stay
under production. Potapov et al. (2022) report that cropland area increased by 9% globally from 2003 to 2019.
Furthermore, integrated assessment modeling of future scenarios suggests that global cropland areas, including
bioenergy cropland, are expected to increase through 2100. See for example the figure on page 32 of IPCC (2019).
Potapov, P., Turubanova, S., Hansen, M.C. et al. Global maps of cropland extent and change show accelerated
cropland expansion in the twenty-first century. Nat Food 3, 19-28 (2022). hi:t:ps://doLorg/10.1038/s43018-021-
00429-z; IPCC, 2019: Summary for Policymakers. In: Climate Change and Land: an IPCC special report on climate
change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in
terrestrial ecosystems [P.R. Shukla, J. Skea, E. Calvo Buendia, V. Masson-Delmotte, H.- O. Portner, D. C. Roberts,
P. Zhai, R. Slade, S. Connors, R. van Diemen, M. Ferrat, E. Haughey, S. Luz, S. Neogi, M. Pathak, J. Petzold, J.
Portugal Pereira, P. Vyas, E. Huntley, K. Kissick, M. Belkacemi, J. Malley, (eds.)]. In press.

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approach is appropriate for the conventional fuels they replace. Thus, our literature review for
this proposed rule includes studies that estimate the lifecycle GHG emissions associated with
petroleum-based gasoline and diesel.

For the March 2010 RFS2 rule, EPA estimated the lifecycle GHG emissions associated
with average 2005 gasoline and diesel. Our review includes the 2010 RFS2 rule and studies that
estimated lifecycle GHG emissions for average U.S. gasoline and diesel that were published
following the 2010 RFS2 rule. Studies that estimate only the GHG emissions associated with
crude oil extraction327 or refining328 are excluded from our review, as we require estimates of the
full lifecycle GHG emissions. It is not appropriate to simply sum crude oil extraction estimates
with refining estimates as the properties of the crude oil from different wells significantly effects
the refining emissions.

We recognize that the CI of the average gallon of gasoline and diesel replaced by biofuels
may be different than the CI of the marginal gallons replaced. While there is one study that
suggests the CI of the marginal oil supplies may be higher than average oil supplies,329 we did
not identify any studies that estimate the full lifecycle GHG emissions of the marginal volumes,
including oil extraction, oil transport, refining, fuel distribution and use.

327	See for example, Masnadi, M. S., et al. (2018). "Global carbon intensity of crude oil production." Science
361(6405): 851-853.

328	See for example, Jing, L., et al. (2020). "Carbon intensity of global crude oil refining and mitigation potential."
Nature Climate Change 10(6): 526-532.

329	Masnadi, M. S., et al. (2021). "Carbon implications of marginal oils from market-derived demand shocks."
Nature 599(7883): 80-84.

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Figure 4.2.3.2-1: Petroleum Gasoline Lifecycle GHG Estimates

0	25	50	75	100

Petroleum Gasoline GHG Emissions (gC02e/MJ)

Notes: The name on the y-axis for each bar/estimate includes multiple descriptors separated by "/". In order, these descriptors are
the author or other name (e.g., RFS2 rule) and a brief descriptor of the scenario modeled. The Upstream stage includes all of the
emissions associated with extracting, handling and delivering crude oil to the refinery gate. The. Conversion stage includes
emissions associated with refining. The Downstream stage includes emissions associated with gasoline distribution and tailpipe
combustion emissions. The gasoline baseline estimate in the March 2010 RFS2 rule used SAR GWP values. All values in this
chart use 100-year AR5 GWP values.

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Figure 4.2.3.2-2: Petroleum Diesel Lifecycle GHG Estimates

0	25	50	75

Petroleum Diesel GHG Emissions (gC02e/MJ)

Notes: The name on the y-axis for eaich bar/estimate includes multiple descriptors separated by 7". In order, these descriptors are
the author or other name (e.g., RFS2 rule) and a brief descriptor of the scenario modeled. The Upstream stage includes all of the
emissions associated with extracting, handling and delivering crude oil to the refinery gate. The. Conversion stage includes
emissions associated with refining. The Downstream stage includes emissions associated with diesel distribution and tailpipe
combustion emissions. The diesel baseline estimate in the March 2010 RFS2 rule used SAR GWP values, but all the values in
this chart use 100-year AR5 GWP values.

The 2010 RFS2 estimates were largely based on a study by the National Energy
Technology Laboratory (NETL).330 A team of NETL researchers published new estimates of the
lifecycle GHG emissions associated with 2005 and 2014 average U.S. gasoline and diesel
(Cooney et al. 2017). For 2005 average diesel the Cooney et al. (2017) estimates are very similar
to our estimates for the 2010 RFS2 rule, For 2005 average gasoline the Cooney et al. (2017)

330 U.S. EPA, (2010). 2005 Petroleum Baseline Lifecycle GHG (Greenhouse Gas) Calculations. U.S. Environmental
Protection Agency, EPA-HQ OAR-2005-0161 3151. Washington DC, January. Available at
https://www.regulations.gov/document/EPA-HO-OAR 2005-0161-3151

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estimates are higher by approximately 4 gC02e/MJ. The Cooney et al. (2017) estimates for 2005
average gasoline and diesel values represent the high end of the range used in our illustrative
GHG impacts assessment. The GREET-2021 model estimates lifecycle GHG emissions for
average U.S. gasoline and diesel. The GREET estimates for average gasoline and diesel are
lower than the estimates from RFS2 rule (2010) and Cooney et al. (2014) but all of these
estimates are all within 5 gCChe/MJ. The figures above also report results from a study with the
BEIOM model (Avelino et al. 2021), an "environmentally extended input-output model." The
BEIOM estimates are significantly lower than those from the other studies. BEIOM's
methodology differs significantly from the other studies in our review and is limited in
geographic scope to the United States, which may explain its lower estimates for the carbon
intensity of gasoline and diesel. Based on our review of published estimates, we use a range of
84 to 98 gC02e/MJ for gasoline and for diesel we use a range of 84 to 94 gC02e/MJ.

4.2.3.3 Corn Starch Ethanol

More studies have been published on the GHG emissions associated with corn starch
ethanol than any of the other biofuel pathways considered for this rule. Our literature review
includes 9 studies that estimate the lifecycle GHG emissions associated with corn ethanol. Many
of these studies include multiple emissions estimates based on different assumptions about the
energy efficiency of dry mill ethanol production, co-products and other factors. Some of these
studies report a large number of estimates. The figure below includes 19 estimates from these
studies that are representative of the range of results that each of them reports.

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Figure 4.2.3.3-1: Corn Starch Ethanol Lifecycle Greenhouse Gas Estimates

Lark et al. (2022)/Other/RFS2 RIA -
Brandao (2022)-
Lark et al. (2022)/Other/CA-LCFS -
CARB (2018)/GTAP-BIO+AEZ-EF/Dry Mill/High LUC-
RFS2 rule (2010)/FASOM-FAPRI/NG Dry DDGS/High LUC -
Lark et al. (2022)/Other/GREET -
CARB (2018)/GTAP-BIO+AEZ-EF/Dry Mill/Mean LUC -
RFS2 rule (2010)/FASOM-FAPRI/2022 Avg NG Dry Mill/Mean LUC-
BEIOM (2021)/Avg. Dry Mill -
CARB (2018)/GTAP-BIO+AEZ-EF/Dry Mill/Low LUC-
Scully et al. (2021)/GTAP-BIOCCLUB/High LUC -
GREET (2021 )/GTAP-BIO+CCLUB/NG Dry Mill DDGS -
GREET (2021 )/GTAP-BIO+CCLUB/Avg Plant -
GREET (2021 )/GTAP-BIO+CCLUB/Gen 1.5 w/ DCO -
Lewandrowski et al. (2019)/FASOM+GTAP-BIO/2022 BAU -
Scully et al. (2021 )/GTAP-BIO+CCLUB/Central LUC -
RFS2 rule (2010)/FASOM-FAPRI/Adv. NG Dry Mill/Low LUC-
GREET (2021 )/GTAP-BIO+CCLUB/NG Dry Mill WDGS-
Lee et al. (2021 )/GTAP-BIO+CCLUB/2019 -
Scully et al. (2021)/GTAP-BIO+CCLUB/Low LUC-

Notes: The name on the y-axis for eaieh bar/estimate includes multiple descriptors separated by 7". In order, these descriptors are
the author or other name (e.g., RFS2 rule) and year of the study; the model used to estimate the LUC emissions; the type of
natural gas-fired diy mill used for ethanol production (e.g., 2022 Avg. NG Diy Mill); the LUC estimate case (e.g., Low LUC);
and the non-LUC estimate case (e.g.. Low CI). The Upstream stage includes all of the emissions associated with corn production
and transport upstream of the ethanol production facility . The Conversion stage includes emission associated with fuel production
at the ethanol production facility. The Downstream stage includes emissions associated with ethanol transport and non-C02
combustion emissions. The LUC stage includes emissions from induced land use changes. For studies that do not report
disaggregated results, results are reported as LUC and Non-LUC emissions.

We include estimates for different natural gas-fired dry mill configurations from RFS2
(2010) and GREET-2021 (see Chapter 4.2.2 for more information on the 2010 RFS2 rule
modeling and GREET). We include the high, low and mean land use change GHG estimates
from RFS2 (2010). The CARB (2018) estimates are based on the default assumptions in the most
recent version of the CA-GREET model (version 3.0), a version of GREET developed by CARB
for the CA-LCFS. We include a range of land use change emissions for CARB (2018) based on
the CARB (2014) report describing the indirect land use change modeling that continues to be
used for CA-LCFS implementation. Lewandrowski et al. (2019) is a study that attempts to
update the RFS2 (2010) estimates based on more recent data and swaps in land use change

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estimates from GTAP-BIO. Lee et al. (2021) uses GREET to estimate U.S. corn ethanol carbon
intensity from 2005 to 2019. We include the estimate for 2019 and add the default land use
change estimate from GREET. The lowest estimate is from Scully et al. (2021), a review paper
that developed a range of LCA estimates by combining elements of prior studies. The highest
estimates are from Lark et al. (2022), a study that modeled historical U.S. land use change GHG
emissions attributable to corn ethanol and added these estimates to the LCA estimates from RFS
(2010), CARB (2018) and GREET.331 We also include the estimate from BEIOM (2021) which
uses economic input-output methodology (see Chapter 4.2.2.6 for more information). Finally, we
include the estimate from Brandao (2022), a consequential lifecycle analysis of the GHG
emissions associated with ramping up ethanol production to 15 billion gallons from 1999-2018.

Among the estimates in the above figure, upstream emissions range from 9 to 51
gC02e/MJ. These include emissions associated with feedstock production and transport,
including non-LUC market-mediated impacts in the agricultural sector. BEIOM reports the
highest upstream emissions, with the next highest estimate being 25 gC02e/MJ from GREET
(2021). The lowest estimate comes from Scully et al. (2021), which includes a relatively large
credit (-13.5 gC02e/MJ) for DGS displacing other sources of livestock feed.

We include estimates for ethanol produced at a U.S. dry mill facility using natural gas
and electricity for energy,332 as dry mills produce over 90% of U.S. fuel ethanol and natural gas
and electricity account for almost all of the energy use at these facilities.333 Among the studies in
Figure 4.2.3.2-1, conversion emissions range from 13 to 33 gC02e/MJ.334 The highest estimates
are from CARB (2018) based on the default assumptions used in the CA-GREET3.0 model. The
GREET-2021 estimate for "industrial average dry mill corn ethanol production is 21 gC02e/MJ,
and the RFS2 (2010) estimate for a projected 2022 natural gas dry mill facility is 26 gC02e/MJ.
The lowest GHG estimate of 13 gC02e/MJ for the fuel production stage comes from the most
advanced natural gas-fired dry mill facility evaluated in the 2010 RFS2 rule. This advanced
facility includes wet DGS, corn oil fractionation, combined heat and power (CHP) and
membrane separation technologies.335

The largest source of variation between estimates are the land use change emissions,
ranging from -1 to 65 gC02e/MJ in Figure 4.2.3.3-1. The highest land use change estimates are
from Lark et al. (2021), which produced new estimates of U.S. land use change attributable to
corn ethanol and added the U.S. emission to non-US land use change estimates from RFS2

331	Lark et al. caveat that incorporating their U.S. land use change emissions into other fuel program estimates is
only a partial analysis, and that to accurately assess the carbon intensity of corn ethanol, a full reanalysis is needed
to ensure consistent treatment and systems boundaries.

332	In accordance with CAA 211 (o) (2) (A) (i) renewable fuel production from facilities that commenced construction
prior to December 19. 2007, are exempt from the 20% GHG reduction requirement to qualify as renewable fuel
under the RFS program. Our review in this section focuses on average dry mill corn ethanol production in the U.S.
regardless of facility status pursuant to this "grandfathering" exemption.

333	Lee, U., et al. (2021). "Retrospective analysis of the US corn ethanol industry for 2005-2019: implications for
greenhouse gas emission reductions." Biofuels, Bioproducts and Biorefining

334	This excludes the studies that do not report disaggregated non-LUC emissions.

335	Including this facility in our review also allows us to include a wider range of RFS2 (2010) estimates which is
beneficial for the 30-year illustrative scenario as the RFS2 (2010) estimates are the only ones that report a
differentiated 30-year stream of annual emissions. Without this estimate the range used for the illustrative scenario
would be further from the full range identified in the literature.

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(2010), GREET and CARB. Scully et al. (2021) reports negative land use change emissions in
part because they assumed that planting annual crops on land categorized as cropland pasture
would result in net sequestration of soil carbon.336 For more discussion of corn ethanol land use
change estimates see Chapter 4.2.2.

Downstream emissions range from 1 to 7 gC02e/MJ. Downstream emissions are
associated with fuel distribution from ethanol production facilities to retail gasoline stations and
tailpipe emissions. Some studies also include emissions from production and use of denaturant
which is added to ethanol in small volume percentages to render it undrinkable. The highest
downstream estimate is from Scully et al. (2021) including emissions associated with denaturant.
All of the other estimates are 4 gC02e/MJ or less.

Overall, our literature review of estimates representative of average corn ethanol
production at natural gas-fired U.S. dry mills produces a range from 38 to 116 gC02e/MJ. The
largest source of variation across studies continues to be estimated emissions associated with
direct and indirect land use change. Although this is already a wide range, corn ethanol can have
higher or lower GHG emissions depending on farm specific or facility specific factors. For
example, ethanol produced from facilities fired with coal or from corn grown on marginal lands
with lower yields produce emissions that are greater than the top end of this range. On the other
hand, corn ethanol produced with the adoption of advanced technologies or climate smart
agricultural practices can have lower LCA emissions. Corn ethanol facilities produce a highly
concentrated stream of C02 that lends itself to carbon capture and sequestration (CCS). CCS is
being deployed at ethanol plants and has the potential to result in negative emissions at the
ethanol production facility, especially if mills with CCS use renewable sources of electricity and
other advanced technologies to lower their needs for thermal energy. Climate smart practices are
being adopted at the feedstock production stage. For example, planting cover crops between corn
rotations can build soil organic carbon stocks. Collecting data on and evaluating these trends in
corn and ethanol production are areas for additional effort that will inform future LCA estimates
for corn ethanol.

4.2.3.4 Soybean Oil Biodiesel

Relative to corn ethanol, there have been fewer studies published on the GHG emissions
associated with soybean oil biodiesel. Our literature review includes 8 studies that estimate the
lifecycle GHG emissions associated with soybean oil biodiesel. Given that soybeans are
approximately 20% oil and 80% meal by dry mass, these studies often include several estimates
based on different allocation approaches for the soybean meal coproduct. The figure below
includes 20 estimates of the lifecycle GHG emissions associated with soybean oil biodiesel
production and use.

336 Spawn-Lee, S. A., et al. (2021). "Comment on 'Carbon Intensity of corn ethanol in the United States: state of the
science'." Environmental Research Letters 16(11): 118001.

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Figure 4.2.3.4-1: Soybean Oil Biodiesel Lifecycle Greenhouse Gas Estimates

Stage

¦

LUC



Non-LUC



Downstream



Conversion



Upslrearn

CARB (2018)/GTAP-B IO+AEZ-EF/High LUC-
RFS2 rule (2010>/FASOM-FAPRI/H»gh LUC-
CARB (2018)/GTAP-BIOAEZ-EF/Mean LUC-
BEIOM (2021J/USA Avg .-
Xu etal (2021 VGTAP-BfO+AEZ-EF/USA avg./Mass/CARB (2014)-
Knoope et al (2018)/Higli -
Chen et al. (2018)/GTAP-B10+A£2-EF/GTAP 2011/High Non-LUC -
GREET (2021 VGTAP-BIO+CCLUB/Energy/Avg Proxy -
GREET (2021 yGTAP-BIQ+CCLUB/MM/Case 8-
CARB (2018>/GTAP-BIQ+AEZ-EF/Low LUC-
Chen el al (2018J/GTAP-B IO+AEZ-EF/GTAP 2011/Central Non-LUC -
RFS2 rule (2010VFASOM-FAPR I/Mean LUC-
Knoope el al (2018)/Average-
Xw et al (2021VGTAP-BIO+CCLUB/USA avg ,/Mass/CCLUB -
GREET (2021 )/GTAP-B!OCCLU Brassy Case 8 -
Chen et al (2018}/GTAP-BlO+CCLUB/GTAP 2011 /Central Non-LUC *

GREET (2021 )/GTAP-BIO+CCLUB/Mas&/GTAP 2011 -
Knoope el al <2018)/Low-
Chen et al (2018)/GTAP-BICHCCLUB/GTAP 2011/Low Non-LUC -

RFS2 rule (2010)/FASOM.F APR I/Low LUC-

0	20	40	60

Soybean Oil Biodiesel GHG Emissions (gC02e/MJ)

Notes: The name on they-axis for each bar/estimate includes multiple descriptors separated by In order, these descriptors are
the author or other name (e.g., RFS2 rule] and year of the study; the model used to estimate the LUC emissions; the allocation
approach used for soybean meal (e.g., mass, energy); the LUC estimate case (e.g.. Low LUC); and the non-LUC estimate case
(e.g., Low CI). The Upstream stage includes all of the emissions associated with soybean oil production and transport upstream
of the biodiesel production facility. The Conversion stage includes emission associated with fuel production at the biodiesel
production facility. The Downstream stage includes emissions associated with biodiesel transport and non-C02 combustion
emissions. The LUC stage includes emissions from induced land use changes. For studies that do not report disaggregated results,
results are reported as LUC and Non-LUC emissions.

RFS2 (2010) estimated uncertainty in land use change GHG emissions and reported a
relatively wide range of estimates. The only estimate in our review that is outside the range of
estimates from the RFS2 (2010) estimate is from CARB (2018) using CARB's high estimate for
soy biodiesel land use change emissions from CARB (2014). GREET-2021 allows users to



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choose from land use change results from three different GTAP-BIO runs, and four different
allocation approaches to account for soybean meal coproduct. We include a range of estimates
from GREET-2021 based on different combinations of these factors. Chen et al. (2018) used
GREET and the GTAP-BIO model to estimate soy biodiesel carbon intensity. This study uses a
range of estimates based on sensitivity analysis on the GREET input parameters as well as
multiple prior land use change GHG estimates based on GTAP-BIO. Knoope et al. (2018) is a
GREET-style LCA study that excludes land use change GHG emissions and reports a range of
estimates based on sensitivity analysis of input parameters. We also include the estimate from
BEIOM (2021) which uses economic input-output methodology (see Chapter 4.2.2.6 for more
information).

Among the estimates in the above figure, upstream emissions range from 7 to 37
gC02e/MJ. These include emissions associated with feedstock production and transport,
including non-LUC market-mediated impacts in the agricultural sector. Upstream emissions
estimates depend on the methodology used to estimate them and the co-product accounting
methods applied to the soybean meal co-product. By default, GREET uses mass allocation for
the meal co-product, but GREET allows users to select market, energy or displacement
approaches. We include the mass, energy and market-based allocation approaches in the figure
above.337 The highest estimate (19 gC02e/MJ) uses the market-based allocation approach, and
the lowest estimate (9 gC02e/MJ) uses the mass-based allocation. Market-based allocation in
GREET produces higher estimates based on the assumed prices for soybean oil and meal. The
lowest overall estimate for upstream emissions is from RFS2 (2010). RFS2 (2010) is the only
study in our review that uses a consequential modeling approach for non-land use change
emissions, whereby the GHG impacts were modeled using economic models. The highest
estimate is from BEIOM which is also unique in its modeling approach. All of the other studies
use an attributional approach to estimates upstream GHG emissions, and most of them apply a
mass-based allocation approach to account for the soybean meal co-product.

We include estimates for biodiesel produced at U.S. facilities that use a transesterification
process. The range of conversion emissions in Figure 4.2.3.4-1 range from -1 to 15 gC02e/MJ.
Most of the fuel production estimates are from 8-12 gC02e/MJ. The RFS2 (2010) estimate is -1
gC02e/MJ based on the assumption that the glycerin co-product from biodiesel production is
burned for thermal process energy displacing the use of petroleum residual oil. Most of the other
studies use energy, market, or mass-based allocation to account for the glycerin co-product
which results in a larger estimate for fuel production GHG emissions.

Similar to corn ethanol, the largest source of variation between soybean oil biodiesel
LCA estimates are the land use change emissions, ranging from 5 to 64 gC02e/MJ in Figure
4.2.3.4-1.338 The highest and lowest land use change GHG estimates are from RFS2 (2010)
based on the upper and lower bounds of the reported 95% confidence interval. The land use
change uncertainty analysis for RFS2 (2010) considered uncertainty in land conversion types and
emissions factors but did not consider uncertainty in economic model parameters. As discussed,

337	Using displacement results in upstream emissions of -17 gC02e/MJ and total LCA emissions of 38 gC02e/MJ.
Although the inclusion of the displacement method provides interesting variation in the estimates for each stage the
overall estimate is near the middle of the range, thus we exclude it from Figure 4.2.3.3 to improve legibility.

338	This excludes Knoope et al. (2021) and BEIOM (2021) which exclude land use change emissions.

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in Chapter 4.2.2.8, above, the range of soybean oil biodiesel land use change GHG estimates in
the literature is wider when we consider studies that only estimate land use change emissions,
ranging from 5 to 80 gC02e/MJ.

Particular characteristics of soybean oil biodiesel production introduce greater potential
for uncertainty relative to corn ethanol. For example, the quantity of biofuel that can be produced
from an acre of U.S. soybeans is substantially smaller than that produced from an acre of US
corn. Based on data from USDA and GREET, an average acre of U.S. farmland yields about four
times as much corn ethanol as soybean oil biodiesel on an energy basis.339 This difference in per-
acre fuel yields means that soybean biodiesel modeling results are far more sensitive to tradeoffs
between cropland extensification and other means of obtaining additional soybean oil. For
example, every acre of cropland extensification projected in a given soybean oil biodiesel
scenario represents four times as much new cropland per megajoule of biodiesel relative to a
corn ethanol scenario.

Another key sensitivity for soybean oil is the impact on livestock markets. While soybean
oil represents about 19 percent, by mass, of the crush product of soybeans, meal represents about
80 percent of that crush. Soybean meal is an important source of protein in livestock feed diets.
Corn ethanol also has a livestock feed co-product in the form of distillers grains. On a weight
basis, one MMBTU of soybean oil biodiesel is associated with approximately 4 times as much
feed coproduct as one MMBTU of corn ethanol.340 Soybean meal and distillers grains are used
differently in feed rations and their nutritional contents are also not identical. However, even this
general comparison demonstrates that the quantity of feed product associated with a given
quantity of soybean oil biodiesel is substantially greater than that associated with the same
quantity of corn ethanol. The impact of biofuel feed coproducts on GHG emissions is highly
complex. As a brief example, to the extent greater production of feed coproducts allows cattle
producers to intensify production, reducing the use of grazing lands, these feed coproducts may
mitigate LUC emissions. Conversely, to the extent that greater availability of feed products
reduces costs for livestock producers, this may lead to increased livestock-related emissions. It is
unclear which of these market dynamics may prove dominant in the future, making the net signal
of livestock emissions highly uncertain. The larger quantities of feed coproducts associated with
the production of soybean oil biodiesel relative to corn ethanol amplify this uncertainty at both
ends of the emissions range, contributing to the wider overall range of GHG impacts we observe
in the literature.

Another key sensitivity present in the literature is uncertainty about the type of land that
will be converted in response to increased soybean oil demand, either to increase production of

339	Assumes soybean yield of 3,084 lbs/acre and corn yield of 9,912 lbs/acre, based on 2021 average yields from
USDA NASS. Assumes 93.6 lbs of soybean oil per MMBTU of biodiesel output and 163.7 lbs of corn per MMBTU
of ethanol based on GREET-2021.Thus, one acre yields 6.26 MMBTU (128.6 gallons ethanol-equivalent) of
soybean oil biodiesel, or 60.6 MMBTU (506.2 gallons of ethanol) of corn ethanol. USDA NASS data from
QuickStats database, https://quickstats.nass.usda.gov/ (accessed August 3rd, 2022).

340	For every lb of soybean oil produced, approximately 5.26 lbs of soybean meal are produced. At GREET-2021
average biodiesel yields, production of the one MMBTU of soybean oil biodiesel is associated with the production
of approximately 251.4 lbs of soybean meal. For comparison, according to GREET-2021, production of one
MMBTU of corn ethanol using the aforementioned dry mill ethanol process coproduces about 60.4 lbs of dried
distillers grains (assuming 100 percent drying).

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soybeans or through market-mediated impacts on other vegetable oils. Soybean oil is part of the
larger global market for vegetable oils and is a good substitute for palm oil in many use cases.
Given the potential for marginal palm oil extensification into carbon-rich peat lands in Southeast
Asia,341 the extent to which palm oil backfills for soybean oil diverted to biofuel production from
other uses also substantially impacts LUC emissions. In addition, increased demand for soybean
oil in the U.S. could lead to land conversion in other large soybean-producing countries such as
Argentina and Brazil that have carbon-dense forests and grasslands. Therefore, the potential for
these types of impacts on sensitive high-carbon lands creates additional uncertainty in soybean
oil biodiesel GHG modeling.

Downstream emissions range from 1 to 4 gC02e/MJ. Downstream emissions are
associated with fuel distribution from biodiesel production facilities to retail gasoline stations
and tailpipe emissions. The highest downstream estimates are from GREET and lowest are from
RFS2 (2010).

Overall, our literature review of estimates representative of average U.S. soybean oil
biodiesel production provides a range from 14 to 73 gC02e/MJ. The largest source of variation
across studies continues to be estimated emissions associated with direct and indirect land use
change. Although this is a wide range, biodiesel produced under particular conditions may
produce emissions that are outside of this range on a per MJ basis. For example, LCA emissions
may be higher if economic conditions result in soybean oil used for biodiesel to be backfilled
with palm oil or soybeans grown in tropical regions with high rates of deforestation. It may also
be possible to produce soybean oil biodiesel with lower LCA emissions with the adoption of
climate smart agricultural practices. For example, planting cover crops between soybean
rotations has the potential to build soil organic carbon stocks. Collecting data on and evaluating
these trends in soybean production and vegetable oil markets are areas for additional research
that will inform future LCA estimates for soybean oil biodiesel.

4.2.3.5 Soybean Oil Renewable Diesel

Relative to soybean oil biodiesel, there have been fewer studies published on the GHG
emissions associated with soybean oil renewable diesel. Lifecycle GHG estimates for soybean
oil renewable diesel Our literature review includes 5 sources that estimate the GHG emissions
associated with soybean oil renewable diesel. These studies include numerous estimates based on
different scenarios for land use change and assumptions related to co-product accounting. The
figure below includes 13 LCA estimates from 5 studies.

341 See for example: Austin, K. G., et al. (2017). "Shifting patterns of oil palm driven deforestation in Indonesia and
implications for zero-deforestation commitments." Land Use Policy 69: 41-48.

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Figure 4.2.3.5-1: Soybean Oil Renewable Diesel Lifecycle Greenhouse Gas Estimates







J 54







1 "|S3







1 (52]







B 50)

Stage



¦

LUC



Non-LUC



Downstream



Conversion



Upslream

RFS2 rale {2010)/FASOM-FAPRI/CA-LCFS Avg /High LUC-
CARB (2022VGTAP-BIO+AEZ-EF/Mass/H'igh LUC/H»gh Ch
CARB {20t8)/GTAP-BIO»AEZ-EF/Mass/High LUC -
RFS2 rule (2Q10)/FASOM-FAPRI/CA-LCFS Avg /Mean LUC-
Xu et al (2021KGTAP-BIO+AEZ-EF/USA avg /Mass/CARB (2014)-
CARB (2Q18)/GTAP-BIQ+AEZ-EF/Mass/Mean LUC-
GREET (2021 )/GTAP-BICHCCLUB/Mkt./Avg Proxy-
Xu el af. <2021 VGTAP-BtG+AEZ-EF/USA avg,/Mass/ICAO (2019)-
CARB (2022)/GTAP- BIO+AEZ-E F/Mass/Low LUC/Low CI -
CARB (2018)/GTAP-B10+AEZ-EF/Mass/ L ow LUC-
Xu et al (2021VGTAP-BIO+CCLUB/USA avg /Mass/CCLUB-
GREET (2021 J/GTAP-BlO+CCLUB/Mass/Case 8 -
GREET (2021 J/GTAP-BIO+CCLUB/Mass/GTAP 2011 -

RFS2 rule (2010J/FASOM-FAPRI/CA-LCFS Avg ./Low LUC - 	

0	25	50	75

Soybean Oil Renewable Diesel GHG Emissions (gC02e/MJ)

Notes: The name on the y-axis for each bar/estimate includes multiple descriptors separated by 7". In order, these descriptors are
the author or other name (e.g., RFS2 rule) and year of the study; the model used to estimate the LUC emissions; the allocation
approach used for soybean meal (e.g., mass, energy); the LUC estimate case (e.g., Low LUC); and the non-LUC estimate case
(e.g., Low CI). The Upstream stage includes all of the emissions associated with soybean oil production and transport upstream
of the renewable diesel production facility. The Conversion stage includes emission associated with fuel production at the
renewable diesel production facility. The Downstream stage includes emissions associated with renewable diesel transport and
non-C02 combustion emissions. The LUC stage includes emissions from induced land use changes. For studies that do not report
disaggregated results, results are reported as LUC and Non-LUC emissions.

The estimates from RFS2 (2010) in the figure above are based on the "upstream" GHG
modeling for soybean oil from the 2010 RFS2 rule combined with estimates that EPA published
more recently for renewable diesel production and downstream fuel distribution and use.342
Similar to the review for soybean oil biodiesel, CARB (2018) provides a range of land use
change GHG estimates and GREET (2021) includes multiple land use change scenarios and co-
product allocation approaches for soybean meal. Given the relative scarcity of LCA estimates for
soybean oil renewable diesel, we also include the highest and lowest carbon intensities for
individual U.S. facilities as certified by CARB for the CA-LCFS (CARB 2022) using their
central land use change GHG estimates.

342 April 2022 Canola Oil Pathways NPRM (87 FR 22823): https://www.govinfo.gov/content/pkg/FR-2022-04-
18/pdf/2022-07598.pdf

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Among the estimates in the above figure, upstream emissions range from 8 to 20
gC02e/MJ. Upstream emissions vary for the same reasons discussed for soybean oil biodiesel,
including the methodology used to estimate them and the co-product accounting methods applied
to the soybean meal co-product. The lowest upstream emissions estimates are from RFS2
(2010).343 The highest upstream emissions are from GREET using a market-based allocation
approach to account for the meal co-product. Market-based allocation in GREET produces
higher estimates for soybean oil than mass- or energy-based allocation based on the assumed
prices for soybean oil and meal. Using mass-based allocation, CARB (2018) estimates higher
emissions (14 gC02e/MJ) than GREET-2021 (9 gC02e/MJ). The lowest upstream estimates are
from RFS2 (2010). As discussed above for soybean oil biodiesel, the RFS2 (2010) analysis uses
an entirely different methodology than GREET or CARB for estimating GHG emissions
associated with feedstock production.

Our review includes estimates representative of U.S. renewable diesel production via a
hydrotreating process. The range of conversion emissions in Figure 4.2.3.5-1 range from 8 to 19
gC02e/MJ. This range does not include the facility-specific carbon intensities from CARB
(2022) as this source does not report carbon intensity disaggregated into lifecycle stages. The
lowest estimate is from CARB (2018) and the highest estimate is from GREET-2021 using
market-based allocation. The RFS2 (2010) estimates in the figure above use hydrotreating
processing data provided by CARB representing the average of renewable diesel production
facilities registered for the CA-LCFS as of June 20 21.344 The estimate uses an energy allocation
approach to account for co-products of renewable diesel production. The lowest estimates come
from CARB (2018) based on the default assumptions in CA-GREET version 3.0.

Similar to soybean oil biodiesel, the largest source of variation between soybean oil
biodiesel LCA estimates are the land use change emissions. The same factors, discussed above,
that introduce additional complexity into LUC modeling for soybean oil biodiesel also apply to
soybean oil renewable diesel. For renewable diesel the land use change GHG estimates range
from 6 to 67 gC02e/MJ in Figure 4.2.3.4-1.345 The highest and lowest land use change GHG
estimates are from RFS2 (2010) based on the upper and lower bounds of the reported 95%
confidence interval. The land use change uncertainty analysis for RFS2 (2010) considered
uncertainty in land conversion types and emissions factors but did not consider uncertainty in
economic model parameters. As discussed, in Chapter 4.2.2.8, above, the range of soybean oil
biodiesel land use change GHG estimates in the literature is wider when we consider studies that
only estimate land use change emissions, ranging from 5 to 80 gC02e/MJ.

Downstream emissions are associated with fuel distribution from renewable diesel
production facilities to retail gasoline stations and tailpipe emissions. For renewable diesel, there
is little variation in the review estimates, as they range from 0.5 to 1 gC02e/MJ.

343	The renewable diesel upstream emissions from RFS2(2010) are lower than those for soybean oil biodiesel,
because we have updated the soybean oil upstream estimates for renewable diesel using more recent emissions
factors from GREET and AR5 GWP values. More details are provided in a technical memo to the docket titled
"Notes on Literature Review of Transportation Fuel Greenhouse Gas (GHG) Lifecycle Analysis (LCA)."

344	For more information on hydrotreating process data evaluated by EPA, see April 2022 Canola Oil Pathways
NPRM (87 FR 22823), Section II.C.9.

345	This excludes Knoope et al. (2021) and BEIOM (2021) which exclude land use change emissions.

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Overall, our literature review of estimates representative of average U.S. soybean oil
renewable production provides a range from 26 to 87 gCChe/MJ. This is a relatively wide range,
and the largest source of variation between studies continues to be estimated emissions
associated with direct and indirect land use change. Although this is a wide range, renewable
diesel produced under particular conditions may produce emissions that are outside of this range
on a per MJ basis. Some of the main factors that could result in emissions higher or lower than
the literature range are the same as those discussed above for soybean oil biodiesel. Renewable
diesel production requires a relatively large amount of hydrogen. Renewable diesel carbon
intensities could be reduced by consuming less hydrogen or sourcing the hydrogen from low
carbon sources.

It is worth noting that the International Civil Aviation Organization (ICAO) has been
conducting similar lifecycle GHG analysis in support of the Carbon Offsetting and Reduction
Scheme for International Aviation (CORSIA). Given ICAO's focus on jet fuel, they have not
specifically released an LCA value for soybean oil renewable diesel. However, the lifecycle
analysis for soybean oil jet fuel is almost identical to an LCA for soybean oil renewable diesel
since both are produced through the same hydrotreating process. While most current
hydrotreating processes yield renewable diesel with small amounts of naptha and LPG co-
products, these facilities can be configured to produce a separate jet fuel stream from the rest of
the products produced. Producing jet fuel requires additional refining, therefore jet fuel LCA
estimates tend to be slightly more GHG intensive than producing renewable diesel alone. The
soybean oil jet fuel results from ICAO (2021) are summarized in the table below.

Table 4.2.3.5-1: U.S. Soybean Oil Jet Fuel Estimates from ICAO (2021) (gCChe/MJ)

Estimate

Core346

Land Use Change

LCA Value

GLOBIOM LUC

40

14

54

(Low end of 95% CI)







GTAP-BIO LUC

40

20

60

ICAO Default

40

25

65

GLOBIOM LUC

40

50

91

GLOBIOM LUC

40

92

132

(High end of 95% CI)







Notes: For their default land use change estimate, ICAO uses the GTAP-BIO estimate plus 4.45 gC02e/MJ, see ICAO (2021) p.
149 for explanation. The GTAP-BIO and central GLOBIOM land use change estimates are from ICAO (2021) Table 67. The low
and high GLOBIOM estimates are from ICAO (2021) Table 72. The low estimate is the 2.5% quantile and the high estimate is
the 97.5% quantile from sensitivity analysis (300 runs). LCA values in table might not be the sum or core and LUC values due to
rounding.

Given the similarities in the hydrotreating process, it is a relatively straightforward
adjustment to modify a soybean oil jet fuel LCA to a soybean oil renewable diesel LCA.347 If the
ICAO soybean oil jet fuel LCA was adjusted for the lower energy needs for renewable diesel, the

346	ICAO (2021) includes estimates from GREET of the direct, or "core," GHG emissions associated withjet fuel
produced from soybean oil through a hydrotreating process.

347	ICAO's core GHG estimates are based on analysis with GREET using an energy allocation approach for co-
products. The GREET-2021 core GHG estimate for soybean oil renewable diesel using energy allocation is 36
gC02e/MJ. This GREET-2021 estimate can be substituted for the 40 gC02e/MJ core jet fuel value to produce an
LCA range for soybean oil renewable diesel.

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ICAO estimates for soybean oil renewable diesel would be 50 to 128 gC02e/MJ. If the ICAO
LCA values were included in Figure 4.2.3.5-1 and Table 4.2.3.12, the overall range of values for
soybean oil renewable diesel would be wider (26 gCOze/MJ to 128 gCChe/MJ).

4.2.3.6 FOG Biodiesel

We reviewed literature on the GHG emissions associated with biodiesel produced from
fats, oils and greases (FOG). Specifically, we reviewed estimates for biodiesel produced from
used cooking oil (UCO) and animal tallow. Figure 4.2.3.6-1 includes the LCA estimates for
IJCO biodiesel, and Figure 4.2.3.6-2 includes the LCA estimates for animal tallow biodiesel.

Figure 4.2.3.6-1: UCO Biodiesel Lifecycle Greenhouse Gas Estimates

CARB (2022)/Higriest C! -

RFS2 (2010) + O'Malley (2021)-

CARB (2018)-

Xuelal (2021VUSA avg ¦

RFS2 rule (2010) -

Stage

LUC

Non-LUC
Downstream
Conversion
Upstream

CARB (2022)/LoweSl C< -

0

a	10	20	30

UCO Biodiesel GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with UCO pre treatment/rendering and transport upstream of
the biodiesel production facility. O'Malley et al. (2021) also includes indirect GHG emissions in the Upstream stage. The
Conversion stage includes: emission associated with fuel production at the biodiesel production facility. The Downstream stage
includes emissions associated with biodiesel transport and non-C02 combustion emissions. Estimates that only report total
lifecycle GHG emissions are depicted only with a label and no bars.

Estimates for UCO biodiesel range from 12 to 32 gC02e/MJ. Given the relative scarcity
of LCA studies on UCO biodiesel, we include the highest and lowest certified carbon intensities
for individual biodiesel facilities under the CA-LCFS in our review. The highest and lowest
estimates come from the CA-LCFS range (CARB 2022). The CARB and RFS2 estimates assume

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that the only upstream emissions for supplying UCO are associated with rendering/cooking the
raw UCO and transporting it to biodiesel production facilities. O'Malley et al. (2021) looked at
the current uses for UCO apart from biofuel production and evaluated a case study where UCO
diverted from livestock feed and oleochemical uses is backfilled with corn, soybean oil and palm
oil. Based on this case study, they estimated potential indirect emissions of 12.2 gC02e/MJ
associated with UCO use for biodiesel. In the figure above, we include the potential indirect
emissions estimate from O'Malley et al. (2021) added to the RFS2 (2010) estimates.

Figure 4.2.3.6-2: Animal Tallow Biodiesel Lifecycle Greenhouse Gas Estimates

GREET (2021) + O'Malley et al <2021)/Energy-
CARB (2018)-
CARB (2022)/Higbest CI -
Chen et al (2018)/Htgh-
CARB (2022)/Lowest CI -
GREET (2021 VEnergy -
GREET (2021 yMarket -
Chen et al (2018VNBB (2016)/Central-
Xu et al (2021 )/USA avg -

GREET (2021)/Displacement-

0	20	40	60

Tallow Biodiesel GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with animal tallow pre-treatment/rendering and transport
upstream of the biodiesel production facility. The Conversion stage includes emission associated with fuel production at the
biodiesel production facility. The Downstream stage includes emissions associated with biodiesel transport and non-C02
combustion emissions. For studies that do not report disaggregated results, results arc reported as LUC and Non-LUC emissions.
Estimates that only report total lifecycle GHG emissions are depicted only with a label and no bars.

Estimates for tallow biodiesel range from 15 to 58 gC02e/MJ. Most of the estimates
assume that tallow is a byproduct of meat production and assume zero upstream emissions from
livestock production allocated to the tallow. For these estimates the ranges are primarily based
on different assumptions about the energy requirements for rendering, as well as different
assumptions about the co-products from rendering and the accounting methods for these co-
products. The exception is the case study by O'Malley et al. (2021) which estimates emissions of
34.8 gC02e/MJ associated with backfilling tallow used in livestock feed and oleochemical

184


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production with corn, soybean oil and palm oil. To inform our range of estimates we add this
backfill emissions estimate to the estimates from GREET-2021.

4.2.3.7 FOG Renewable Diesel

We reviewed literature on the GHG emissions associated with renewable diesel produced
from FOG. Specifically, we reviewed estimates for renewable diesel produced from used
cooking oil (UCO) and animal tallow. Figure 4.2.3.7-1 includes the LCA estimates for UCO
biodiesel, and Figure 4.2.3.7-2 includes the LCA estimates for animal tallow biodiesel.

Figure 4.2.3.7-1: UCO Renewable Diesel Lifecycle Greenhouse Gas Estimates

RFS2 (2010) ~ O'Malley (2021J/CA-LCFS Avg •

I®

CAR8 (2022)/Highest CI -

@

RFS2 rule (2010)/CA-LCFS Avg -

RFS2 rule (201 OyPearlson et al Energy -

CARB (2018)-

CARB (2022VLowest CI -

Xuetal (2021 )/USA avg -

0

Stage

LUC

Non-LUC
Downstream
Conversion
Upstream

Seber et al (2014)/Pear1son et al (2013)/Low -

0	10	20	30

UCO Renewable Diesel GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with UCO pre-treatment/rendering and transport upstream of
the biodiesel production facility. O'Malley et al. (2021) also includes indirect GHG emissions in the Upstream stage. The
Conversion stage includes emission associated with fuel production at the biodiesel production facility. The Downstream stage
includes emissions associated with biodiesel transport and non-C02 combustion emissions. Estimates that only report total
lifecycle GHG emissions are depicted only with a label and no bars.

Estimates for UCO renewable diesel range from 12 to 37 gC02e/MJ. The CARB and
RFS2 estimates assume that the only upstream emissions for supplying UCO are associated with
rendering/cooking the raw UCO and transporting it to biodiesel production facilities. O'Malley
et al. (2021) looked at the current uses for UCO apart from biofuel production and evaluated a
case study where UCO diverted from livestock feed and oleochemical uses is backfilled with

185


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corn, soybean oil and palm oil. Based on this case study, they estimated potential indirect
emissions of 12.2 gC02e/MJ associated with UCO use for biodiesel. In the figure above, the
highest estimate is based on the sum of the potential indirect emissions estimate from O'Malley
et al. (2021) added to the RFS2 (2010) estimate. The lowest estimates are from Seber et al.
(2014), which do not include any backfilling emissions.

^¦80





J 63 )









Stage

Figure 4.2.3.7-2: Animal Tallow Renewable Diesel Lifecycle Greenhouse Gas Estimates

Seber el al. (2014)ff»earlson et al {20t3)/CopFOducl High -
Seber el al (2014)/Pearlson el al (2013)/Coproducl Base -
Seber et al {2014VPear>son et al. (2013}/Coprotluct Low-
GREET (2021) + O'Malley et al (2021 VEnergy -
Riazi {2020)/Aspen Pius/Poullry High/Mass -
CARB (2022)/Highest CI -
CARS (2018)-
Riazl (2020VA$pen Plus/Beef Highu'Mass -
Seber et al (2014VPearlson el al. (2013)/Byproducl High -
R(azi (2020)/Aspen Plus/Poultry Low/Mass-
Seber et al. (2014yPearlson el al (2013)/Byproducl Base -
R»az» (202Q)/Aspen Plus/Beef Lew/Mass -
GREET (2021 )/GREET-202VEnergy -
GREET (2021 )/GREET-2021/Market -
Sebef et al (2014VPear1son et al (201 SJ/Byproctuct Low -
CARB (2022VLowesl CI -
GREET (2021 yGREET-20217Mass -
Xu et al (202iyUSA avg -
GREET (2021VGREET-2021/Displacemenl -

LUC

Non-LUC
Downstream
Conversion
Upslrearn

60

@0

Tallow Renewable Diesef GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with tallow pre-treatment/rendering and transport upstream of
the biodiesel production facility. Seber et al. (2021) also includes livestock production GHG emissions in the Upstream stage.
The Conversion stage includes emission associated with fuel production at the biodiesel production facility. The Downstream
stage includes emissions associated with biodiesel transport and non-CO2 combustion emissions. Estimates that only report total
lifecycle GHG emissions are depicted only with a label and no bars.

Estimates for tallow renewable diesel range from 14 to 80 gC02e/MJ. The highest
estimates are from Seber et al. (2014). Seber et al. (2014) is the only study that includes
scenarios where GHG emission associated with livestock raising and meat production are
allocated the tallow. In other words, in these scenarios the tallow is considered a co-product of
meat production rather than a byproduct. Our review also includes a case study by O'Malley et
al. (2021) that evaluates emission associated with backfilling tallow used in livestock feed and
oleochemical production with corn, soybean oil and palm oil. The lowest estimate is from
GREET-2021 using a displacement approach for the co-products from tallow rendering.

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4.2.3.8 Distillers Corn Oil Biodiesel

We reviewed published estimates of the GHG emissions associated with biodiesel
produced from distillers corn oil (DCO). DCO is a co-product from ethanol production whereby
oil is removed the DGS before it is sold as livestock feed. The DCO can then be used as a biofuel
feedstock or added back into livestock feed at desired levels. Figure 4.2.3.8-1 includes the LCA
estimates for DCO biodiesel.

Figure 4.2.3.8-1: DCO Biodiesel Lifecycle Greenhouse Gas Estimates

CARB (2022Wishes! CI-

0

RFS2 rule (2020)-

CARB (2018>-

CARB (2022VLowesl CI -

Stage

LUC

Non-LUC
Downstream
Conversion
Upstream

Xuetal {202iyUSAavg ¦

GREET (20211-

10	20

DCO Biodiesel GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with DCO extraction and in some cases backfilling with corn
in livestock feed. The Conversion stage includes emission associated with fuel production at the biodiesel production facility.
The Downstream stage includes emissions associated with biodiesel transport and non-CO2 combustion emissions. Estimates that
only report total lifecycle GHG emissions are depicted only with a label and no bars.

DCO biodiesel estimates range from 10 to 37 gC02e/MJ. Most of the estimates assume
that DCO is a byproduct and assign none of the emissions associated with corn or ethanol
production to it. For the 2020 RFS2 rule, we estimated the emissions associated with corn
backfilling for DCO in animal feed. As discussed in that rule and a prior rule on distillers
sorghum oil, we determined that DCO is used as a source of energy/calories in feed diets and that
corn is a likely product to backfill when DCO is used as a biofuel feedstock. The lowest estimate
is from GREET-2021.

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4.2.3.9 Distillers Corn Oil Renewable Diesel

We reviewed published estimates of the GHG emissions associated with renewable diesel
produced from DCO. Figure 4.2.3.9-1 includes the LCA estimates for DCO renewable diesel.

Figure 4.2.3.9-1: DCO Renewable Diesel Lifecycle Greenhouse Gas Estimates

CARB (2Q22)/Highest CI -

0

RFS2 rule (2020)-

CARB (2018)-

CARB (2022VLowest CI -

0

Stage

LUC

Non-LUC
Downstream
Conversion
Upstream

GREET (2021)-

Xuelal (2021J/USA avg -

0	10	20	30	40

DCO Renewable Diesel GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with DCO extraction and in some cases backfilling with corn
in livestock feed. The Conversion stage includes emission associated with fuel production at the renewable diesel production
facility. The Downstream stage includes emissions associated with biodiesel transport and non-C02 combustion emissions.
Estimates that only report total lifecycle GHG emissions are depicted only with a label and no bars.

DCO renewable diesel estimates range from 12 to 46 gC02e/MJ. Most of the estimates
assume that DCO is a byproduct and assign none of the emissions associated with corn or
ethanol production to it. For the 2020 RFS2 rule, we estimated the emissions associated with
corn backfilling for DCO in animal feed. The lowest estimate is from GREET-2021.

4.2.3.10 Natural Gas CNG

As discussed above for petroleum gasoline and diesel, for the purposes of conducting the
lifecycle GHG emissions analysis and determining which biofuels meet the GHG requirements,
CAA Section 211 (o) (1) (C) defines baseline lifecycle greenhouse gas emissions as "the average

188


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lifecycle greenhouse gas emissions, as determined by the Administrator, after notice and
opportunity for comment, for gasoline or diesel (whichever is being replaced by the renewable
fuel) sold or distributed as transportation fuel in 2005." While the baseline lifecycle GHG
emissions are used for a different specific purpose under the RFS program, we are not required
to use it here in this analysis for evaluating the GHG impacts of the candidate volumes.

To inform a range of potential GHG impacts associated with renewable CNG we
consider two scenarios for the conventional fuels it displaces. In the first scenario we assume that
the candidate volumes of renewable CNG, relative to the No RFS baseline, cause some miles
traveled with diesel vehicles to be replaced with miles traveled with vehicles that run on
renewable CNG. This scenario assumes that the candidate volumes make CNG vehicles more
economically attractive than diesel vehicles in some cases, leading to a marginal increase in
CNG vehicle miles traveled relative to diesel vehicle miles traveled. In the second scenario, we
assume the candidate volumes of renewable CNG do not shift the relative miles traveled for
diesel vehicles relative to CNG vehicles, but instead cause CNG vehicles to be fueled with
renewable CNG instead of conventional CNG.

Thus, our literature review for this proposed rule includes studies that estimate the
lifecycle GHG emissions associated with natural gas CNG. Figure 4.2.3.9-1 includes the natural
gas CNG from our review of the literature. Based on our review, LCA estimates for diesel are
higher than those for natural gas CNG on a per MJ of fuel basis. For the illustrative 30-year
GHG scenario discussed in the next section (Chapter 4.2.4), the scenario where renewable CNG
replaces diesel fuel produces a high estimate of the GHG benefits of renewable CNG. The low
estimate of renewable CNG GHG benefits is based on the scenario that assumes renewable CNG
displaces conventional CNG.

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Figure 4.2.3.10-1: Natural Gas CNG Well-to-Wheel Greenhouse Gas Estimates

CARB (2022)/Highest CI -	[sT|

CARB (2022)/Lowest CI -

( 79 ]

L—J Stage

GREET (2021 )/Default CH4 Leak-

GREET (2021 /'EPA" CH4 Leak -

EPA and NHTSA(2016)-

Upstream

Downstream

Conversion

Non-LUC

LUC

0

20

40

60

80

Natural Gas CNG GHG Emissions (gC02e/MJ)

Notes:: The name on the y-axis for each bar/estimate includes multiple descriptors separated by "t". In order, these descriptors are
the author or other name (e.g., RFS2 rule) and a brief descriptor of the scenario modeled. The Upstream stage includes all of the,
emissions associated with extracting, processing and delivering natural gas to a compression facility. The Conversion stage
includes emissions associated compressing natural gas to CNG. The Downstream stage includes emissions associated with
fueling a CNG vehicle and tailpipe combustion emissions. The gasoline baseline estimate in the March 2010 RFS2 rule used
SAR GWP values, All values in this chart use 100-year AR5 GWP values, Estimates that only report total lifecycle GHG
emissions are depicted only with a label and no bars.

The natural gas CNG estimates in our review range from 72 to 81 gCChe/MJ. Our review
did not identify many applicable studies, as there are many more studies on the lifecycle
emissions associated with natural gas production than natural gas for CNG vehicles. The EPA
and NHTSA (2016) estimate is from the R1A for the Greenhouse Gas Emissions and Fuel
Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles - Phase 2 rule. It
represents lifecycle emissions for CNG used in a 2014 or later dedicated CNG vehicle. The
lowest estimates are from GREET-2021, By default, GREET-2021 assumes a set of assumptions
for methane leakage during natural gas production. The model also gives users the option of
choosing methane leakage assumptions derived from the EPA GHG Inventory. The highest
estimates are the natural gas CNG pathways certified under the CA-LCFS program. CNG
produced from natural gas that is in turn produced from wells or systems with high leakage rates
may have much greater carbon intensity than the estimates in our review. This is an area where
additional LCA research would be helpful.

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4.2.3.11 Landfill Biogas CNG

Our literature review did not identify many studies on the lifecycle GHG emissions
associated with CNG produced from landfill gas (LFG). Our review is limited to estimates
derived from the GREET model and estimates by CARB as part of their implementation of the
CA-LCFS program. Figure 4.2.3.11-1 includes the LCA estimates for CNG produced from
landfill biogas.

Figure 4.2.3.11-1: Landfill Biogas CNG Lifecycle Greenhouse Gas Estimates

CARB (2018)/1% Leak/NG/Offsite-

CARB (2022)/Highest Cl/Offsite -

CARB (2022)/Lowest Cl/Offsite -

GREET (2021 V3% Leak/RNG/Offsite -

GREET (2021 )/2% Leak/RNG/Offsite -

GREET (2021 )/2% Leak/RNG/Onsite -

GREET (2021 )/1% Leak/RNG/Offsite -

Q

Stage

-40	0	40

LFG CNG GHG Emissions (gCQ2e/MJ)

80

Non-LUC
Downstream
Conversion
Upstream

Notes: The Upstream stage includes all of the emissions associated with capturing LFG. processing it to pipeline quality, and
transporting it to the fueling location. Downstream emission include tailpipe emissions including C02 emissions. In most studies
upstream emissions are negative because they assume LFG will beflared in the counterfactual baseline scenario. Because
reductions in C02 emissions are included in the Upstream emissions, C02 tailpipe emissions are included in the Downstream
emissions. CARB (2018) reports more disaggregated results and excludes tailpipe C02 emissions. Estimates that only report total
lifecycle GF1G emissions are depicted only with a label and no bars.

The range of estimates in Figure 4.2.3.11-1 range from 6 to 70 gC02e/MJ. The higher
estimates are from CARB and the lower estimates are from GREET-2021. We varied two
parameters in GREET-2021 to provide a range of estimates. By default, GREET-2021 assumes a
2% methane leakage rate associated with processing landfill gas to pipeline quality. We include
estimates assuming 1% and 3% methane leakage and show that each 1% of additional methane
leakage increases the LCA estimates by 6 gC02e/MJ. By default, GREET-2021 assumes CNG
fueling occurs offsite from where the landfill gas is produced, and the majority of CA-LCFS
certified LFG CNG pathways are for offsite CNG fueling. Based on GREET-2021 onsite fueling
reduces the LCA estimate by approximately 3 gC02e./MJ. The highest estimates are from CARB,

191


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with the very highest estimate coming from the default CA-GREET version 3.0 model. GREET -
2021 includes negative upstream emissions based on reduced GHG emissions in a baseline
scenario absent the use of the LFG as fuel. The CA-GREET model has much larger upstream
GHG emissions than GREET-2021 as it does not include the large emissions reductions relative
to the baseline. Landfills with high leakage rates associated with capturing and cleaning up the
biogas may have much greater carbon intensity than the estimates in our review. This is an area
where additional I.CA research would be helpful.

4.2.3.12 Manure Digester CNG

Our literature review did not identify many studies on the lifecycle GHG emissions
associated with CNG produced from manure digester biogas. Our review is limited to estimates
derived from the GREET model and estimates by CARB as part of their implementation of the
CA-LCFS program. Figure 4.2.3.12-1 includes the LCA estimates for CNG produced from
landfill biogas.

Figure 4.2.3.12-1: Manure Digester CNG Lifecycle Greenhouse Gas Estimates

GREET (2021 )/BroiIer/Offsite -

GREET (2021 )/Layers/Offsite -

GREET (2021 VBeef/Offsite-

GREET (2021 )/Beef Heifer/Offsite -

GREET (2021 yDairy/Offslte -

CARB (2022)/Highest CI/Dairy-

Stage

Q

LUC

Non-LUC
Downstream
Conversion
Upstream

GREET (2021 )/Swine/0(fsite -

-256



CARB (2022(/Lowest CI/Dairy-[ -533 )

-400	-200	0

Manure Biogas CNG GHG Emissions (gC02e/MJ)

Notes: The Upstream stage includes all of the emissions associated with capturing LFG. processing it to pipeline quality, and
transporting it to the fueling location. Downstream emission include tailpipe emissions including C02 emissions. In most studies
upstream emissions are negative because they assume LFG will be flared in the counteffactual baseline scenario. Because
reductions in C02 emissions are included in the Upstream emissions, C02 tailpipe emissions are included in the Downstream
emissions. CARB (2018) reports more disaggregated results and excludes tailpipe C02 emissions. Estimates that only report total
lifecycle GF1G emissions are depicted only with a label and no bars.

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There are relatively few studies but a very large range of LCA estimates (-533 to 44
gCChe/MJ) for biogas CNG produced from manure digesters. CARB has certified pathways for
CNG produced from over 50 different sources of manure biogas. All of these pathways have
negative carbon intensities meaning they reduce GHG emissions even before displacing any
conventional transportation fuels. The negative emissions are due to the assumed high methane
and nitrous oxide emissions in the baseline scenario absent the collection and treatment of animal
manure in anaerobic digesters. Consequently, the biggest area of uncertainty in the LCA for
manure digester GHG emissions is what level of control is assumed in the baseline. Based on
estimates from GREET-2021, CNG produced from poultry manure biogas has positive carbon
intensities, as high as 44 gC02e/MJ.

4.2.3.13 Summary of LCA Ranges

Based on the literature review for each pathway discussed above, the range of LCA
estimates are summarized in Table 4.2.3.12-1.

Table 4.2.3.13-1: Lifecycle GHG Ranges Based on Literature Review (gCChe/MJ)

Pathway

LCA Range

Petroleum Gasoline

84 to 98

Petroleum Diesel

84 to 94

Corn Starch Ethanol

38 to 116

Soybean Oil Biodiesel

14 to 73

Soybean Oil Renewable Diesel

26 to 87

Used Cooking Oil Biodiesel

12 to 32

Used Cooking Oil Renewable Diesel

12 to 37

Tallow Biodiesel

15 to 58

Tallow Renewable Diesel

14 to 81

Distillers Corn Oil Biodiesel

10 to 37

Distillers Corn Oil Renewable Diesel

12 to 46

Natural Gas CNG

72 to 81

Landfill Gas CNG

9 to 70

Manure Biogas CNG

-533 to 44

In the sections that follow we present a range of monetized climate benefits associated
with the candidate volumes for an illustrative 30-year scenario. In order to appropriately
monetize GHG impacts over this period an annual stream of net GHG emissions is required. For
the non-crop based fuel pathways we assume a constant stream of GHG emissions per MJ over
the 30-year period. The land use change emissions associated with crop-based biofuels are highly
dynamic, as the majority of emission increases associated with land use changes occur relatively
quickly (e.g., in the first few years) with the reduced emissions associated with the biofuel use
occuring over time. Thus, for the 30-year illustrative scenario, we use estimates for crop-based
biofuels that report an annual stream of land use change emissions. The majority of the land use
change GHG estimates in the literature do not report an annual stream. In many cases, these LUC
estimates are derived by estimating land conversions induced by the crop-based biofuel
production and then multiplying these conversions by emissions factors that estimate the

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resulting total emissions over a 20-30 year period. The only study identified in our review that
does report an annual stream of land use change emissions is the analysis for the 2010 RFS2 rule.
The reasons that no other studies report annual emissions are not entirely clear, but many studies
use static models to estimate land use change that are not conducive to reporting annual
emissions. Other studies use models that have the capability to estimate an annual stream but did
not report them for reasons that were not discussed in the publication. Thus, for the illustrative
GHG scenario we use the highest and lowest LCA estimates from the 2010 RFS2 rule for the
crop-based biofuel pathways. The LCA ranges used for the illustrative 30-year scenario are
summarized in the following table. The results for the 30-year scenario are described in the
following section.

Table 4.2.3.13-2: Lifecycle GHG Ranges for Illustrative 30-Year Scenario (gCChe/MJ)

Pathway

LCA Range

Petroleum Gasoline

84 to 98

Petroleum Diesel

84 to 94

Corn Starch Ethanol

49 to 91

Soybean Oil Biodiesel

14 to 72

Soybean Oil Renewable Diesel

24 to 78

Used Cooking Oil Biodiesel

12 to 32

Used Cooking Oil Renewable Diesel

12 to 37

Tallow Biodiesel

15 to 44

Tallow Renewable Diesel

14 to 81

Distillers Corn Oil Biodiesel

10 to 37

Distillers Corn Oil Renewable Diesel

12 to 46

Natural Gas CNG

72 to 90

Landfill Gas CNG

6 to 70

Manure Biogas CNG

-533 to 44

4.2.3.14 References for LCA Literature Review

For ease of reference, the following is the list of references cited in Chapter 4.2.3, unless
otherwise cited with the footnote:

•	BEIOM. (2021). Avelino, A. F. T., et al. "Creating a harmonized time series of
environmentally-extended input-output tables to assess the evolution of the US
bioeconomy - A retrospective analysis of corn ethanol and soybean biodiesel." Journal of
Cleaner Production 321: 128890.

•	Brandao, M. (2022). "Indirect Effects Negate Global Climate Change Mitigation
Potential of Substituting Gasoline With Corn Ethanol as a Transportation Fuel in the
USA." Frontiers in Climate 4.

•	CARB (2014). Detailed Analysis for Indirect Land Use Change. California Air Resources
Board. Sacramento, CA. 113 pages

•	CARB (2018). CA-GREET3.0 Model. Sacramento, CA, California Air Resources Board.

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•	CARB (2022). CA-LCFS Current Pathways Certified Carbon Intensities. California Air
Resources Board. Sacramento, CA. https://ww2.arb.ca.gov/resources/documents/lcfs-
pathway-certified-carbon-intensities

•	Carriquiry, M., et al. (2019). "Incorporating Sub-National Brazilian Agricultural
Production and Land-Use into U.S. Biofuel Policy Evaluation." Applied Economic
Perspectives and Policy.

•	Chen, R., et al. (2018). "Life cycle energy and greenhouse gas emission effects of
biodiesel in the United States with induced land use change impacts." Bioresource
Technology 251: 249-258.

•	Cooney, G., et al. (2017). "Updating the U.S. Life Cycle GHG Petroleum Baseline to
2014 with Projections to 2040 Using Open-Source Engineering-Based Models."
Environmental Science & Technology 51(2): 977-987.

•	EPA (2010). Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis.
U.S. Environmental Protection Agency, Office of Transportation Air Quality.
Washington, DC. EPA-420-R-10-006.

•	EPA (2020). Renewable Fuel Standard Program: Standards for 2020 and Biomass-Based
Diesel Volume for 2021 and Other Changes. 85 FR 7016.

•	EPA and NHSTA (2016). Greenhouse Gas Emissions and Fuel Efficiency Standards for
Medium- and Heavy-Duty Engines and Vehicles - Phase 2: Regulatory Impact Analysis.

•	EPA (2014). July 2014 Pathways II final rule. 79 FR 42128.

•	GREET (2021). Wang, Michael, Elgowainy, Amgad, Lee, Uisung, Bafana, Adarsh,
Banerjee, Sudhanya, Benavides, Pahola T., Bobba, Pallavi, Burnham, Andrew, Cai, Hao,
Gracida, Ulises, Hawkins, Troy R., Iyer, Rakesh K., Kelly, Jarod C., Kim, Taemin,
Kingsbury, Kathryn, Kwon, Hoyoung, Li, Yuan, Liu, Xinyu, Lu, Zifeng, Ou, Longwen,
Siddique, Nazib, Sun, Pingping, Vyawahare, Pradeep, Winjobi, Olumide, Wu, May, Xu,
Hui, Yoo, Eunji, Zaimes, George G., and Zang, Guiyan. Greenhouse gases, Regulated
Emissions, and Energy use in Technologies Model ® (2021 Excel). Computer Software.
USDOE Office of Energy Efficiency and Renewable Energy (EERE). 11 Oct. 2021.
Web. doi: 10.11578/GREET-Excel-202l/dc.20210902.1.

•	ICAO (2021). CORSIA Eligible Fuels — Lifecycle Assessment Methodology. CORSIA
Supporting Document. Version 3: 155.

•	Knoope, M. M. J., et al. (2019). "Analysing the water and greenhouse gas effects of soya
bean-based biodiesel in five different regions." Global Change Biology Bioenergy 11 (2):
381-399.

•	Laborde, D., et al. (2014). Progress in estimates of ILUC with MIRAGE model. JRC
Scientific and Policy Reports. Italy, European Commission Joint Research Centre
Institute for Energy and Transport: 46.

•	Lark, T. J., et al. (2022). "Environmental outcomes of the US Renewable Fuel Standard."
Proceedings of the National Academy of Sciences 119(9)

•	Lee, U., et al. (2021). "Retrospective analysis of the US corn ethanol industry for 2005—
2019: implications for greenhouse gas emission reductions." Biofuels, Bioproducts and
Biorefining.

•	Lewandrowski, J., et al. (2019). "The greenhouse gas benefits of corn ethanol - assessing
recent evidence." Biofuels: 1-15.

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•	O'Malley, J., et al. (2021). Indirect Emissions from Waste and Residue Feedstocks: 10
Case Studies from the United States, The International Council of Clean Transportation:
49.

•	Plevin, R. J., et al. (2015). "Carbon Accounting and Economic Model Uncertainty of
Emissions from Biofuels-Induced Land Use Change." Environmental Science &
Technology 49(5): 2656-2664.

•	Plevin, R. J., et al. (2022). "Choices in land representation materially affect modeled
biofuel carbon intensity estimates." Journal of Cleaner Production: 131477.

•	Riazi, B., et al. (2020). "Renewable diesel from oils and animal fat waste: implications of
feedstock, technology, co-products and ILUC on life cycle GWP." Resources,
Conservation and Recycling 161: 104944.

•	Scully, M. J., et al. (2021). "Carbon intensity of corn ethanol in the United States: state of
the science." Environmental Research Letters.

•	Seber, G., et al. (2014). "Environmental and economic assessment of producing
hydroprocessed jet and diesel fuel from waste oils and tallow." Biomass and Bioenergy
67: 108-118.

•	Taheripour, F., et al. (2017). "The impact of considering land intensification and updated
data on biofuels land use change and emissions estimates." Biotechnology for Biofuels
10(1): 191.

•	Xu, H., et al. (2022). "Life Cycle Greenhouse Gas Emissions of Biodiesel and Renewable
Diesel Production in the United States." Environmental Science & Technology 56(12):
7512-7521.

4.2.4 GHG Results for Illustrative Scenario

For each of the 2023, 2024, and 2025 standards, we estimate a 30-year stream of changes
in GHG emissions for renewable fuel volumes above the No RFS baseline for each analyzed fuel
using the carbon intensity analyses discussed above. While the standards proposed in this
rulemaking only apply in individual years, this analysis portrays what might be expected if, in
each of the ensuing 29 years, aggregate renewable fuel consumption for each category exceeded
baseline levels by the same volume as required by the rule.

Table 4.2.4-2 summarizes the annual low biofuel emission estimates and high petroleum
baseline emission estimates in grams CChe per megajoule (Table 4.2.4-4 does the same for high
biofuel and low petroleum baseline estimates). Table 4.2.4-3 presents the high petroleum
subtracted from the low biofuel emission estimates to show net emissions from displacing
petroleum fuels with biofuels on a per fuel-equivalent megajoule basis (Table 4.2.4-5 does the
same for high biofuel and low petroleum baseline estimates). GHG benefits from biofuels
displacing fossil fuel use include the GHG emissions associated with biofuel production and use,
including land use change emissions relative to the baseline scenario.

Emissions streams based on the 2023 through 2025 standards are presented in Tables
4.2.4-6 through 4.2.4-8 for low biofuel/high petroleum lifecycle analysis estimates, and Tables
4.2.4-10 through 4.2.4-12 for high biofuel/low petroleum lifecycle analysis estimates
respectively, both compared to the No RFS baseline. These are derived by first converting the
net emission streams presented in Tables 4.2.4-3 and 4.2.4-5 from grams CChe per megajoule to

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million metric tons CChe per megajoule, then multiplying these streams of emissions factors by
changes in renewable fuel volumes. The volume changes in 2023 reflect the difference between
the target volumes and the No RFS baseline as presented in Table 4.2.4-1. As discussed in
Section 4.2.3.1, our GHG analysis of the 2023 standard assumes that the target volumes will
produce GHG benefits for the subsequent 29 years due to ongoing use of renewable fuels (and
their consequent displacement of fossil fuels). In analyzing the GHG impacts of the 2024
standard we only consider the difference in volumes between the 2024 standard and 2023
standard because the emissions benefits of the increase in use of renewable fuels to meet the
2023 standards are already accounted for in the 29 years following 2023 (i.e., 2023-2053). Thus,
we only attribute emissions to the 2024 standard for the volumes that have changed compared to
the previous year (2023). Similarly, for 2024, we only include the emission impact for volumes
that have changed from the 2024 levels. These resulting annual sequences of emissions for the
2023 through 2025 standards are then summed, resulting in a combined stream of estimated
annual emissions from 2023 through 2054. These are presented in Tables 4.2.4-9 and 4.2.4-13
respectively below.

Table 4.2.4-

: Volume Changes Used for Illustrative GHG Scenario





Landfill
Biogas
CNG/
LNG348

Agricultural
Digester
Biogas
CNG/LNG

Wood

Waste/

MSW

Diesel/Jet

Fuel

Soybean/

Canola

Oil

Biodiesel

Fats/Oils/

Greases

Biodiesel

Corn Oil
Biodiesel

Soybean Oil

Renewable

Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil

Renewable

Diesel

Corn

Starch

Ethanol

Volume
Changes
Relative to No
RFS Baseline
[Table 3.2-3]
(million
gallons)

2023

44

44

-

968

200

120

901

275

80

706

2024

91

91

3

935

200

120

1,048

329

86

776

2025

145

145

6

901

200

120

1,054

388

91

840

Volume
Changes
Relative to
Previous Year
(million
gallons)

2023

44

44

-

968

200

120

901

275

80

706

2024

48

48

3

(33)

-

-

147

53

6

70

2025

54

54

3

(33)

-

-

6

60

6

65

Table 4.2.4-5 shows positive net GHG emissions for the corn ethanol and soybean oil
renewable diesel and biodiesel volumes in 2023 due to the initial pulse of land use change
emissions in the estimates used for this illustrative scenario. For corn ethanol, volumes relative to
the No RFS baseline increase in years 2024 and 2025, therefore there are positive emissions in
all three years. Conversely as shown in Table 4.2.4-6, soybean oil renewable diesel and biodiesel
volumes are negative in 2024 because those volumes decrease relative to the previous year's
(2023) volume increases from the No RFS baseline. As noted above, this scenario assumes that
the biofuel production continues for 30 years, irrespective of volume mandates in future years.

We separately estimate a 30-year stream of changes in GHG emissions for renewable fuel
volumes from the supplemental volume requirement proposed in this rulemaking as described in

348 Table 3.2-3 presents total volume changes for CNG/LNG from biogas. We assume for purposes of this
illustrative GHG scenario that half of that biogas is sourced from landfills and half from agricultural digesters.

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Chapter 3.3. As shown in Table 3.3-1, the supplemental volume requirement of 250 million
ethanol-equivalent gallons is represented by an energy-equivalent 147 million soybean oil
renewable diesel gallons in 20 2 3.349 Table 4.2.4-14 shows the illustrative GHG scenario using
the same process described above for both low biofuel/high petroleum and high biofuel/low
petroleum lifecycle analysis estimates for the supplemental volumes.

349 See Chapter 3.3 for more details.

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Table 4.2.4-2: Gross low biofuel/high petroleum annual lifecycle analysis estimates for



Landfill
Biogas
CNG/
LNG

Ag-
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel351

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean

Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch

Ethanol

Gasoline

(High
Estimate)

Diesel
(High
Estimate)

Year 0

8.7

(532.7)

37.6

710.3

13.0

9.9

755.9

12.8

12.4

395.0

98.1

94.1

Year 1

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 2

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 3

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 4

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 5

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 6

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 7

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 8

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 9

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 10

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 11

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 12

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 13

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 14

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 15

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 16

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 17

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 18

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 19

8.7

(532.7)

37.6

(20.0)

13.0

9.9

(8.7)

12.8

12.4

38.9

98.1

94.1

Year 20

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 21

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 22

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 23

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 24

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 25

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 26

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 27

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 28

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

Year 29

8.7

(532.7)

37.6

7.5

13.0

9.9

19.9

12.8

12.4

34.5

98.1

94.1

35° Parentheses indicate a reduction in GHG emissions.

351 Wood waste/MSW diesel and jet fuels are comprised of a wide variety of feedstocks and represent a small
volume of fuels in this rule. We have made a simplifying assumption that these fuels meet a 60% GHG reduction
(equal to the cellulosic threshold) compared to the diesel GHG estimate shown in this table.

199


-------
Table 4.2.4-3: Net low biofuel/high petroleum (low biofuel minus high petroleum baseline)
annual lifecycle analysis estimates for individual biofuels, presented in grams CChe per
mega joule of fuel.352 								



Landfill

Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

Year 0

(85.4)

(626.8)

(56.5)

616.2

(81.1)

(84.2)

661.8

(81.3)

(81.7)

296.9

Year 1

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 2

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 3

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 4

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 5

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 6

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 7

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 8

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 9

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 10

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 11

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 12

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 13

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 14

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 15

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 16

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 17

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 18

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 19

(85.4)

(626.8)

(56.5)

(114.1)

(81.1)

(84.2)

(102.8)

(81.3)

(81.7)

(59.2)

Year 20

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 21

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 22

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 23

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 24

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 25

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 26

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 27

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 28

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

Year 29

(85.4)

(626.8)

(56.5)

(86.6)

(81.1)

(84.2)

(74.2)

(81.3)

(81.7)

(63.6)

352 Parentheses indicate a net reduction in GHG emissions.

200


-------
Table 4.2.4-4: Gross high biofuel/low petroleum annual lifecycle analysis estimates for

individual biofuels, presented in grams CChe per mega joule of fuel.



Landfill
Biogas
CNG/
LNG

Ag-
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet

Fuel 353

Soybean/
Canola

Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean

Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch

Ethanol

Gasoline

(Low
Estimate)

Diesel
(Low
Estimate)

Natural
Gas
(Low
Estimate)

Year 0

69.8

44.0

33.4

1,044.0

42.3

36.6

1,102.7

54.2

46.3

665.1

83.6

83.5

71.9

Year 1

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 2

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 3

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 4

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 5

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 6

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 7

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 8

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 9

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 10

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 11

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 12

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 13

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 14

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 15

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 16

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 17

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 18

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 19

69.8

44.0

33.4

54.2

42.3

36.6

68.4

54.2

46.3

79.8

83.6

83.5

71.9

Year 20

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 21

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 22

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 23

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 24

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 25

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 26

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 27

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 28

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

Year 29

69.8

44.0

33.4

8.4

42.3

36.6

20.9

54.2

46.3

53.6

83.6

83.5

71.9

353 Wood waste/MSW diesel and jet fuels are comprised of a wide variety of feedstocks and represent a small
volume of fuels in this rule. We have made a simplifying assumption that these fuels meet a 60% GHG reduction
(equal to the cellulosic threshold) compared to the diesel GHG estimate shown in this table.

201


-------
Table 4.2.4-5: Net high biofuel/low petroleum (high biofuel minus low petroleum baseline)
annual lifecycle analysis estimates for individual biofuels, presented in grams CChe per
mega joule of fuel.354 								



Landfill

Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

Year 0

(2.1)

(27.8)

(50.1)

960.5

(41.2)

(46.9)

1,019.2

(29.4)

(37.2)

581.5

Year 1

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 2

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 3

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 4

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 5

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 6

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 7

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 8

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 9

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 10

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 11

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 12

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 13

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 14

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 15

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 16

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 17

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 18

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 19

(2.1)

(27.8)

(50.1)

(29.3)

(41.2)

(46.9)

(15.1)

(29.4)

(37.2)

(3.8)

Year 20

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 21

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 22

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 23

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 24

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 25

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 26

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 27

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 28

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

Year 29

(2.1)

(27.8)

(50.1)

(75.1)

(41.2)

(46.9)

(62.6)

(29.4)

(37.2)

(30.0)

354 Parentheses indicate a net reduction in GHG emissions.

202


-------
Table 4.2.4-6: 30-year stream of emissions for 2023 standards using low biofuel/high
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

(0.3)

(2.2)

-

75.2

(2.0)

(1.3)

77.3

(2.9)

(0.8)

16.9

2024

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2025

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2026

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2027

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2028

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2029

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2030

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2031

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2032

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2033

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2034

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2035

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2036

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2037

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2038

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2039

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2040

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2041

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2042

(0.3)

(2.2)

-

(13.9)

(2.0)

(1.3)

(12.0)

(2.9)

(0.8)

(3.4)

2043

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2044

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2045

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2046

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2047

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2048

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2049

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2050

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2051

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2052

(0.3)

(2.2)

-

(10.6)

(2.0)

(1.3)

(8.7)

(2.9)

(0.8)

(3.6)

2053

-

-

-

-

-

-

-

-

-

-

2054

-

-

-

-

-

-

-

-

-

-

355 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

203


-------
Table 4.2.4-7: 30-year stream of emissions for 2024 standards using low biofuel/high
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

-

-

-

-

-

-

-

-

-

-

2024

(0.3)

(2.4)

(0.0)

(2.6)

-

-

12.6

(0.6)

(0.1)

1.7

2025

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2026

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2027

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2028

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2029

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2030

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2031

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2032

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2033

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2034

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2035

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2036

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2037

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2038

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2039

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2040

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2041

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2042

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2043

(0.3)

(2.4)

(0.0)

0.5

-

-

(2.0)

(0.6)

(0.1)

(0.3)

2044

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2045

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2046

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2047

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2048

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2049

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2050

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2051

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2052

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2053

(0.3)

(2.4)

(0.0)

0.4

-

-

(1.4)

(0.6)

(0.1)

(0.4)

2054

-

-

-

-

-

-

-

-

-

-

356 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

204


-------
Table 4.2.4-8: 30-year stream of emissions for 2025 standards using low biofuel/high
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

-

-

-

-

-

-

-

-

-

-

2024

-

-

-

-

-

-

-

-

-

-

2025

(0.4)

(2.7)

(0.0)

(2.6)

-

-

0.5

(0.6)

(0.1)

1.5

2026

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2027

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2028

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2029

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2030

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2031

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2032

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2033

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2034

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2035

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2036

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2037

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2038

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2039

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2040

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2041

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2042

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2043

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2044

(0.4)

(2.7)

(0.0)

0.5

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2045

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2046

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2047

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2048

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2049

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2050

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2051

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2052

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2053

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

2054

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

357 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

205


-------
Table 4.2.4-9: 30-year stream of emissions for combined 2023-2025 standards using low
biofuel/high petroleum lifecycle analysis estimates for individual biofuels, relative to the No
RFS baseline, presented in millions of metric tons C02e.358				



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

(0.3)

(2.2)

-

75.2

(2.0)

(1.3)

77.3

(2.9)

(0.8)

16.9

2024

(0.6)

(4.6)

(0.0)

(16.5)

(2.0)

(1.3)

0.6

(3.5)

(0.9)

(1.7)

2025

(1.0)

(7.3)

(0.0)

(16.0)

(2.0)

(1.3)

(13.5)

(4.1)

(1.0)

(2.2)

2026

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2027

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2028

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2029

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2030

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2031

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2032

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2033

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2034

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2035

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2036

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2037

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2038

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2039

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2040

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2041

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2042

(1.0)

(7.3)

(0.0)

(13.0)

(2.0)

(1.3)

(14.0)

(4.1)

(1.0)

(4.0)

2043

(1.0)

(7.3)

(0.0)

(9.6)

(2.0)

(1.3)

(10.7)

(4.1)

(1.0)

(4.3)

2044

(1.0)

(7.3)

(0.0)

(9.7)

(2.0)

(1.3)

(10.2)

(4.1)

(1.0)

(4.3)

2045

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2046

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2047

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2048

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2049

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2050

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2051

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2052

(1.0)

(7.3)

(0.0)

(9.8)

(2.0)

(1.3)

(10.1)

(4.1)

(1.0)

(4.3)

2053

(0.7)

(5.1)

(0.0)

0.7

-

-

(1.5)

(1.2)

(0.1)

(0.7)

2054

(0.4)

(2.7)

(0.0)

0.4

-

-

(0.1)

(0.6)

(0.1)

(0.3)

358 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

206


-------
Table 4.2.4-10: 30-year stream of emissions for 2023 standards using high biofuel/low
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS
baseline, presented in millions of metric tons C02e.359

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

2051

2052

2053

2054

Landfill
Biogas
CNG/LNG

(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)
(0-0)

(0.0)

Agricultural
Digester
Biogas
CNG/LNG

(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)
(0-1)

(0.1)

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

117.3
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(3.6)
(9-2)
(9-2)
(9.2)
(9.2)
(9.2)
(9.2)
(9.2)
(9.2)
(9.2)
(9-2)

Fats/Oils/
Greases
Biodiesel

1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)

1.0)

Corn Oil
Biodiesel

(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0-7)
(0.7)

Soybean Oil
Renewable
Diesel

119.0

(7.3)
(7.3)
(7.3)
(7.3)
(7.3)
(7.3)
(7.3)
(7.3)
(7.3)
(7.3)

Fats/Oils/
Greases
Renewable
Diesel

1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)
1.0)

1.0)

Corn Oil
Renewable
Diesel

(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0-4)
(0.4)

359 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

207


-------
Table 4.2.4-11: 30-year stream of emissions for 2024 standards using high biofuel/low
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS

360



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

-

-

-

-

-

-

-

-

-

-

2024

(0.0)

(0.1)

(0.0)

(4.0)

-

-

19.4

(0.2)

(0.0)

3.3

2025

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2026

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2027

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2028

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2029

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2030

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2031

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2032

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2033

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2034

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2035

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2036

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2037

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2038

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2039

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2040

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2041

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2042

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2043

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.3)

(0.2)

(0.0)

(0.0)

2044

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2045

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2046

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2047

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2048

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2049

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2050

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2051

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2052

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2053

(0.0)

(0.1)

(0.0)

0.3

-

-

(1.2)

(0.2)

(0.0)

(0.2)

2054

-

-

-

-

-

-

-

-

-

-

360 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

208


-------
Table 4.2.4-12: 30-year stream of emissions for 2025 standards using high biofuel/low
petroleum lifecycle analysis estimates for individual biofuels, relative to the No RFS



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

-

-

-

-

-

-

-

-

-

-

2024

-

-

-

-

-

-

-

-

-

-

2025

(0.0)

(0.1)

(0.0)

(4.0)

-

-

0.8

(0.2)

(0.0)

3.0

2026

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2027

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2028

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2029

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2030

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2031

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2032

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2033

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2034

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2035

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2036

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2037

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2038

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2039

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2040

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2041

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2042

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2043

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2044

(0.0)

(0.1)

(0.0)

0.1

-

-

(0.0)

(0.2)

(0.0)

(0.0)

2045

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2046

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2047

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2048

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2049

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2050

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2051

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2052

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2053

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

2054

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

361 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

209


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Table 4.2.4-13: 30-year stream of emissions for combined 2023-2025 standards using high
biofuel/low petroleum lifecycle analysis estimates for individual biofuels, relative to the No
RFS baseline, presented in millions of metric tons C02e.362				



Landfill
Biogas
CNG/LNG

Agricultural
Digester
Biogas
CNG/LNG

Wood
Waste/
MSW
Diesel/Jet
Fuel

Soybean/
Canola Oil
Biodiesel

Fats/Oils/
Greases
Biodiesel

Corn Oil
Biodiesel

Soybean Oil
Renewable
Diesel

Fats/Oils/
Greases
Renewable
Diesel

Corn Oil
Renewable
Diesel

Corn
Starch
Ethanol

2023

(0.0)

(0.1)

-

117.3

(1.0)

(0.7)

119.0

(1.0)

(0.4)

33.1

2024

(0.0)

(0.2)

(0.0)

(7.6)

(1.0)

(0.7)

17.7

(1.3)

(0.4)

3.1

2025

(0.0)

(0.3)

(0.0)

(7.5)

(1.0)

(0.7)

(1.3)

(1.5)

(0.4)

2.8

2026

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2027

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2028

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2029

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2030

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2031

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2032

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2033

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2034

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2035

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2036

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2037

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2038

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2039

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2040

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2041

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2042

(0.0)

(0.3)

(0.0)

(3.3)

(1.0)

(0.7)

(2.1)

(1.5)

(0.4)

(0.3)

2043

(0.0)

(0.3)

(0.0)

(8.9)

(1.0)

(0.7)

(7.6)

(1.5)

(0.4)

(1.7)

2044

(0.0)

(0.3)

(0.0)

(8.7)

(1.0)

(0.7)

(8.5)

(1.5)

(0.4)

(1.9)

2045

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2046

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2047

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2048

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2049

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2050

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2051

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2052

(0.0)

(0.3)

(0.0)

(8.5)

(1.0)

(0.7)

(8.6)

(1.5)

(0.4)

(2.0)

2053

(0.0)

(0.2)

(0.0)

0.6

-

-

(1.2)

(0.4)

(0.1)

(0.3)

2054

(0.0)

(0.1)

(0.0)

0.3

-

-

(0.0)

(0.2)

(0.0)

(0.2)

362 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

210


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Table 4.2.4-14: 30-year stream of lifecycle analysis estimates for volume changes from 2023
supplemental volume requirement, represented by soybean renewable diesel compared to

363



Low Biofuel/High Petroleum

High Biofuel/Low Petroleum

2023

12.6

19.4

2024

(2.0)

(0.3)

2025

(2.0)

(0.3)

2026

(2.0)

(0.3)

2027

(2.0)

(0.3)

2028

(2.0)

(0.3)

2029

(2.0)

(0.3)

2030

(2.0)

(0.3)

2031

(2.0)

(0.3)

2032

(2.0)

(0.3)

2033

(2.0)

(0.3)

2034

(2.0)

(0.3)

2035

(2.0)

(0.3)

2036

(2.0)

(0.3)

2037

(2.0)

(0.3)

2038

(2.0)

(0.3)

2039

(2.0)

(0.3)

2040

(2.0)

(0.3)

2041

(2.0)

(0.3)

2042

(2.0)

(0.3)

2043

(1.4)

(1.2)

2044

(1.4)

(1.2)

2045

(1.4)

(1.2)

2046

(1.4)

(1.2)

2047

(1.4)

(1.2)

2048

(1.4)

(1.2)

2049

(1.4)

(1.2)

2050

(1.4)

(1.2)

2051

(1.4)

(1.2)

2052

(1.4)

(1.2)

2053

-

-

2054

-

-

363 This analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. Parentheses
indicate a net reduction in GHG emissions.

211


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4.2.5 Monetized GHG Impacts

4.2.5.1 Social Cost of Greenhouse Gases

For assessing GHG impacts in this illustrative scenario, we rely upon past biofuel
emissions reductions estimates that are available in CChe—carbon equivalent emissions using
the global warming potentials utilized in those analyses.364 We estimate the social benefits of
GHG reductions in this illustrative scenario using estimates of the social cost of greenhouse
gases (SC-GHG)365, specifically using the SC-CO2 estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under
Executive Order 13990 (hereinafter the "February 2021 TSD").366 The SC-GHG is the monetary
value of the net harm to society associated with a marginal increase in GHG emissions in a given
year, or the benefit of avoiding that increase. In principle, SC-GHG includes the value of all
climate change impacts (both negative and positive), including (but not limited to) changes in net
agricultural productivity, human health effects, property damage from increased flood risk and
natural disasters, disruption of energy systems, risk of conflict, environmental migration, and the
value of ecosystem services. The SC-GHG therefore, reflects the societal value of reducing
emissions of the gas in question by one metric ton. The SC-GHG is the theoretically appropriate
value to use in conducting benefit-cost analyses of policies that affect GHG emissions. In
practice, data and modeling limitations naturally restrain the ability of SC-GHG estimates to
include all the important physical, ecological, and economic impacts of climate change, such that
the estimates are a partial accounting of climate change impacts and will therefore, tend to be
underestimates of the marginal benefits of abatement.

We have evaluated the SC-GHG estimates in the February 2021 TSD and have
determined that these estimates are appropriate for use in estimating the social benefits of GHG
reductions in this illustrative scenario. These SC-GHG estimates are interim values developed
for use in benefit-cost analyses until updated estimates of the impacts of climate change can be
developed based on the best available science and economics. After considering the TSD, and
the issues and studies discussed therein, EPA finds that these estimates, while likely an
underestimate, are the best currently available SC-GHG estimates.

EPA and other federal agencies began regularly incorporating SC-CO2 estimates in
benefit-cost analyses conducted under Executive Order (E.O.) 128 6 6 367 in 2008, following a
court ruling in which an agency was ordered to consider the value of reducing CO2 emissions in a

364	It would be preferable to use estimates for each gas (e.g., CO2, CH4, N2O), but we use C02e estimates for this
illustrative scenario as they are the most readily available biofuel carbon intensity estimates.

365	Estimates of the social cost of greenhouse gases are gas specific (e.g., social cost of carbon (SC-CO2), social cost
of methane (SC-CH4), social cost of nitrous oxide (SC-N2O)), but collectively they are referenced as the social cost

of greenhouse gases (SC-GHG).

366	Interagency Working Group on Social Cost of Greenhouse Gases (IWG). 2021. Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990. February.

United States Government. Available at: https://www.whitehouse.gov/briefing-room/b1og/2021/02/26/a-return-to-

science-evidence- based-estimates-of-the-benefits-of-reducing-climate-pollu Hon/.

367	Under E.O. 12866, agencies are required, to the extent permitted by law and where applicable, "to assess both the
costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to

quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended

regulation justify its costs."

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rulemaking process. The SC-CO2 estimates presented here were developed over many years,
using a transparent process, peer-reviewed methodologies, the best science available at the time
of that process, and with input from the public. Specifically, in 2009, an interagency working
group (IWG) that included the EPA and other executive branch agencies and offices was
established to develop estimates relying on the best available science for agencies to use. The
IWG published SC-CO2 estimates in 2010 that were developed from an ensemble of three widely
cited integrated assessment models (IAMs) that estimate global climate damages using highly
aggregated representations of climate processes and the global economy combined into a single
modeling framework. The three IAMs were run using a common set of input assumptions in each
model for future population, economic, and CO2 emissions growth, as well as equilibrium
climate sensitivity (ECS)—a measure of the globally averaged temperature response to increased
atmospheric CO2 concentrations. These estimates were updated in 2013 based on new versions
of each JAM.368,369,370 In August 2016 the IWG published estimates of the social cost of methane
(SC-CH4) and nitrous oxide (SC-N2O) using methodologies that are consistent with the
methodology underlying the SC-CO2 estimates. In 2015, as part of the response to public
comments received to a 2013 solicitation for comments on the SC-CO2 estimates, the IWG
announced a National Academies of Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure that the estimates continue
to reflect the best available science and methodologies. In January 2017, the National Academies
released their final report, Valuing Climate Damages: Updating Estimation of the Social Cost of
Carbon Dioxide, and recommended specific criteria for future updates to the SC-CO2 estimates,
a modeling framework to satisfy the specified criteria, and both near-term updates and longer-
term research needs pertaining to various components of the estimation process.371 Shortly
thereafter, in March 2017, President Trump issued Executive Order 13783, which disbanded the
IWG, withdrew the previous TSDs, and directed agencies to ensure SC-CO2 estimates used in
regulatory analyses are consistent with the guidance contained in OMB 's Circular A-4,

"including with respect to the consideration of domestic versus international impacts and the
consideration of appropriate discount rates" (E.O. 13783, Section 5(c)). Benefit-cost analyses
following E.O. 13783 used SC-CO2 estimates that attempted to focus on the U.S. specific share
of climate change damages as estimated by the models and were calculated using two discount
rates recommended by Circular A-4, 3 percent and 7 percent. All other methodological decisions
and model versions used in SC- CO2 calculations remained the same as those used by the IWG in
2010 and 2013, respectively.

On January 20, 2021, President Biden issued Executive Order 13990, which re-
established the IWG and directed it to develop updated estimates of the social cost of carbon and
other greenhouse gases that reflect the best available science and the recommendations of the
National Academies. The IWG was tasked with first reviewing the SC-GHG estimates currently
used in Federal analyses and publishing interim estimates within 30 days of the E.O. that reflect
the full impact of GHG emissions, including by taking global damages into account.

368	Dynamic Integrated Climate and Economy (DICE) 2010 (Nordhaus 2010).

369	Climate Framework for Uncertainty, Negotiation, and Distribution (FUND) 3.8 (Anthoff and Tol 2013a, 2013b)

370	Policy Analysis of the Greenhouse Gas Effect (PAGE) 2009 (Hope 2013).

371	National Academies of Sciences, Engineering, and Medicine (National Academies). 2017. Valuing Climate
Damages: Updating Estimation of the Social Cost of Carbon Dioxide. Washington, D.C.: National Academies Press.

213


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As noted above, EPA participated in the IWG but has also independently evaluated the interim
SC-CO2 estimates published in the February 2021 TSD and determined they are appropriate to
use here to estimate the climate benefits associated with this illustrative scenario. EPA and other
agencies intend to undertake a fuller update of the SC-GHG estimates that takes into
consideration the advice of the National Academies (2017) and other recent scientific literature.
The EPA has also evaluated the supporting rationale of the February 2021 TSD, including the
studies and methodological issues discussed therein, and concludes that it agrees with the
rationale for these estimates presented in the TSD and summarized below.

In particular, the IWG found that the SC-GHG estimates used under E.O. 13783 fail to
reflect the full impact of GHG emissions in multiple ways. First, the IWG concluded that those
estimates fail to capture many climate impacts that can affect the welfare of U.S. citizens and
residents. Examples of affected interests include direct effects on U.S. citizens and assets located
abroad, international trade, and tourism, and spillover pathways such as economic and political
destabilization and global migration that can lead to adverse impacts on U.S. national security,
public health, and humanitarian concerns. Those impacts are better captured within global
measures of the social cost of greenhouse gases.

In addition, assessing the benefits of U.S. GHG mitigation activities requires
consideration of how those actions may affect mitigation activities by other countries, as those
international mitigation actions will provide a benefit to U.S. citizens and residents by mitigating
climate impacts that affect U.S. citizens and residents. A wide range of scientific and economic
experts have emphasized the issue of reciprocity as support for considering global damages of
GHG emissions. Using a global estimate of damages in U.S. analyses of regulatory actions
allows the U.S. to continue to actively encourage other nations, including emerging major
economies, to take significant steps to reduce emissions. The only way to achieve an efficient
allocation of resources for emissions reduction on a global basis—and so benefit the U.S. and its
citizens—is for all countries to base their policies on global estimates of damages.

Therefore, in this illustrative analysis, EPA centers attention on a global measure of SC-
GHG. This approach is the same as that taken in EPA regulatory analyses over 2009 through
2016. A robust estimate of climate damages to U.S. citizens and residents that accounts for the
myriad of ways that global climate change reduces the net welfare of U.S. populations does not
currently exist in the literature. As explained in the February 2021 TSD, existing estimates are
both incomplete and an underestimate of total damages that accrue to the citizens and residents
of the U.S. because they do not fully capture the regional interactions and spillovers discussed
above, nor do they include all of the important physical, ecological, and economic impacts of
climate change recognized in the climate change literature, as discussed further below. EPA, as a
member of the IWG, will continue to review developments in the literature, including more
robust methodologies for estimating the magnitude of the various damages to U.S. populations
from climate impacts and reciprocal international mitigation activities, and explore ways to
better inform the public of the full range of carbon impacts.

Second, the IWG concluded that the use of the social rate of return on capital (7 percent
under current OMB Circular A-4 guidance) to discount the future benefits of reducing GHG
emissions inappropriately underestimates the impacts of climate change for the purposes of

214


-------
estimating the SC-GHG. Consistent with the findings of the National Academies and the
economic literature, the IWG continued to conclude that the consumption rate of interest is the
theoretically appropriate discount rate in an intergenerational context, and recommended that
discount rate uncertainty and relevant aspects of intergenerational ethical considerations be
accounted for in selecting future discount rates.372,373,374,375,376 Furthermore, the damage
estimates developed for use in the SC-GHG are estimated in consumption-equivalent terms, and
so an application of OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. EPA agrees with this assessment and will
continue to follow developments in the literature pertaining to this issue. EPA also notes that
while OMB Circular A-4, as published in 2003, recommends using 3% and 7% discount rates as
"default" values, Circular A-4 also reminds agencies that "different regulations may call for
different emphases in the analysis, depending on the nature and complexity of the regulatory
issues and the sensitivity of the benefit and cost estimates to the key assumptions." On
discounting, Circular A-4 recognizes that "special ethical considerations arise when comparing
benefits and costs across generations," and Circular A-4 acknowledges that analyses may
appropriately "discount future costs and consumption benefits.. .at a lower rate than for
intragenerational analysis." In the 2015 Response to Comments on the Social Cost of Carbon for
Regulatory Impact Analysis, OMB, EPA, and the other IWG members recognized that "Circular
A-4 is a living document" and "the use of 7 percent is not considered appropriate for
intergenerational discounting. There is wide support for this view in the academic literature, and
it is recognized in Circular A-4 itself." Thus, EPA concludes that a 7% discount rate is not an
appropriate value to apply to the social cost of greenhouse gases in this analysis. In this analysis,
to calculate the present and annualized values of climate benefits, EPA uses the same discount
rate as the rate used to discount the value of damages from future GHG emissions, for internal
consistency. That approach to discounting follows the same approach that the February 2021
TSD recommends "to ensure internal consistency—i.e., future damages from climate change
using the SC-GHG at 2.5 percent should be discounted to the base year of the analysis using the
same 2.5 percent rate." EPA has also consulted the National Academies' 2017 recommendations

372	GHG emissions are stock pollutants, where damages are associated with what has accumulated in the atmosphere
over time, and they are long lived such that subsequent damages resulting from emissions today occur over many
decades or centuries depending on the specific greenhouse gas under consideration. In calculating the SC-GHG, the
stream of future damages to agriculture, human health, and other market and non-market sectors from an additional
unit of emissions are estimated in terms of reduced consumption (or consumption equivalents). Then that stream of
future damages is discounted to its present value in the year when the additional unit of emissions was released.
Given the long time horizon over which the damages are expected to occur, the discount rate has a large influence
on the present value of future damages.

373	Interagency Working Group on Social Cost of Carbon (IWG). 2010. Technical Support Document: Social Cost of
Carbon for Regulatory Impact Analysis under Executive Order 12866. February. United States Government.

374	Interagency Working Group on Social Cost of Carbon (IWG). 2013. Technical Support Document: Technical
Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. May. United
States Government.

375	Interagency Working Group on Social Cost of Greenhouse Gases (IWG). 2016a. Technical Support Document:
Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866.
August. United States Government.

376	Interagency Working Group on the Social Cost of Greenhouse Gases. 2016b. Addendum to Technical Support
Document on Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866: Application of
the Methodology to Estimate the Social Cost of Methane and the Social Cost of Nitrous Oxide. August. United
Stated Government. Available at: https://www.epa.gov/sites/production/files/2016-12/documents/addenduni to sc-
ghg tsd august 2016.pdf (accessed February 5, 2021).

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on how SC-GHG estimates can "be combined in RIAs with other cost and benefits estimates that
may use different discount rates." The National Academies reviewed "several options," including
"presenting all discount rate combinations of other costs and benefits with [SC-GHG] estimates."

While the IWG works to assess how best to incorporate the latest, peer reviewed science
to develop an updated set of SC-GHG estimates, it recommended the interim estimates to be the
most recent estimates developed by the IWG prior to the group being disbanded in 2017. The
estimates rely on the same models and harmonized inputs and are calculated using a range of
discount rates. As explained in the February 2021 TSD, the IWG has concluded that it is
appropriate for agencies to revert to the same set of four values drawn from the SC-GHG
distributions based on three discount rates as were used in regulatory analyses between 2010 and
2016 and subject to public comment. For each discount rate, the IWG combined the distributions
across models and socioeconomic emissions scenarios (applying equal weight to each) and then
selected a set of four values for use in agency analyses: an average value resulting from the
model runs for each of three discount rates (2.5 percent, 3 percent, and 5 percent), plus a fourth
value, selected as the 95th percentile of estimates based on a 3 percent discount rate. The fourth
value was included to provide information on potentially higher-than-expected economic impacts
from climate change, conditional on the 3 percent estimate of the discount rate. As explained in
the February 2021 TSD, this update reflects the immediate need to have an operational SC-GHG
that was developed using a transparent process, peer-reviewed methodologies, and the science
available at the time of that process.

Table 4.2.5.1-1 summarizes the interim SC-CO2 estimates for the years 2023-2054.377
These estimates are reported in 2020 dollars in the IWG's 2021 TSD but are otherwise identical
to those presented in the IWG's 2016 TSD. For purposes of capturing uncertainty around the SC-
CO2 estimates in analyses, the February 2021 TSD emphasizes the importance of considering all
four of the SC-CO2 values. The SC-CO2 increases over time within the models (i.e., the societal
harm from one metric ton emitted in 2030 is higher than the harm caused by one metric ton
emitted in 2025) because future emissions produce larger incremental damages as physical and
economic systems become more stressed in response to greater climatic change, and because
GDP is growing over time and many damage categories are modeled as proportional to GDP.

377 The February 2021 TSD provides SC-GHG estimates through emissions year 2050. Estimates were extended for
the period 2051 to 2054 using the IWG methods, assumptions, and parameters identical to the 2020-2050 estimates.
Specifically, 2051-2054 SC-GHG estimates were calculated in Mimi.jl, an open-source modular computing platform
used for creating, running, and performing analyses on IAMs (www.iiiiiiiifraniework.org). For CO2, the 2051-2054
SC-GHG values were calculated by linearly interpolating between the 2050 TSD values and the 2055 Mimi-based
values.

216


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Table 4.2.5.1-1: Interim Social Cost of Carbon Values, 2023-2054 (2021$/Metric Ton

C02)378

Emissions
Year

Discount Rate and Statistic

5% Average

3% Average

2.5% Average

3% 95th Percentile

2023

$16

$55

$81

$164

2024

$17

$56

$82

$167

2025

$17

$57

$84

$171

2026

$18

00
LO

LO
00

$174

2027

$18

$59

$86

$178

2028

$19

$60

$88

$181

2029

$19

$61

$89

$185

2030

$20

$62

$90

$189

2031

$20

$64

$92

$192

2032

$21

$65

$93

$196

2033

$21

$66

$95

$200

2034

$22

$67

$96

$204

2035

$23

$68

$97

$208

2036

$23

$69

$99

$212

2037

$24

$70

$100

$216

2038

$24

$72

$101

$219

2039

$25

$73

$103

$223

2040

$25

$74

$104

$227

2041

$26

$75

$105

$231

2042

$27

$76

$107

$234

2043

$27

$77

$108

$238

2044

$28

$79

$110

$241

2045

$29

$80

$111

$245

2046

$29

$81

$112

$248

2047

$30

$82

$114

$252

2048

$31

$83

$115

$255

2049

$31

$84

$116

$259

2050

$32

$86

$118

$263

2051

$33

$86

$119

$263

2052

$33

$87

$120

$264

2053

$34

$88

$121

$265

2054

$35

$89

$123

$266

Note: The 2023-2050 SC-CO2 values are identical to those reported in the 2016 TSD (IWG 2016a) adjusted for

inflation to 2021 dollars using the annual GDP Implicit Price Deflator values in the U.S. Bureau of Economic

378 Interagency Working Group on Social Cost of Greenhouse Gases (IWG). 2021. Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990. February.
United States Government. Available at: https://www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-
science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution

217


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Analysis' (BEA) NIPA Table 1.1.9 (U.S. BEA 2021). This table displays the values rounded to the nearest dollar;

the annual unrounded values used in the calculations in this analysis are available on OMB's website:

https://www.whitehouse.gOv/omb/information-regulatorv-affairs/regulatorv-matters/#scghgs.

The estimates were extended for the period 2051 to 2054 using methods, assumptions, and parameters identical to

the 2020-2050 estimates. The values are stated in $/metric ton C02 and vary depending on the year of C02

emissions.

There are a number of limitations and uncertainties associated with the 8C CO2
estimates presented in Table 4.2.5.1-1. Some uncertainties are captured within the analysis, while
other areas of uncertainty have not yet been quantified in a way that can be modeled. Figure
4.2.5.1-1 presents the quantified sources of uncertainty in the form of frequency distributions for
the SC-CO2 estimates for emissions in 2030 (in 2018$). The distribution of the SC-CO2 estimate
reflects uncertainty in key model parameters such as the equilibrium climate sensitivity, as well
as uncertainty in other parameters set by the original model developers. To highlight the
difference between the impact of the discount rate and other quantified sources of uncertainty,
the bars below the frequency distributions provide a symmetric representation of quantified
variability in the SC-CO2 estimates for each discount rate. As illustrated by the figure, the
assumed discount rate plays a critical role in the ultimate estimate of the SC-CO2. This is
because CO2 emissions today continue to impact society far out into the future, so with a higher
discount rate, costs that accrue to future generations are weighted less, resulting in a lower
estimate. As discussed in the February 2021 TSD, there are other sources of uncertainty that
have not yet been quantified and are thus not reflected in these estimates.

Figure 4.2.5.1-1: Frequency Distribution of SC-CO2 Estimates for 20303' 9

5% Average = $19

E

U3

Discount Rate
S.0%
D 3.0%

n 2.5%

3%

95th Pet =3181

I

5 - 95" Percentile
of Simulations

rrTrriTiTn 1111 rnmTrn 1»' 1 < 1 > n rnrvn 1 1 rhffTii

60 80 100 120 140 160 180 200 220 240 260 280 300 320

Social Cost of Carbon in 2030 [2018S I metric ton COJ

In addition, the interim SC-C02 estimates presented in Table 4.2.5.1-1 have a number of
other limitations. First, the current scientific and economic understanding of discounting

379 Although the distributions and numbers are based on the full set of model results (150,000 estimates for each
discount rate and gas), for display purposes the horizontal axis is truncated with 0.02 to 0.68 percent of the estimates
falling below the lowest bin displayed and 0.12 to 3.11 percent of the estimates falling above the highest bin
displayed, depending on the discount rate and GHG.

218


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approaches suggests discount rates appropriate for intergenerational analysis in the context of
climate change are likely to be less than 3 percent, near 2 percent or lower. Second, the IAMs
used to produce these interim estimates do not include all of the important physical, ecological,
and economic impacts of climate change recognized in the climate change literature and the
science underlying their "damage functions" (i.e., the core parts of the IAMs that map global
mean temperature changes and other physical impacts of climate change into economic (both
market and nonmarket) damages) lags behind the most recent research. For example, limitations
include the incomplete treatment of catastrophic and non-catastrophic impacts in the integrated
assessment models, their incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are modeled, uncertainty in the
extrapolation of damages to high temperatures, and inadequate representation of the relationship
between the discount rate and uncertainty in economic growth over long time horizons.

Likewise, the socioeconomic and emissions scenarios used as inputs to the models do not reflect
new information from the last decade of scenario generation or the full range of projections.

The modeling limitations do not all work in the same direction in terms of their influence
on the SC- CO2 estimates. However, as discussed in the February 2021 TSD, the IWG has
recommended that, taken together, the limitations suggest that the SC- CO2 estimates used in this
rule likely underestimate the damages from GHG emissions. In particular, the Intergovernmental
Panel on Climate Change (IPCC) Fourth Assessment Report, which was the most current IPCC
assessment available at the time when the IWG decision over the ECS input was made,
concluded that SC-CO2 estimates "very likely.. .underestimate the damage costs" due to omitted
impacts.380 Since then, the peer-reviewed literature has continued to support this conclusion, as
noted in the IPCC's Fifth Assessment report and other recent scientific

380 Intergovernmental Panel on Climate Change (IPCC). 2007. Core Writing Team; Pachauri, R.K; and Reisinger, A.
(ed.), Climate Change 2007: Synthesis Report, Contribution of Working Groups I, II and III to the Fourth
Assessment Report of the Intergovernmental Panel on Climate Change, IPCC, ISBN 92 9169122 4.

219


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assessments.381,382'383'384'385'386'387,388 These assessments confirm and strengthen the science,
updating projections of future climate change and documenting and attributing ongoing changes.
For example, sea level rise projections from the IPCC's Fourth Assessment report ranged from
18 to 59 centimeters by the 2090s relative to 1980-1999, while excluding any dynamic changes
in ice sheets due to the limited understanding of those processes at the time. A decade later, the
Fourth National Climate Assessment projected a substantially larger sea level rise of 30 to 130
centimeters by the end of the century relative to 2000, while not ruling out even more extreme
outcomes. The February 2021 TSD briefly previews some of the recent advances in the scientific
and economic literature that the IWG is actively following and that could provide guidance on,
or methodologies for, addressing some of the limitations with the interim SC-GHG estimates.
EPA has reviewed and considered the limitations of the models used to estimate the interim SC-
GHG estimates, and concurs with the February 2021 TSD's assessment that, taken together, the
limitations suggest that the interim SC-CO2 estimates likely underestimate the damages from
CO2 emissions. The IWG, of which EPA is a member, is currently working on a comprehensive
update of the SC-GHG estimates taking into consideration recommendations from the National
Academies of Sciences, Engineering and Medicine, recent scientific literature, and public
comments received on the February 2021 TSD.

Tables 4.2.4-6 through Tables 4.2.4-13 show the estimated changes in CChe for the
volume changes analyzed in each year, 2023-2025. This analysis portrays what might be

381	Intergovernmental Panel on Climate Change (IPCC). 2014. Climate Change 2014: Synthesis Report.

Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on
Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp.

382	Intergovernmental Panel on Climate Change (IPCC). 2018. Global Warming of 1.5°C. An IPCC Special Report
on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the threat of climate change, sustainable
development, and efforts to eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Portner, D. Roberts, J. Skea,
P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Pean, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou,
M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. Waterfield (eds.)].

383	Intergovernmental Panel on Climate Change (IPCC). 2019a. Climate Change and Land: an IPCC special report
on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse
gas fluxes in terrestrial ecosystems [P.R. Shukla, J. Skea, E. Calvo Buendia, V. Masson-Delmotte, H.-O. Portner, D.
C. Roberts, P. Zhai, R. Slade, S. Connors, R. van Diemen, M. Ferrat, E. Haughey, S. Luz, S. Neogi, M. Pathak, J.
Petzold, J. Portugal Pereira, P. Vyas, E. Huntley, K. Kissick, M. Belkacemi, J. Malley, (eds.)].

384	Intergovernmental Panel on Climate Change (IPCC). 2019b. IPCC Special Report on the Ocean and Cryosphere
in a Changing Climate [H.-O. Portner, D.C. Roberts, V. Masson-Delmotte, P. Zhai, M. Tignor, E. Poloczanska, K.
Mintenbeck, A. Alegria, M. Nicolai, A. Okem, J. Petzold, B. Rama, N.M. Weyer (eds.)].

385	U.S. Global Change Research Program (USGCRP). 2016. The Impacts of Climate Change on Human Health in
the United States: A Scientific Assessment. Crimmins, A., J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen,
R.J. Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. Mills, S. Saha, M.C. Sarofim, J. Trtanj, and
L. Ziska, Eds. U.S. Global Change Research Program, Washington, DC, 312 pp.

hl:l:t)s://dx.doi. org/10.7930/I0R49NQX.

386	U.S. Global Change Research Program (USGCRP). 2018. Impacts, Risks, and Adaptation in the United States:
Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel,
K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC,
USA, 1515 pp. doi: 10.7930/NCA4.2018.

387	National Academies of Sciences, Engineering, and Medicine (National Academies). 2016b. Attribution of
Extreme Weather Events in the Context of Climate Change. Washington, DC: The National Academies Press.
https://d0i.0rg/l 0.17226/21852.

388	National Academies of Sciences, Engineering, and Medicine (National Academies). 2019. Climate Change and
Ecosystems. Washington, DC: The National Academies Press, https://doi.org/10.17226/25504.

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expected if, in each of the ensuing 29 years, aggregate renewable fuel consumption for each
category exceeded baseline levels by the same volume associated with the rule. EPA estimated
the dollar value of these GHG-related effects for each analysis year between 2023 through 2054
by applying the SC-CO2 estimates, shown in Table 4.2.5.1-1, to the estimated changes in GHG
emissions inventories resulting from the candidate volumes. EPA then calculated the present
value and annualized benefits from the perspective of each year by discounting each year-
specific value to that year using the same discount rate used to calculate the SC-CO2.

4.2.5.2 Results

For this illustrative scenario, the interim estimates for carbon dioxide from the February
2021 TSD, presented in Table 4.2.5.1-1, were used to estimate the social benefits of the
estimated 30-year stream of GHG impacts presented in Chapter 4.2.4. For each year, the total of
emissions changes presented in Tables 4.2.4-6 through 4.2.4-13 are multiplied by each of the
four SC-CO2 values for the same year. Values for each year and discount rate statistic are then
converted to present value using the corresponding discount rates. The resulting streams of
estimated social benefits of the biofuel volume changes assumed in this illustrative scenario for
the 2023-2025 standards are presented in Tables 4.2.5.2-1 through 4.2.5.2-8.389 Note that in these
tables, volume changes for the 2023-2025 standards are relative to the No RFS baseline. We
separately estimate the social benefits of the biofuel volume changes assumed in this illustrative
scenario from the supplemental volume requirement proposed in this rulemaking as described in

389 According to OMB's Circular A-4 (2003), an "analysis should focus on benefits and costs that accrue to citizens
and residents of the United States", and international effects should be reported separately. Circular A-4 also
reminds analysts that" [different regulations may call for different emphases in the analysis, depending on the
nature and complexity of the regulatory issues." To correctly assess the total climate damages to U.S. citizens and
residents, an analysis should account for all the ways climate impacts affect the welfare of U.S. citizens and
residents, including how U.S. GHG mitigation activities affect mitigation activities by other countries, and spillover
effects from climate action elsewhere. The SC-GHG estimates used in regulatory analysis under revoked E.O. 13783
were a limited approximation of some of the U.S. specific climate damages from GHG emissions (e.g., $7/mtC02
(2021 dollars) and $12/mtC02 using a 3% discount rate for emissions occurring in 2020 and 2050, respectively). As
discussed at length in the February 2021 TSD, these estimates are an underestimate of the benefits of CO2 mitigation
accruing to U.S. citizens and residents, as well as being subject to a considerable degree of uncertainty due to the
manner in which they are derived. In particular, as discussed in this analysis, EPA concurs with the assessment in
the February 2021 TSD that the estimates developed under revoked E.O. 13783 did not capture significant regional
interactions, spillovers, and other effects and so are incomplete underestimates. As the U.S. Government
Accountability Office (GAO) concluded in a June 2020 report examining the SC-GHG estimates developed under
E.O. 13783, the models "were not premised or calibrated to provide estimates of the social cost of carbon based on
domestic damages" (U.S. GAO 2020, p. 29). Further, the report noted that the National Academies found that
country-specific social costs of carbon estimates were "limited by existing methodologies, which focus primarily on
global estimates and do not model all relevant interactions among regions" (U.S. GAO 2020, p. 26). It is also
important to note that the SC-GHG estimates developed under E.O. 13783 were never peer reviewed, and when their
use in a specific regulatory action was challenged, the U.S. District Court for the Northern District of California
determined that use of those values had been "soundly rejected by economists as improper and unsupported by
science," and that the values themselves omitted key damages to U.S. citizens and residents including to supply
chains, U.S. assets and companies, and geopolitical security. The Court found that by omitting such impacts, those
estimates "fail[ed] to consider.. .important aspect[s] of the problem" and departed from the "best science available"
as reflected in the global estimates. California v. Bernhardt, 472 F. Supp. 3d 573, 613-14 (N.D.Cal. 2020). EPA
continues to center attention in this analysis on the global measures of the SC-GHG as the appropriate estimates
given the flaws in the U.S. specific estimates, and as necessary for all countries to use to achieve an efficient
allocation of resources for emissions reduction on a global basis, and so benefit the U.S. and its citizens.

221


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Section 3.3. We present the results for these supplemental volumes in Tables 4.2.5.2-9 and
4.2.5.2-10. All calculations are available in a spreadsheet in the docket for this rule.390

Table 4.2.5.2-1: Present value of 30-year stream of climate benefits for 2023 standards,
using low biofuel/high petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(2,778)

$(9,461)

$(14,001)

$(28,257)

2024

$645

$2,216

$3,285

$6,633

2025

$633

$2,193

$3,256

$6,576

2026

$620

$2,170

$3,227

$6,517

2027

$607

$2,146

$3,197

$6,456

2028

$594

$2,121

$3,167

$6,393

2029

$581

$2,096

$3,136

$6,328

2030

$568

$2,071

$3,105

$6,261

2031

$557

$2,048

$3,075

$6,203

2032

$546

$2,025

$3,045

$6,143

2033

$535

$2,001

$3,015

$6,082

2034

$523

$1,977

$2,984

$6,019

2035

$512

$1,952

$2,953

$5,954

2036

$500

$1,927

$2,922

$5,888

2037

$488

$1,902

$2,890

$5,821

2038

$477

$1,877

$2,859

$5,752

2039

$465

$1,852

$2,827

$5,683

2040

$453

$1,827

$2,795

$5,613

2041

$443

$1,801

$2,762

$5,534

2042

$432

$1,776

$2,729

$5,455

2043

$350

$1,451

$2,235

$4,457

2044

$341

$1,430

$2,208

$4,391

2045

$332

$1,408

$2,180

$4,326

2046

$324

$1,387

$2,153

$4,261

2047

$315

$1,366

$2,126

$4,195

2048

$307

$1,345

$2,099

$4,130

2049

$298

$1,324

$2,071

$4,066

2050

$290

$1,303

$2,044

$4,001

2051

$284

$1,273

$2,023

$3,898

2052

$275

$1,250

$1,991

$3,797

2053

$-

$-

$-

$-

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle

390 See "GHG Scenario for 2023-25 Set Rule (NPRM).xlsx," available in the docket for this rule.

222


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analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

223


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Table 4.2.5.2-2: Present value of 30-year stream of climate benefits for 2024 standards,
using low biofuel/high petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$-

$-

$-

$-

2024

$69

$237

$352

$710

2025

$50

$173

$257

$520

2026

$49

$171

$255

$515

2027

$48

$170

$253

$510

2028

$47

$168

$250

$505

2029

$46

$166

$248

$500

2030

$45

$164

$245

$495

2031

$44

$162

$243

$490

2032

$43

$160

$241

$485

2033

$42

$158

$238

$481

2034

$41

$156

$236

$476

2035

$40

$154

$233

$470

2036

$40

$152

$231

$465

2037

$39

$150

$228

$460

2038

$38

$148

$226

$455

2039

$37

$146

$223

$449

2040

$36

$144

$221

$444

2041

$35

$142

$218

$437

2042

$34

$140

$216

$431

2043

$33

$138

$213

$425

2044

$34

$142

$220

$437

2045

$33

$140

$217

$431

2046

$32

$138

$214

$424

2047

$31

$136

$212

$418

2048

$31

$134

$209

$411

2049

$30

$132

$206

$405

2050

$29

$130

$204

$398

2051

$28

$127

$201

$388

2052

$27

$124

$198

$378

2053

$27

$122

$195

$368

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

224


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

225


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Table 4.2.5.2-3: Present value of 30-year stream of climate benefits for 2025 standards,
using low biofuel/high petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$-

$-

$-

$-

2024

$-

$-

$-

$-

2025

$67

$233

$346

$698

2026

$56

$196

$292

$590

2027

$55

$194

$289

$584

2028

$54

$192

$287

$579

2029

$53

$190

$284

$573

2030

$51

$187

$281

$567

2031

$50

$185

$278

$561

2032

$49

$183

$276

$556

2033

$48

$181

$273

$551

2034

$47

$179

$270

$545

2035

$46

$177

$267

$539

2036

$45

$174

$264

$533

2037

$44

$172

$262

$527

2038

$43

$170

$259

$521

2039

$42

$168

$256

$514

2040

$41

$165

$253

$508

2041

$40

$163

$250

$501

2042

$39

$161

$247

$494

2043

$38

$158

$244

$487

2044

$37

$156

$241

$479

2045

$37

$159

$246

$487

2046

$36

$156

$243

$480

2047

$35

$154

$239

$473

2048

$35

$152

$236

$465

2049

$34

$149

$233

$458

2050

$33

$147

$230

$451

2051

$32

$143

$228

$439

2052

$31

$141

$224

$428

2053

$30

$138

$221

$417

2054

$29

$136

$217

$406

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

226


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

227


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Table 4.2.5.2-4: Present value of 30-year stream of climate benefits for the combined 2023-
2025 standards, using low biofuel/high petroleum lifecycle analysis estimates, relative to the
No RFS baseline, presented with four values for the social cost of carbon (SC-CO2)

(millions of 2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(2,778)

$(9,461)

$(14,001)

$(28,257)

2024

$714

$2,454

$3,637

$7,342

2025

$750

$2,600

$3,859

$7,794

2026

$725

$2,538

$3,774

$7,622

2027

$710

$2,510

$3,739

$7,550

2028

$695

$2,481

$3,703

$7,476

2029

$679

$2,452

$3,667

$7,400

2030

$664

$2,422

$3,631

$7,323

2031

$651

$2,395

$3,596

$7,255

2032

$638

$2,368

$3,561

$7,185

2033

$625

$2,340

$3,526

$7,113

2034

$612

$2,312

$3,490

$7,039

2035

$598

$2,283

$3,454

$6,963

2036

$585

$2,254

$3,417

$6,886

2037

$571

$2,225

$3,380

$6,807

2038

$558

$2,196

$3,343

$6,728

2039

$544

$2,166

$3,306

$6,647

2040

$530

$2,136

$3,269

$6,565

2041

$518

$2,107

$3,230

$6,473

2042

$506

$2,077

$3,192

$6,380

2043

$421

$1,748

$2,692

$5,368

2044

$412

$1,728

$2,669

$5,308

2045

$403

$1,707

$2,643

$5,244

2046

$392

$1,682

$2,610

$5,165

2047

$382

$1,656

$2,577

$5,086

2048

$372

$1,630

$2,544

$5,007

2049

$361

$1,605

$2,511

$4,928

2050

$351

$1,580

$2,478

$4,850

2051

$344

$1,543

$2,452

$4,725

2052

$334

$1,515

$2,414

$4,603

2053

$57

$260

$416

$785

2054b

$29

$136

$217

$406

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

228


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.
b Combined impacts presented in Table 4.2.5.2-4 are the sum of the three thirty-year streams of impacts for the 2023
through 2025 standards presented in Tables 4.2.5.2-1, 4.2.5.2-2, and 4.2.5.2-3. Because we assess thirty years of
impacts for each year standards, the period of analysis for the 2023 standards extends to 2052.

229


-------
Table 4.2.5.2-5: Present value of 30-year stream of climate benefits for 2023 standards,
using high biofuel/low petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(4,599)

$(15,662)

$(23,178)

$(46,778)

2024

$144

$496

$735

$1,484

2025

$142

$491

$728

$1,471

2026

$139

$485

$722

$1,458

2027

$136

$480

$715

$1,444

2028

$133

$475

$708

$1,430

2029

$130

$469

$701

$1,415

2030

$127

$463

$694

$1,400

2031

$125

$458

$688

$1,387

2032

$122

$453

$681

$1,374

2033

$120

$448

$674

$1,361

2034

$117

$442

$668

$1,346

2035

$114

$437

$661

$1,332

2036

$112

$431

$654

$1,317

2037

$109

$426

$647

$1,302

2038

$107

$420

$639

$1,287

2039

$104

$414

$632

$1,271

2040

$101

$409

$625

$1,256

2041

$99

$403

$618

$1,238

2042

$97

$397

$610

$1,220

2043

$234

$972

$1,497

$2,985

2044

$228

$958

$1,479

$2,941

2045

$223

$943

$1,460

$2,897

2046

$217

$929

$1,442

$2,854

2047

$211

$915

$1,424

$2,810

2048

$205

$901

$1,406

$2,766

2049

$200

$887

$1,387

$2,723

2050

$194

$873

$1,369

$2,680

2051

$190

$853

$1,355

$2,611

2052

$184

$837

$1,334

$2,543

2053

$-

$-

$-

$-

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

230


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

231


-------
Table 4.2.5.2-6: Present value of 30-year stream of climate benefits for 2024 standards,
using high biofuel/low petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$-

$-

$-

$-

2024

$19

$67

$99

$200

2025

$4

$14

$21

$43

2026

$4

$14

$21

$42

2027

$4

$14

$21

$42

2028

$4

$14

$21

$42

2029

$4

$14

$20

$41

2030

$4

$13

$20

$41

2031

$4

$13

$20

$40

2032

$4

$13

$20

$40

2033

$3

$13

$20

$39

2034

$3

$13

$19

$39

2035

$3

$13

$19

$39

2036

$3

$13

$19

$38

2037

$3

$12

$19

$38

2038

$3

$12

$19

$37

2039

$3

$12

$18

$37

2040

$3

$12

$18

$36

2041

$3

$12

$18

$36

2042

$3

$12

$18

$35

2043

$3

$11

$18

$35

2044

$2

$9

$14

$28

2045

$2

$9

$14

$28

2046

$2

$9

$14

$27

2047

$2

$9

$14

$27

2048

$2

$9

$13

$26

2049

$2

$8

$13

$26

2050

$2

$8

$13

$25

2051

$2

$8

$13

$25

2052

$2

$8

$13

$24

2053

$2

$8

$12

$24

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

232


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

233


-------
Table 4.2.5.2-7: Present value of 30-year stream of climate benefits for 2025 standards,
using high biofuel/low petroleum lifecycle analysis estimates, relative to the No RFS
baseline, presented with four values for the social cost of carbon (SC-CO2) (millions of
2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$-

$-

$-

$-

2024

$-

$-

$-

$-

2025

$10

$35

$51

$103

2026

$5

$17

$25

$50

2027

$5

$16

$25

$50

2028

$5

$16

$24

$49

2029

$4

$16

$24

$49

2030

$4

$16

$24

$48

2031

$4

$16

$24

$48

2032

$4

$16

$23

$47

2033

$4

$15

$23

$47

2034

$4

$15

$23

$46

2035

$4

$15

$23

$46

2036

$4

$15

$22

$45

2037

$4

$15

$22

$45

2038

$4

$14

$22

$44

2039

$4

$14

$22

$44

2040

$3

$14

$21

$43

2041

$3

$14

$21

$42

2042

$3

$14

$21

$42

2043

$3

$13

$21

$41

2044

$3

$13

$20

$41

2045

$3

$12

$19

$37

2046

$3

$12

$19

$37

2047

$3

$12

$18

$36

2048

$3

$12

$18

$36

2049

$3

$11

$18

$35

2050

$3

$11

$18

$35

2051

$2

$11

$18

$34

2052

$2

$11

$17

$33

2053

$2

$11

$17

$32

2054

$2

$10

$17

$31

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

234


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

235


-------
Table 4.2.5.2-8: Present value of 30-year stream of climate benefits for the combined 2023-
2025 standards, using high biofuel/low petroleum lifecycle analysis estimates, relative to the
No RFS baseline, presented with four values for the social cost of carbon (SC-CO2)

(millions of 2021$)a	

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(4,599)

$(15,662)

$(23,178)

$(46,778)

2024

$164

$563

$834

$1,684

2025

$156

$539

$801

$1,617

2026

$148

$516

$768

$1,550

2027

$144

$510

$760

$1,536

2028

$141

$505

$753

$1,521

2029

$138

$499

$746

$1,505

2030

$135

$493

$738

$1,489

2031

$132

$487

$731

$1,475

2032

$130

$482

$724

$1,461

2033

$127

$476

$717

$1,447

2034

$124

$470

$710

$1,432

2035

$122

$464

$702

$1,416

2036

$119

$458

$695

$1,401

2037

$116

$453

$687

$1,385

2038

$113

$447

$680

$1,368

2039

$111

$441

$672

$1,352

2040

$108

$434

$665

$1,335

2041

$105

$428

$657

$1,316

2042

$103

$422

$649

$1,298

2043

$240

$997

$1,535

$3,061

2044

$234

$980

$1,513

$3,010

2045

$228

$964

$1,493

$2,962

2046

$222

$950

$1,474

$2,918

2047

$216

$936

$1,456

$2,873

2048

$210

$921

$1,437

$2,829

2049

$204

$907

$1,419

$2,784

2050

$199

$892

$1,400

$2,740

2051

$194

$872

$1,385

$2,669

2052

$188

$856

$1,364

$2,600

2053

$4

$18

$29

$56

2054b

$2

$10

$17

$31

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th

236


-------
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.
b Combined impacts presented in Table 4.2.5.2-8 are the sum of the three thirty-year streams of impacts for the 2023
through 2025 standards presented in Tables 4.2.5.2-5, 4.2.5.2-6, and 4.2.5.2-7. Because we assess thirty years of
impacts for each year standards, the period of analysis for the 2023 standards extends to 2052.

237


-------
Table 4.2.5.2-9: Present value of 30-year stream of climate benefits for 2023 supplemental
volume requirement, using low biofuel/high petroleum lifecycle analysis estimates,

presented with

'our values for the social cost of carbon (SC-CO2) (millions of 2021$)a

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(203)

$(692)

$(1,024)

$(2,066)

2024

$31

$106

$158

$318

2025

$30

$105

$156

$316

2026

$30

$104

$155

$313

2027

$29

$103

$153

$310

2028

$29

$102

$152

$307

2029

$28

$101

$150

$304

2030

$27

$99

$149

$300

2031

$27

$98

$148

$298

2032

$26

$97

$146

$295

2033

$26

$96

$145

$292

2034

$25

$95

$143

$289

2035

$25

$94

$142

$286

2036

$24

$92

$140

$283

2037

$23

$91

$139

$279

2038

$23

$90

$137

$276

2039

$22

$89

$136

$273

2040

$22

$88

$134

$269

2041

$21

$86

$133

$266

2042

$21

LO
00

$131

$262

2043

$15

$61

$93

$186

2044

$14

$60

$92

$184

2045

$14

$59

$91

$181

2046

$14

00
LO

$90

$178

2047

$13

$57

$89

$175

2048

$13

$56

$88

$173

2049

$12

$55

$87

$170

2050

$12

$54

LO
00
&

$167

2051

$12

$53

LO
OO

$163

2052

$12

$52

$83

$159

2053

$-

$-

$-

$-

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated

238


-------
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

Table 4.2.5.2-10: Present value of 30-year stream of climate benefits for 2023 supplemental
volume requirement, using high biofuel/low petroleum lifecycle analysis estimates,

presented with

'our values for the social cost of carbon (SC-CO2) (millions of 2021$)a

Year

Rate: 5%

Rate: 3%

Rate: 2.5%

Rate: 3%
95th percentile

2023

$(313)

$(1,065)

$(1,577)

$(3,182)

2024

$5

$16

$23

$47

2025

$4

$15

$23

$46

2026

$4

$15

$23

$46

2027

$4

$15

$23

$46

2028

$4

$15

$22

$45

2029

$4

$15

$22

$45

2030

$4

$15

$22

$44

2031

$4

$14

$22

$44

2032

$4

$14

$21

$43

2033

$4

$14

$21

$43

2034

$4

$14

$21

$42

2035

$4

$14

$21

$42

2036

$4

$14

$21

$41

2037

$3

$13

$20

$41

2038

$3

$13

$20

$41

2039

$3

$13

$20

$40

2040

$3

$13

$20

$40

2041

$3

$13

$19

$39

2042

$3

$13

$19

$38

2043

$12

$51

$79

$157

2044

$12

$50

$78

$155

2045

$12

$50

$77

$153

2046

$11

$49

$76

$150

2047

$11

00

$75

$148

2048

$11

$47

$74

$146

2049

$11

$47

$73

$143

2050

$10

$46

$72

$141

2051

$10

$45

$71

$138

2052

$10

$44

$70

$134

2053

$-

$-

$-

$-

2054

$-

$-

$-

$-

aThis analysis portrays what might be expected if, in each of the ensuing 29 years, aggregate renewable fuel
consumption for each category exceeded baseline levels by the same volume as required by the rule. EPA's lifecycle
analysis methodology includes GHG impacts for biofuels over a 30-year period based on public comment and the

239


-------
input of an expert peer review panel as described in the March 2010 RFS2 rule (75 FR 14670). Parentheses indicate
negative values. Climate benefits are based on changes (reductions) in CO2 emissions and are calculated using four
different estimates of the SC-CO2 (model average at 2.5 percent, 3 percent, and 5 percent discount rates; and 95th
percentile at 3 percent discount rate). We emphasize the importance and value of considering the benefits calculated
using all four estimates. As discussed in the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021), a consideration of climate benefits
calculated using lower discount rates are also warranted when discounting intergenerational impacts.

We note that the methodology underlying the SC-CO2 estimates used in this analysis has
been subject to public comment in the context of dozens of proposed rulemakings as well as in a
dedicated public comment period in 2013. We note that there is an ongoing interagency process
to update the SC-GHG estimates, and there will be further opportunity to provide public input on
the SC-GHG methodology through that process.391 As part of that separate process, the EPA
welcomes the opportunity to continually improve its understanding through public input on the
analytical issues associated with the presentation of anticipated costs, benefits, and other impacts
of its actions, as done through RIAs.

4.3 Conversion of Wetlands, Ecosystems, and Wildlife Habitats

The Second Triennial Report to Congress on Biofuels392 summarized the numerous
studies that have examined changes in wetlands, ecosystems, and wildlife habitats. The Report
noted, for example, there has been an observed increase in acreage planted with soybeans and
corn between the decade leading up to enactment of EISA and the decade following enactment.
Evidence from observations of land use change suggests that some of this increase in acreage
and crop use is a consequence of increased biofuel production. It is likely that the environmental
and natural resource impacts associated with land use change are, at least in part, due to
increased biofuel production and use. However, at this time we cannot quantify the amount of
land with increased intensity of cultivation nor confidently estimate the portion of crop land
expansion that is due to the market for biofuels. (see Second Triennial Report to Congress on
Biofuels Sections 2 and 4.2). Often these changes are ascribed to agricultural expansion for
biofuel production, and in some cases even to the RFS program itself, but, in reality, such a
causal connection is difficult to make with confidence (see Second Triennial Report to Congress
on Biofuels Section 2). Moreover, as discussed in Section 2 of the Second Triennial Report to
Congress on Biofuels, these land use change studies vary widely in approach and scope, making
comparison inherently difficult. It can also be seen in section 4.2.2 of this section the wide range
of estimates for the area and types of land use change depending on feedstock, model choice,
scenario design and input assumptions. This section focuses on impacts related to the domestic
production of renewable fuels and their underlying feedstocks. Effects from the end use of
renewable fuel (i.e., retail station storage and dispensing, and combustion of renewable fuel in

391	For example, EPA, on behalf of the IWG, published a Federal Register notice on January 25, 2022, to solicit
public nominations of scientific experts for the upcoming peer review the forthcoming update. See
https://www.federalregister.gov/docunients/2022/01/25/2022-Q1387/request-for-noniinations-of-experts-for-the-
review-of-technical-support-document-for-the-social-cost. EPA has a webpage where additional information
regarding the peer review process will be posted as it becomes available: https://www.epa.gov/environmental-
economics/scghg-tsd-peer-review. There will be a separate Federal Register notice for the public comment period on
the forthcoming SC-GHG technical support document once it is released.

392	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June 2018.

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vehicles and engines) are mostly from air quality effects (Chapter 4.1), climate effects (Chapter
4.2), and possible leakage from underground storage tanks (Chapter 4.4.4). Insofar as there are
impacts of renewable fuel on the conversion of wetlands, ecosystems, and wildlife habitats, they
are associated with crop-based feedstocks rather than waste fats, oils, and greases, biogas, or
biogas electricity. Discussion of the impacts of the candidate volumes in many of these chapters
will be related to the 2022 baseline as a substitute to the No RFS baseline as land use change
would not be drastically affected by the removal of the RFS program as referenced in Chapter 2.
Additionally, as stated in Chapter 4.1.3 the proposed electricity volume requirements are
expected to be met with existing renewable electricity production. We note that to the extent the
RFS standards in this proposed rule are associated with increased palm oil production, either as a
biofuel feedstock or for other purposes (e.g., backfilling of soybean oil that has been diverted to
biofuel production), there is strong evidence that palm oil production is linked with degradation
of wetlands, ecosystems and wildlife habitats outside of the U.S., and other adverse
environmental impacts on air quality, soil quality and water quality outside of the U.S. Tropical
forests are carbon sinks, and their conversion for oil palm production results in both sequestered
carbon emissions and foregone future carbon sequestration. These impacts mitigate the potential
GHG benefit otherwise provided by biofuel displacement of conventional fuels.393

393 Austin, K. G., A. Schwantes, Y. Gu and P. S. Kasibhatla (2019). "What causes deforestation in Indonesia?"
Environmental Research Letters 14(2): 024007; Austin, K. G., M. Gonzalez-Roglich, D. Schaffer-Smith, A. M.
Schwantes and J. J. Swenson (2017). "Trends in size of tropical deforestation events signal increasing dominance of
industrial-scale drivers." Environmental Research Letters 12(5); Austin, K. G., A. Mosnier, J. Pirker, I. McCallum,
S. Fritz and P. S. Kasibhatla (2017). "Shifting patterns of oil palm driven deforestation in Indonesia and implications
for zero-deforestation commitments." Land Use Policy 69: 41-48; Babel, M. S., B. Shrestha and S. R. Perret (2011).
"Hydrological impact of biofuel production: A case study of the Khlong Phlo Watershed in Thailand." Agricultural
Water Management 101(1): 8-26.; Carlson, K. M., L. M. Curran, G. P. Asner, A. M. Pittman, S. N. Trigg and J. M.
Adeney (2013). "Carbon emissions from forest conversion by Kalimantan oil palm plantations." Nature Climate
Change 3(3): 283-287; Gatto, M., M. Wollni and M. Qaim (2015). "Oil palm boom and land-use dynamics in
Indonesia: The role of policies and socioeconomic factors." Land Use Policy 46: 292-303; Gaveau, D. L. A., D.
Sheil, M. A. Salim, S. Arjasakusuma, M. Ancrenaz, P. Pacheco and E. Meijaard (2016). "Rapid conversions and
avoided deforestation: Examining four decades of industrial plantation expansion in Borneo." Scientific reports 6(1):
1-13; Gunarso, P., M. E. Hartoyo, F. Agus and T. J. Killeen (2013). Oil palm and land use change in Indonesia,
Malaysia and Papua New Guinea. Reports from the Technical Panels of the 2nd greenhouse gas working Group of
the Roundtable on Sustainable Palm Oil (RSPO). the Netherlands, Tropenbos International: 29-63; Hooijer, A., S.
Page, J. Jauhiainen, W. A. Lee, X. X. Lu, A. Idris and G. Anshari (2012). "Subsidence and carbon loss in drained
tropical peatlands." Biogeosciences 9(3): 1053; Koh, L. P., J. Miettinen, S. C. Liew and J. Ghazoul (2011).
"Remotely sensed evidence of tropical peatland conversion to oil palm." Proc Natl Acad Sci USA 108(12): 5127-
5132; Koh, L. P. and D. S. Wilcove (2008). "Is oil palm agriculture really destroying tropical biodiversity?"
Conservation letters 1(2): 60-64; Luskin, M. S., J. S. Brashares, K. Ickes, I.-F. Sun, C. Fletcher, S. Wright and M. D.
Potts (2017). "Cross-boundary subsidy cascades from oil palm degrade distant tropical forests." Nature
communications 8(1): 1-7; Miettinen, J., C. Shi and S. C. Liew (2016). "Land cover distribution in the peatlands of
Peninsular Malaysia, Sumatra and Borneo in 2015 with changes since 1990." Global Ecology and Conservation 6:
67-78; Miettinen, J., A. Hooijer, D. Tollenaar, S. Page, C. Malins, R. Vernimmen, C. Shi and S. C. Liew (2012).
"Historical analysis and projection of oil palm plantation expansion on peatland in Southeast Asia." ICCT White
Paper 17; Mukherjee, I. and B. K. Sovacool (2014). "Palm oil-based biofuels and sustainability in southeast Asia: A
review of Indonesia, Malaysia, and Thailand." Renewable and sustainable energy reviews 37: 1-12; Omar, W., N.
Aziz, A. T. Mohammed, M. H. Harun and A. K. Din (2010). "Mapping of oil palm cultivation on peatland in
Malaysia." MPOB Information Series; Vijay, V., S. L. Pimm, C. N. Jenkins and S. J. Smith (2016). "The impacts of
oil palm on recent deforestation and biodiversity loss." PLoS One 11(7): eO 159668.

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4.3.1 Wetlands

There are several federal reports that describe the status and trends of U.S. wetlands,394
including the U.S. Fish and Wildlife Service (USFWS) Status and Trends of Wetlands in the
Conterminous United States,395 the USFWS and NOAA Status and Trends of Wetlands in the
Coastal Watersheds of the Coterminous United States,396 the USFWS Status and Trends of
Prairie Wetlands in the United States,397 EPA's National Wetland Condition Assessment398
(NWCA), and USDA's Natural Resources Inventory (NRI).399 The USGS NWALT (National
Water-Quality Assessment (NAWQA) Program's Wall-to-Wall Anthropogenic Land Use
Trends) series does not model changes in wetlands.400 Although these federal wetland reports are
a wealth of information on wetland status and trends in the U.S., many of them are unfortunately
not particularly useful in evaluating the impact of biofuels or the RFS program. The most recent
versions of the three USFWS reports only cover up to 2009, and, therefore, are of limited utility
given that EISA was enacted in 2007 and the RFS2 program was promulgated in 2010. The 2011
NCWA was the first in the series, thus, trends cannot be inferred from that report alone. The
second field sampling for NWCA was conducted in 2016 and may be used to infer trends once
the report is available.

The most pertinent federal program that monitors and reports the status and trends of U.S.
wetlands in the context of biofuels is the USDA NRI.401 Wetlands are not an independent land
cover class in the NRI, but are overlaid on other land cover types (e.g., wetlands on forested
lands made up 66,053,800 acres in 2007). The changes in wetland acres between 2007 and 2017
are shown in Table 4.3.1-1. There was an overall reduction by roughly 52,800 acres between
2007 and 2012, and a further reduction of 64,300 acres between 2012 and 2017. Over the full
2007 to 2017 timeframe, these changes represent a reduction of 0.11%. These reductions were
mostly from losses of wetlands on cropland and rangeland, which were partly offset by gains in

394	Summarized and listed here: https://www.epa.gov/wetlands/how-does-epa-keep-track-status-and-trends-

wetlands-ns

395	Dahl, T.E. 2011. Status and trends of wetlands in the conterminous United States 2004 to 2009. U.S.
Department l'lc Interior; Fish and Wildlife Service, Washington, D.C. 108 pp.

396	T.E. Dahl and S.M. Stedman. 2013. Status and trends of wetlands in the coastal watersheds of the
Conterminous United States 2004 to 2009. U.S. Department of the Interior, Fish and Wildlife Service and National
Oceanic and Atmospheric Administration, National Marine Fisheries Service. (46 p.)

397	Dahl, T.E. 2014. Status and trends of prairie wetlands in the United States 1997 to 2009. U.S. Department of
t]lc Interior; Fish and Wildlife Service, Ecological Services, Washington, D.C. (67 pages).

398	NATIONAL WETLAND CONDITION ASSESSMENT 2011: A Collaborative Survey of the Nation's
Wetlands. U.S. Environmental Protection Agency Office of Wetlands, Oceans and Watersheds Office of Research

and Development Washington, DC 20460. EPA-843-R-15-005. May 2016

399	U.S. Department of Agriculture. 2020. Summary Report: 2017 National Resources Inventory, Natural
Resources Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State
University, Ames, Iowa. https://www.nrcs.usda.gov/sites/defauit/files/2022-10/2017NRISummary Finai.pdf
(accessed November 30, 2022).

400	Falcone JA (2015). U.S. conterminous wall-to-wall anthropogenic land use trends (NWALT), 1974-2012. U.S.
Geological Survey: 33 pp. Washington, DC.

401	See Table 7 - Changes in land use/cover between 2012 and 2017, U.S. Department of Agriculture. 2020.
Summary Report: 2017 National Resources Inventory, Natural Resources Conservation Service, Washington, DC,

and Center for Survey Statistics and Methodology, Iowa State University, Ames, Iowa.

https://www.nrcs.nsda.gov/sites/defanit/files/2022-10/2017NRISnm.mare Finai.pdf (accessed November 30, 2022).

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developed and water areas.402 The report does not provide the information needed to determine
the portion of wetland acres lost in order to grow feedstocks for biofuels, nor does it attempt to
identify the portion of lost wetland acres attributable to the RFS program.

Table 4.3.1-1: Changes in palustrine403 and estuarine404 wetlands on different land
use/cover types between 2007, 2012, and 2Q17405	



Acres (in thousands)



Wetlands on

2007

2012

2017

Change
(2017 - 2007)

Change
(%)

Cropland, pastureland,
& CRP land

17,623.5

17,552.5

17,426.4

-197.1

-1.12

Rangeland

7,969.2

7,913.0

7,876.8

-92.4

-1.16

Forest land

66,053.8

66,035.9

65,983.6

-70.2

-0.11

Other rural land

14,731.1

14,736.6

14,801.5

70.4

0.48

Developed land

1,411.0

1,450.9

1,486.5

75.5

5.35

Water areas

3,556.0

3,602.9

3,652.7

96.7

2.72

Total

111,344.6

111,291.8

111,227.5

-117.1

-0.11

There are several other regional studies examining changes in wetland area, including
several from the Prairie Pothole Region.406 In the only other national assessment to date, Wright
et al. (2017) found that within 50 miles of an ethanol biorefineiy there was a 14,000-acre loss of
wetland between 2008 and 2012. While one might infer a causal connection between proximity
to an ethanol biorefinery and loss of wetlands (a question that was not investigated directly), this
study nevertheless does not demonstrate a connection to the RFS program specifically. As
discussed in Chapter 1, there are and have been numerous other drivers for ethanol use in the
U.S., most significantly the economic benefits of using ethanol in E10 blends. Additionally, a

402	"Water areas" are defined in the USDA NRI as "[a] broad land cover/use category comprising water bodies and
streams that are permanent open water."

403	The NRI defines "palustrine wetlands" as "[w]etlands occurring in the Palustrine System, one of five systems in
the classification of wetlands and deepwater habitats (Cowardin et al. 1979). Palustrine wetlands include all nontidal
wetlands dominated by trees, shrubs, persistent emergent plants, or emergent mosses or lichens, as well as small,
shallow open water ponds or potholes. Palustrine wetlands are often called swamps, marshes, potholes, bogs, or
fens." NRI Glossary, available at

https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/technical/nra/nri/processes/?cid=nrcs 143 014127 (last
accessed May 6, 2021).

404	The NRI defines "estuarine wetlands" as "[w]etlands occurring in the Estuarine System, one of five systems in
the classification of wetlands and deepwater habitats (Cowardin et al. 1979). Estuarine wetlands are tidal wetlands
that are usually semienclosed by land but have open, partly obstructed or sporadic access to the open ocean, and in
which ocean water is at least occasionally diluted by freshwater runoff from the land. The most common example is
where a river flows into the ocean." NRI Glossary, available at

https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/technical/nra/nri/processes/?cid=nrcs 143 014127 (last
accessed May 6, 2021).

405	U.S. Department of Agriculture. 2020. Summary Report: 2017National Resources Inventory, Natural Resources
Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State University,
Ames, Iowa, https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/nra/nri/results.

406	Johnston, C. A. (2013). "Wetland losses due to row crop expansion in the Dakota Prairie Pothole Region."
Wetlands 33(1): 175-182. Johnston, C. A. (2014). "Agricultural expansion: land use shell game in the U.S. Northern
Plains." landscape Ecology 29(1): 81 95: 10.1007/sl0980 013 9947 0.

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significant portion of U.S. ethanol production is exported and therefore cannot be attributed to
the RFS program.

There are also many differences between Wright et al. (2017) and the NRI that make
direct comparison of these two studies not relevant. These differences stem from numerous
sources, including the geographic extent (the entire contiguous U.S. for the NRI versus only
areas in the contiguous U.S. within 100 miles of a biorefineiy in Wright et al. (2017)), and
source data (fixed random points in the NRI versus satellite-derived data from the USDA's
Cropland Data Layer in Wright et al. (2017)). Reconciling these estimates is beyond the scope of
this rulemaking. Nonetheless, when we consider these two national assessments and the other
studies cited above overall, they demonstrate that agricultural extensification may affect
wetlands,407 but any losses are relatively small compared with the total amount of wetland.
Moreover, as stated above, where these studies were directed at the potential impacts of biofuels
they considered the impact of increased biofuel production generally, not the incremental impact
in biofuel production attributable to the RFS program or the volumes being proposed in this
proposed rule. As discussed in further detail in Chapter 2, much of the biofuel projected to be
used in 2023-2025 would be expected to be used even in the absence of the RFS volume
requirements. Any land use change associated with biofuels that would be used in the absence of
the RFS volume requirements is therefore not attributable to this proposed rule.

In the most recent NRI, the USDA reported that there was a decrease of 24,300 acres in
the total wetland and deepwater habitat area, including palustrine and estuarine wetlands and
other aquatic habitats, between 2012 and 20 1 7.408 The bulk of the wetland losses were in the
Prairie Pothole region, as reported elsewhere,409 with some very high rates (i.e., >15%, Wright et
al. 2017). The conversion reported by Wright, Larson et al. (2017) explicitly included only lands
that had not been in cropland for at least 20 years; although these areas may not represent
pristine habitats, they are expected to represent habitats that are in a relatively natural state.

The studies discussed above show that total wetland acres in the contiguous U.S. have
been decreasing since 2007. However, additional information is needed in order to draw any
conclusions with confidence as to whether biofuel production is a driving factor in that loss, as
well as the extent to which the annual volume requirements under the RFS program cause
changes in biofuel production and in particular the candidate volumes. The volume increases for
2023-2025 compared to the No RFS baseline that are described in Chapter 3 due to biofuels
produced from agricultural feedstocks (especially corn and soybeans) would suggest the

407	Agricultural extensification is the expansion of agricultural land onto previously uncultivated land. U.S. EPA
(2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental Protection

Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

408	U.S. Department of Agriculture. 2020. Summary Report: 2017National Resources Inventory, Natural
Resources Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State

University, Ames, Iowa, at Table 18. https://www.nrcs.nsda.gov/sites/defanlt/files/2022-10/

2017NRISummary Finatpdf (accessed November 30, 2022). See also USDA, 2017 National Resources Inventory,

at https://www.nrcs.usda.gov/Internet/NRCS	RCA/repoits/nil	wet	nathlml. (Last accessed on April 12, 2021).

The National Wetlands table shows a total area of wetlands and aquatic habitat on water areas and non-federal land

as 160,755,900 acres in 2012 and 160,731,600 acres in 2017.

409	Johnston, C. A. (2013). "Wetland losses due to row crop expansion in the Dakota Prairie Pothole Region."
Wetlands33(1): 175-182. Johnston, C. A. (2014). "Agricultural expansion: land use shell game in the UTS.

Northern Plains." Landscape Ecology 29(1): 81-95.

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potential for an associated increase in crop production. As such, they may be associated with
increased pressure to convert wetlands into cropland or otherwise impact wetlands. However, if
we consider the potential impacts relative to the current situation in 2022 (i.e., the 2022 baseline
discussed in Chapter 2.2) there would be much less potential impact. Additional information on
land use change from corn and soybean can be located in Chapter 4.2. The main proposed
volume changes are from biofuel produced from biogas (CNG/LNG and electricity) which are
anticipated to be supplied from existing facilities. Therefore, no effect from this change would be
anticipated on wetlands as no additional land is needed to meet these candidate volumes. More
information is needed to assess the degree to which the volume requirements impact land use and
management decisions in order to estimate the magnitude of their impacts on wetland loss.
However, such analysis would be expansive and could not be performed on the timeline of this
rulemaking.

Figure 4.3.1-1: Relative conversion rates from wetland to cropland from 2008 to 2012

0 0.8 2.4 5.9 16.5 100	0 400 800

Rates are relativized by type of ecosystem within a 3.5-mile spatial grid (modified from 410). Stars denote the
location of biorefineries in the analysis.

4.3.2 Ecosystems Other Than Wetlands

There are many ecosystems other than wetlands that may be affected by biofuel
production and use, including grasslands, forests, and aquatic habitats downstream of corn and
soybean production areas. Impacts on aquatic habitats, such as from runoff of fertilizer and
pesticides, as well as changes in hydrology from tilling, are discussed in Chapter 4.4. As with
other land use changes and associated environmental effects, attributing the fraction of these
changes to biofuels is not currently possible with any degree of confidence. Consequently,
attribution to the RFS annual volumes is also not currently possible, and such an analysis would
be expansive and could not be conducted in time to be included in this rulemaking. The
conversion of these ecosystems to other uses, including agriculture, is summarized below.

410 Wright, C. K., et al. (2017). "Recent grassland losses are concentrated around US ethanol refineries."
Environmental Research Letters 12 (4).

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In addition to wetlands, Wright et al. (2017) also reported on the losses of grasslands,
shrublands, and forests within 50 miles of a biorefinery in their study.411 Wright et al. (2017)
estimated much larger reductions of grassland (2 million acres), forests (60,000 acres), and
shrublands (52,000 acres), than in wetland reductions (estimated 14,000 acre reduction) (Figure
4.3.2-1). The bulk of the grassland conversions occurred in South Dakota (348,000 acres), Iowa
(297,000 acres), Kansas (256,000 acres), Missouri (239,000 acres), Nebraska (213,000 acres),
and North Dakota (176,000 acres).412

Figure 4.3.2-1: Relative conversion rates to cropland from either (a) grassland, (b) forest,
or (c) shrubland from 2008 to 2012

0 04 1.2 2 7 7.8 too	0 1.2 i5 82 21.2 100

Rates are relativized by type of ecosystem within a 3.5-mile spatial grid (modified from 41^). Stars denote the location of
biorefineries, and the 100 mile radius from all biorefineries is included in (a) for reference (purple outline).

The 2 million acre reduction in grassland described in Wright et al. (2017) between 2008
and 2012 is comparable to the 1.475 million acre reduction in rangeland reported in the USDA
NRI between 2007 and 2012.414 The NRI defines rangeland as a land use/land cover that is more

411	Id.

412	Id.

413	Id.

414	U.S. Department of Agriculture, 2020. Summary Report: 2017 National Resources Inventory, Natural
Resources Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State
University, Ames, Iowa. https://www.nrcs.usda.gov/sites/default/files/2022-10/2017NRISummaA' Final.pdf
(accessed November 30, 2022).

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lightly managed than pastureland,415 and, as such, is probably the NRI land use/land cover most
comparable to the grassland in Wright et al. (2017). The biggest reduction in rangeland was from
conversion to cropland (743,400 acres), followed by developed land (535,800 acres), and then
conversion to other land uses by smaller amounts. The NRI does not parse out individual crops
within the cropland category, making it impossible to draw specific conclusions about the impact
of crop production for biofuels on grassland habitat. This reduction in rangeland acreage between
2007 and 2012 was reported to continue between 2012 and 2017, with an additional reduction of
over 2.4 million acres of rangeland, again with the largest conversion to cropland (754,600
acres).416

The Conservation Reserve Program (CRP) is especially relevant to the land use change
and impacts to ecosystems. CRP lands are often grassland habitat that are entered into contract
for 10-15 years, and provide a range of ecosystem services over that period, including carbon
sequestration, nutrient capture, and habitat for birds.417 CRP lands are formerly agricultural
lands, and, once they have left the CRP, could be used for the production of biofuel feedstocks.
However, they are often not used for production because the lands are often of lower quality, and
the guaranteed rental rate from admission to the CRP program is more attractive to farmers than
the uncertainty of growing crop on marginal lands.418 Despite the rental payment incentive to
farmers, enrollment in the CRP has been shrinking since 2007.419 This is due to specifications in
the Farm Bills, with a reduction from 36.8 million acres in 2007 to 21.9 million acres in 20 20.420
The 2020 NRI reported a net reduction of CRP land by 8.7 million acres between 2007 and 2012,
mostly to cropland (66.5%) and pastureland (38%).421 These reductions continued from 2012 to
2017, with a reduction of 7.8 million acres between 2012 and 2017, again mostly to cropland
(63%) and pasture (37%). A detailed study from a 12-state area in the Midwest found that 30%
of the CRP land that left the program between 2010 and 2013 went into five principal crops (i.e.,

415	The 2020 NRI defines rangeland as "A broad land cover/use category on which the climax or potential plant
cover is composed principally of native grasses, grass-like plants, forbs or shrubs suitable for grazing and browsing,

and introduced forage species that are managed like rangeland. This would include areas where introduced hardy

and persistent grasses, such as crested wheatgrass, are planted and such practices as deferred grazing, burning,

chaining, and rotational grazing are used, with little or no chemicals or fertilizer being applied. Grasslands,

savannas, many wetlands, some deserts, and tundra are considered to be rangeland. Certain communities of low

forbs and shrubs, such as mesquite, chaparral, mountain shrub, and pinyon-juniper, are also included as rangeland."

416	U.S. Department of Agriculture. 2020. Summary Report: 2017National Resources Inventory, Natural Resources
Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State University,

Ames, Iowa. https://www.nrcs.usda.gov/sites/default/files/2022-10/2017NRISummarv Final.pdf (accessed

November 30, 2022).

417	USDA Farm Services Agency (FSA). 2016. The Conservation Reserve Program: 49th Signup Results,
https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/Conservation/PDF/SU49Book_State_finall.pdf

418	Gray, B. J., & Gibson, J. W. (2013). "Actor-networks, farmer decisions, and identity." Culture, Agriculture,
Food311^Environment, 35(2), 82el0l. Brown, J. C., et al. (2014). "Ethanol plant location and intensification vs.
extensification of corn cropping in Kansas." Applied Geography 53: 141-148.

419	Data from the USDA Farm Service Agency (FSA). available at https://www.fsa.usda.gov/proarams-and-

services/ctmservation-programs/reports-and-statistics/amseivation-liijifv^

on April 12, 2021).

420	USDA FSA, FY 2020 Annual Summary. Data from the USDA Farm Service Agency (FSA), available at^E^
www.fsa.usda.gov/programs-and-services/conservation-programs/reports-and-statistics/conservation-reserve-

program-statistics/index (last accessed on May 5, 2021).

421	U.S. Department of Agriculture. 2020. Summary Report: 2017National Resources Inventory, Natural Resources
Conservation Service, Washington, DC, and Center for Survey Statistics and Methodology, Iowa State University,

Ames, Iowa, at 3-45. https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/nra/nri/results/.

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corn, soybean, winter wheat, spring wheat, and sorghum), with the majority of that to corn and
soybean.42z Reconciling these studies suggests that, of the land that leaves the CRP and goes into
the generic category of cropland in the NRI, at least half of that cropland is devoted to row crops.
The change in CRP enrollment is not uniform across the country (Figure 4.3.2-2), with much of
the reduction in the western and northern plains, the same areas experiencing losses of grassland
and increases in agriculture.

Figure 4.3.2-2: Change in CRP enrollment between 2007 and 2016.423

Note. Data as of the end of April 2010.

Prepared by FSA/EPAS/NRA

Reductions in forested areas to grow corn or soybeans does not appear to be occurring in
large amounts. As noted above, Wright et al. (2017) reported a net conversion of roughly 60,000
acres of forest within 50 miles of biorefineries. The NRI reported an overall increase of
forestland between 2007 and 2012 (+672,400 acres) which continued between 2012 and 2017
(+1,099,700 acres). Most of the new forest land in both periods came from conversion of
pastureland, which offset smaller losses of forest land to predominantly developed lands.424

422	Morefield, P. I".., et al. (2016). "Grasslands, wetlands, and agriculture: the fate of land expiring from the
Conservation Reserve Program in the Midwestern United States." Environmental Research Letters 11 (9): 094005.

423	Data from the USDA Farm Services Agency (https://www.fsa.usda.gov/programs-and-services/conservation-
programs/reports-and-statistics/conservation-reserve-program-statistics/index).

424	The increase in forest land between 2007 and 2012 came mostly from addition of pastureland (+2.5 million
acres), which offset losses to developed land (-1.4 million acres). These trends continued between 2012 and 2017,
with an increase in forestland from pasture (+2.3 million acres) offsetting losses to developed land (-1.2 million
acres). There were many other smaller changes that occurred simultaneously.

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Thus, even though some forest land did convert to cropland according to the NRI,425 these
conversions appear small and to be offset by reforestation of pastureland.

The volume increases for the 2023-2025 years compared to the No RFS baseline
described in Chapter 2 due to biofuel production from agricultural feedstock (notably soybean oil
for renewable diesel) suggests the potential for an associated increase in crop production. As
renewable diesel growth continues, it is expected that demand for soybean crush with rise. Thus
the 2023-2025 volumes will have a potential to adversely impact grassland and other non-
wetland ecosystems. However, if we consider the potential impacts relative to the current
situation in 2022 (i.e., the 2022 baseline discussed in Chapter 2.2) there would be little impact, as
the overall volume increase for biodiesel and renewable diesel is much smaller and expected to
be met with expanded waste fats, oils, and greases supply. Additional information on the factors
driving grassland to cropland conversion is needed in order to estimate the direction and
magnitude of any impact the RFS volumes may have on those land use/land cover changes.

4.3.3 Wildlife

There are many subsequent potential impacts to wildlife from these changes in wetlands
and other ecosystems, which were also summarized in the Second Triennial Report to Congress
on Biofuels.426 The potential impacts and their severity vary depending on such factors as crop
type, geographic location, and land management practices. The CRP, in particular, provides
incentives for maintaining many of these habitats, including practices that target pollinators (e.g.,
Conservation Practice (CP) 42, and CP2), ducks (e.g., CP 37), and other wildlife (e.g., CP4B,
4D, 33).427 Here we focus on potential impacts to terrestrial wildlife, including primarily birds
and insects, which have been the most studied to date. Impacts to aquatic wildlife are described
in Chapter 4.4.2.3.

There are many bird species that use patches of grassland, wetland, pasture, and other
lightly managed areas as habitat within largely agricultural areas. Conversion of wetlands to row
crops is associated with reduced duck habitat and productivity of duck food sources, including
aquatic plants and invertebrates.428 However, studies of the effects of bioenergy feedstock
production suggest that grassland bird species of conservation concern are more likely to be
affected by increased corn production than are more common species of birds.429 Evidence
suggests that the direct effects of increasing cultivation of corn and soybean for biofuel
production are coming mostly from the conversion of grasslands to cropland, rather than other

425	The 2020 NRI reports that 292,200, and 265,600 acres of forest land converted to cropland between 2007-2012,
and 2012-2017, respectively.

426	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

427	Listed here: https://www.fsa.usda.gov/programs-and-services/conservation-programs/crp-practices-library/index.

428	Gleason, R.A., Euliss, N.H., Tangen, B.A., Laubhan, M.K., and Browne, B.A. (2011). "USDA conservation
program and practice effects on wetland ecosystem services in the Prairie Pothole Region." Ecological Applications
21: S65-S81.

429	Fletcher, R.J., Robertson, B.A., Evans, J., Doran, P.J., Alavalapati, J.R.R., and Schemske, D.W. (2011).
"Biodiversity conservation in the era of biofuels: risks and opportunities." Frontiers in Ecology and the
Environment^(3): 161-168: 10.1890/090091. Blank PJ, Sample DW, Williams CL and Turner MG (2014). "Bird
Communities and Biomass Yields in Potential Bioenergy Grasslands." PLOS ONE9(10): el09989:

10.1371/journal.pone.0109989.

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habitat types (e.g., wetlands, forests, shrublands). Thus, it is likely that the wildlife species with
the largest potential risk are grassland species, including bird species and various insect species.
However, other types of land use change may also occur, with evidence from the NRI suggesting
roughly 50,000 acres of wetland converted to cropland between 2012 and 2017.

While the impacts of land use and management on wildlife have been studied, such as in
Tudge et al (2021), the impacts of the RFS program specifically have not.430 Evans et al. (2015)
conducted a detailed assessment of trends in the populations of 22 grassland bird species across
an 11-state area using the USGS Breeding Bird Survey.431 The 22 species examined were a
subset of the 28 identified by the USGS as grassland birds. Six species were excluded because
their breeding ranges were outside of the 11-state study area. Evans et al. (2015) found that
observations of six species were negatively associated with primary crop area, while
observations for five species were positively associated with primary crop area.432 All of the bird
species with negative associations were on the U.S. FWS list of species of conservation concern,
while none of the species exhibiting positive responses were on the list of conservation
concern.433 Although the above results using Ordinary Least Squares regression analysis were
statistically significant, associations were weaker when random or fixed effects were included.
When using random or fixed effects, only two species of conservation concern retained a
negative association with crop area (Bobolink [Dolichonyx oryzivoras] and Henslow's Sparrow
[Anunodra/nus henslowii]). Furthermore, when the marginal trends from primary crop increases
were compared with overall trends, the magnitudes of effect were modest. The effects from land
use change of primary crops led to a -0.20% to +0.15% effect, compared to the overall trends
which ranged from -2.74% to +10.66%. or a 10- to 100-fold larger overall effect.434

Potential harm to insects, especially insect pollinators, has also been of particular
concern. One study estimated that bees contributed an estimated $14.6 billion toward agricultural
production in 2009, or 11% of the nation's agricultural gross domestic product.435 Roughly 20%
of these pollination services are estimated from wild populations which depend on local habitat
for food and nesting sites.436 A 2016 modeling study suggests that wild bee populations
decreased by 23% across the U.S. between 2008 and 20 1 3.437 The causes of these reductions are

430	Tudge, S.J., Purvis, A. & De Palma, A. "The impacts of biofuel crops on local biodiversity: a global synthesis."
Biodivers Conserve, 2863-2883 (2021). https://doLorg/10.1007/sl0531-021-02232-5

431	Evans, S.G. and Potts, M.D. (2015). "Effect of agricultural commodity prices on species abundance of US
grassland birds." Environmental and Resource Economics, 62(3), pp. 549-565.

432	Primary crops were defined as corn, soybeans, and wheat.

433	Evans, S.G. and Potts, M.D. (2015). "Effect of agricultural commodity prices on species abundance of US
grassland birds." Environmental and Resource Economics, 62(3), pp. 549-565.

434	Id.

435	Lautenbach, S., Seppelt, R., Liebscher, J., Dormann, C.F. (2012). "Spatial and temporal trends of global
pollination benefit." PLoS One 7(4):e35954. Morse, R.A., Calderone, N.W. (2000). "The value of honey bees as
pollinators of U.S. crops in 2000." Bee Culture 128:1-15. Koh, I., Lonsdorf, E.V., Williams, N.M., Brittain, C.,
Isaacs, R., Gibbs, J., and Ricketts, T.H. (2016). "Modeling the status, trends, and impacts of wild bee abundance in
the United States." Proceedings of the National Academy of Sciences 113(1): 140-145: 10.1073/pnas. 1517685113.

436	Losey, J.E., Vaughan, M. (2006). "The economic value of ecological services provided by insects." Bioscience
56(4) :311 323.

437	Koh, I., Lonsdorf, E.V., Williams, N.M., Brittain, C., Isaacs, R., Gibbs, J., and Ricketts, T.H. (2016). "Modeling
the status, trends, and impacts of wild bee abundance in the United States." Proceedings of the National Academy of
Sciences 113(1): 140-145: 10.1073/pnas. 1517685113.

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complex, but include land use change, pesticides, and disease.438 Subsequent effects from
reductions in local bee populations are possible, including reductions in pollinator-dependent
crops grown in the area,439 as well as natural pollination services provided to wild habitat and
associated ecological effects.

In the most comprehensive study to date, Hellerstein et al. (2017) found that when
averaged across the United States, the forage suitability index for pollinators increased from
1982 to 2002 and declined slightly from 2002 to 2012—though in important honey bee regions
(such as Central North and South Dakota), the decline from 2002 to 2012 was more
pronounced.440 The Dakota's are the summer grounds for many managed honey bee colonies,
and thus the reduction in forage quality in these areas may have impacts. Although the largest
stressors to honey bee populations remains the varroa mites, rather than pesticides from nearby
crops, the presence of high quality forage nearby colonies is thought to improve the resilience
and health of colonies by supplementing feeding.

In a series of recent reviews, researchers concluded that there is evidence of adverse
impacts to pollinators due to neonicotinoid pesticide exposure.441 But also that the evidence is
mixed, and major gaps remain in our understanding of how pollinator colony-level (for social
bees) and population processes may dampen or amplify the lethal or sublethal effects. EPA's
preliminary assessment of the risk to bees from imidacloprid, clothianidin, and thiamethoxam
found on-field risk to be low for these pesticides applied to corn, which is the dominant use
pattern for this crop.442 For soybeans, risks were considered uncertain at the time and are
currently undergoing re-evaluation by EPA. Neonicotinoids, like all pesticides, are approved for
use under specific conditions that are designed to protect ecosystems and human health.

Recently, EPA expanded its pesticide risk assessment process specifically for bees to quantify or
measure exposures and relate them to effects at the individual and colony level.443 Because of the
uncertainty surrounding the impacts of neonicotinoid use in soybean cultivation on pollinators, it
is difficult to state with any certainty that the RFS standards in this action will have an impact on
pollinators.

438	Goulson, D., Nicholls, E., Botias, C., Rotheray, E.L. (2015). "Bee declines driven by combined stress from
parasites, pesticides, and lack of flowers." Science 347(6229): 1255957.

439	For example, USDA NASS data for 2017 show that even though most apples (which are highly dependent on
pollinators) are grown in Washington (165,000 acres), smaller acreages are also grown in Michigan (33,000 acres),
Ohio (4,000 acres) and Illinois (1,700 acres). If 20% of these pollination services are provided by wild insects as
estimated by Losey et al. (2006), that could have effects on local apple production.

440	Hellerstein, Daniel, Claudia Hitaj, David Smith, and Amelie Davis. Land Use, Land Cover, and Pollinator
Health: A Review and Trend Analysis, ERR-232, U.S. Department of Agriculture, Economic Research Service, June
2017.

441	Godfray, H., Charles, J., Tjeerd Blacquiere, Linda M. Field, Rosemary S. Hails, Gillian Petrokofsky, Simon G.
Potts, Nigel E. Raine, Adam J. Vanbergen, and Angela R. McLean. (2014) "A restatement of the natural science
evidence base concerning neonicotinoid insecticides and insect pollinators." Proceedings of the Royal Society B:
Biological Sciences 281, no. 1786: 20140558.

442	EPA (2016). Preliminary Aquatic Risk Assessment to Support the Registration Review of Imidacloprid. U.S.
Environmental Protection Agency Office of Chemical Safety and Pollution Prevention, EPA-HQ-OPP-2008-0844-
1086: 219 pp. Washington, DC, December 22. EPA (2017). Preliminary Bee Risk Assessment to Support the
Registration Review of Clothianidin and Thiamethoxam. Office of Pesticide Programs, EPA-HQ-OPP-2011-0865-
0173: 414 pp. Washington, DC.

443	U.S. EPA (2018), "How We Assess Risks to Pollinators." Available at https://www.epa.gov/po11inator-
protection/how-we-ass ess-risks-pollinators (last accessed April 12, 2021).

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At present it is not possible to confidently estimate the fraction of wildlife habitat loss
that is attributable to biofuel production or use. Thus, we cannot confidently estimate the impacts
to date on wildlife from biofuels generally nor from the candidate volumes, specifically.
Attributing such impacts to the RFS program generally, let alone the specific candidate volumes
being analyzed in this action, is even more difficult (see Second Triennial Report to Congress on
Biofuels Sections 4.4.3.2 and 2.4.4). EPA is in the process of conducting a Biological Evaluation
which will evaluate impacts on endangered species from the RFS Program. More information on
the estimated impact to species in the affected region on the RFS program will be available when
the evaluation is concluded.

4.3.4 Potential Future Impacts of Annual Volume Requirements

The volume increases for 2023-2025 described in Chapter 3 due to biofuels produced
from agricultural feedstocks (especially corn and soybeans) would suggest the potential for an
associated increase in crop production. As such, they may be associated with increased pressure
to convert grasslands and wetlands into cropland, and, therefore, also increased pressure on
wildlife habitats. There exists substantial uncertainty in projecting changes in land use and
management associated with corn, soybeans, and other crops. Additional information and
modeling are needed to fully assess changes in habitat areas and effects on wildlife, both for crop
expansion and pesticide use. Modeling and discussion on the estimates for land use change are
further discussed in Chapter 4.2. Changes as a result of biofuel to electricity are not excepted to
impact grasslands and wetlands as it is believed that existing CNG/LNG production will be
transferred to meet these volumes.

4.4 Soil and Water Quality

Soil and water quality are addressed together here as they are in many ways intertwined,
with effects on soil often directly altering water quality (e.g., soil erosion leading to
sedimentation). Soil quality, also referred to as soil health, is the capacity of a soil to function,
including the ability to sustain plant growth.444 It can be affected by biofuel feedstock production
through changes in soil erosion, soil organic matter (SOM),445 and soil nutrients, among other
characteristics. Soil erosion can negatively impact soil quality by disproportionately removing

444	The USDA Natural Resources Conservation Service (NRCS) defines soil health or soil quality as "The capacity
of a specific kind of soil to function, within natural or managed ecosystem boundaries, to sustain plant and animal
productivity, maintain or enhance water and air quality, and support human health and habitation. In short, the
capacity of the soil to function" USDA-NRCS. (2017). "Soil health glossary." Retrieved 5/1, 2017, from
https://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/soils/health/?cid=nrcsl42p2 053848. In this section, "soil
quality" is used as a general term, independent of area—it is used both to describe effects on single soil types and
cumulative effects across large areas and multiple soil types.

445	Soil organic matter is defined by Brady, N. and R. Weil (2000). Elements of the Nature and Properties of Soils.
Upper Saddle River, NJ, USA, Prentice-Hall, Inc. as "[t]he organic fraction of the soil that includes plant and animal
residues at various stages of decomposition, cells and tissues of soil organisms, and substances synthesized by the
soil population." Brady N and Weil R (2000). Elements of the Nature and Properties of Soils. Upper Saddle River,
NJ, USA, Prentice-Hall, Inc. The USDA NRCS similarly defines soil organic matter as "[t]he total organic matter in
the soil. It can be divided into three general pools: living biomass of microorganisms, fresh and partially
decomposed residues (the active fraction), and the well-decomposed and highly stable organic material. Surface
litter is generally not included as part of soil organic material." (USDA-NRCS 2021).

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the finest soil particles generally higher in organic matter, plant nutrients, and water-holding
capacity than the remaining soil. Soil organic matter is critical to soil quality because it provides
nutrients to plants, facilitates water retention in the soil, promotes soil structure, and reduces
erosion, while also sequestering carbon from the atmosphere. Soil nutrients (e.g., nitrogen,
phosphorus) are necessary for plant growth. Too little of these nutrients can reduce crop yields;
too much can negatively affect water quality via runoff or leaching.

Water quality is the condition of water to serve human or ecological needs.446 Crop-based
biofuel feedstock production can affect water quality through associated changes in nutrients,
dissolved oxygen, sediment, and chemical loadings.447 Nutrient releases from cropland into
nearby waterways can result in excessive algal growth (i.e., algal blooms), leading to low
dissolved oxygen levels (i.e., hypoxia) in some cases. Increased sediment and total dissolved
solids can make water unsuitable for consumption and irrigation, and also have negative impacts
on aquatic species. In addition, chemical releases or biofuel leaks and spills from above-ground,
underground, and transport tanks can be detrimental to water quality leading to ground, surface,
and drinking water contamination (see Chapter 4.4.2).448 Water quality impacts are presented as
either proximal (i.e., geographically close) or downstream, although effects can span both. We
discuss sediment and chemical loadings under proximal effects, and nutrients and hypoxia due to
algal blooms in both coastal and non-coastal waters under downstream effects.

4.4.1 The Role of Biofuels

Corn starch ethanol and soybean oil biodiesel account for most of the biofuel volumes
produced to date. As a result, the majority of soil and water quality impacts from biofuels thus
far have come from the production of corn and soybeans. There have also been notable quantities
of biogas from landfills that is cleaned and compressed to be used in compressed natural gas
(CNG) vehicles, and waste fats, oils and greases (FOG) that is used to produce biodiesel. As of
this proposed rule, electricity from biogas will also be biofuel source. However, they are not
sourced from crop-based feedstocks and thus have only a tenuous connection to soil and water
quality. Additionally, products such as CNG/LNG and electricity from biofuel are not anticipated
to have any land affecting production changes. Canola oil is also used for biodiesel production,
though in considerably smaller quantities than soybean oil and FOG, and it is a crop-based
feedstock that could potentially impact soil and water quality. However, few studies focus on
canola oil.

446	EPA (2003). National Management Measures to Control Nonpoint Pollution from Agriculture. U.S.
Environmental Protection Agency Office of Water, EPA-841-B-03-004. Washington, DC, July.

EPA (2011). Biofuels and the Environment: First Triennial Report to Congress. U.S. Environmental Protection
Agency, EPA/600/R-10/183F: 220 pp. Washington, DC, December.

447	The USDA NRCS Environmental Technical Note No. MT-1 (2011) defines these water quality parameters and
their significance.

448	This section focuses on the non-point source, water quality effects of feedstock production and spills. Any direct
point source discharges from biofuel production facilities are expected to be effectively controlled by existing
environmental statutes under the Clean Water Act (EPA 2011). Biofuels and the Environment: First Triennial
Report to Congress. Office of Research and Development, National Center for Environmental Assessment,
Washington, DC: EPA/600/R-10/183F).

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Since 2007, grasslands, including CRP grasslands, have been converted to corn and
soybeans, in a process termed extensification (see Chapter 4.4.2.1). Corn and soybeans have also
replaced other kinds of cropland. By contrast, the use of other crop-based feedstocks for biofuel
production has been much more limited. For example, use of corn stover has been attempted at a
couple of locations.449 To date, other feedstocks, such as perennial grasses, woody biomass, and
algae, have generally not yet materialized, with a few exceptions (e.g., algal biofuels for the U.S.
Navy), though there is a substantial amount of literature available on the impacts of perennial
grasses on soil and water quality.450 For that reason, we have included those feedstocks in this
analysis, though they are not widely used. Finally, outside the U.S., palm oil production for
biodiesel is an established industry in countries such an Indonesia, Malaysia, and Thailand, with
production occurring mainly for export, including to the U.S. As noted in Chapter 4.3, there is
strong evidence that expanded palm oil production would adversely affect soil and water quality,
in addition to carbon sequestration, outside of the U.S.

4.4.2 Impacts to Date

4.4.2.1 Soil and Proximal Water Quality Effects

Primarily, the magnitude of the impacts to soil and water quality depend upon the
feedstock grown and land use—i.e., the type of land used for growing the biofuel feedstock and
the management implemented on that land. For a given acre of cropland, planting corn or
soybeans onto grasslands (extensification) can be expected to have greater negative effects on
soil and water quality relative to the conversion of other existing cropland, such as wheat, to corn
or soybeans (intensification). Grassland-to-annual-crop conversion typically impacts soil quality
negatively because it increases erosion and the loss of soil nutrients and SOM, including soil
carbon loss to the atmosphere.451 In a meta-analysis, Qin et al. (2016) found that replacing
grasslands with corn decreased soil carbon by approximately 20% on average.452 The effects of
converting grasslands to soybeans are likely greater on erosion, SOM, and soil carbon than
converting to corn, since corn generally inputs more organic matter and carbon into the soil than
soybeans, when both crops are managed using the same tillage practice (tillage practices are
discussed in greater detail later in this section).453 Increased erosion from conversion, in turn, can

449	81 FR 89746 (December 12, 2016).

450	Ziolkowska, J.R., and Simon, L. (2014). "Recent developments and prospects for algae-based fuels in the US."
Renewable & Sustainable Energy Reviews I'd: 847-853: 10.1016/j .rser.2013.09.021.

451	Gregorich, E.G., and Anderson, D.W. (1985). "Effects of cultivation and erosion on soils of four toposequences
in the Canadian prairies." Geoderma 36(3-4): 343-354: 10.1016/0016-7061(85)90012-6. Gelfand, I., Zenone, T.,
Jasrotia, P., Chen, J.Q., Hamilton, S.K., and Robertson, G.P. (2011). "Carbon debt of Conservation Reserve
Program (CRP) grasslands converted to bioenergy production." Proceedings of the National Academy of Sciences of
the United States of America 108(33): 13864-13869: 10.1073/pnas.1017277108. Qin, Z.C., Dunn, J.B., Kwon, H.Y.,
Mueller, S., and Wander, M.M. (2016). "Soil carbon sequestration and land use change associated with biofuel
production: empirical evidence." Global Change Biology Bioenergy 8 (1): 66-80: 10. Ill 1/gcbb. 12237. Lai, R.
(2003). "Soil erosion and the global carbon budget." Environment Internationally^)'. 437-450: 10.1016/s0160-
4120(02)00192-7.

452	Qin, Z.C., Dunn, J.B., Kwon, H.Y., Mueller, S., and Wander, M.M. (2016). "Soil carbon sequestration and land
use change associated with biofuel production: empirical evidence." Global Change Biology Bioenergy 8(1): 66-80:
10.1111/gcbb. 12237.

453	Johnson, J.M.-F., Allmaras, R.R., and Reicosky, D.C. (2006). "Estimating source carbon from crop residues,
roots and rhizodeposits using the national grain-yield database." Agronomy Journal 98:622-636.

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negatively impact water quality through increased sediment and nutrient loadings to
waterways.454

Corn and soybeans additionally affect water quality through increased chemical usage,
some of which moves as runoff or leaching to surface waterways or groundwater. Table 4.4.2.1-1
summarizes the most recent USDA National Agricultural Statistics Service (NASS) Agricultural
Chemical Use Survey results for domestic corn and soybean acreage, as well as domestic wheat
acreage for comparison. In general, soybean acreage receives substantially less fertilizer than
corn, particularly nitrogen, because soybeans can attain nitrogen from the atmosphere via
symbiotic nitrogen fixation whereas corn cannot. Thus, as an example, multiplying 1.94 million
acres of extensification in the U.S. attributed to corn455 by the average nitrogen fertilizer rate
corn receives (149 lbs N/acre) yields an increase of approximately 289 million pounds of
additional nitrogen added per year. Likewise, from the most recent surveys by the USDA NASS,
97% of planted corn acres were treated with herbicides, 13% with insecticides, and 17% with
fungicides (Table 4.4.2.1-1). Atrazine was the top active ingredient among herbicides applied to
the planted corn acres, applied to 65% of planted acres, followed by mesotrione, applied to 42%
of planted acres.456 For planted soybean acres, 99% were treated with herbicides, 16% with
insecticides, and 15% with fungicides.457 Glyphosate isopropylamine salt and glyphosate
potassium salt were the top active ingredients among herbicides applied to planted soybean
acres.458 Due to the widespread nutrient and pesticide usage on corn and soybeans, it can be
inferred that runoff and/or leaching of these chemicals from corn and soybean acres are
contributing in part to proximal water quality impacts. For instance, in a modeling study of the
continental U.S., Garcia et al. (2017) estimated that increased corn production (up to 18 billion
gallons of corn ethanol) between 2002 and 2022 would increase nitrate groundwater
contamination (above or equal to 5 mg/L), particularly in areas with irrigated corn on sandy or
loamy soils.459

454	Yasarer, L.M.W., Sinnathamby, S., and Sturm, B.S.M. (2016). "Impacts of biofuel-based land-use change on
water quality and sustainability in a Kansas watershed." Agricultural Water Management 175: 4-14:
10.1016/j.agwat.2016.05.002.

455	Lark, T.J., Salmon, J.M., and Gibbs, H.K. (2015). "Cropland expansion outpaces agricultural and biofuel policies
in the United States." Environmental Research Letters 10(4): 10.1088/1748-9326/10/4/044003.

456	USDA NASS (2019). 2018 Agricultural Chemical Use Survey: Corn. Available at

https://www.nass.usda.gov/Surveys/Guide to NASS Surveys/Chemical Use/2018 Peanuts Soybeans Corn/Chem
UseHighlights Corn 2018.pdf (last accessed April 13, 2021).

457	USDA NASS (2019). 2018 Agricultural Chemical Use Survey: Soybeans. Available at

https://www.nass.usda.gov/Surveys/Guide to NASS Surveys/Chemical Use/2018 Peanuts Soybeans Corn/Chem
UseHighlights Soybeans 2018.pdf (last accessed April 13, 2021).

458	USDA NASS (2019). 2018 Agricultural Chemical Use Survey: Soybeans. Available at

https://www.nass.usda.gov/Suryeys/Guide to NASS Surveys/Chemical Use/2018 Peanuts Soybeans Corn/Chem
UseHighlights Soybeans 2018.pdf (last accessed April 13, 2021).

459	Garcia, V., Cooter, E., Crooks, J., Hinckley, B., Murphy, M., and Xing, X. (2017). "Examining the impacts of
increased corn production on groundwater quality using a coupled modeling system." Science of The Total
Environment586: 16-24: https://doi.Org/10.1016/j.scitotenv.2017.02.009.

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Table 4.4.2.1-1: Summary of Chemical Use for Corn, Soybeans, and Wheat Acreage in the

U.S. based on 2018 and 2019 USDA

MASS Chemical Use Surveys460'461'462



Corn

Soybeans

Winter
wheat

Spring
wheat

Durum
wheat

Nitrogen Fertilizer Applied: % of Planted
Acres

98

29

88

97

98

Average Application Rate for Year for
Acres with Nitrogen Fertilizer Applied (lbs
N/acre)

149

17

73

102

83

Phosphate Fertilizer Applied: % of Planted
Acres

79

42

63

89

84

Average Application Rate for Year for
Acres with Phosphate Fertilizer Applied
(lbs PzCVacre)

69

55

31

39

29

Atrazine Applied: % of Planted Acres

65

Not
Reported

Not
Reported

Not
Reported

Not
Reported

Average Application Rate for Year for
Acres with Atrazine Applied (lbs/acre)

1.037

Not
Reported

Not
Reported

Not
Reported

Not
Reported

Glyphosate Potassium Salt: % of Planted
Acres

Not
Reported

28

Not
Reported

Not
Reported

Not
Reported

Average Application Rate for Year for
Acres with Glyphosate Potassium Salt
Applied (lbs/acre)463

Not
Reported

1.527

Not
Reported

Not
Reported

Not
Reported

Glyphosate Isopropylamine Salt: % of
Planted Acres

34

47

Not
Reported

Not
Reported

46

Average Application Rate for Year for
Acres with Glyphosate Isopropylamine Salt
Applied (lbs/acre) 464

0.993

1.202

Not
Reported

Not
Reported

0.555

There are a couple of factors that can mitigate impacts on soil and water quality, at least
in part. First, the type of CRP lands, conservation lands, or other grasslands that are converted to
cropland can affect soil quality. In a modeling study, LeDuc et al. (2017) simulated that greater
erosion and loss of soil carbon and nitrogen occurs from converting low productivity, highly
sloped CRP grasslands compared to those with higher productivity soils and lower slopes.465 In
turn, higher erosion results in greater sedimentation and nutrient loading to waterways. Second,
the effects can also depend upon land management and production practices, like different tilling

460	USDA NASS (2019). 2018 Agricultural Chemical Use Survey: Corn. Available at

https://www.nass.usda.gov/Surveys/Guide to NASS Surveys/Chemical Use/2018 Peanuts Soybeans Corn/Chem
UseHighlights Corn 2018.pdf (last accessed April 13, 2021).

461	USDA NASS (2019). 2018 Agricultural Chemical Use Survey: Soybeans. Available at

https://www.nass.usda.gov/Surveys/Guide to NASS Surveys/Chemical Use/2018 Peanuts Soybeans Corn/Chem
UseHighlights Soybeans 2018.pdf (last accessed April 13, 2021).

462	USDA NASS (2020). 2019 Agricultural Chemical Use Survey: Wheat. Available at

https://www.nass.usda.gov/Surveys/Guide to NASS Surveys/Chemical Use/2019 Field Crops/chem-highlights-
wheat-2019.pdf (last accessed April 13, 2021).

463	This is expressed in acid equivalent.

464	This is expressed in acid equivalent.

465	LeDuc SD, Zhang XS, Clark CM and Izaurralde RC (2017). Cellulosic feedstock production on Conservation
Reserve Program land: potential yields and environmental effects. Global Change Biology Bioenergy 9(2): 460-468:
10.1111/gcbb. 12352.

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practices. About 60-70% of corn and soybeans are grown using conservation tillage.466,467
Conservation tillage, including no-till, reduces soil erosion and increases SOM content relative to
conventional tillage.468,469 (Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski
et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel,
Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995, West and Post 2002)
(Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995, West and Post
2002) (Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995, West and
Post 2002) (Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995, West
and Post 2002) (Cassel, Raczkowski et al. 1995, West and Post 2002) (Cassel, Raczkowski et al. 1995,
West and Post 2002) (Cassel, Raczkowski et al. 1995, West and Post 2002)

The soil and water quality effects of converting to corn or soybeans from other crops,
such as wheat, are generally less than those of the conversion of grasslands.470 Zuber et al.
(2015) observed similar soil effects of no-till, continuous corn rotations, and corn-soybean-wheat
rotations on fine textured soils with high organic matter content.471 From this evidence, Zuber et

466	Claassen, R., Bowman, M., McFadden, J., Smith, D., & Wallander, S. (2018, September). Tillage Intensity and
Conservation Cropping in the United States. (EIB-197). U.S. Department of Agriculture, Economic Research
Service.

467	Conservation tillage is defined as any tillage practice leaving at least 30% of the soil surface covered by crop
residues; whereas conventional tillage leaves less than 15% of the ground covered by crop residues Lai, R. (1997).
"Residue management, conservation tillage and soil restoration for mitigating greenhouse effect by C02-
enrichment." Soil & Tillage Research 43(1-2): 81-107. No-till management, a subset of conservation tillage, disturbs
the soil marginally by cutting a narrow planting strip. Nationally, approximately 30% and 45% of the area planted to
corn and soybeans, respectively, are under no-till Wade, T., R. Claassen and S. Wallander (2015). Conservation-
practice adoption rates vary widely by crop and region, EIB-147, US Department of Agriculture Economic Research
Service. Since 2000, there has been a general trend toward greater percent residue remaining after planting for both
crops (USDA-ERS 2018 https://data.ers.usda.gov/reports.aspx?ID=17883; data accessed 2/15/2018). Lai R (1997).
Residue management, conservation tillage and soil restoration for mitigating greenhouse effect by C02-enrichment.
Soil & Tillage Research 43(1-2): 81-107. USDA-NRCS (2010). Assessment of the effects of conservation practices
on cultivated cropland in the Upper Mississippi River Basin. N. R. C. S. United States Department of Agriculture.
Available at https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/technical/nra/ceap/pub/?cid=nrcsl43 014161
(last accessed April 13, 2021).

Wade T, Claassen R and Wallander S (2015). Conservation-practice adoption rates vary widely by crop and region,
EIB-147, U.S. Department of Agriculture Economic Research Service.

468	Cassel DK, Raczkowski CW and Denton HP (1995). Tillage effects on corn production and soil physical
conditions. Soil Science Society of America Journal 59(5): 1436-1443. West TO and Post WM (2002). Soil organic
carbon sequestration rates by tillage and crop rotation: A global data analysis. Soil Science Society of America
Journal 66(6): 1930-1946.

469	Follett RF, Varvel GE, Kimble JM and Vogel KP (2009). No-Till Corn after Bromegrass: Effect on Soil Carbon
and Soil Aggregates. Agronomy Journal 101(2): 261-268: 10.2134/agronj2008.0107.

Gelfand I, Zenone T, Jasrotia P, Chen JQ, Hamilton SK and Robertson GP (2011). Carbon debt of Conservation
Reserve Program (CRP) grasslands converted to bioenergy production. Proceedings of the National Academy of
Sciences of the United States of America 108(33): 13864-13869: 10.1073/pnas.1017277108.

470	Zuber SM, Behnke GD, Nafziger ED and Villamil MB (2015). Crop Rotation and Tillage Effects on Soil
Physical and Chemical Properties in Illinois. Agronomy Journal 107(3): 971-978: 10.2134/agronjl4.0465.

Qin ZC, Dunn JB, Kwon HY, Mueller S and Wander MM (2016). Soil carbon sequestration and land use change

associated with biofuel production: empirical evidence. Global Change Biology Bioenergy 8(1): 66-80:

10.1111/gcbb. 12237. Yasarer LMW, Sinnathamby S and Sturm BSM (2016). Impacts of biofuel-based land-use

change on water quality and sustainability in a Kansas watershed. Agricultural Water Management 175: 4-14:

10.1016/j.agwat.2016.05.002.

471	Zuber SM, Behnke GD, Nafziger ED and Villamil MB (2015). Crop Rotation and Tillage Effects on Soil
Physical and Chemical Properties in Illinois. Agronomy Journal 107(3): 971-978: 10.2134/agronjl4.0465.

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al. (2015) suggests a movement from wheat to corn may not materially affect soil quality,
provided a shift from no-till to conventional tillage does not occur concomitantly. In a meta-
analysis, Qin, Dunn et al. (2016) found that corn replacing other cropland (e.g., soybean, wheat)
increased soil organic carbon, whereas the opposite occurred when corn replaced grassland or
forest land.472 Notably, the percent increase in soil organic carbon of other cropland moving to
corn was exceeded in magnitude by the percent decrease in soil organic carbon by the conversion
of grassland to corn. For water quality, an increase in corn at the expense of other crops is likely
to lead to greater nutrient loadings. In a global meta-analysis, Zhou and Butterbach-Bahl (2014)
found that average nitrate losses from leaching from corn (57.4 kg N/ha) exceeded those of
wheat (29 kg N/ha), suggesting that a replacement of wheat by corn would lead to higher nitrate
leaching to waterways.473 Between 2003 and 2010, Plourde et al. (2013) found that the practice
of rotating corn and soybeans decreased, while corn mono-cropping, or continuous corn,
increased.474 In a modeling study, Secchi et al. (2011) concluded that this intensification475 of
corn would likely lead to higher nitrogen and phosphorus loads in the Upper Mississippi River
Basin.476

Beyond corn and soy, the production of cellulosic feedstocks for biofuels, such as corn
stover and perennial grasses, may also affect soil and water quality. Partial stover removal can
increase corn yields in some locations, in part by reducing nitrogen uptake from the soil by
microorganisms and potentially by increasing soil temperatures in no-till systems.477 Corn stover
collection in areas with high rates of production also facilitates no-till land management
(compared to conventional tillage), which can reduce erosion, nutrient losses, and thereby
improve soil and water quality.478 Yet too much stover removal can increase soil erosion,
decrease SOM and soil nutrients, and ultimately decrease corn yields.479 Whether corn stover can
be harvested sustainably, and at what removal rate, depends on many site-specific factors,
including yields, topography, soil characteristics, climate, and tillage practices. In a study across
multiple locations in seven states, stover harvesting increased corn grain yields slightly, although

472Qin ZC, Dunn JB, Kwon HY, Mueller S and Wander MM (2016). Soil carbon sequestration and land use change
associated with biofuel production: empirical evidence. Global Change Biology Bioenergy 8(1): 66-80:
10.1111/gcbb. 12237.

473	Zhou and Butterbach-Bahl (2014). "Assessment of nitrate leaching loss on a yield-scaled basis from maize and
wheat cropping systems." Plant Soil 374: 977-991: 10.1007/sl 1104-013-1876-9.

474	Plourde, J.D., Pijanowski, B.C., and Pekin, B.K. (2013). "Evidence for increased monoculture cropping in the
Central United States." Agriculture, ecosystems & environment 165: 50-59.

475	Agricultural intensification is the increased production from the land without an increase in acreage. U.S. EPA
(2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental Protection
Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

476	Secchi, S., Gassman, P.W., Jha, M., Kurkalova, L., and Kling, C.L. (2011). "Potential water quality changes due
to corn expansion in the Upper Mississippi River Basin." Ecological Applications 21 (4): 1068-1084.

477	Coulter, J.A. and Naftiger, E.D. (2008). "Continuous Corn Response to Residue Management and Nitrogen
Fertilization." Agronomy Journal 100(6): 1774-1780: 10.2134/agronj2008.0170. Karlen, D.L., Birrell, S.J., Johnson,
J.M.F., Osborne, S.L., Schumacher, T.E., Varvel, G.E., Ferguson, R.B., Novak, J.M., Fredrick, J.R., Baker, J.M.,
Lamb, J.A., Adler, P.R., Roth, G.W., and Nafziger, E.D. (2014). "Multilocation Corn Stover Harvest Effects on
Crop Yields and Nutrient Removal." Bioenergy Research 7(2): 528-539: 10.1007/sl2155-014-9419-7.

478	Dale, V.H., Kline, K.L., Richard, T.L., Karlen, D.L., and Belden, W.W. (2017). "Bridging biofuel sustainability
indicators and ecosystem services through stakeholder engagement." Biomass and Bioenergy. Also available at
https://doi.Org/l0.1016/j.bioriibioe.2017.09.016 (last accessed April 13, 2021).

479	EPA (2011). Biofuels and the Environment: First Triennial Report to Congress. U.S. Environmental Protection
Agency, EPA/600/R-10/183F: 220 pp. Washington, DC, December.

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the authors cautioned against extrapolating these results to other sites and noted that there is a
need to conduct site-specific planning with soil testing.480 Additional research is needed to
understand effects on soil and water quality if soil conservation methods are employed while
harvesting corn stover.

Perennial grasses are a potential cellulosic feedstock that is not currently used at the
commercial scale. But, like other feedstocks, their impacts on soil and water quality would likely
depend upon the type of land use replaced and the management practices employed. Replacing
grasslands with intensively managed perennial feedstocks could have negative soil and water
quality effects, while replacing annual crops would likely lead to improvements.481 The scientific
literature continues to emphasize that perennial grasses or woody biomass grown on marginal
lands (e.g., abandoned agricultural land) can help restore soil quality.482 Notably, however, the
effects of these perennial feedstocks can depend upon the plant species grown and the type of
land converted.483 Additionally, the literature definitions of what constitutes marginal land and
estimates of its extent vary widely.484 For water quality, a modeling study found partially
replacing annual crops with Miscanthus and switchgrass—two perennial grasses—could reduce
inorganic nitrogen loadings by roughly 15% and 20%, respectively, in the Mississippi-
Atchafalaya River Basin.485 Alternative feedstock production (e.g., switchgrass) requires less
fertilizer than corn, thereby reducing nutrient runoff.486 One recent modeling study for the state
of Iowa estimated that converting 12% and 37% of cropland to switchgrass would reduce
leached nitrate-nitrogen (NO3-N) by 18% and 38%, respectively, statewide.487 Another modeling
study estimated cropland conversion to switchgrass and stover harvest could greatly reduce
suspended sediment, total nitrogen, and phosphorus by 54 to 57%, 30 to 32%, and 7 to 17%,
respectively, in the South Fork Iowa River (SFIR) watershed if accompanied by best
management practices (e.g., riparian buffers and cover crops).488

480	Karlen, D.L., Birrell, S.J., Johnson, J.M.F., Osborne, S.L., Schumacher, T.E., Varvel, G.E., Ferguson, R.B.,
Novak, J.M., Fredrick, J.R., Baker, J.M., Lamb, J.A., Adler, P.R., Roth, G.W., and Nafziger, E.D. (2014).
"Multilocation Corn Stover Harvest Effects on Crop Yields and Nutrient Removal." Bioenergy Research 7(2): 528
539: 10.1007/sl 2155-014-9419-7.

481	Ha, M., Z. Zhang, M. Wu (2017). Biomass production in the Lower Mississippi River Basin: Mitigating
associated nutrient and sediment discharge to the Gulf of Mexico. Science of the Total Environment, DOI:
10.1016/j.scitotenv.2018.03.184.

482	Blanco-Canqui H (2016). Growing Dedicated Energy Crops on Marginal Lands and Ecosystem Services. Soil
Science Society of America Journal 80(4): 845-858: 10.2136/sssaj2016.03.0080.

483	Robertson GP, Hamilton SK, Barham BL, Dale BE, Izaurralde RC, Jackson RD, Landis DA, Swinton SM,

Thelen KD and Tiedje JM (2017). Cellulosic biofuel contributions to a sustainable energy future: Choices and
outcomes. Science 356(6345): 10.1126/science.aal2324.

484	Emery I, Mueller S, Qin Z and Dunn JB (2016). Evaluating the potential of marginal land for cellulosic feedstock
production and carbon sequestration in the United States. Environmental Science & Technology 51: 733-741.

485	VanLoocke A, Twine TE, Kucharik CJ and Bernacchi CJ (2017). Assessing the potential to decrease the Gulf of
Mexico hypoxic zone with Midwest US perennial cellulosic feedstock production. GCB Bioenergy 9(5): 858-875:
10.1111/gcbb. 12385.

486	Parish ES, Hilliard MR, Baskaran LM, Dale VH, Griffiths NA, Mulholland PJ, Sorokine A, Thomas NA,
Downing ME and Middleton RS (2012). Multimetric spatial optimization of switchgrass plantings across a
watershed. Biofuels, Bioproducts and Biorefining 6(1): 58-72: 10.1002/bbb.342.

487	Brandes E (2018). Targeted subfield switchgrass integration could improve the farm economy, water quality, and
bioenergy feedstock production. GCB Bioenergy 10: 199-212, doi: 10.Ill 1/gcbb. 12481.

488	Ha, M. and M. Wu (2017). Land management strategies for improving water quality in biomass production under
changing climate. Environ. Res. Lett. 12 (3), 034015.

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4.4.2.2 Downstream Water Quality Effects

Increased corn and soybean cultivation may also affect downstream surface water and
aquatic systems, which can lead to aquatic life effects (see Chapter 4.4.2.3).489 Fertilizer runoff,
in addition to other factors (e.g., temperature and precipitation) and conservation practices,
influence downstream eutrophication,490 algal blooms, and hypoxia in fresh and coastal waters.
In freshwater systems, weather conditions and agricultural activity can increase nutrient runoff,
as observed in 2011 in western Lake Erie with dissolved reactive phosphorus.491 Total nitrogen
in lake water is also strongly correlated to the probability of detecting the cyanobacterium
Microcystis in lakes, in addition to the percentage of agricultural land cover within a given lake's

49?

ecoregion.

In coastal systems, nutrient loadings affect hypoxic zone size, which is also a function of
climate, weather (e.g., storms), basin493 morphology, circulation patterns, water retention time,
freshwater inflows, stratification, and mixing, as seen in the Gulf of Mexico.494 Conservation
practices (e.g., filter strips, cover crops, riparian buffers) can help mitigate downstream water
quality effects due to nutrients. Additionally, studies suggest that land conversion to perennial

489	LaBeau MB, Robertson DM, Mayer AS, Pijanowski BC and Saad DA (2014). Effects of future urban and biofuel
crop expansions on the riverine export of phosphorus to the Laurentian Great Lakes. Ecological Modelling 277: 27-
37: https://doi.Org/10.1016/j.ecolmodel.2014.01.016. Jarvie HP, Sharpley AN, Flaten D, Kleinman PJA, Jenkins A
and Simmons T (2015). The pivotal role of phosphorus in a resilient water-energy-food security nexus. Journal of
Environmental Quality 44(4): 1049-1062: 10.2134/jeq2015.01.0030.

490	EPA defines eutrophication as " [a] reduction in the amount of oxygen dissolved in water. The symptoms of
eutrophication include blooms of algae (both toxic and non-toxic), declines in the health of fish and shellfish, loss of
seagrass and coral reefs, and ecological changes in food webs." EPA, Vocabulary Catalog: Acid Rain Glossary,
available at

https://sor.epa.gov/sor internet/registry/termreg/searchandretrieve/glossariesandkeywordlists/search.do?details=&gl
ossaryName=Acid%20Rain%20Glossary (last accessed April 14, 2021).

491	Michalak AM, Anderson EJ, Beletsky D, Boland S, Bosch NS, Bridgeman TB, Chaffin JD, Cho K, Confesor R,
Daloglu I, DePinto JV, Evans MA, Fahnenstiel GL, He L, Ho JC, Jenkins L, Johengen TH, Kuo KC, LaPorte E, Liu

X, McWilliams MR, Moore MR, Posselt DJ, Richards RP, Scavia D, Steiner AL, Verhamme E, Wright DM and
Zagorski MA (2013). Record-setting algal bloom in Lake Erie caused by agricultural and meteorological trends
consistent with expected future conditions. Proceedings of the National Academy of Sciences 110(16): 6448-6452:
10.1073/pnas. 1216006110.

492	Taranu ZE, Gregory-Eaves I, Steele RJ, Beaulieu M and Legendre P (2017). Predicting microcystin

concentrations in lakes and reservoirs at a continental scale: A new framework for modelling an important health
risk factor. Global Ecology and Biogeography.

493	EPA defines basin as "[a]n area of land that drains into a particular river, lake, bay or other body of water. Also
called a watershed." EPA, Vocabulary Catalog: Chesapeake Bay Glossary, available at

https://sor.epa.gov/sor internet/registry/termreg/searchandretrieve/glossariesandkeywordlists/search.do?details=&gl
ossaryName=Chesapeake%20Bay%20Glossary (last accessed April 14, 2021).

494	Dale VH, Kling C, Meyer JL, Sanders J, Stallworth H, Armitage T, Wangsness D, Bianchi TS, Blumberg A,
Boynton W, Conley DJ, Crumpton W, David MB, Gilbert D, Howarth RW, Lowrance R, Mankin K, Opaluch J,
Paerl H, Reckhow K, Sharpley AN, Simpson TW, Snyder C and Wright. D (2010). Hypoxia in the Northern Gulf of
Mexico. New York, Springer. Turner RE and Rabalais NN (2016). 2016 forecast: Summer hypoxic zone size
Northern Gulf of Mexico. Louisiana Universities Marine Consortium: 14 pp.

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grasses such as switchgrass and Miscanthus, even with manure application, could significantly
reduce phosphorus runoff into water bodies.495

4.4.2.3 Aquatic Life Effects

According to the Second Triennial Report to Congress on Biofuels, the impacts of biofuel
crop production on aquatic ecosystems is understudied compared to the impacts on terrestrial
ecosystems.496 However, it has been shown that increased corn and soybean cultivation may
affect downstream aquatic communities, chiefly through runoff or leaching of nutrients and
pesticides, though changes in land use and land cover also impact aquatic ecosystems,
particularly through conversion of wetlands that provide ecosystem services like improving
surface water flow, groundwater recharge, and sediment control.497 Aquatic organisms interact
within a food web and contribute to many ecosystem services. The aquatic food web includes
microorganisms (bacteria, fungi, and algae), macroinvertebrates and macrophytes (submerged
and floating aquatic plants), and larger animals such as fish and marine mammals. When
increased corn and soybean cultivation changes the flow of water, nutrients, and other chemicals
to downstream systems, aquatic communities change in assemblage composition, typically in
favor of organisms that can tolerate nutrient and chemical pollution. Sensitive organisms that
decrease in abundance in response to these changes may be important food resources or key
species in aquatic chemical and biological processes, such as nutrient uptake or fish production.

Inputs of nutrients are a leading cause of impairment of freshwater and coastal
ecosystems, in part due to corn and soybean production.498 Corn production requires greater
application of nitrogen fertilizer compared to soy production because soy plants develop root
nodules with bacteria that can fix nitrogen from the atmosphere (Table 4.4.2.1-1). EPA's
National Aquatic Resource Surveys assess the quality of the nation's freshwater and coastal
ecosystems, including biological condition usually derived from the abundance of pollution-
tolerant and pollution-sensitive benthic macroinvertebrate taxa499 and fish.500 As of 2014, nearly
half (44%) of the nation's river- and stream-miles were in poor biological condition and about
30% were in good condition based on benthic macroinvertebrate indicators, and while 37% were

495	Muenich RL, Kalcic M and Scavia D (2016). Evaluating the Impact of Legacy P and Agricultural Conservation
Practices on Nutrient Loads from the Maumee River Watershed. Environmental Science & Technology 50(15):
8146-8154.

496	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

497	Ibid.

498	Ibid

499	Benthic macroinvertebrate taxa are small, bottom-dwelling, aquatic animals and the aquatic larval stages of
insects. EPA, National Aquatic Resource Survey: Indicators: Benthic Macroinvertebrates, available at
https://www.epa.gov/nationa1-aquatic-resource-surveys/indicators-benthic-

macro invertebrates#:~:text=What%20are%20benthic%20macroinvertebrates%3F.snai1s%2C%20worms%2C%20an
d%20beet1es (last accessed April 14, 2021).

500	USEPA (2020). National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841-R-19-
001. Washington, DC. Available at https://www.epa.gov/national-aquatic-resource-surveys/nrsa (last accessed April
14, 2021).

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in poor condition and 26% were in good condition based on fish species indicators.501 The
leading problems contributing to poor biological condition were excess nutrients (especially
phosphorus), loss of shoreline vegetation, and excess sediments.502 For rivers and streams, sites
with a condition rating of poor because of excess nutrients were most prevalent in the mid-
continent ecoregions503 of the nation compared to the eastern and western regions.504 Agriculture
is the dominant land use in the Mississippi River basin. As of 2012, 31% of the nation's lakes
were rated as having poor biological condition, over 35% had excess nutrient concentrations, and
nearly 10% of lakes had greater concentrations of cyanobacterial cells and the algal toxin
microcystin compared to 2007.505 For lakes, disturbance by nutrients varied by ecoregion (Figure
4.4.2.3-1). Northern Plains and Southern Appalachian ecoregions had a higher proportion (67-
80% of within-ecoregion lakes) of sites classified as most disturbed by phosphorus pollution and
there was a statistically significant increase from 2007 to 2014 in the number of most disturbed
lakes in the Northern Appalachian ecoregion. For coastal and Great Lakes nearshore waters
(Figure 4.4.2.3-1), phosphorus was again a widespread problem (rating of poor in 21% of sites)
and biological condition was poorest along the Northeast coast (rating of poor in 27% of sites),
followed by the Great Lakes nearshore waters (rating of poor in 18% of sites).506 By 2014, the
greatest reduction in number of fish species occurred in portions of the Midwest and the Great
Lakes, where several watersheds have lost more than 20 species known to occur in those
locations prior to 1970.507

501	USEPA (2020). National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841-R-19-
001. Washington, DC. Available at https://www.epa.gov/nationa1-aquatic-resource-surveys/nrsa (last accessed April
14, 2021).

502	USEPA (2020). National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841-R-19-
001. Washington, DC. Available at https://www.epa.gov/national-aquatic-resource-surveys/nrsa (last accessed April
14, 2021).

503	The National Rivers and Streams Assessment 2013-2014 defines "ecoregion" as "geographic areas that display
similar environmental characteristics, such as climate, vegetation, type of soil, and geology." USEPA (2020).
National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841 R 19 001. Washington, DC.
Available at https://www.epa.gov/national-aquatic-resource-surveys/nrsa (last accessed April 14, 2021).

504	USEPA (2020). National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841-R-19-
001. Washington, DC. Available at https://www.epa.gov/national-aquatic-resource-surveys/nrsa (last accessed April
14, 2021).

505	USEPA (2016). National Lakes Assessment 2012: A Collaborative Survey of Lakes in the United States. EPA
841 R 16 113. U.S. Environmental Protection Agency, Washington, DC. Available at

https://www.epa.gov/sites/default/files/2016-12/documents/nla report dec 2016.pdf (last accessed September 14,
2021).

506	USEPA (2015). Office of Water and Office of Research and Development. National Coastal Condition
Assessment. EPA 841-R-15-006. U.S. Environmental Protection Agency, Washington, DC. Available at

TOIO NCCA 2010 Summary Report Review Draft ES 20101029 (epa.gov) (last accessed September 14, 2021).

507	USEPA (2015). Report on the Environment. Fish Faunal Intactness. hl:l:ps://cfpub.epa.gov/roe/indical:orxfm?i=84

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Figure 4.4.2.3-1: Locations of ecoregions and coastal areas defined by the USEPA's
National Aquatic Resource Surveys.508

CPL: Coastal Plains

NAP: Northern Appalachians NPL: Northern Plains



I

m

SAP: Southern Appalachians	SPL: Southern Plains	TPL: Temperate Plains

UMW: Upper Midwest

%

WMT: Western Mountains

liJJX
XER: Xeric



West coast

Gulf coast

<

i

Great Lakes Southeast coast Northeast coast

Excess nutrients (both nitrogen and phosphorus)in waterbodies can also result in
harmful algal blooms, some of which can produce toxins. Algal blooms, especially
cyanobacteria, can create surface scums that block sunlight and reduce the growth of other algae
and aquatic plants. Because of potential toxin production and composition of fatty acids in their
cells, cyanobacteria are lower quality food for aquatic insects and fish compared to other algae
such as diatoms. Lakes and reservoirs with excess nutrient loads are susceptible to recurring
algal blooms. The western Lake Erie is a good example as it receives nutrient loads from a
drainage area dominated by agricultural land use. Larger streams and rivers are often associated
with nutrient loading from nearby agricultural activities, as well as slower water flow rates and
longer residence times favorable for algal blooms.

In both freshwater and coastal marine systems, algal blooms terminate with microbial
decomposition of algal cells resulting in oxygen depletion or hypoxic zones. The 2017 Gulf of

508 Figures modified from Figure 5.1 in Ecoregions at a Glance in the National Lakes Assessment 2012. USEPA
(2016). National Lakes Assessment 2012. EPA 841 -R 16-113 and from USEPA (2015) National Coastal Condition
Assessments 2010. EPA 841-R-15-006. U.S. Environmental Protection Agency, Washington, DC.

5°9 paeri; H.W., Scott, J.T., McCarthy, M.J., Newell, S.E., Gardner, W.S., Havens, K.E., Hoffman, D.K., Wilhelm,
S.W. and Wurtsbaugh, W.A. (2016). It takes two to tango: When and where dual nutrient (N & P) reductions are
needed to protect lakes and downstream ecosystems. Environmental science & technology, 50(20): 10805 10813.

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Mexico hypoxic zone was the largest size measured since 1985, spanning 8,776 square miles.510
Hypoxic zones result in the death of fish and other organisms that need oxygen to live. Along
lake shorelines, blooms of filamentous green algae such as Cladophora harbor potentially
pathogenic bacteria and foul recreational beaches when the algae proliferate and decay.511 While
fertilizer use by current agricultural practices contribute to much of the nutrient loading that
stimulates algal responses in many waterbodies, the total nutrient budgets512 of some
waterbodies also include internal nutrient recycling of legacy inputs.513

In addition to nutrients, pesticides from corn and soybeans can also have deleterious
effects on aquatic life. Toxicological studies of glyphosate on fish have measured mainly
sublethal effects, such as DNA damage514 in organ tissues and altered muscle and brain
function.515 Some bacteria can use glyphosate for growth, enhancing microbial proliferation.516
There are cyanobacteria with natural tolerance to glyphosate517 and certain concentrations of
glyphosate can stimulate photosynthesis in a common bloom-forming taxon, Microcystis
aeruginosa,518 There is a notable link between glyphosate and phosphorus because more than
18% of glyphosate acid by mass is phosphorus. Glyphosate has chemical similarities with
phosphate ions (competing for the same sorption sites in soil), and glyphosate rapidly degrades
in water and releases phosphorus compounds easily used by organisms for growth. Glyphosate-
derived phosphorus has now reached levels in aquatic systems similar to phosphorus derived
from detergents prior to legislation banning these products, in part because of negative impacts
on aquatic life.519 In 2014, 58% of U.S. rivers and streams were given a rating of poor for the

510	Louisiana Universities Marine Consortium (2017). August 2, 2017 Summary. Shelfwide Cruise: July 24 - July
31. https://gulfhypoxia.net/research/shelfwide-cruise/?y=2017&p=press release. USNOAA (2019). Large 'dead
zone' measured in Gulf of Mexico. Available at https://www.noaa.gov/niedia-release/large-dead-zone-measured-in-
gulf-of-mexico (last accessed April 14, 2021).

511	Ibsen, M., Fernando, D.M., Kumar, A. and Kirkwood, A.E. (2017). Prevalence of antibiotic resistance genes in
bacterial communities associated with Cladophora glomerata mats along the nearshore of Lake Ontario. Canadian
Journal of Microbiology 63(5): 439-449.

512	"A nutrient budget quantifies the amount of nutrients imported to and exported from a system []. The budget is
considered in balance if inputs and outputs are equal. Nutrient budgets can be calculated at any scale, such as a farm,
a county, a watershed, a state, or a country." Amy L. Shober, George Hochmuth, and Christine Wiese (2011). "An
Overview of nutrient budgets for use in nutrient management planning." University of Florida IFAS Extension
SL361. Available at https://edis.ifas.ufl.edu/pdffiles/SS/SS56200.pdf (last accessed April 14, 2021).

513	Chen, D., Shen, H., Hu, M., Wang, J., Zhang, Y. and Dahlgren, R.A. (2018). Legacy nutrient dynamics at the
watershed scale: principles, modeling, and implications. In: Advances in Agronomy. Ed: Donald L. Sparks. 149:
237-313. Academic Press. Cambridge, MA.

514	Guilherme, S., Gaivao, I., Santos, M.A. and Pacheco, M. (2012). DNA damage in fish (Anguilla anguilla)
exposed to a glyphosate-based herbicide-elucidation of organ-specificity and the role of oxidative stress. Mutation
Research/Genetic Toxicology and Environmental Mutagenesis, 743(1-2): 1-9.

515	Modesto, K.A. and Martinez, C.B. (2010). Roundup® causes oxidative stress in liver and inhibits
acetylcholinesterase in muscle and brain of the fish Prochilodus lineatus. Chemosphere, 78(3): 294-299.

516	Hove-Jensen B, Zechel DL, and Jochlmsen B. (2014). Utilization of glyphosate as phosphate source:
biochemistry and genetics of bacterial carbon-phosphorus lyase. Microbiol Mol Biol R 78: 176-97.

517	Harris TD and Smith VH. 2016. Do persistent organic pollutants stimulate cyanobacterial blooms? Inland Waters
6: 124-30.

518	Qiu, H., Geng, J., Ren, H., Xia, X., Wang, X. and Yu, Y. (2013). Physiological and biochemical responses of
Microcystis aeruginosa to glyphosate and its Roundup® formulation. Journal of hazardous materials, 248:172-176.

519	Hebert, M.P., Fugere, V. and Gonzalez, A. (2019). The overlooked impact of rising glyphosate use on
phosphorus loading in agricultural watersheds. Frontiers in Ecology and the Environment, doi: 10.1002/fee. 1985.

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phosphorus indicator of EPA's National Rivers and Streams Assessment.520 While both corn and
soybean production use glyphosate, corn production can also use atrazine (Table 4.4.2.1-1). In
2012, EPA detected atrazine in 30% of lakes, but concentrations rarely reached the EPA level of
concern for plants in freshwaters (<1% of lakes).521 In 2016, EPA concluded that in areas where
atrazine use is heaviest (mainly in the Temperate Plains ecoregion, Figure 4.4.2.3-1), there are
impacts on aquatic plants and potential chronic risk to fish, amphibians, and aquatic
invertebrates; there is a high probability of changes to aquatic plant assemblage structure,
function, and primary production at a 60-day average concentration of 3.4 ug L 1 and
reproductive effects to fish exposed for several weeks to 5 ug L 1 atrazine.522 When there are
changes to aquatic plant assemblage structure, function, or productivity, other parts of the food
web become at risk because there is reduced food and altered habitat for fish, invertebrates, and
birds. Additional information on the affects to aquatic life will become available as EPA
finalizes their evaluation of the affects the RFS program has on endangered species.

4.4.3	Comparison with Petroleum

Biofuel feedstocks are not the only input to energy production affecting soil and water
quality. For comparison, petroleum used to produce gasoline and diesel fuel also impacts soil and
water quality, but at different spatial and temporal scales than corn and soy. When comparing the
two, it is necessary to consider both the spatial extent of the effects (e.g., the acreage of soil or
volume of water impacted) and the time or effort to recover from any effects. While petroleum
production may have required less land than agriculture in the U.S. between 2007 and 2011,
when considering recovery time or effort, a recent study suggested the effects of petroleum
production can be longer lasting and harder to mitigate (e.g., brine or oil contamination in soil or
groundwater) than those of biofuel feedstocks on soil and water quality.523 A full comparison
between the effects of the two fuel types of energy feedstocks would need to consider both
factors (spatial extent and recovery time or effort), but such an assessment would be expansive
and could not be performed on the timeline of this rulemaking.

4.4.4	Water Quality and Underground Storage Tanks

Releases from underground storage tank (UST) systems can threaten human health and
the environment, contaminating both soil and groundwater. As of September 2021, more than
564,767 UST releases have been confirmed across the United States, averaging about 5,400 per

520	USEPA (2020). National Rivers and Streams Assessment 2013-2014: A collaborative Survey. EPA 841-R-19-
001. Washington, DC. Available at https://www.epa.gov/nationa1-aquatic-resource-surveys/nrsa (last accessed April
14, 2021).

521	USEPA (2016). National Lakes Assessment 2012: A Collaborative Survey of Lakes in the United States. EPA
841 R 16 113. U.S. Environmental Protection Agency, Washington, DC.

522	USEPA (2016). Refined Ecological Risk Assessment for Atrazine. EPA-HQ-OPP-2013-0266. U.S.
Environmental Protection Agency, Washington, DC.

523	Parish ES, Kline KL, Dale VH, Efroymson RA, McBride AC, Johnson TL, Hilliard MR (2012). Comparing
Scales of Environmental Effects from Gasoline and Ethanol Production. Env Management: 10.1007/s00267 012
9983-6.

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year between 2016 and 2021.524,525 One possible cause of an UST releasing fuel to the
environment is incompatibility of the UST system with the fuel being stored.

Ensuring UST systems are compatible with the substances they store is essential because
USTs contain many components made of different materials. In certain percentages petroleum-
biofuel blends are more incompatible with certain materials used in UST system construction
than petroleum based fuel without biofuels. The whole UST system—including the tank, piping,
pipe dopes, containment sumps, pumping equipment, release detection equipment, spill
prevention equipment, and overfill prevention equipment—needs to be compatible with the fuel
stored to prevent releases to the environment. Compatibility with the substance stored is required
for all UST systems under EPA regulations, and storing certain biofuels requires additional
actions of UST owners and operators.

Equipment or components incompatible with the fuel stored could harden, soften, swell,
or shrink, and could lead to release of fuel to the environment. Examples of observed
incompatibility between fuels stored and UST materials include equipment or components such
as tanks, piping, or gaskets and seals on ancillary equipment that have become brittle, elongated,
thinner, or swollen when compared with their condition when initially installed.

Many of the tanks, piping and ancillary components being newly introduced into the
market today have now been designed to be compatible with up to 15% ethanol or up to 20%
biodiesel. However, most currently installed UST systems have at least some components that
may not be compatible with fuel blends containing more than 10% ethanol or more than 20%
biodiesel. EPA's 2015 UST regulation includes requirements for owners and operators of UST
systems storing any regulated substances containing greater than 10% ethanol or greater than
20% biodiesel, or any other substance identified by the implementing agency, to demonstrate
their UST system is compatible with those blends of biofuels prior to storing them.526 In 2021,
EPA proposed new regulations intended to strengthen the requirements for the underground
storage of fuels to ensure compatibility of new systems with high concentrations of biofuels.527
Nevertheless, insofar as blends of biofuel with gasoline or diesel are stored in USTs that are
either incompatible with those blends or have incompatible components, the increased
consumption of biofuels could increase leaks that affect water quality.

4.4.5 Potential Future Impacts of Proposed Volume Requirements

Future soil and water quality impacts associated with biofuel volumes will be driven, in
large part, by any associated land use/land cover changes. Directionally, increases in production
of biofuels made from crops would likely lead to an increase in land used for agriculture globally
and in the U.S. There are inherent uncertainties in estimating the amount and type of crop-based
feedstocks needed to fulfill the candidate volumes in this action, but an increase in cropland
acreage would generally be expected to lead to more negative soil and water quality impacts. As

524	USEPA (2021). Frequent questions about underground storage tanks. Available at
https://www.epa.gov/ust/frequent-questions-about-undergfound-storage-tanks (last accessed April 14, 2021).

525	"UST Confirmed Releases National data 2016-2021," available in the docket.

526	40 CFR Part 280.

527	86 FR 5094 (January 19, 2021).

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outlined previously, the conversion of non-cropland, such as the extensification of corn and
soybeans onto grasslands, can be expected to have greater negative effects on soil and water
quality relative to the conversion of other existing cropland (intensification).

Although effects may generally be more negative, the cumulative magnitude of such an
increase in soil and water quality impacts is uncertain. The magnitude of effects depends on the
feedstocks planted, the types of land used, and management practices, all of which are not
directly determined by the RFS standards. Additional factors, such as vegetative barriers, and
advances in biotechnology and crop yields, can lessen future impacts. Expanded use of soil
amendments (e.g., biochar, manure) also could help counterbalance the removal of organic
matter and avoid or reduce the potential negative impacts of corn stover harvesting on soil
quality.528 In the case of biogas, there are numerous soil and water quality benefits compared to a
baseline of no manure or waste management. Dairy digesters, for example, are an essential piece
of proper manure management, as once the biogas has been captured, properly aerated manure
can be applied evenly to soil as a fertilizer.529,530 The additional soil and water quality modeling
that would be needed to assess the potential cumulative impacts of future land use changes for
the candidate volumes in this action would be expansive and could not be performed on the
timeline of this rulemaking.

The volume increases for 2023-2025 described in Chapter 3 due to biofuels produced
from agricultural feedstocks (especially corn and soybeans) in comparison to the No RFS
baseline would suggest the potential for an associated increase in crop production, which in turn
may impact soil and water quality. However, the magnitude of this potential impact cannot be
estimated at this time, as more information is needed regarding the other factors and the
magnitude of the impacts on land use and management changes. There is substantial uncertainty
in projecting changes in land use and management associated with corn, soybean, and other
crops due to the other factors driving biofuel demand. Furthermore, if we consider the potential
impacts relative to the current situation in 2022 (i.e., the 2022 baseline discussed in Chapter 2.2)
there would be little impact, as the overall volume increase for biodiesel and renewable diesel is
much smaller and expected to be met with expanded waste fats, oils, and greases supply.
Additional information and modeling are needed to fully assess the degree to which the annual
volume requirements drive land use and management changes that would impact soil and water
quality. Such analysis would be expansive and could not be performed on the timeline of this
rulemaking.

4.5 Water Quantity and Availability

This section assesses the impact of the production and use of renewable fuels and their
primary feedstocks on the use and availability of water in the U.S. We first review the drivers of
impacts on water use and availability of freshwater resources, summarize impacts to date,
highlight more recent work focused on groundwater supplies. Finally, we discuss the potential

528	Blanco-Canqui H (2013). Crop Residue Removal for Bioenergy Reduces Soil Carbon Pools: How Can We Offset
Carbon Losses? Bioenergy Research 6(1): 358-371: 10.1007/sl2155 012 92213.

529	2010 - US Climate Action Report: Fifth National Communication of the United States of America Under the
United Nations Framework Convention on Climate Change.

530	2011 Annual Report: ENERGY STAR and Other Climate Protection Partnerships.

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future effects of the candidate volumes as increases in feedstock production such as soybeans
may lead to water impacts.

4.5.1	Drivers of Impacts on Water Use and Availability

Water quantity, in the context of renewable fuels, refers to the volume of water used in
the production of biomass feedstocks (i.e., irrigation of corn, soybeans or other crops) and the
conversion of those feedstocks to biofuel (i.e., water use in the biofuel production plant itself).
The irrigation of corn and soybeans used to produce biofuels is the predominant driver of water
quantity impact and is generally orders of magnitude greater than water use in the biofuel
production process.531 The water use for the full biofuels supply chain also has been quantified
as significantly higher than the water use for petroleum-based fuels, meaning biofuels are more
water intensive on a per gallon of fuel basis. Of concern are the impacts that this water use may
have on freshwater supplies and availability. Water intensive corn and soybean production
occurs on irrigated acres in states such as Nebraska and Kansas, in particular, the western parts
of those states. These states also overlap the High Plains Aquifer (HPA) 532 "where groundwater
levels have declined at unsustainable rates."533

As noted above, the primary driver of impacts to water quantity is the water used for
irrigation of the biofuel feedstocks. To the extent that feedstock production expands into regions
where irrigation is required, the demand for water will increase, whether the expansion is a direct
consequence of production specifically for biofuel feedstocks or an indirect result of increased
production for all feedstock uses. Water demand for biofuel production processes can also drive
impacts on water use and availability. Although water demands of biofuel production facilities
may be much smaller at a national scale than the water demands of irrigated feedstock
production, biofuel facility water use may be locally consequential in areas that are already
experiencing stress on water availability.

4.5.2	Life Cycle Water Use of Biofuels

In the Second Triennial Report to Congress on Biofuels, the water quantity impacts of
biofuels were assessed.534 Research investigating the water quantity impacts of biofuels started
shortly after the passage of the Energy Policy Act of 2005. Several highly cited and visible
articles compared the life cycle water use of biofuels relative to petroleum-based fuels on the
basis of "gallons of water per mile" or "gallons of water per gallon of fuel." 535 These early

531	Wu M, Zhang Z and Chiu Y-w (2014). Life-cycle Water Quantity and Water Quality Implications of Biofuels.
Current Sustainable/Renewable Energy Reports 1(1): 3-10.

532	The High Plains Aquifer is often referred to as the Ogallala Aquifer, which is the largest formation within the
High Plains Aquifer.

533	Smidt, S. J., Haacker, E. M., Kendall, A. D., Deines, J. M., Pei, L., Cotterman, K. A	& Hyndman, D. W.

(2016). Complex water management in modern agriculture: Trends in the water-energy-food nexus over the High
Plains Aquifer. Science of the Total Environment, 566, 988-1001.

534	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

535	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

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studies characterized this issue as biofuel's water intensity,536 embodied water,537 and water
footprint.538 Many studies of the water footprint further divide the consumptive water use into
two components: blue water (ground and surface water) and green water (rainwater).539 Most of
the focus of life cycle analyses (LCAs) has been on blue water or irrigation requirements for crop
production, as well as other freshwater use for biofuel conversion processes. When comparing
different transportation energy sources, Scown et al. (2011) found ethanol from corn-based
feedstocks to be one of the most significant users of freshwater.540 The same study calculated the
gallons of water consumed per mile of travel and found that the full life cycle water footprint of
ethanol produced from corn grain and stover (using average irrigation rates) would require
almost seven times as much surface water consumption as any other transportation power source
and an order of magnitude more groundwater consumption when compared to other

CA 1

transportation energy sources.

4.5.2.1 Feedstock Production

Researchers have continued to refine the LCA-based water footprint of biofuels—with a
focus on feedstock production—for both current biofuels crops and future feedstocks. Because
more than 90% of corn is grown in rain-fed areas where corn production is non-irrigated, Wu et
al. (2014) suggested that, at the highly aggregated level, the "national water footprint of corn is
consistently low to modest." 542 However, water quantity demands depend on the crops grown,
where they are grown, and how they are grown. In terms of differences among feedstocks,
Dominguez-Faus et al. (2009) calculated the irrigation water required for corn-based ethanol at
an average of approximately 600 liters (approximately 158.5 gallons) of water per liter of ethanol
produced (liter/liter).543 Much of the focus has been on corn ethanol, due to the higher volumes
of corn ethanol produced to date. However, in the same article, Dominguez-Faus et al. estimated
that irrigated soybean based biodiesel water requirement averaged nearly 1,300 liters of water

536	King, C. W., & Webber, M. E. (2008). Water intensity of transportation. Environmental Science & Technology,
42(21), 7866.

537	Chiu, Y. W., Walseth, B., & Suh, S. W. (2009). Water embodied in bioethanol in the United States.
Environmental Science & Technology, 43(8), 2688-2692.

538	Dominguez-Faus, R., Powers, S. E., Burken, J. G., & Alvarez, P. J. (2009). The water footprint of biofuels: A
drink or drive issue? Environmental Science & Technology 43(9): 3005-3010: 10.1021/es802162x; Scown, C. D.,
Horvath, A., & McKone, T. E. (2011). Water footprint of US transportation fuels. Environmental Science &
Technology 45(7), 2541-2553.

539	Another category is the gre/water footprint, which is the volume of water required to assimilate pollutant loads,
such as excess nitrogen. Topics relating to grey water are covered in the water quality section. See Hoekstra, A. Y.,
& Mekonnen, M. M. (2012). The water footprint of humanity. Proceedings of the national academy of sciences,
109(9), 3232-3237.

540	Scown CD, Horvath A and McKone TE (2011). Water Footprint of U.S. Transportation Fuels. Environmental
Science & Technology 45(7): 2541-2553: 10.1021/esl02633h.

541	Scown CD, Horvath A and McKone TE (2011). Water Footprint of U.S. Transportation Fuels. Environmental
Science & Technology 45(7): 2541-2553: 10.1021/esl02633h.

542	Wu, M., Zhang, Z., & Chiu, Y. W. (2014). Life-cycle water quantity and water quality implications of biofuels.
Current Sustainable/Renewable Energy Reports, 1(1), 3-10.

543	Dominguez-Faus R, Powers SE, Burken JG and Alvarez PJ (2009). The Water Footprint of Biofuels: A Drink or
Drive Issue? Environmental Science & Technology 43(9): 3005-3010: 10.1021/es802162x.

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per liter of ethanol-equivalent biodiesel (based on energy equivalence).544 These values all
represent an upper end estimate of water demands, if fuels are made from irrigated crops.

However, where and how crops are grown also matter because irrigation rates for the
same crops can vary enormously based on where they are cultivated: from no irrigation in rain-
fed acres in the Midwest to high irrigation rates in more arid regions in the West. Dominguez-
Faus et al. (2013) calculated a range of irrigation water use for corn ethanol between 350 and
1400 gal/gal.545 That study estimated that if 20% of corn production was used to produce 12
billion gallons per year of ethanol in 2011 (irrigated at a weighted average of 800 gal/gal), that
would amount to 1.8 trillion gallons of irrigation water withdrawals per year. While not an
insignificant amount, it represents only 4.4% of all irrigation withdrawals.546 Other researchers
have similarly focused on the wide range of water intensity estimates between rain-fed and
irrigated counties and among a variety of crops (see Figure 4.5.2.1-1). Gerbens-Leenes et al.
(2012) estimated Nebraska's blue water (irrigation water) footprint at three times higher than the
U.S. weighted average blue water footprint.547 Many other corn producing states have much
smaller irrigation demands relative to Nebraska. Yet, it should be noted that, after Iowa,
Nebraska is the second largest producer of corn-based ethanol in the U.S., with 25 active ethanol
facilities, many concentrated in southern Nebraska.548 Additionally, the blue water footprint in
areas that have already stressed water sources, like the HPA, could experience more severe water
quantity impacts. A report by the National Academy of Sciences (NAS 2011) highlighted the
groundwater depletion in the HPA, noting that Nebraska is "among the states with the largest
water withdrawals for irrigation, and its usage has continued to increase in recent years, largely
driven by the need to irrigate corn for ethanol." 549 This suggests that the majority of groundwater
consumption would come from areas like Nebraska that are already impacted by over-pumping
due to their high blue water footprint for corn production (Gerbens-Leenes et al. 20 1 2).550

544	Dominguez-Faus R, Powers SE, Burken JG and Alvarez PJ (2009). The Water Footprint of Biofuels: A Drink or
Drive Issue? Environmental Science & Technology 43(9): 3005-3010: 10.1021/es802162x.

545	Dominguez-Faus, R., Folberth, C., Liu, J., Jaffe, A. M., & Alvarez, P. J. (2013). Climate change would increase
the water intensity of irrigated corn ethanol. Environmental science & technology, 47(11), 6030-6037.

546	Dominguez-Faus R, Folberth C, Liu J, Jaffe AM and Alvarez PJJ (2013). Climate Change Would Increase the
Water Intensity of Irrigated Corn Ethanol. Environmental Science & Technology 47(11): 6030-6037:
10.1021/es400435n.

547	Gerbens-Leenes, W., & Hoekstra, A. Y. (2012). The water footprint of sweeteners and bio-ethanol. Environment
international, 40, 202-211.

548	EIA (2018). "Six states account for more than 70% of U.S. fuel ethanol production." Available at
https://www.eia.gov/todayinenergy/detail.php ?id=36892 (last accessed April 14, 2021). See also EIA. (2017,
February 16). "Nebraska State Profile and Energy Estimates: Profile Analysis." Retrieved June 2, 2017, from
https://www.eia.gov/state/analysis.php?sid=NE.

549	NAS (2011). Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy.
National Academy of Sciences. Washington, DC.

550	Gerbens-Leenes, W., & Hoekstra, A. Y. (2012). The water footprint of sweeteners and bio-ethanol. Environment
international, 40, 202-211.

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Figure 4.5.2.1-1: Estimate of the blue/irrigation, green/rainwater and grey/pollution water
footprint associated with corn grain, stover, wheat straw and soybean during the crop
growing phase.

« Regional range
* County max
-National average

Green Water	Grey Water

The national production weighted average is represented by the horizontal bar, while the regional ranges (this
includes all USDA regions such as the Corn Belt, Southern Plains, etc.) are represented by the shaded bars. County-
level variation in feedstock water footprints, shown in dashed lines, are driven by differences in irrigation and
evapotranspiration (ET). The circles show both "County max" as well as "County min." [Source: Chiu and Wu
(2012)].

4.5.2.2 Biofuel Processing

Studies of water use at biofuels conversion facilities have generally quantified water
consumption as gallons of water per gallon of biofuel produced, mostly concentrating on ethanol,
especially dry mill facilities.551 Process level engineering studies and surveys of ethanol facilities
have shown declines in water requirements from 5.8 gallons of water per gallon of ethanol
(gal/gal) in 1998 to 2.7 gal/gal in 20 1 2.552 These values are typical of a dry mill facility. Wet mill
facilities require closer to 4 gallons per gallon of ethanol.553 Some reports also point to
reductions in the water intensity of ethanol facilities through more efficient water use and
recovery, and reuse of wastewater after treatment for processes such as fermentation or possibly

551	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

552	Mueller S (2010). 2008 National dry mill corn ethanol survey. Biotechnology Letters 32(9): 1261-1264:

10.1007/sl0529-010-0296-7. and Wu Y and Liu S (2012). Impacts of biofuels production alternatives on water
quantity and quality in the Iowa River Basin. Biomass and Bioenergy 36: 182-191: 10.1016/j.biombioe.2011.10.030.
See a/so Wu Y and Liu S (2012b). Impacts of biofuels production alternatives on water quantity and quality in the
Iowa River Basin. Biomass and Bioenergy 36: 182-191: 10.1016/j.biombioe.2011.10.030.

553	Grubert, E. A., & Sanders, K. T. (2018). Water use in the US energy system: A national assessment and unit
process inventory of water consumption and withdrawals. Environmental science & technology.

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cooling towers.554 Some facilities have set goals to both reduce water use and minimize
discharges.

Biodiesel conversion from oil crops such as soybeans requires water use for multiple
stages of the process (crop to oil, and oil to biodiesel). The soybean processing (crop to oil) stage
involves crushing, oil extraction and crude soybean oil refining (degumming). Water
consumption includes make-up water for cooling towers and other processes. In the biodiesel
production stage (oil to biodiesel), following the crushing and oil extraction steps, water is used
to remove residual glycerol, a by-product of the transesterification process, and other impurities,
while some water is also for additional make-up water for cooling towers.555 Tu et al. (2016)
estimated that the water footprint of soybean based biodiesel to be under 1 gal/gal biodiesel (0.17
for crop to oil and 0.31 for oil to biodiesel).556

Renewable diesel is chemically very similar to petroleum-based diesel despite being
made from renewable wastes such as fats and vegetable oils. This means that it is processed in
the same manner that petroleum diesel which is hydrotreating. With this knowledge it can be
assumed that the same about of water used for processing petroleum diesel is used to process
renewable diesel.557 As renewable diesel is a plant-based feedstock, its additional water usage
would be from the irrigation process to grow the plants used to create the oil and not from the
process itself.

There are no recently published surveys of water consumption representing all current
biofuel and renewable fuel facilities, and no comprehensive data on the type of water sources
utilized (e.g., groundwater, surface freshwater, public supply, etc.). Grubert and Sanders estimate
that the majority of the water used is freshwater. There is also some evidence that groundwater
from aquifers is being extracted for use in ethanol production in states such as Iowa and
Nebraska,558 and likely a source of water for facilities along the HPA (see Figure 4.5.3-3).

4.5.2.3 Summary and Comparison to Petroleum

Improvements in irrigation have brought down the upper range of water use, with recent
estimates of irrigation for corn production ranging from 9.7 gal/gal ethanol for USD A Region 5
(Iowa, Indiana, Illinois, Ohio and Missouri) to 220.2 gal/gal ethanol in Region 7 (North Dakota,

554	Schill, S. R. (2017) Water: Lifeblood of the Process. Ethanol Producer Magazine. January 24, 2017.
http://www.ethanolproducer.coni/artLcles/14049/water-Hfeblood-of-the-process. See also Jessen, H. (2012) Dropping
Water Use. Ethanol Producer Magazine. June 12, 2012. Available at

http://www.ethanolproducer.com/artLcles/8860/droppLng-water-use (last accessed September 16, 2021).

555	Tu, Q., Lu, M., Yang, Y. J., and D. Scott (2016) Water consumption estimates of the btodLesel process In the US.
Clean Technologies and Environmental Policy. 18(2): 507-516.

556	Tu, Q., Lu, M., Yang, Y. J., and D. Scott (2016) Water consumption estimates of the biodiesel process in the US.
Clean Technologies and Environmental Policy. 18(2): 507-516.

557	Sun, Pinping: Estimation of U.S. refinery water consumption and allocation to refinery products: Fuel: Volume
221: June 18, 2018.

558	Schilling, K. E., Jacobson, P. J., Libra, R. D., Gannon, J. M., Langel, R. J., & Peate, D. W. (2017). Estimating
groundwater age in the Cambrian-Ordovician aquifer in Iowa: implications for biofuel production and other water
uses. Environmental Earth Sciences, 76(1), 2. See also Gerbens-Leenes, W., & Hoekstra, A. Y. (2012). The water
footprint of sweeteners and bio-ethanol. Environment international, 40, 202-211.

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South Dakota, Nebraska and Kansas) for groundwater.559 The conversion of corn to ethanol
requires 2-10 gal/gal for processing, with most dry mill plants requiring roughly 3 gal/gal. When
averaging production over all regions, and accounting for co-products of ethanol production
(such as distillers dried grain and solubles), the range for full life cycle consumptive water use
for U.S. corn ethanol is 8.7 - 160.0 gal/gal ethanol based on the updated analysis by Wu et al
(2018). By comparison, the most recent estimates of the net consumptive water use over the
petroleum-based fuel life cycle would be in the range of 1.4 - 8.6 gallons of water per gallon of
gasoline based on U.S. conventional crude, and diesel fuel would likely be a little less than
gasoline's consumption.560 561 The Wu et al (2018) analysis does not include biodiesel. The most
recent estimate for the full LCA water consumption for biodiesel provides a range of values for
each state: Missouri 21-79 gal water/gal biodiesel, Kansas and Oklahoma 80-150 gal/gal,
Nebraska and Texas 150-300 gal/gal.562 The water consumption of a biodiesel plant is well under
1 gallon of water consumed for each gallon of biodiesel produced, therefore, virtually all the
water associated with the lifecycle production of biodiesel made from vegetable oils is due to the
growing and processing of vegetable oil feedstocks.563 Assuming that renewable diesel fuel
production plants consume the same amount of water as a distillate hydrotreater, then renewable
diesel fuel production plants likely consume about 3 gallons of water for each gallon of
renewable diesel produced.564 As with biodiesel, we expect that water consumption associated
with renewable diesel made from vegetable oils is primarily associated with the production of the
underlying vegetable oil feedstocks. Since biodiesel and renewable diesel made from FOG does
not require crop-based inputs, we expect that the water usage for these biofuels is significantly
lower.

In summary, while values will vary across states and counties, ethanol, and biodiesel and
renewable diesel made from vegetable oils are substantially more water intensive than the
petroleum fuels they would displace. It is likely, though, that FOG-based biodiesel and
renewable diesel are more similar in water consumption to petroleum diesel fuel which it
displaces.

4.5.3 Impacts to Date

Because the majority of the growth in biofuels production has come from corn- and soy-
based biofuels, the water consumption impacts to date would have come from additional water
use for corn and soybean acreage. To our knowledge, there have been no comprehensive studies
of the changes in irrigated acres, rates of irrigation, or changes in surface and groundwater
supplies attributed specifically to the increased production of corn grain-based ethanol and

559 Wu, M., & Xu, H. (2018/ Consumptive Water Use in the Production of Ethanol and Petroleum Gasoline—2018
Update (No. ANL/ESD/09-1 Rev. 2). Argonne National Lab.(ANL), Argonne, IL (United States).
https://publications.anl.gov/anlpubs/2019/01/148043.pdf

56°

561	Sun, Pinping: Estimation of U.S. refinery water consumption and allocation to refinery products: Fuel: Volume
221: June 18, 2018.

562	Tu, Q., Lu, M., Yang, Y. J., and D. Scott (2016). Water consumption estimates of the biodiesel process in the US.
Clean Technologies and Environmental Policy. 18(2): 507-516.

563	Haas, M.J, A process model to estimate biodiesel production costs, Bioresource Technology 97 (2006) 671-678.

564	Sun, Pinping: Estimation of U.S. refinery water consumption and allocation to refinery products: Fuel: Volume
221: June 18, 2018.

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soybean-based biodiesel. There are, however, studies that can give some indication of how
changes in production of these biofuels may have affected water demand and availability. The
Second Triennial Report to Congress on Biofuels highlights analyses in Lark et al. (2015) and
Wright et al. (2017) that show changes in land use, including cropland expansion in the western
Dakotas and Kansas, related to biofuels.565 These are areas unlikely to have sufficient
precipitation to support corn or soybean cultivation.566 While difficult to attribute how much
additional water use might be required as a result of the candidate volumes in this rule, there are
several lines of evidence that suggest increased production of corn-based ethanol and soybean-
based biodiesel will increase water demands and, potentially, affect limited water supplies.

The USD A Irrigation and Water Management Surveys (formerly the Farm and Ranch
Irrigation Survey or FRIS), a supplement to the Census of Agriculture completed every five
years, provide a general indication of the changes in water demands between 2013 and 2018.567
From 2013 to 2018, there was an increase in total irrigated acres of nearly 0.6 million acres in the
U.S.568 Over the same period, irrigated acres of corn for grain and seed decreased from 13.3
million acres to 11.6 million acres harvested, along with a lower irrigation rate of 0.9 acre-feet
applied in 2018 compared to 1.1 acre-feet applied in 20 1 3.569 Over the same time period,
irrigated acres of soybeans increased from 7.4 to 8.2 million acres harvested, while average acre-
feet applied declined from 0.9 to 0.6 per acre.570 Figure 4.5.3-1 shows acres of irrigated land in
2012, the most recent year of data for which this figure is available.

565	U.S. EPA (2018). Biofuels and the Environment: Second Triennial Report to Congress. U.S. Environmental
Protection Agency, EPA/600/R-18/195: 159 pp. Washington, DC, June.

566	Lark TJ, Salmon JM and Gibbs HK (2015). Cropland expansion outpaces agricultural and biofuel policies in the
United States. Environmental Research Letters 10(4): 10.1088/1748-9326/10/4/044003. and Wright, C. K., et al.
(2017). "Recent grassland losses are concentrated around US ethanol refineries." Environmental Research Letters
12(4).

567	USDA NASS (2018). 2018 Irrigation and Water Management Survey. Available at

https://www.nass.usda.gov/Publications/AgCensus/2017/Online Resources/Farm and Ranch Irrigation Survey/fri
s.pdf (last accessed April 14, 2021).

568	USDA NASS (2018). 2018 Irrigation and Water Management Survey. Available at

https://www.nass.usda.gov/Pubncations/AgCensus/2017/Online Resources/Farm and Ranch Irrigation Survey/fri
s.pdf (last accessed April 14, 2021).

569	USDA NASS (2018). 2018 Irrigation and Water Management Survey. Available at

https://www.nass.usda.gov/Publications/AgCensus/2017/Online Resources/Farm and Ranch Irrigation Survey/fri
s.pdf (last accessed April 14, 2021).

570	USDA NASS (2018). 2018 Irrigation and Water Management Survey. Available at

https://www.nass.usda.gov/Publications/AgCensus/2017/Online Resources/Farm and Ranch Irrigation Survey/fri
s.pdf (last accessed April 14, 2021).

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Figure 4.5.3-1: Acres of irrigated land in 2012

management/irrigation water-use/background.aspx

Figure 4.5.3-2 shows corn and soybean areas and share of irrigated acres. Irrigated corn
grain/seed acres are heavily concentrated in Nebraska (4.5 million acres) followed by Kansas
(1.3 million acres). This is a decrease of 0.9 and 0.2 million acres respectively from 2012 to
2018. Irrigated soybean acres are also found in Nebraska, Kansas, particularly the more western
part of those states. Overall soybean production is generally more concentrated (as a share of
total harvested cropland) in rainfed areas, whereas corn production reaches further west. There is
also a high percentage of soybean acres in Arkansas and Mississippi, with a large share of those
soybean acres being irrigated. The top rows of Figure 4.5.3-2 show the distribution of corn and
soybean acres, as a share of total cropland acres, while the bottom rows of Figure 4.5.3-2 show
the percent of irrigated corn and soybean acres relative to total acres for those crops (measures as
harvested acres).

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Figure 4.5.3-2: Percent of irrigated corn and soybean acres relative to total acres,
respectively

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Irrigaseti Soybeansfor Bean*. HsrvwiWAerw.« P«ic«r5ol Soytwaire for Beats. Harvsefed Aero. 201 r

Top left: Acres of Corn Harvested as a Percent of Harvested Cropland Acreage,

Top right: Acres of Soybean Harvested as a Percent of Harvested Cropland Acreage.

Bottom left: Irrigated Corn as a Percent of Total Corn (Harvested Acres).

Bottom right: Irrigated Soybeans as a Percent of Total Soybeans (Harvested Acres).

Source: USDA Agricultural Census Web Maps (Accessed April 14, 2021).

https://www.nass.usda.gov/Publications/AgCensus/2Q12/Online Resources/Ag Census Web Maps/index.php

Higher irrigation demands may coincide with areas of already-stressed surface and
groundwater resources, such as the HPA (also called the Ogallala Aquifer). A 2011 report by the
National Academy of Sciences highlighted the groundwater drawdown in the HPA, noting that
Nebraska is "among the states with the largest water withdrawals for irrigation, and its usage has
continued to increase in recent years, largely driven by the need to irrigate corn for ethanol."1,1
This suggests that the majority of groundwater consumption would come from areas like
Nebraska, which are already impacted by over-pumping due to their high blue water footprint for
corn production. Changes in irrigation practices are dependent on a number of economic and
agronomic factors that affect how land is managed, making it difficult to attribute expanded
irrigation to biofuels production and use without more detailed analysis. A study by Wright et al.

571 NAS (2011). Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy.
National Academy of Sciences. Washington, DC.

276


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(2017) of land use change rates noted that "along the Ogallala Aquifer, elevated rates of land use
change to corn production in Western Kansas, Oklahoma and Texas coincided with areas
experiencing groundwater depletion rates ranging from 5-20% per decade" (see Figure 4.5.3-3).
However, this correlation does not necessarily mean there is a direct, causal relationship between
biofuel production and groundwater depletion.

(2008-2012).

H Ogallala Aquifer

Non-crop to crop (%}

— I I H

0 ,4 .8 1.2 2.0 2.7 3.9 5.5 7.8 12.1 35

Includes conversion located along the Ogallala aquifer, Stars denote biofuel production facilities, (Source: Wright et
al. 2017)

As stated above, there have been no comprehensive studies of the changes in irrigated
acres, rates of irrigation, or changes in surface and groundwater supplies attributed specifically to
the increased production of corn grain-based ethanol and soybean-based biodiesel. In the absence
of analyses that do focus directly on crops for biofuel production, there are studies that look
more broadly at the connection between agricultural water use and groundwater levels. For
example, Smidt et al. (2016) analyzed the water-energy-food nexus over the HPA to look at the
major drivers that have affected and will continue to affect agriculture's water use. That study
highlights that, across large portions of the HPA, "groundwater levels have declined at
unsustainable rates despite improvements in both the efficiency of water use and water

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277


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productivity in agricultural practices."572 Figure 4.5.3-3 shows the relative conversion rates of
arable cropland to non-cropland, as well as the location of the HPA and biofuel conversion
facilities. Figure 4.5.3-4 also shows the HPA, but shows the absolute changes in groundwater
levels, from predevelopment to 2017 based on data from USGS.573 The HPA can be divided into
three geographical regions: the Northern, Central, and Southern High Plains. The Northern HPA
groundwater supplies have been relatively stable since predevelopment (with some increases
shown in green/blue), whereas the Central and Southern HP As have seen substantial declines, in
some areas over 150 ft of declines (shown in yellow/orange/red). Biofuel facility locations (from
the National Renewable Energy Laboratory574) are overlaid onto the HPA data from USGS to
highlight where biofuel production facilities are co-located with areas of changes in the
groundwater levels. Again, while the Central and Southern HPAs have seen substantial declines,
the Northern HPA has remained relatively stable and even increased in some areas (as shown in
Figure 4.5.3-4). This does not demonstrate that biofuel production causes declines in
groundwater levels, but it does show that some biofuel facilities operate in areas that are
experiencing water-stressed aquifer resources.

572	Smidt, S. J., Haacker, E. M., Kendall, A. D., Deines, J. M., Pei, L., Cotterman, K. A	& Hyndman, D. W.

(2016). Complex water management in modern agriculture: Trends in the water-energy-food nexus over the High
Plains Aquifer. Science of the Total Environment, 566, 988-1001.

573	The predevelopment water level is defined as "the water level in the aquifer before extensive groundwater
pumping for irrigation, or about 1950. The predevelopment water level was generally estimated by using the earliest
water-level measurement in more than 20,000 wells." https://ne.water.usgs.gov/projects/HPA/index.htnil

574	https://maps.nrel.gov/biofuels-atlas/

278


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Figure 4.5.3-4: Water-level changes in the High Plains Aquifer, predevelopment (about
1950) to 2015

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corn. The value of irrigation was lower for soybeans.575 The high value of irrigation for corn is
due to the large yield increases that occur with irrigation for corn, as well as the high water-use
efficiency. This indicates that higher corn prices will increase the incentives to irrigation, and,
conversely, lower corn prices may lead to decreases in acres and rates of irrigation. The same
would hold true for soy- higher prices for soybeans incentivizing more irrigation, lower prices
leading to less irrigation. Though the impact would be smaller than it would be from an increase
in corn cultivation, since soybeans generally require less irrigation than does corn.

Earlier work also looked at the impact of agricultural commodity prices on irrigation
demands by taking an economic-based approach that calculated the price elasticities of irrigation
water demands.576 More recent work by Deines et al (2017) utilized satellite images to produce
annual maps of irrigation for 1999-2016 to study changes in irrigation over time.577 In addition to
looking at changes in the area and location of irrigated fields, Deines et al (2017) also did
statistical modeling to assess how factors such as precipitation and commodity prices influenced
the extent of irrigation. That study confirmed that "farmers expanded irrigation when crop prices
were high to increase crop yield and profit."578

4.5.3.2 Non-Cropland Biofuels and Non-U.S. Crops

The Second Triennial Report to Congress on Biofuels and the published research on the
water quantity impacts of biofuels generally do not report or estimate water used for production
of non-cropland biofuels or impacts outside of the U.S. However, some of the changes in
volumes are associated with non-cropland biofuels, such as biogas, or with biofuels produced
from feedstocks produced in foreign countries, such as palm-based biofuels. We will briefly
discuss biogas here. Palm oil water demands are discussed in section 2.6 of the Second Triennial
Report. In addition, as noted in Chapter 4.3, there is strong evidence that expanded palm oil
production would have adverse impacts on water quality outside of the U.S.

Biogas does not have the irrigation requirements associated with crop-based biofuels.
Because their inventory covers all of the U.S. energy system at a high level of detail (including
126 unit processes), Grubert and Sanders (2018) examined whether there were any water
consumption and withdrawals for biogas from landfills, wastewater and animal manure
digesters.579 For biogas, they reported no water requirements. Since the biogas is a byproduct of
wastes (i.e., landfills, manure, and wastewater), none of the water used for the primary products
(e.g., the agricultural operations that produced the manure) is allocated to the produced biogas. In

575	Smidt, S. J., Haacker, E. M., Kendall, A. D., Deines, J. M., Pei, L., Cotterman, K. A	& Hyndman, D. W.

(2016). Complex water management in modern agriculture: Trends in the water-energy-food nexus over the High
Plains Aquifer. Science of the Total Environment, 566, 988-1001.

576	See for example, Scheierling, S. M., Loomis, J. B., & Young, R. A. (2006). Irrigation water demand: A meta-
analysis of price elasticities. Water resources research, 42(1).

577	Deines, J.M., Kendall, A.D., and Hyndman, D.W. (2017). Annual Irrigation Dynamics in the U.S. Northern High
Plains Derives from Landsat Satellite Data. Geophysical Research Letters 44, 9350-9360.

578	Deines, J.M., Kendall, A.D., and Hyndman, D.W. (2017). Annual Irrigation Dynamics in the U.S. Northern High
Plains Derives from Landsat Satellite Data. Geophysical Research Letters 44, 9350-9360.

579	Grubert, E., & Sanders, K. (2018). Water Use in the United States Energy System: A National Assessment and
Unit Process Inventory of Water Consumption and Withdrawals. Environmental Science & Technology 52 (11),
6695-6703.

280


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the case of landfill biogas, we therefore assume no significant amounts of water are used.

Grubert and Sanders also assume negligible water requirements for the processing and
transportation of biogas, although they note that some water may be used for upgrading biogas if
water-intensive amine scrubbing is used.

4.5.4 Potential Future Impacts of Annual Volume Requirements

Most of the available research looks at the past and potential future water quantity and
availability impacts associated with increased use of corn ethanol, and in some instances,
cellulosic biofuels. Because of the high volumes of corn ethanol produced to date, the water
quantity and availability concerns have been focused on corn ethanol, with less focus on soy
biodiesel. The changes in mandatory volumes under this rule and future rules are different from
the scenarios analyzed in the literature published to date. Studies on future water quantity
impacts often project larger changes for corn ethanol580 or focus on future cellulosic
feedstocks.581 Thus, the water quantity impacts due to this rule are difficult to quantify based on
the existing literature. That said, there are several ways to assess the impacts of the volume
scenarios, based on the studies reviewed above.

We can assess potential water demand changes based on volume changes by biofuel type
as summarized in Section 3.3 of the Second Triennial Report to Congress on Biofuels. All else
being equal, the life cycle water consumption of ethanol and biodiesel (derived from soybeans
and likely palm) is higher, sometimes orders of magnitude higher, than the petroleum-based fuels
they are intended to displace (see Chapter 2.2). However, while the life cycle approach estimates
the direction of changes in the water demands associated with shifting from petroleum to
biomass-based fuels, how much that translates into increased irrigation or changes in water
availability is more difficult to assess.

A second approach to estimate changes in water demands due to the volume changes
would rely on scenarios projecting land use changes and changes in crop management practices
with a high enough level of precision to also assess or estimate the change in irrigation
requirements. One study we reviewed attempted to project water requirements of increased
biofuels production in the U.S.582 However, the biofuel volumes modeled by Liu et al. (2017)
represented an E20 scenario for 2025 and differed greatly in their modeled expansion of crops
compared to the volumes in this rulemaking.

580	Liu, X. V., Hoekman, S. K., & Broch, A. (2017). Potential water requirements of increased ethanol fuel in the
USA. Energy, Sustainability and Society, 7(1), 18.

581	Several studies have estimated water use and availability impacts associated with future scenarios of increased
cellulosic biofuel production. These studies often project future land use/management for different scenarios of
increased production of cellulosic crops, and then estimate impacts on water use and changes in streamflow for
specific watersheds. See for example: Cibin, R., Trybula, E., Chaubey, I., Brouder, S. M., & Volenec, J. J. (2016).
Watershed-scale impacts of bioenergy crops on hydrology and water quality using improved SWAT model. Gcb
Bioenergy, 8(4), 837-848 or Le, P. V., Kumar, P., & Drewry, D. T. (2011). Implications for the hydrologic cycle
under climate change due to the expansion of bioenergy crops in the Midwestern United States. Proceedings of the
National Academy of Sciences, 108(37), 15085-15090.

582	Liu, X., Hoekman, S.K., and Broch, A. 2017. Potential water requirements of increased ethanol fuel in the USA.
Energy, Sustainability and Society, 7: 18.

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A third approach to estimate the changes in water demands is based on changes in crop
prices and the associated economic value of irrigation. While the attribution of impacts due to
land use changes and associated irrigation requirements is difficult, it may be possible to assess
at a broad scale, at least in terms of directionality, the changes in irrigation that may result from
the impact of the candidate volumes on crop prices. However, we have not yet been able to
perform such an analysis and it remains an area where additional analysis and research is needed
to better understand the impacts of the promulgated volumes on water demand.

In summary, based on the approaches above, there will likely be some increased
irrigation pressure on water resources due to the candidate volumes. Specifically, the volume
increases for 2023-2025 compared to the No RFS baseline that is described in Chapter 2 due to
biofuels produced from agricultural feedstocks (especially corn and soybeans) would suggest the
potential for some associated increase in crop production, which in turn would likely increase
irrigation pressure on water resources. The increased volume requirements especially that of
renewable diesel could incent greater production of its underlying feedstock (soybeans). There is
uncertainty in projecting changes in acreage and irrigation rates associated with corn, soybeans,
and other crops. Furthermore, if we consider the potential impacts relative to the current situation
in 2022 (i.e., the 2022 baseline discussed in Chapter 2.2) there would be little impact, as the
overall volume increase for biodiesel and renewable diesel is much smaller and expected to be
met with expanded waste fats, oils, and greases supply. Additional information and modeling are
needed to fully assess changes in water demands and effects on water stressed regions, both for
crop irrigation as well as impacts of biofuel facility water use. Additionally, and as described in
Chapter 4.4, we note that there may be potential effects on water and soil quality. While we
could not quantify these effects, as described in Chapter 4.4, the potential for negative effects is
an area of ongoing concern and research.

4.6 Ecosystem Services

Ecosystem services broadly consist of the many life-sustaining benefits humans receive
from nature, such as clean air and water, fertile soil for crop production, pollination, and flood
control.583 The United Nations Millennium Ecosystem Assessment584 categorized four different
types of ecosystem services, including:

•	Provisioning Services; the provision of food, fresh water, fuel, fiber, and other goods

•	Regulating Services; climate, water, and disease regulation as well as pollination

•	Supporting Services; soil fermentation and nutrient cycling

•	Cultural services; education, aesthetic, and cultural heritage values as well as recreation

and tourism

Several of the drivers of ecosystems loss identified in the Millennium Ecosystem
Assessment, such as climate change, pollution, and land-use change, are expected to be impacted
by the production of renewable fuels generally and may be impacted by the candidate volumes in
this rule specifically.

583	US EPA website on Ecosystem Services. Available at: https://www.epa.gov/eco-research/ecosystem-services

584	Millennium Ecosystem Assessment, 2005. Ecosystems and Human Well-being: Synthesis. Island Press,
Washington, DC.

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The previous sections in this chapter discussed the projected impacts associated with this
rule on a variety of different environmental end points such as air quality, climate change, land-
use change, soil and water quality, and water availability as required by the statute. Each of the
impacts discussed in these sections would be expected to have an impact on one or more
ecosystems services. These impacts could be positive (e.g., result in ecosystem services benefits)
or negative. We have focused our analyses in the specific factors identified in the statute and we
have not quantified all of the human well-being changes or monetized these effects. We have,
however, provided a potential framework for how the impacts on ecosystem services might be
considered (see Figure 4.6-1). Note that there are multiple frameworks for categorizing
ecosystem services in the literature. Future analyses, such as those presented in the Triennial
Biofuels and the Environment reports to Congress, may refine this approach to better capture
incremental ecosystem service benefits and costs.

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Figure 4.6-1: Framework for Considering the Impact of the RFS Volumes on Ecosystem
Services

Action: RFS Set Rule (2023-2025)

Biophysical Changes

GHG Emissions

•	Displacing Petroleum
Based Fuels

•	Domestic Land Use
Change

•	International Land Use
Change

Air Quality

•	Potential changes in PM,
NOx, S02, VOC, CO, NH3

Water Quality and Aquatic
Habitats

•	Fertilizer and Pesticide
Runoff

•	Sediment Runoff

•	Habitat and Associated
Filtration

•	Leakage from
Underground Storage
Tanks

•	Atmospheric
Deposition

r ^

Human Well-Being

Changes

Monetary Value
1 Changes



Social Effects from Climate
Change

Social Cost of GHGs

Property Effects

Property Values

Morbidity and Mortality Effects

Health Values

Energy, Transportation, and
Drinking Water Production

Agricultural Product Value

Effects

Wildlife Product Value

Recreation Effects

Wildlife Existence Value
Recreation Value

Hydrology, Water Quantity,
and Flood Risk

•	Tilling

•	Land Use/Habitat Change

•	Irrigation

Wildlife and Habitat

•	Pollinating Insects

•	Commercial Species

•	Species of Public Interest

•	Pest Control Species

Soil Quality

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Chapter 5: Energy Security Impacts

The CAA directs EPA to analyze "the impact of renewable fuels on the energy security
of the United States" in using the set authority to establish volumes. U.S. energy security is
broadly defined as the continued availability of energy sources at an acceptable price.585 Most
discussions of U.S. energy security revolve around the topic of the economic costs of U.S.
dependence on oil imports.586 In addition to evaluating energy security, we have also considered
energy independence, which is the idea of eliminating U.S. dependence on imports of petroleum
and other foreign sources of energy. While energy independence is not a statutory factor in the
CAA, one goal of the RFS program is to improve the U.S.'s energy independence.587 Energy
independence and energy security are distinct but related concepts, and an analysis of energy
independence also helps to inform our analysis of energy security.588

Since renewable fuels substitute for petroleum-derived conventional fuels, changes in
renewable fuel volumes have an impact on U.S. petroleum consumption and imports. All else
being constant, a change in U.S. petroleum consumption and imports would alter both the
financial and strategic risks associated with sudden disruptions in global oil supply, thus
influencing the U.S.'s energy security position. Renewable fuels also may have some energy
security risks, for example, as a result of weather-related events (e.g., droughts). To the extent
that renewable fuel price shocks are not strongly correlated with oil price shocks, blending
renewable fuels with petroleum fuels can provide energy security benefits. However, the energy
security risks of using renewable fuels themselves are not well understood, nor well studied. This
chapter reviews the literature on energy security impacts associated with petroleum consumption
and imports and summarizes EPA's estimates of the benefits of reduced petroleum consumption
and imports that would result from the candidate volumes for 2023-2025.

The U.S.'s oil consumption has been gradually increasing in recent years (2015-2019)
before dropping dramatically as a result of the COVID-19 pandemic in 2020 and 2021.589 U.S.
oil consumption is anticipated to return to roughly pre-COVID-19 levels and be relatively steady
in 2023-2025.590 The U.S. has increased its production of oil, particularly "tight" (i.e., shale) oil
over the last decade.591 As a result of the recent increase in U.S. oil production and to a lesser
extent renewable fuels, the U.S. is projected to be a net exporter of crude oil and refined

585	Greene, D. 2010. Measuring energy security: Can the United States achieve oil independence? Energy Policy 38,
pp. 1614-1621.

586	The issue of cyberattacks is another energy security issue that could grow in significance over time. For example,
one of the U.S.'s largest pipeline operators, Colonial Pipeline, was forced to shut down after being hit by a
ransomware attack. The pipeline carries refined gasoline and jet fuel from Texas to New York. Cyber attack Forces
a Shutdown of a Top U.S. Pipeline. New York Times. May 8th, 2021.

587	See Americans for Clean Energy v. Env'tProt. Agency, 864 F.3d 691, 696 (D.C. Cir. 2017) ("By mandating the
replacement—at least to a certain degree—of fossil fuel with renewable fuel, Congress intended the Renewable Fuel
Program to move the United States toward greater energy independence and to reduce greenhouse gas emissions.");
id. 697 (citing 121 Stat, at 1492).

588	Greene, D. 2010. Measuring energy security: Can the United States achieve oil independence? Energy Policy 38,
pp. 1614-1621.

589	EIA. Total Energy. Monthly Energy Review. Table 3.1. Petroleum Overview. December 2021.

590	EIA. AEO 2022. Reference Case. Table All. Petroleum and Other Liquids Supply and Disposition.

591	https://www.eia.gOv/energyexp1ained/oi1-and-petro1eum-products/images/u.s.tight oil production.jpg.

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petroleum products in 2023-2025.592 This is a significant reversal of the U.S.'s oil trade balance
position since the U.S. has been a substantial net importer of crude oil and refined petroleum
products starting in the early 1950s.593

Given that the U.S. is projected to be a modest net exporter of crude oil and refined
petroleum products for 2023-2025, one could reason that the U.S. no longer has a significant
energy security problem. However, U.S. refineries still rely on significant imports of heavy crude
oil from potentially unstable regions of the world. Also, oil exporters with a large share of global
production have the ability to raise or lower the price of oil by exerting the market power
associated with a cartel—the Organization of Petroleum Exporting Countries (OPEC)—to alter
oil supply relative to demand. The degree of market power that OPEC has during the three-year
time frame of this analysis is difficult to quantify. These factors contribute to the continued
vulnerability of the U.S. economy to episodic oil supply shocks and price spikes, even when the
U.S. is projected to be a modest net exporter of crude oil and refined petroleum products in
2023-2025.

We recognize that because the U.S. is a participant in the world market for crude oil and
refined petroleum products, its economy cannot be shielded from worldwide price shocks.594 But
the potential for petroleum supply disruptions due to supply shocks has been diminished due to
the increase in tight oil production, and to a lesser extent renewable fuels (among other factors),
which have shifted the U.S. to being a modest net petroleum exporter in the world petroleum
market in 2023-2025. The potential for supply disruptions has not been eliminated, however, due
to the continued need to import petroleum to satisfy the demands of the U.S. petroleum industry
and because the U.S. continues to consume substantial quantities of oil.595

5.1 Review of Historical Energy Security Literature

Energy security discussions are typically based around the concept of the oil import
premium, sometimes also labeled the oil security premium. The oil import premium is the extra
cost/impacts of importing oil beyond the price of the oil itself as a result of: (1) potential
macroeconomic disruption and increased oil import costs to the economy from oil price spikes or
"shocks"; and (2) monopsony impacts. Monopsony impacts stem from changes in the demand
for imported oil, which changes the price of all imported oil.

592	EIA. AEO 2022. Reference Case. Table All. Petroleum and Other Liquids Supply and Disposition. While the
U.S. is a net exporter of the aggregate of crude oil and refined petroleum products, it is still a net importer of crude
oil.

593	EIA. "Oil and petroleum products explained - Oil imports and exports." April 21, 2022.
https://www.eia.gov/energyexp1ained/oi1-and-petro1eurn-products/irnports-and-exports.php.

594	Bordoff, J. 2019. The Myth of US Energy Independence has Gone Up in Smoke. Foreign Policy. September 18.
https://foreLgnpoHcy.com/2019/09/18/the-myth-of-u-s-energy-Lndependence-has-gone-up-Ln-smoke.

595	Foreman, D. 2018. Why the US must Import and Export Oil: American Petroleum Institute. June 14th.
https://www.apL.org/news-polLcy-and-Lssues/b1og/2018/06/14/why-the-us-niust-Lmport-and-export-oLl.

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The so-called oil import premium gained attention as a guiding concept for energy policy
in the aftermath of the oil shocks of the 1970s (Bohi and Montgomery (1982), EMF (1981)).596
Plummer (1982) provided valuable discussion of many of the key issues related to the oil import
premium as well as the analogous oil stockpiling premium.597 Bohi and Montgomery (1982)
detailed the theoretical foundations of the oil import premium and established many of the
critical analytic relationships.598 Hogan (1981) and Broadman and Hogan (1986, 1988) revised
and extended the established analytical framework to estimate optimal oil import premia with a
more detailed accounting of macroeconomic effects.599 Since the original work on energy
security was undertaken in the 1980s, there have been several reviews on this topic by Leiby,
Jones, Curlee and Lee (1997) and Parry and Darmstadter (2004).600,601

The economics literature on whether oil shocks are the same level of threat to economic
stability as they once were, is mixed. Some of the literature asserts that the macroeconomic
component of the energy security externality is small. For example, the National Research
Council (2009) argued that the non-environmental externalities associated with dependence on
foreign oil are small, and potentially trivial.602 Analyses by Nordhaus (2007) and Blanchard and
Gali (2010) question the impact of oil price shocks on the economy in the early-2000s time
frame.603 They were motivated by attempts to explain why the economy actually expanded
during the oil shock in the early-2000s, and why there was no evidence of higher energy prices
being passed on through higher wage inflation. One reason, according to Nordhaus and
Blanchard and Gali, is that monetary policy has become more accommodating to the price
impacts of oil shocks. Another reason is that consumers have simply decided that such
movements are temporary and have noted that price impacts are not passed on as inflation in
other parts of the economy.

596	Bohi, D. and Montgomery, D. 1982. Social Cost of Imported and U.S. Import Policy, Annual Review of Energy,
7:37-60. Energy Modeling Forum, 1981. World Oil, EMFReport 6, Stanford University Press: Stanford 39 CA.

https://emf.stanford.edu/publications/emf-6-woiid-oil (accessed November 30, 2022).

597	Plummer, J. (Ed.). 1982. Energy Vulnerability, "Basic Concepts, Assumptions and Numerical Results," pp. 13 -
36, Cambridge MA: Ballinger Publishing Co.

598	Bohi, D. and Montgomery, D. 1982. Social Cost of Imported and U.S. Import Policy, Annual Review of Energy,
7:37-60.

599	Hogan, W. 1981. "Import Management and Oil Emergencies," Chapter 9 in Deese,^ David andjoseph Nye, eds.
Energy and Security. Cambridge, MA: Ballinger Publishing Co. Broadman, H. 1986. "The Social Cost of Imported

Oil," Energy Policy I A(2):2A2-252. Broadman H. and Hogan, W. 1988. "Is an Oil Import Tariff Justified? An

American Debate: The Numbers Say 'Yes,'" The Energy Journal 9: 7-29.

600	Leiby, P., Jones, D., Curlee, R. and Lee, R. 1997. Oil Imports: An Assessment of Benefits and Costs, ORNL-
6851, Oak Ridge National Laboratory, November.

601	Parry, I. and Darmstadter, J. 2004. "The Costs of U.S. Oil Dependency," Resources for the Future, November 17,
2004. Also published as NCEP Technical Appendix Chapter 1: Enhancing Oil Security, the National Commission

on Energy Policy 2004 Ending the Energy Stalemate-A Bipartisan Strategy to Meet America's Energy Challenges.

602	National Research Council. 2009. Hidden Costs of Energy: Unpriced Consequences of Energy Production and
Use. National Academy of Science, Washington, DC.

603	Nordhaus, W. 2007. "Who's Afraid of a Big Bad Oil Shock?". Brookings Papers on Economic Activity,

Economic Studies Program, The Brookings Institution, vol. 38(2), pp. 219^40. Blanchard, O. and Gali, J. 2010. The

macroeconomic effects of oil price shocks: why are the 2000's so different from the 1970s. International
Dimensions of Monetary Policy. University of Chicago Press.

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Hamilton (2012) reviews the empirical literature on oil shocks and suggests that the
results are mixed, noting that some work (e.g., Rasmussen and Roitman (2011)) finds less
evidence for economic effects of oil shocks or declining effects of shocks (Blanchard and Gali
(2010)), while other work continues to find evidence regarding the economic importance of oil
shocks.604 For example, Baumeister and Peersman (2012) find that an "oil price increase of a
given size seems to have a decreasing effect over time, but noted that the declining price-
elasticity of demand meant that a given physical disruption had a bigger effect on price and
turned out to have a similar effect on output as in the earlier data."605 Hamilton observes that "a
negative effect of oil prices on real output has also been reported for a number of other countries,
particularly when nonlinear functional forms have been employed" (citing as examples Kim
(2012) and Engemann, Kliesen, and Owyang (2011)).606,607 Alternatively, rather than a declining
effect, Ramey and Vine (2010) find "remarkable stability in the response of aggregate real
variables to oil shocks once we account for the extra costs imposed on the economy in the 1970s
by price controls and a complex system of entitlements that led to some rationing and
shortages."608

Some of the literature on oil price shocks emphasizes that economic impacts depend on
the nature of the oil shock, with differences between price increases caused by a sudden supply
loss and those caused by rapidly growing demand. Recent analyses of oil price shocks have
confirmed that "demand-driven" oil price shocks have greater effects on oil prices and tend to
have positive effects on the economy while "supply-driven" oil shocks still have negative
economic impacts (Baumeister, Peersman, and Robays (2010)).609 A paper by Kilian and
Vigfusson (2014), for example, assigns a more prominent role to the effects of price increases
that are unusual, in the sense of being beyond the range of recent experience.610 Kilian and
Vigfussen also conclude that the difference in response to oil shocks may well stem from the
different effects of demand- and supply-based price increases: "One explanation is that oil price
shocks are associated with a range of oil demand and oil supply shocks, some of which stimulate
the U.S. economy in the short-run and some of which slow down U.S. growth (see Kilian
2009)."611

604	Rasmussen, T. and Roitman, A. 2011. Oil Shocks in a Global Perspective: Are We Really That Bad. IMF
Working Paper Series.

605	Baumeister, C. and Peersman, G. 2012. The Role of Time-Varying Price Elasticities in Accounting for Volatility
Changes in the Crude Oil Market. Journal of Applied Economics.

606	Kim, D. 2012. What is an oil shock? Panel data evidence. Empirical Economics, Volume 43, pp. 121-143.

607	Engemann, K., Kliesen. K. and Owyang, M. 2011. Do Oil Shocks Drive Business Cycles, Some U.S. and
International Evidence. Federal Reserve Bank of St. Louis, Working Paper Series. No. 2010-007D.

608	Ramey, V. and Vine, D. 2010. "Oil, Automobiles, and the U.S. Economy: How Much have Things Really
Changed?". National Bureau of Economic Research Working Papers, WP 16067 (June).

609	Baumeister C., Peersman, G. and Van Robays, I. 2010. "The Economic Consequences of Oil Shocks: Differences
across Countries and Time," RBA Annual Conference Volume in: Renee Fry & Galium Jones & Christopher Kent
(ed.), Inflation in an Era of Relative Price Shocks, Reserve Bank of Australia.

610	Kilian, L. and Vigfusson, R. 2014. "The role of oil price shocks in causing U.S. recessions," CFS Working Paper
Series 460, Center for Financial Studies.

611	Kilian, L. 2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude
Oil Market." American Economic Review, 99 (3): pp. 1053-69.

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The general conclusion that oil supply-driven shocks reduce economic output is also
reached in a paper by Cashin et al. (2014), which focused on 38 countries from 1979-2011.612
They state: "The results indicate that the economic consequences of a supply-driven oil-price
shock are very different from those of an oil-demand shock driven by global economic activity,
and vary for oil-importing countries compared to energy exporters." Cashin et al. continues
".. .oil importers (including the U.S.) typically face a long-lived fall in economic activity in
response to a supply-driven surge in oil prices." But almost all countries see an increase in real
output caused by an oil-demand disturbance.

EPA's assessment of the energy security literature finds that there are benefits to the U.S.
from reductions in its oil imports. But there is some debate as to the magnitude, and even the
existence, of energy security benefits from U.S. oil import reductions. Over the last decade,
differences in economic impacts from oil demand and oil supply shocks have been distinguished.
The oil import premium calculations in this analysis (described in Chapter 5.4) are based on
price shocks from potential future supply events. Oil supply shocks, which reduce economic
activity, have been the predominant focus of oil security issues since the oil price shocks/oil
embargoes of the 1970s. While we project some increase in imported renewable fuels due to this
rule, the rule results in an overall reduction by the U.S. in imported fuels (i.e., combined total of
imported oil and imported renewable fuels), moving the U.S. modestly towards the goal of
energy independence and enhanced energy security.

5.2 Review of Recent Energy Security Literature

There have also been a handful of recent studies that are relevant for the issue of energy
security. We provide a brief review and high-level summary of each of these studies below.

5.2.1 Recent Oil Energy Security Studies

The first studies on the energy security impacts of oil that we review are by Resources for
the Future (RFF), a study by Brown and two studies by Oak Ridge National Laboratory (ORNL).
The RFF study (2017) attempts to develop updated estimates of the relationship among gross
domestic product (GDP), oil supply and oil price shocks, and world oil demand and supply
elasticities.613 In a follow-on study, Brown summarized the RFF study results as well.614 The
RFF work argues that there have been major changes that have occurred in recent years that have
reduced the impacts of oil shocks on the U.S. economy. First, the U.S. is less dependent on
imported oil than in the early 2000s due in part to the "fracking revolution" (i.e., tight/shale oil),
and to a lesser extent, increased production of renewable fuels. In addition, RFF argues that the
U.S. economy is more resilient to oil shocks than in the earlier 2000s time frame. Some of the
factors that make the U.S. more resilient to oil shocks include increased global financial
integration and greater flexibility of the U.S. economy (especially labor and financial markets),
many of the same factors that Nordhaus and Blanchard and Gali pointed to as discussed above.

612	Cashin, P., Mohaddes, K., and Raissi, M. 2014. The Differential Effects of Oil Demand and Supply Shocks on
the Global Economy, Energy Economics, 12 (253).

613	Krupnick, A., Morgenstern, R., Balke, N., Brown, S., Herrara, M. and Mohan, S. 2017. "Oil Supply Shocks, U.S.
Gross Domestic Product, and the Oil Security Problem," Resources for the Future Report.

614	Brown, S. 2018. New estimates of the security costs of U.S. oil consumption", Energy Policy, 113 pp. 171-192.

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In the RFF effort, a number of comparative modeling scenarios are conducted by several
economic modeling teams using three different types of energy-economic models to examine the
impacts of oil shocks on U.S. GDP. The first is a dynamic stochastic general equilibrium model
developed by Balke and Brown.615 The second set of modeling frameworks use alternative
structural vector autoregressive models of the global crude oil market.616 The last of the models
utilized is the National Energy Modeling System (NEMS).617

Two key parameters are focused upon to estimate the impacts of oil shock simulations on
U.S. GDP: oil price responsiveness (i.e., the short-run price elasticity of demand for oil) and
GDP sensitivity (i.e., the elasticity of GDP to an oil price shock). The more inelastic (i.e., the less
responsive) short-run oil demand is to changes in the price of oil, the higher the price impacts of
a future oil shock. Higher price impacts from an oil shock result in higher GDP losses. The more
inelastic (i.e., less sensitive) GDP is to an oil price change, the less the loss of U.S. GDP with
future oil price shocks.

For oil price responsiveness, RFF reports three different values: a short-run price
elasticity of oil demand from their assessment of the "new literature," -0.17; a "blended"
elasticity estimate; -0.05, and short-run oil price elasticities from the "new models" RFF uses,
ranging from -0.20 to -0.35. The "blended" elasticity is characterized by RFF in the following
way: "Recognizing that these two sets of literature [old and new] represent an evolution in
thinking and modeling, but that the older literature has not been wholly overtaken by the new,
Benchmark-E [the blended elasticity] allows for a range of estimates to better capture the
uncertainty involved in calculating the oil security premiums."

The second parameter that RFF examines is the GDP sensitivity. For this parameter,
RFF's assessment of the "new literature" finds a value of -0.018, a "blended elasticity" estimate
of -0.028, and a range of GDP elasticities from the "new models" that RFF uses that range from
-0.007 to -0.027. One of the limitations of the RFF study is that the large variations in oil price
over the last 15 years are believed to be predominantly "demand shocks" (e.g., a rapid growth in
global oil demand followed by the Great Recession and then the post-recession recovery).

There have only been two recent situations where events have led to a potential
significant supply-side oil shock in the last several years. The first event was the attack on the
Saudi Aramco Abqaiq oil processing facility and the Khurais oil field. On September 14, 2019, a
drone and cruise missile attack damaged the Saudi Aramco Abqaiq oil processing facility and the
Khurais oil field in eastern Saudi Arabia. The Abqaiq oil processing facility is the largest crude

615	Balke, N. and Brown, S. 2018. "Oil Supply Shocks and the U.S. Economy: An Estimated DSGE Model." Energy
Policy, 116, pp. 357-372.

616	These models include Kilian, L. 2009. Not All Oil Price Shocks are Alike: Disentangling Demand and Supply
Shocks in the Crude Oil Market, American Economic Review, 99:3, pp., 1053-1069: Kilian, L. and Murphy, D.
2013. "The Role of Inventories and Speculative Trading in the Global Market for Crude Oil, "Journal of Applied
Economics, https://doi.org/10.10Q2/iae.2322: and Baumeister, C. and Hamilton, J. 2019. "Structural Interpretation of
Vector Autoregressions with Incomplete Identification: Revisiting the Role of Oil Supply and Demand Shocks,"
American Economic Review, 109(5), pp.1873-1910.

617	Mohan, S. 2017. "Oil Price Shocks and the U.S. Economy: An Application of the National Energy Modeling
System." Resources for the Future Report Appendix.

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oil processing and stabilization plant in the world, with a capacity of roughly 7 MMBD or about
7% of global crude oil production capacity.618 On September 16, the first full day of commodity
trading after the attack, both Brent and WTI crude oil prices surged by $7.17/bbl and $8.34/bbl,
respectively, in response to the attack, the largest price increase in roughly a decade.

However, by September 17, Saudi Aramco reported that the Abqaiq plant was producing
2 MMBD, and they expected its entire output capacity to be fully restored by the end of
September.619 Tanker loading estimates from third-party data sources indicated that loadings at
two Saudi Arabian export facilities were restored to the pre-attack levels.620 As a result, both
Brent and WTI crude oil prices fell on September 17, but not back to their original levels. The oil
price spike from the attack on the Abqaiq plant and Khurais oil field was prominent and unusual,
as Kilian and Vigfusson (2014) describe. While pointing to possible risks to world oil supply, the
oil shock was short-lived, and generally viewed by market participants as being transitory, so it
did not influence oil markets over a sustained time period.

The second situation is the set of events leading to the recent world oil price spike
experienced in 2022. World oil prices rose fairly rapidly in the beginning of 2022. For example,
on January 3, 2022, the WTI crude oil price was roughly $76/bbl. The WTI oil price increased to
roughly $ 123/bbl on March 8, 2022, a 62% increase.621 High and volatile oil prices in 2022 are a
result of a combination of several factors: supply not rising fast enough to meet rebounding
world oil demand from increased economic activity as the COVID-19 pandemic recedes;
reduced supply from some leading oil-producing nations; and geopolitical events and concerns
(e.g., the Ukraine War). It is not clear to what extent the current oil price volatility will continue,
or even increase, or be transitory. Since both significant demand and supply factors are
influencing world oil prices in 2022, it is not clear how to evaluate unfolding oil market price
trends from an energy security standpoint. Thus, the attack of the Abqaiq oil processing facility
in Saudi Arabia and the unfolding events in the world oil market in 2022 do not currently
provide enough empirical evidence to provide an updated estimate of the response of the U.S.
economy to an oil supply shock of a significant magnitude.622

A second set of recent studies related to energy security are from ORNL. In the first
study, ORNL (2018) undertakes a quantitative meta-analysis of world oil demand elasticities
based upon the recent economics literature.623 The ORNL study estimates oil demand elasticities
for two sectors (transportation and non-transportation) and by world regions (OECD and Non-
OECD) by meta-regression. To establish the data set for the meta-analysis, ORNL undertakes a

618	EIA. "Saudi Arabia crude oil production outage affects global crude oil and gasoline prices." Today in Energy.
September 23, 2019. https://www.eia.gov/todayinenergy/de tail.php?id=41413.

619	Ibid.

620	Ibid.

621	EIA. Petroleum and Other Liquids Spot Prices, https://www.eia.gov/dnav/pet/pet pil spl: si d.htm.

622	Hurricanes Katrina and Rita in 2005 primarily caused a disruption in U.S. oil refinery production, with a more
limited disruption of some crude supply in the U.S. Gulf Coast area. Thus, the loss of refined petroleum products
exceeded the loss of crude oil, and the regional impact varied even within the U.S. Hurricanes Katrina and Rita were
a different type of oil disruption event than is quantified in the Stanford EMF risk analysis framework, which
provides the oil disruption probabilities than ORNL is using.

623	Una-Martinez, R., Leiby, P., Oladosu, G., Bowman, D., Johnson, M. 2018. Using Meta-Analysis to Estimate
World Oil Demand Elasticity, ORNL Working Paper.

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literature search of peer reviewed journal articles and working papers between 2000-2015 that
contain estimates of oil demand elasticities. The data set consisted of 1,983 observations from 75
published studies. The study finds a short-run price elasticity of world oil demand of -0.07 and a
long-run price elasticity of world oil demand of -0.26.

The second relevant ORNL (2018) study from the standpoint of energy security is a
meta-analysis that examines the impacts of oil price shocks on the U.S. economy as well as many
other net oil-importing economies.624 19 studies after 2000 were identified that contain
quantitative/accessible estimates of the economic impacts of oil price shocks. Almost all studies
included in the review were published since 2008. The key result that the study finds is a short-
run oil price elasticity of U.S. GDP, roughly one year after an oil shock, of -0.021, with a 68%
confidence interval of -0.006 to -0.036.

5.2.2 Recent Studies on Tight/Shale Oil

The discovery and development of U.S. tight oil (i.e., shale oil) reserves that started in the
mid-2000s could affect U.S. energy security in at least several ways.625 First, the increased
availability of domestic supplies has resulted in a reduction of U.S. oil imports and an increasing
role of the U.S. as exporter of crude oil and petroleum-based products. Largely due to increases
in tight oil, in December 2015, the U.S. Congress lifted the ban on the U.S.'s ability to export
domestically produced crude oil.626 Second, due to differences in development cycle
characteristics and average well productivity, tight oil producers could be more price responsive
than most other oil producers. However, the oil price level that triggers a substantial increase in
tight oil production appears to be higher in 2021-2022 relative to the 2010s as tight oil producers
seek higher profit margins per barrel in order to reduce the debt burden accumulated in previous
cycles of production growth.627

U.S. crude oil production increased from 5.0 MMBD in 2008 to an all-time peak of 12.3
MMBD in 2019 and tight oil wells have been responsible for most of the increase.628 Figure
5.2.2-1 shows tight oil production changes from various tight oil producing regions (e.g., Eagle
Ford, Bakken, etc.) in the U.S. and the WTI crude oil spot price. Viewing Figure 5.2.2-1, one can
see that the annual average U.S. tight oil production grew from 0.6 MMBD in 2008 to 7.8
MMBD in 20 1 9.629 Growth in U.S. tight oil production during this period was only interrupted in

624	Oladosu, G., Leiby, P., Bowman, D., Una-Martinez, R., Johnson, M. 2018. Impacts of oil price shocks on the
U.S. economy: a meta-analysis of oil price elasticity of GDP for net oil-importing economies, Energy Policy 115.
pp. 523-544.

625	Union of Concerned Scientist, "What is Tight Oil?". 2015. "Tight oil is a type of oil found in impermeable shale
and limestone rock deposits. Also known as "shale oil," tight oil is processed into gasoline, diesel, and jet fuels —
just like conventional oil — but is extracted using hydraulic fracturing, or "fracking.

626	GAO, 2020. Crude Oil Markets: Effects of the Repeal of the Crude Oil Export Ban. GAO-21-118. According to
the GAO, "Between 1975 and the end of 2015, the Energy Policy and Conservation Act directed a ban on nearly all
exports of U.S. crude oil. This ban was not considered a significant policy issue when U.S. oil production was
declining and import volumes were increasing. However, U.S. crude oil production roughly doubled from 2009 to
2015, due in part to a boom in shale oil production made possible by advancements in drilling technologies. In
December 2015, Congress effectively repealed the ban, allowing the free export of U.S. crude oil worldwide".

627	Kemp, J. 2021. U.S. shale restraint pushes oil prices to multi-year high. Reuters. June 4, 2021.

628	EIA (2021). Crude Oil Production, https://www.eia.gov/dnav/pet/pet crd crpdn adc mbbl m.htm.

629	EIA (2021). Tight oil production estimates byplay, https://www.eia.aov/petroleuni/data.php.

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2015-2016 following the world oil price downturn that began in mid-2014. The second growth
phase started in late 2016 and continued until 2020. The sharp decrease in demand that followed
the onset of the COVID-19 pandemic resulted in a 25% decrease in tight oil production in the
period from December 2019 to May 2020. U.S. tight oil production in 2020 and 2021 averaged
7.4 MMBD and 7.2 MMBD, respectively, and represents a relatively modest share (less than
10% in 2019) of global liquid fuel supply.630 importantly, U.S. tight oil is considered the most
price-elastic component of non-OPEC supply due to differences between its development and
production cycle and that of conventional oil wells. Unlike conventional wells where oil starts
flowing naturally after drilling, shale oil wells require the additional step of fracking to complete
the well and release the oil.031 Shale oil producers keep a stock of drilled but uncompleted wells
and can optimize the timing of the completion operation depending on price expectations.
Combining this decoupling between drilling and production with the front-loaded production
profile of tight oil—the fraction of total output from a well that is extracted in the first year of
production is higher for tight oil wells than conventional oil wells—tight oil producers have a
clear incentive to be responsive to prices in order to maximize their revenues.

Figure 5.2.2-1: U.S. Tight Oil Production (by Producing Regions) (in MMBD) and WTI
Crude Oil Spot Price (in U.S. Dollars per Barrel)

10 -j	r iso

2008	2010	2012	2014	2016	201S	2020	2022

Producing Regions

Bakken	I Niobrara-Codell	Bonespring

(NO & MT) I - (CO & WY)	(TX & NM Permian)

¦ Spraberry nj Wolfcamp	0 .. |C,

(TX Permian) I.- (TX & MM Permian)

Source! EIA6®*®4

Only in recent years have the implications of the "tight/shale oil revolution" been felt in
the international market where U.S. production of oil is rising to be roughly on par with Saudi

630 The 2019 global crude oil production value used to compute the U.S. tight oil share is from EIA International
Energy Statistics, https://www.eia.gov/international/data/world/petroleum-and-other-liquids/annual-petroleum-and-
other-liquids-production.

Hydraulic fracturing ("fracking") involves injecting water, chemicals, and sand at high pressure to open fractures
in low-permeability rock formations and release the oil that is trapped in them.

632 Bjornland, H., Nordvik, F. and Rohrer, M. 2021. "Supply flexibility in the shale patch: Evidence from North
Dakota," Journal of Applied Economics.

EIA. Tight oil production estimates by play. https://www.eia.gov/petroleum/data.php.

EIA. Petroleum and Other Liquids Spot Prices, https://www.eia.gov/dnav/pet/pet pri spt si d.htm.

Price

Eagle Ford 	 ^

(TX)

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Arabia and Russia. Recent economic literature of the tight oil expansion in the U.S. has a bearing
on the issue of energy security as well. It could be that the large expansion in tight oil has eroded
the ability of OPEC to set world oil prices to some degree, since OPEC cannot directly influence
tight oil production decisions. Also, by effecting the percentage of global oil supply controlled
by OPEC, the growth in U.S. oil production may be influencing OPEC's degree of market
power. But given that the tight oil expansion is a relatively recent trend, it is difficult to know
how much of an impact the increase in tight oil is having, or will have, on OPEC behavior.

Three recent studies have examined the characteristics of tight oil supply that have
relevance for the topic of energy security. In the context of energy security, the question that
arises is: Can tight oil respond to an oil price shock more quickly and substantially than
conventional oil?635 If so, then tight oil could potentially lessen the impacts of future oil shocks
on the U.S. economy by moderating the price increases from a future oil supply shock.

Newell and Prest (2019) look at differences in the price responsiveness of conventional
versus shale oil wells, using a detailed data set of 150,000 oil wells, during the 2005-2017 time
frame in five major oil-producing states: Texas, North Dakota, California, Oklahoma, and
Colorado.636 For both conventional oil wells and shale oil wells (i.e., unconventional oil wells),
Newell and Prest estimate the elasticities of drilling operations and well completion operations
with respect to expected revenues and the elasticity of supply from wells already in operation
with respect to spot prices. Combining the three elasticities and accounting for the increased
share of tight oil in total U.S. oil production during the period of analysis, they conclude that
U.S. oil supply responsiveness to prices increased more than tenfold from 2006 to 2017. They
find that tight/shale oil wells are more price responsive than conventional oil wells, mostly due to
their much higher productivity, but the estimated oil supply elasticity is still small. Newell and
Prest note that the tight oil supply response still takes more time to arise than is typically
considered for a "swing producer," referring to a supplier able to increase production quickly,
within 30-90 days. In the past, only Saudi Arabia and possibly one or two other oil producers in
the Middle East have been able to ramp up oil production in such a short period of time.

Another study, by Bjornland et al. (2021), uses a well-level monthly production data set
covering more than 16,000 crude oil wells in North Dakota to examine differences in supply
responses between conventional and tight/shale oil.637 They find a short-run (i.e., one-month)
supply elasticity with respect to oil price for tight oil wells of 0.71, whereas the one-month
response of conventional oil supply is not statistically different from zero. It should be noted that
the elasticity value estimated by Bjornland et al. combines the supply response to changes in the
spot price of oil as well as changes in the spread between the spot price and the 3-month futures
price.

635	Union of Concerned Scientist, "What is Tight Oil?". 2015. "Tight oil is a type of oil found in impermeable shale
and limestone rock deposits. Also known as "shale oil," tight oil is processed into gasoline, diesel, and jet fuels—
just like conventional oil - but is extracted using hydraulic fracturing, or 'Tracking."

636	Newell, R. and Prest, B. 2019. The Unconventional Oil Supply Boom: Aggregate Price Response from
Microdata, The Energy Journal, Volume 40, Issue Number 3.

637	Bjornland, H., Nordvik, F. and Rohrer, M. 2021. "Supply flexibility in the shale patch: Evidence from North
Dakota," Journal of Applied Economics.

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Walls and Zheng (2022) explore the change in U.S. oil supply elasticity that resulted
from the tight oil revolution using monthly, state-level data on oil production and crude oil prices
from January 1986 to February 2019 for North Dakota, Texas, New Mexico, and Colorado.638
They conduct statistical tests that reveal an increase in the supply price elasticities starting
between 2008-2011, coinciding with the times in which tight oil production increased sharply in
each of these states. Walls and Zheng also find that supply responsiveness in the tight oil era is
greater with respect to price increases than price decreases. The short-run (one-month) supply
elasticity with respect to price increases during the tight oil area ranges from zero in Colorado to
0.076 in New Mexico; pre-tight oil, it ranged from zero to 0.021.

The results from Newell and Prest, Bjornland et al., and Walls and Zheng all suggest that
tight oil may have a larger supply response to oil prices in the short-run than conventional oil,
although the estimated short-run elasticity is still small. The three studies use data sets that end in
2019 or earlier. The responsiveness of U.S. tight oil production to recent price increases does not
appear to be consistent with that observed during the episodes of crude oil price increases in the
2010s captured in these three studies. Despite an 80% increase in the WTI crude oil spot price
from October 2020 to the end of 2021, Figure 5.2.2-1 shows that U.S. tight oil production has
increased by only 8% in the same period. It is a somewhat challenging period in which to
examine the supply response of tight oil to its price to some degree, given that the 2020-2021
time period coincided with the COVID-19 pandemic. However, previous shale oil production
growth cycles were financed predominantly with debt, at very low interest rates.639 Most U.S.
tight oil producers did not generate positive cashflow.640 As of 2021, U.S. shale oil producers
have pledged to repay their debt and reward shareholders through dividends and stock
buybacks.641 These pledges translate into higher prices that need to be reached (or sustained for a
longer period) than in the past decade to trigger large increases in drilling activity.

In its first quarter 2022 energy survey, the Dallas Fed (i.e., the Federal Reserve Bank of
Dallas) asked oil exploration and production (E&P) firms about the WTI price levels needed to
cover operating expenses for existing wells or to profitably drill a new well. The average
breakeven price to continue operating existing wells in the shale oil regions ranged from $23—
35/bbl. To profitably drill new wells, the required average WTI prices ranged from $48—69/bbl.
For both types of breakeven prices, there was substantial variation across companies, even within
the same region. The actual WTI price level observed in the first quarter of 2022 has been
roughly $95/bbl, substantially larger than the breakeven price to drill new wells. However, the
median production growth expected by the respondents to the Dallas Fed Energy Survey from
the fourth quarter of 2021 to the fourth quarter of 2022 is modest (6% among large firms and
15% among small firms). Investor pressure to maintain capital discipline was cited by 59% of
respondents as the primary reason why publicly traded oil producers are restraining growth
despite high oil prices. The other reasons cited included supply chain constraints, difficulty in
hiring workers, environmental, social, and governance concerns, lack of access to financing, and

638	Walls, W. D., & Zheng, X. 2022. Fracking and Structural Shifts in Oil Supply. The Energy Journal, 43(3).

639	McLean, B. The Next Financial Crisis Lurks Underground. New York Times, September 1, 2018.

640	Ibid.

641	https://www.bloomberg.coni/news/artLcles/2021-08-02/shale-heavyweLghts-shower-Lnvestors-wLth-dLvLdends-on-

oil-rally.

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government regulations.642 Given the recent behavior of tight oil producers, we do not believe
that tight oil will provide additional significant energy security benefits in 2023-2025 due to its
lack of price responsiveness. The ORNL model still accounts for U.S. tight oil production
increases on U.S. oil imports and, in turn, the U.S.'s energy security position.643

Finally, despite continuing uncertainty about oil market behavior and outcomes and the
sensitivity of the U.S. economy to oil shocks, it is generally agreed that it is beneficial to reduce
petroleum fuel consumption from an energy security standpoint. The relative significance of
petroleum consumption and import levels for the macroeconomic disturbances that follow from
oil price shocks is not fully understood. Recognizing that changing petroleum consumption will
change U.S. imports, our quantitative assessment of oil costs of this rule in Chapter 5.4 focuses
on those incremental social costs that follow from the resulting changes in net imports,
employing the usual oil import premium measure.

5.3 Cost of Existing U.S. Energy Security Policies

An additional often-identified component of the full economic costs of U.S. oil imports is
the costs to the U.S. taxpayers of existing U.S. energy security policies. The two primary
examples are maintaining the Strategic Petroleum Reserve (SPR) and maintaining a military
presence to help secure a stable oil supply from potentially vulnerable regions of the world.

The SPR is the largest stockpile of government-owned emergency crude oil in the world.
Established in the aftermath of the 1973/1974 oil embargo, the SPR provides the U.S. with a
response option should a disruption in commercial oil supplies threaten the U.S. economy.644
Emergency SPR drawdowns have taken place in 1991 (Operation Desert Storm), 2005
(Hurricane Katrina), 2011 (Libyan Civil War), and 2022. All of these releases have been in
coordination with releases of strategic stocks from other International Energy Agency (IEA)
member countries. In the first four months of 2022, using the statutory authority under Section
161 of the Energy Policy and Conservation Act, DOE conducted two emergency SPR
drawdowns in response to ongoing oil supply disruptions.645 The first drawdown resulted in a
sale of 30 million barrels in March 2022. The second drawdown, announced in April, authorized
a total release of approximately one MMBD from May to October 20 2 2.646 While the costs for
building and maintaining the SPR are more clearly related to U.S. oil use and imports,
historically these costs have not varied in response to changes in U.S. oil import levels. Thus,
while the effect of the SPR in moderating price shocks is factored into the analysis that EPA is
using to estimate the macroeconomic oil security premiums, the cost of maintaining the SPR is
excluded.

642	https://www.da11asfed.ora/research/surveys/des/2022/2201.aspx#tab-questions.

643	EPA will monitor data as tight oil production continues to adjust to market conditions in 2022 and will consider
differentiating shale oil price responsiveness on the U.S.'s energy security position in this final RFS rulemaking
should evidence suggest that is appropriate.

644	Energy Policy and Conservation Act, 42 U.S. Code § 6241(d) (1975).

645	https://www.energy.gov/fecni/articles/doe-announces-emergency-notice-sale-crude-oil-strategic-petroleurn-

reserve- add ress- o il.

646	https://www.energy.gov/articles/doe-announces-second-emergency-notice-sale-crude-oil-strategic-petroleum-
reserve-address.

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We have also considered the possibility of quantifying the military benefits components
of energy security but have not done so here for several reasons. The literature on the military
components of energy security has described four broad categories of oil-related military and
national security costs, all of which are difficult to quantify. These include possible costs of U.S.
military programs to secure oil supplies from unstable regions of the world, the energy security
costs associated with the U.S. military's reliance on petroleum to fuel its operations, possible
national security costs associated with expanded oil revenues to "rogue states," and relatedly the
foreign policy costs of oil insecurity.

Of these categories listed above, the one that is most clearly connected to petroleum use
and is, in principle, quantifiable is the first: the cost of military programs to secure oil supplies
and stabilize oil supplying regions. There is ongoing literature on the measurement of this
component of energy security, but methodological and measurement issues—attribution and
incremental analysis—pose two significant challenges to providing a robust estimate of this
component of energy security. The attribution challenge is to determine which military programs
and expenditures can properly be attributed to oil supply protection, rather than some other
objective. The incremental analysis challenge is to estimate how much the petroleum supply
protection costs might vary if U.S. oil use were to be reduced or eliminated. Methods to address
both of these challenges are necessary for estimating the effect on military costs arising from a
modest reduction (not elimination) in oil use attributable to this proposed rule.

Since "military forces are, to a great extent, multipurpose and fungible" across theaters
and missions (Crane et al. 2009), and because the military budget is presented along regional
accounts rather than by mission, the allocation to particular missions is not always clear.647
Approaches taken usually either allocate "partial" military costs directly associated with
operations in a particular region, or allocate a share of total military costs (including some that
are indirect in the sense of supporting military activities overall) (Koplow and Martin 1998).648

The challenges of attribution and incremental analysis have led some to conclude that the
mission of oil supply protection cannot be clearly separated from others, and the military cost
component of oil security should be taken as near zero (Moore et al. 1997).649 Stern (2010), on
the other hand, argues that many of the other policy concerns in the Persian Gulf follow from oil,
and the reaction to U.S. policies taken to protect oil.650 Stern presents an estimate of military cost
for Persian Gulf force projection, addressing the challenge of cost allocation with an activity-
based cost method. He uses information on actual naval force deployments rather than budgets,
focusing on the costs of carrier deployment. As a result of this different data set and assumptions
regarding allocation, the estimated costs are much higher, roughly 4-10 times, than other
estimates. Stern also provides some insight on the analysis of incremental effects, by estimating
that Persian Gulf force projection costs are relatively strongly correlated to Persian Gulf

647	Crane, K., Goldthau, A., Toman, M., Light, T., Johnson, S., Nader, A., Rabasa, A. and Dogo, H. 2009. Imported
oil and US national security. RAND, 2009.

648	Koplow, D. and Martin, A. 1998. Fueling Global Warming: Federal Subsidies to Oil in the United States.
Greenpeace, Washington, D.C.

649	Moore, J., Behrens, C. and Blodgett, J. 1997. "Oil Imports: An Overview and Update of Economic and Security
Effects." CRS Environment and Natural Resources Policy Division report 98, no. 1: pp. 114.

650	Stern, R. 2010. "United States cost of military force projection in the Persian Gulf, 1976-2007." Energy Policy
38, no. 6. June: 2816-2825. http://1inkinghub.e1sevier.com/retrieve/pii/S0301421510000194.

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petroleum export values and volumes. Still, the issue remains of the marginality of these costs
with respect to Persian Gulf oil supply levels, the level of U.S. oil imports, or U.S. oil
consumption levels.

Delucchi and Murphy (2008) seek to deduct from the cost of Persian Gulf military
programs the costs associated with defending U.S. interests other than the objective of providing
more stable oil supply and price to the U.S. economy.651 Excluding an estimate of cost for
missions unrelated to oil, and for the protection of oil in the interest of other countries, Delucci
and Murphy estimated military costs for all U.S. domestic oil interests of between $24-74 billion
per year. Delucchi and Murphy assume that military costs from oil import reductions can be
scaled proportionally, attempting to address the incremental issue.

Crane et al. considers force reductions and cost savings that could be achieved if oil
security were no longer a consideration. Taking two approaches and guided by post-Cold War
force draw downs and by a top-down look at the current U.S. allocation of defense resources,
they concluded that $75-91 billion, or 12-15% of the current U.S. defense budget, could be
reduced.

Finally, an Issue Brief by Securing America's Future Energy (SAFE) (2018) found a
conservative estimate of approximately $81 billion per year spent by the U.S. military protecting
global oil supplies.652 This is approximately 16% of the recent U.S. Department of Defense's
budget. Spread out over the 19.8 million barrels of oil consumed daily in the U.S. in 2017, SAFE
concludes that the implicit subsidy for all petroleum consumers is approximately $11.25/bbl of
crude oil, or $0.28/gal. According to SAFE, a more comprehensive estimate suggests the costs
could be greater than $30/bbl, or over $0.70/gal.653

As in the examples above, an incremental analysis can estimate how military costs would
vary if the oil security mission were no longer needed, and many studies stop at this point. It is
substantially more difficult to estimate how military costs would vary if U.S. oil use or imports
were partially reduced, as is projected to be a consequence of this rule. Partial reduction of U.S.
oil use likely diminishes the magnitude of the energy security problem, but there is uncertainty
that supply protection forces and their costs could be scaled down in proportion, and there
remains the associated goal of protecting supply and transit for U.S. allies and other importing
countries, if they do not decrease their petroleum use as well.654 We are unaware of a robust
methodology for assessing the effect on military costs of a partial reduction in U.S. oil use.
Therefore, we are unable to quantify this effect resulting from the projected reduction in U.S. oil
use attributable to this rule.

651	Delucchi, M. and Murphy, J. 2008. "US military expenditures to protect the use of Persian Gulf oil for motor
vehicles." Energy Policy 36, no. 6. June: 2253-2264.

652	Securing America's Future Energy. 2018. Issue Brief. The Military Cost of Defending the Global Oil Supply.

653	Ibid.

654	Crane, K., Goldthau, A., Toman, M., Light, T., Johnson, S., Nader, A., Rabasa, A. and Dogo, H. 2009. Imported
oil and US national security. 2009. RAND.

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5.4 Energy Security Impacts

5.4.1 U.S. Oil Import Reductions

From 2023-2025, the AEO 2022 Reference Case projects that the U.S. will be both an
exporter and an importer of crude oil.655 The U.S. produces more light crude oil than its
refineries can refine. Thus, the U.S. exports lighter crude oil and imports heavier crude oil to
satisfy the needs of U.S. refineries, which are configured to efficiently refine heavy crude oil.
U.S. crude oil exports are projected to be stable at 3.3 MMBD from 2023-2025. U.S. crude oil
imports, meanwhile, are projected to decrease from 7.8 MMBD in 2023 to 7.2 MMBD in 2025.
AEO 2022 also projects that net U.S. exports of refined petroleum products will increase from
4.7 MMBD in 2023 to 5.0 MMBD in 2025. Given the pattern of stable net U.S. crude oil
imports, and the projected growth in the U.S.'s net oil product exports, the U.S. is projected to
grow its net crude oil and refined petroleum products exports from 0.4 MMBD in 2023 to 1.2
MMBD in 2025.

U.S. oil consumption is estimated to have decreased from 19.8 MMBD in 2019 to 17.5
MMBD in 2020 and 19.1 MMBD in 2021 as a result of social distancing and quarantines that
limited personal mobility as a result of the COVID-19 pandemic.656 U.S. oil consumption is
projected to increase in 2023 to 19.4 MMBD, continue to be 19.4 MMBD in 2024, and modestly
increase to 19.6 MMBD in 2 0 2 5.657 It is not just U.S. crude oil imports alone, but both imports
and consumption of petroleum from all sources and their role in economic activity, that exposes
the U.S. to risk from price shocks in the world oil price. In 2023-2025, the U.S. is projected to
continue to consume significant quantities of oil and to rely on significant quantities of crude oil
imports. As a result, U.S. oil markets are expected to remain tightly linked to trends in the world
crude oil market.

In Chapter 10.4.2.1, we estimate changes in U.S. petroleum consumption as a result of
this rule. For this energy security analysis, we undertake a detailed analysis of differences in U.S.
fuel consumption, crude oil imports/exports, and exports of petroleum products in 2023-2025
using the AEO 2022 Reference Case in comparison with an alternative AEO 2022 sensitivity
case, Low Economic Growth. The Low Economic Growth Case is used since oil demand
decreases in comparison to the Reference Case. We estimate that approximately 99.5% of the
change in fuel consumption resulting from this rule is likely to be reflected in reduced U.S.
imports of crude oil in 2023-2025.658 The 99.5% oil import reduction factor is calculated by
taking the ratio of the changes in U.S. net crude oil and refined petroleum product imports
divided by the change in U.S. oil consumption in the two different AEO cases considered. Thus,
on balance, each gallon of petroleum reduced as a result of this rule is anticipated to reduce total
U.S. imports of petroleum by 0.995 gallons.

655	EIA. AEO 2022. Reference Case. Table All. Petroleum and Other Liquids Supply and Disposition.

656	EIA. Monthly Energy Review. Calculated using series "Petroleum Consumption (Excluding Biofuels) Annual"
(Table 1.3) and "Petroleum Consumption Total Heat Content Annual" (Table A3).

657	EIA. AEO 2022. Reference Case. Table All. Petroleum and Other Liquids Supply and Disposition.

658	We looked at changes in U.S. crude oil imports/exports and net petroleum products in the AEO 2022 Reference
Case, Table 11. Petroleum and Other Liquids Supply and Disposition, in comparison to an alternative case, the Low
Economic Growth Case, from the AEO 2022. See the spreadsheet in the Docket, "Low vs Reference case impact on
imports 2022 AEO".

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Based on the changes in oil consumption estimated by EPA and the 99.5% oil import
reduction factor, the reductions in U.S. oil imports in 2023-2025 as a result of this rule are
estimated in Table 5.4.1-1. Included in this table are estimates of U.S. crude oil exports and
imports, net oil refined product exports, net crude oil and refined petroleum product exports, and
U.S. oil consumption for 2023-2025 based on the AEO 2022 Reference Case.659

Table 5.4.1-1: Projected Trends in U.S. Exports, Imports, and Oil Consumption Resulting
From the Candidate Volumes (MMBD)a	



2023

2024

2025

U.S. Crude Oil Exports

3.3

3.3

3.3

U.S. Crude Oil Imports

7.7

7.5

7.2

U.S. Net Oil Refined Product Exports13

4.7

4.9

5.0

U.S. Net Crude Oil and Refined Petroleum

0.4

0.7

1.2

Product Exports

U.S. Oil Consumption0

19.4

19.4

19.6

Reduction in U.S. Oil Imports from the







Candidate Volumes







Excluding 2023 Supplemental Standard
Including 2023 Supplemental Standard

0.16
0.17

0.17
0.17

0.18
0.18

a AEO 2022 Reference Case, Table All. Values have been rounded off from AEO 2022, so the totals may not add
up to the AEO estimates.

b Calculated from AEO 2022 Table All as Net Product Exports minus Ethanol, Biodiesel, and Other Biomass-
derived Liquid Net Exports.

c Calculated from AEO 2022 Table All as "Total Primary Supply" minus "Biofuels".

5.4.2 Oil Import Premiums Used for This Rule

In order to understand the energy security implications of reducing U.S. oil imports, EPA
has worked with ORNL, which has developed approaches for evaluating the social costs and
energy security implications of oil use. The energy security estimates provided below are based
upon a methodology developed in a peer-reviewed 2008 ORNL study.660 This ORNL study is an
updated version of the approach used for estimating the energy security benefits of U.S. oil
import reductions developed in a 1997 ORNL Report.661 This same approach was used to
estimate energy security benefits for the RFS2 final rule.662 ORNL has updated this methodology
periodically for EPA to account for updated projections of future energy market and economic
trends reported in the EIA's AEO.

The ORNL methodology is used to compute the oil import premium per barrel of
imported oil.663 The values of U.S. oil import premium components (macroeconomic

659	EIA. AEO 2022. Reference Case. Table All. Petroleum and Other Liquids Supply and Disposition.

660	Leiby, P. 2008. Estimating the Energy Security Benefits of Reduced U.S. Oil Imports, Final Report, ORNL/TM-
2007/028, Oak Ridge National Laboratory. March.

661	Leiby, P., Jones, D., Curlee, R. and Lee, R. 1997. Oil Imports: An Assessment of Benefits and Costs, ORNL-
6851, Oak Ridge National Laboratory, November.

662	7 5 FR 14839-42 (March 26, 2010).

663	The oil import premium concept is defined in Chapter 5.1.

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disruption/adjustment costs and monopsony components) are numerically estimated with a
compact model of the oil market by performing simulations of market outcomes using
probabilistic distributions for the occurrence of oil supply shocks, calculating marginal changes
in economic welfare with respect to changes in U.S. oil import levels in each of the simulations,
and summarizing the results from the individual simulations into a mean and 90% confidence
intervals for the import premium. The macroeconomic disruption/adjustment import cost
component is the sum of two parts: the marginal change in expected import costs during
disruption events and the marginal change in GDP due to the disruption. The monopsony
component is the long-run change in U.S. import costs as the level of oil import changes.

For this rule, we are using oil import premiums that incorporate the oil price projections
and energy market and economic trends, particularly global regional oil supplies and demands
(i.e., the U.S./OPEC/rest of the world), from AEO 2022 into its model.664 We only consider the
avoided macroeconomic disruption/adjustment oil import premiums (i.e., labeled
macroeconomic oil security premiums below) as costs, since the monopsony impacts stemming
from changes in renewable fuel volumes are considered transfer payments. In previous EPA
rules when the U.S. was projected by EIA to be a net importer of crude oil and petroleum-based
products, monopsony impacts represented reduced payments by U.S. consumers to oil producers
outside of the U.S. There was some debate among economists as to whether the U.S. exercise of
its monopsony power in oil markets (e.g., from the implementation of EPA's rules) was a
"transfer payment" or a "benefit." Given the redistributive nature of this monopsony impact from
a global perspective, and since there are no changes in resource costs when the U.S. exercises it
monopsony power, some economists argued that it is a transfer payment. Other economists
argued that monopsony impacts were a benefit since they partially address, and partially offset,
the market power of OPEC. In previous EPA rules, after weighing both countervailing
arguments, EPA concluded that the U.S.'s exercise of its monopsony power was a transfer
payment, and not a benefit.665

In the context of this rule, the U.S.'s oil trade balance is quite a bit different than in many
previous RFS rules. The U.S. is projected to be a net exporter of oil and petroleum-based
products in 2023-2025. As a result, reductions in U.S. oil consumption and, in turn, U.S. oil
imports, still lower the world oil price modestly. But the net effect of the lower world oil price is
now a decrease in revenue for U.S. exporters of crude oil and petroleum-based products, instead
of a decrease in payments to foreign oil producers. The argument that monopsony impacts
address the market power of OPEC is no longer appropriate. Thus, we continue to consider the

664	The oil market projection data used for the calculation of the oil import premiums came from AEO 2022,
supplemented by the latest EIA international projections from the Annual Energy Outlook (AEO)/International
Energy Outlook (IEO) 2021. Global oil prices and all variables describing U.S. supply and disposition of petroleum
liquids (domestic supply, tight oil supply fraction, imports, demands) as well as U.S. non-petroleum liquids supply
and demand are from AEO 2022. Global and OECD Europe supply/demand projections as well as OPEC oil
production share are from IEO 2021. The need to combine AEO 2022 and IEO 2021 data arises due to two reasons:
(a) EIA stopped including Table 21 "International Petroleum and Other Liquids Supply, Disposition, and Prices" in
the U.S.-focused Annual Energy Outlook after 2019, (b) EIA does not publish complete updates of the IEO every
year.

665	We also discuss monopsony oil import premiums in previous EPA GHG vehicle rules. See, e.g., Section 3.2.5,
Oil Security Premiums Used for this Rule, RIA, Revised 2023 and Later Model Year Light Duty Vehicle GHG
Emissions Standards, December 2021, EPA-420-F-21-077.

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U.S. exercise of monopsony power to be transfer payments. We also do not consider the effect of
this rule on the costs associated with existing energy security policies (e.g., maintaining the SPR
or strategic military deployments), which are discussed in Chapter 5.3.

The macroeconomic oil security premiums arise from the effect of U.S. oil imports on the
expected cost of supply disruptions and accompanying price increases. A sudden increase in oil
prices triggered by a disruption in world oil supplies has two main effects: (1) it increases the
costs of oil imports in the short-run, and (2) it can lead to macroeconomic contraction,
dislocation, and GDP losses. Since future disruptions in foreign oil supplies are an uncertain
prospect, each of the disruption cost components must be weighted by the probability that the
supply of petroleum to the U.S. will actually be disrupted. Thus, the "expected value" of these
costs—the product of the probability that a supply disruption will occur and the sum of costs
from reduced economic output and the economy's abrupt adjustment to sharply higher petroleum
prices—is the relevant measure of their magnitude.

In addition, EPA and ORNL have worked together to revise the oil import premiums
based upon recent energy security literature. Based on EPA and ORNL's review of the recent
energy security literature, EPA is updating its macroeconomic oil security premiums for this
rule. The recent economics literature (discussed in Chapter 5.2) focuses on three factors that can
influence the macroeconomic oil security premiums: price elasticity of oil demand, GDP
elasticity in response to oil price shocks, and the impacts of the shale oil boom. We discuss each
factor below and provide a rationale for how we are updating the first two factors to develop new
estimates of the macroeconomic oil security premiums. We are not accounting for how U.S. tight
oil is influencing the macroeconomic oil security premiums in this rule, other than how it
significantly reduces the need for net U.S. oil imports.

First, we assess the price elasticity of demand for oil. In RFS rules prior to the 2020-2022
annual rule, EPA used a short-run elasticity of demand for oil of -0.04 5.666 From the recent RFF
study, the "blended" price elasticity of demand for oil is -0.05. The ORNL meta-analysis
estimate of this parameter is -0.07. We find the elasticity estimates from what RFF characterizes
as the "new literature," -0.175, and from the "new models" that RFF uses, -0.20 to -0.33,
somewhat high. Most of the world's oil demand is concentrated in the transportation sector and
there are limited alternatives to oil use in this sector. According to IEA, the share of global oil
consumption attributed to the transportation sector grew from 60% in 2000 to 66% in 2019.667
The next largest sector by oil consumption, and an area of recent growth, is petrochemicals.

There are limited alternatives to oil use in this sector, particularly in the 2023-2025 time frame.
Thus, we believe it would be surprising if short-run oil demand responsiveness has changed in a
dramatic fashion.

The ORNL meta-analysis estimate encompasses the full range of the economics literature
on this topic and develops a meta-analysis estimate from the results of many different studies in a
structured way, while the RFF study's "new models" results represent only a small subset of the
economics literature's estimates. Thus, for the analysis of this rule, and consistent with the 2020-

666	See, e.g., 75 FR 26049 (May 10, 2010).

667	IEA, Data and Statistics, https://www.lea.org/data-and-
statistics?countrv=WORLD&fuel=Oil&indicator=OilProductsConsBvSector.

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2022 annual rule, we are increasing the short-run price elasticity of demand for oil from -0.045
to -0.07, a 56% increase.668 This increase has the effect of lowering the macroeconomic oil
security premium estimates undertaken by ORNL for EPA.

Second, we consider the elasticity of GDP to an oil price shock. In RFS rules prior to the
2020-2022 annual rule, a GDP elasticity to an oil shock of -0.032 was used.669 The RFF
"blended" GDP elasticity is -0.028, the RFF's "new literature" GDP elasticity is -0.018, while
the RFF "new models" GDP elasticities range from -0.007 to -0.027. The ORNL meta-analysis
GDP elasticity is -0.021. We believe that the ORNL meta-analysis value is representative of the
recent literature on this topic since it considers a wider range of recent studies and does so in a
structured way. Also, the ORNL meta-analysis estimate is within the range of GDP elasticities of
RFF's "blended" and "new literature" elasticities. For this rule and consistent with the 2020-
2022 annual rule, EPA is using a GDP elasticity of -0.021, a 34% reduction from the GDP
elasticity used previously (i.e., the -0.032 value).670 This GDP elasticity is within the range of
RFF's "new literature" elasticity, -0.018, and the elasticity EPA has used in previous rules, -
0.032, but lower than RFF's "blended" GDP elasticity, -0.028. This decrease has the effect of
lowering the macroeconomic oil security premium estimates. For U.S. tight oil, EPA has not
made any adjustments to the ORNL model, given the limited tight oil production response to
rising world oil prices in 2020 and 2021.671 Increased tight oil production still results in energy
security benefits though, through its impact of reducing U.S. oil imports in the ORNL model.

Table 5.4.2-1 provides EPA's estimates of the macroeconomic oil security premium for
2023-2025, showing that it is relatively steady over this time period.

Table 5.4.2-1: Estimated Macroeconomic I



Avoided Macroeconomic

Year

Disruption/Adjustment Costs
(Range)

2023

$3.37
($0.88 - $6.20)

2024

$3.46
($0.89 - $6.36)

2025

$3.46
($0.83-$6.40)

3il Security Premiums (2021$/bbl)a

aTop values in each cell are mean values. Values in parentheses are 90% confidence intervals.

We note that the quantified energy security benefits of this rule, while significant, are
dwarfed by the quantified costs discussed in Chapter 10, which are more than an order of
magnitude greater. Even if we were to use the lowest or highest end of the range for oil security
premiums in Table 5.4.2-1, that would continue to be the case: significant quantified energy

668	EPA and ORNL worked together to develop an updated estimate of the short-run elasticity of demand for oil for
use in the ORNL model.

669	See, e.g., 75 FR 26049 (May 10, 2010).

670	EPA and ORNL worked together to develop an updated estimate of the GDP elasticity to an oil shock for use in
the ORNL model. This slightly different value also was produced by an earlier draft of the ORNL meta-analysis.

671	The short-run oil supply elasticity assumed in the ORNL model is 0.06 and is applied to production from both
conventional and shale oil wells.

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security benefits are far smaller than the quantified costs. In all cases, we would reach the same
conclusions as we factor in quantified benefits and costs with regard to the candidate volumes in
this rule.

5.4.3 Energy Security Benefits

Estimates of the total annual energy security benefits of the candidate volumes are based
on the ORNL oil import premium methodology with updated oil import premium estimates
reflecting the recent energy security literature and using AEO 2022. Annual per-gallon benefits
are applied to the reductions in U.S. crude oil and refined petroleum product imports shown in
Table 5.4.3-1. We do not consider military cost impacts or the monopsony effect of U.S. crude
oil and refined petroleum product import changes. The energy security benefits are presented in
Table 5.4.3-1.

Table 5.4.3-1: Annual Energy Security Benefits of the Candidate Volumes



Net Crude Import





Reductions3

Benefits

Year

(millions of gallons)

(millions of 2021$)

2023





Excluding Supplemental Standard

2,494

$200.1

Including Supplemental Standard

2,663

$211.2

2024

2,663

$219.4

2025

2,705

$222.8

a Oil import reductions used for the energy security analysis in this chapter are a combination of reduced U.S.
imports of gasoline, diesel fuel, and crude oil from Tables 10.4.2.1-3 and 4 converted to crude oil-equivalent
gallons.

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Chapter 6: Rate of Production and Consumption of Renewable Fuel

This chapter discusses the expected annual rate of future commercial production of
renewable fuels, including advanced biofuels in each category (cellulosic biofuel and biomass-
based diesel). For 2023-2025, we project production based on historic data and other relevant
factors. We consider both domestically produced biofuels as well as foreign produced biofuels
that are imported into and available for use in the U.S.672

We also project the use (i.e., consumption) of qualifying renewable fuels in the United
States. While not an explicit factor that we must consider under the statute, consumption is
inherent in the requisite consideration of infrastructure which is addressed in Chapter 7, and in
the cost to consumers of transportation fuel which is addressed in Chapter 10. For 2023-2025,
the projection of consumption is based on our assessment of production, exports and imports,
infrastructure constraints on distributing and using biofuels, costs, and other factors explained
below and throughout this DRIA. Sometimes, we term this overall resulting use of biofuels as
the "supply" of biofuels. In general, we expect that all cellulosic biofuels produced in the U.S.
will be used here as they have been historically. By contrast, some quantities of domestically
produced advanced and conventional renewable fuels have historically been exported, and we
expect exports of such fuels to continue through 2025.

We discuss the production and use of each major type of biofuel in turn: cellulosic
biofuel (Chapter 6.1), biomass-based diesel (biodiesel and renewable diesel) (Chapter 6.2),
sugarcane ethanol (Chapter 6.3), other advanced biofuels (besides ethanol, biodiesel, and
renewable diesel) (Chapter 6.4), total ethanol (Chapter 6.5), corn ethanol (Chapter 6.6), and
conventional biodiesel and renewable diesel (Chapter 6.7).

6.1 Cellulosic Biofuel

In the past several years, production of cellulosic biofuel has continued to increase.
Cellulosic biofuel production reached record levels in 2021, driven by CNG and LNG derived
from biogas.673 The projected volumes of cellulosic biofuel production in 2022 is even higher
than the volume produced in 2021. Production of liquid cellulosic biofuel has remained limited
in recent years (see Figure 6.1-1). This section describes our assessment of the rate of production
of qualifying cellulosic biofuel in 2023-2025 and some of the uncertainties associated with the
projected volume for these years. Significantly, in this rule we are proposing regulations that
would allow for the generation of cellulosic biofuel RINs from electricity used as transportation
fuel (eRINs) beginning in 2024. This section therefore includes a projection of eRIN generation
for 2024 and 2025. These assessments address our obligation to analyze the rate of production of
renewable fuel in these years under our reset authority, CAA section 211 (o) (2) (B) (ii) (III).

672	This is what we generally mean when we use the term biofuel "production" in this chapter and do not specify
whether we are discussing domestic production or imports.

673	The majority of the cellulosic RINs generated for CNG/LNG are sourced from biogas from landfills; however,
the biogas may come from a variety of sources including municipal wastewater treatment facility digesters,
agricultural digesters, separated municipal solid waste (MSW) digesters, and the cellulosic components of biomass
processed in other waste digesters.

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Figure 6.1-1: Cellulosic RINs Generated (2013-2022)

700

2013 2014 2015 2016 2017 201S 2019 2020 2021 2022

(Proj.J

¦ CNG/LNG Derived from Biogas ¦ Liquid Cellulosic Biofuel

To project the volume of cellulosic biofuel production in 2023-2025, we considered
numerous factors, including the accuracy of the methodologies used to project cellulosic biofuel
production in previous years, data reported to EPA through EMTS, available cellulosic
feedstocks, projected use of CNG, 1 AG. and electricity as transportation fuel, and information
we collected through meetings with representatives of facilities that have produced qualifying
volumes of cellulosic biofuel in recent years or have the potential to produce qualifying volumes
of cellulosic biofuel by 2025.

To project potential production volumes of liquid cellulosic biofuel for 2023-2025 we
used the same general methodology as the methodology used in the 2018-2022 RFS annual
rules. We have adjusted the percentile values used to select a point estimate within a projected
production range for each group of companies based on updated information (through 2021) with
the objective of improving the accuracy of the projections. To project the production of
cellulosic biofuel RINs for CNG/LNG derived from biogas, we used the same general year-over-
year growth rate methodology as in the 2018-2022 final rules, with updated RIN generation data
through December 2021. This methodology reflects the mature status of this industry, the large
number of facilities registered to generate cellulosic biofuel RINs from these fuels, and EPA's
continued attempts to refine its methodology to yield estimates that are as accurate as possible.
This proposal also contains a newly developed methodology to project the production of eRINs
for 2024-2025.

The balance of this section is organized as follows: Chapter 6.1.1 discusses our current
cellulosic biofuel industry assessment, including a review of the accuracy of EPA's projections
in prior years and the companies EPA assessed in the process of projecting qualifying cellulosic
biofuel production in the U.S. Chapters 6.1.2 through 6.1.4 discuss the methodologies used by
EPA to project cellulosic biofuel production for liquid cellulosic biofuels, CNG/LNG derived
from biogas, and eRINs in 2023-2025. Chapter 6.1.5 summarizes the projected rate of
production and import of cellulosic biofuel volume for 2023-2025.

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6.1.1 Cellulosic Biofuel Industry Assessment

In this section, we first explain our general approach to assessing facilities or groups of
facilities (which we collectively refer to as "facilities") that we believe are likely to generate
qualifying RINs for cellulosic biofuel in 2023-2025. We then review the accuracy of EPA's
projections in prior years. Next, we discuss the criteria used to determine whether to include
potential domestic and foreign sources of cellulosic biofuel in our projection. Finally, we provide
a summary table of all facilities that we expect to produce cellulosic biofuel by the end of 2025.

To project the rate of cellulosic biofuel production for 2023-2025, we have tracked the
progress of a number of potential cellulosic biofuel production facilities, located both in the U.S.
and in foreign countries. We considered a number of factors, including information from EMTS,
the registration status of potential biofuel production facilities as cellulosic biofuel producers in
the RFS program, publicly available information (including press releases and news reports),
information provided by representatives of potential cellulosic biofuel producers, and the
comments received on the proposed rule. As discussed in greater detail in Chapter 6.1.2 through
6.1.4, our projection of liquid cellulosic biofuel is based on a facility-by-facility assessment of
each of the likely sources of cellulosic biofuel in 2023-2025, while our projections of CNG/LNG
derived from biogas and eRINs are based on an industry-wide assessment. To make a
determination of which facilities are most likely to produce liquid cellulosic biofuel and generate
cellulosic biofuel RINs by the end of 2025, each potential producer of liquid cellulosic biofuel
was investigated further to determine the current status of its facilities and its likely cellulosic
biofuel production and RIN generation volumes. Both in our discussions with representatives of
individual companies and as part of our internal evaluation process, we gathered and analyzed
information including, but not limited to, the funding status of these facilities, current status of
the production technologies, anticipated construction and production ramp-up periods, facility
registration status, and annual fuel production and RIN generation targets.

6.1.1.1 Review of EPA's Projection of Cellulosic Biofuel in Previous Years

As an initial matter, it is useful to review the accuracy of EPA's past cellulosic biofuel
projections. The record of actual cellulosic biofuel production, including both cellulosic biofuel
(which generate D3 RINs) and cellulosic diesel (which generate D7 RINs), and EPA's projected
production volumes from 20 1 5-202 1 674 are shown in Table 6.1.1.1-1. These data indicate that
EPA's projection was lower than the actual number of cellulosic RINs made available in 2015
and 20 1 8675 and higher than the actual number of RINs made available in 2016, 2017, 2019, and
20 20.676 The fact that the projections made using this methodology have been somewhat
inaccurate, under-estimating the actual number of RINs made available in some years and over-
estimating in other years, reflects the inherent difficulty with projecting cellulosic biofuel
production. It also emphasizes the importance of continuing to consider refinements to our
projection methodology in order to make our projections more accurate.

674	2 0 21 is the last year for which complete data is available at the time of this proposed rule.

675	EPA only projected cellulosic biofuel production for the final three months of 2015, since data on the availability
of cellulosic biofuel RINs (D3+D7) for the first nine months of the year were available at the time the analyses were
completed for the final rule.

676	2 0 21 values were set at the actuals after the fact, see 87 FR 39600 (July 1, 2022).

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Table 6.1.1.1-1: Projected and Actual Cellulosic Biofuel Production (2015-2021) (million
gallons) 		

Year

Projected Volume3

Actua

Production Volumeb

Liquid
Cellulosic
Biofuel

CNG/LNG

Derived
from Biogas

Total
Cellulosic
Biofuel0

Liquid
Cellulosic
Biofuel

CNG/LNG

Derived
from Biogas

Total
Cellulosic
Biofuel0

2015d

2

33

35

0.5

52.8

53.3

2016

23

207

230

4.1

186.2

190.3

2017

13

298

311

11.7

239.4

251.1

2018

14

274

288

10.6

303.9

314.5

2019

20

399

418

11.1

402.8

413.9

2020

16

577

593

2.1

502.5

504.6

2021

N/A

N/A

N/A

0.7

561.8

562.5

a Projected volumes for 2015 and 2016 can be found in the 2014-2016 Final Rule (80 FR 77506, 77508, December
14, 2015); projected volumes for 2017 can be found in the 2017 Final Rule (81 FR 89760, December 12, 2016);
projected volumes for 2018 can be found in the 2018 Final Rule (82 FR 58503, December 12, 2017); projected
volumes for 2019 can be found in the 2019 Final Rule (83 FR 63704, December 11, 2018); projected volumes for
2020 can be found in the 2020 Final Rule (85 FR 7016, February 6, 2020).

b Actual production volumes are the total number of RINs generated minus the number of RINs retired for reasons
other than compliance with the annual standards, based on EMTS data.

c Total cellulosic biofuel may not be precisely equal to the sum of liquid cellulosic biofuel and CNG/LNG derived
from biogas due to rounding.

d Projected and actual volumes for 2015 represent only the final 3 months of 2015 (October-December) as EPA
used actual RIN generation data for the first 9 months of the year.

EPA's projections of liquid cellulosic biofuel were higher than the actual volume of
liquid cellulosic biofuel produced each year from 2015 to 2020. In an effort to take into account
the most recent data available and make the liquid cellulosic biofuel projections more accurate,
EPA adjusted our methodology in the 2018 final rule following the over-projections in 2015-
2016 (and anticipated over-projection in 20 1 7).677 Despite these adjustments, EPA continued to
over-project the volume of liquid cellulosic biofuel in each year from 2018 through 2020. 2020,
however, was a challenging year for the entire industry due to the impacts of COVID-19, which
was an unforeseen event that EPA could not have accounted for in projecting the volume. Given
this and the fact the liquid cellulosic biofuel volume is a small fraction of the total cellulosic
biofuel volume, we are again applying the same general approach we first used in the 2018 final
rule: using percentile values based on actual production in previous years, relative to the
projected volume of liquid cellulosic biofuel in these years. We believe that the use of the
methodology (described in more detail in Chapter 6.1.2), results in a projection that reflects a
neutral aim at accuracy since it accounts for expected growth in the near future by using
historical data.

We next turn to the projection of CNG/LNG derived from biogas. For 2018 - 2022, EPA
used an industry-wide approach, rather than an approach that projects volumes for individual
companies or facilities, to project the production of CNG/LNG derived from biogas. EPA used a
facility-by-facility approach to project the production of CNG/LNG derived from biogas from

677 8 2 FR 58486 (December 12, 2017).

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2015-2017. Notably the facility-by-facility methodology resulted in significant over-estimates of
CNG/LNG production in 2016 and 2017, leading EPA to develop the alternative industry wide
projection methodology first used in 2018. This updated approach reflects the fact that this
industry is far more mature than the liquid cellulosic biofuel industry, with a far greater number
of potential producers of CNG/LNG derived from biogas. In such cases, industry-wide projection
methods can be more accurate than a facility-by-facility approach, especially as macro market
and economic factors become more influential on total production than the success or challenges
at any single facility. The industry-wide projection methodology slightly under-projected the
production of CNG/LNG derived from biogas in 2018 and 2019 but over-projected the
production of these fuels in 2020. The accuracy of the 2020 projection, however, may have been
influenced by the unforeseen and significant impacts of COVID-19.

As further described in Chapter 6.1.3, EPA is again projecting production of CNG/LNG
derived from biogas using the industry-wide approach in this final rule. We calculate a year-
over-year rate of growth in the renewable CNG/LNG industry and apply this year-over-year
growth rate to the total number of cellulosic RINs generated and available to be used for
compliance with the annual standards in 2021 to estimate the production of CNG/LNG derived
from biogas in 2023-2025.678 In comments on the 2020-2022 RFS rule, some parties claimed
that the production of CNG/LNG derived from biogas was negatively impacted by the COVID-
19 pandemic in 2020 and 2021, and that using a growth rate based on data from these years
underestimates the potential production of this fuel in future years. During this time period the
production of CNG/LNG continued to grow, but at lower rate of growth than in previous years.
At this time, we do not have sufficient information to determine whether the lower growth rate
observed from data in the last 24 months is the result of the COVID-19 pandemic or the
maturation of the market for CNG/LNG derived from biogas. We will continue to monitor the
rate of growth of these fuels in future years, and may consider using RIN generation data from a
longer time period and/or other types of data in addition to RIN generation data to calculate a
rate of growth to project the production of CNG/LNG derived from biogas in future years.

We applied the growth rate to the number of available 2021 RINs generated for
CNG/LNG derived from biogas as data from this year allows us to adequately account for not
only RIN generation, but also for RINs retired for reasons other than compliance with the annual
standards. While more recent RIN generation data is available, the retirement of RINs for
reasons other than compliance with the annual standards generally lags RIN generation.

The production volumes of cellulosic biofuel in previous years also highlight that the
production of CNG/LNG derived from biogas has been significantly higher than the production
of liquid cellulosic biofuel. This is likely the result of a combination of factors, including the
mature state of the technology used to produce CNG/LNG derived from biogas relative to the
technologies used to produce liquid cellulosic biofuel, the relatively low production cost of
CNG/LNG derived from biogas (see Chapter 9), and the comparatively high value of the

678 To project the volume of CNG/LNG derived from biogas in 2023 - 2025, we multiply (1) the number of 2021
RINs generated for these fuels and available to be used for compliance with the annual standards by (2) the
calculated growth rate to project production of these fuels in 2022. We then multiply the projected volume of
CNG/LNG derived from biogas for 2022 by the growth rate again to project the volume of these fuels for 2023, and
repeat this process for 2024 and 2025.

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cellulosic RIN. These factors are unlikely to change in 2023-2025. While we project production
volumes of liquid cellulosic biofuel, CNG/LNG derived from biogas, and eRINs separately,
ultimately it is overall accuracy of the combined cellulosic biofuel volume projection that is
relevant to obligated parties.

6.1.1.2 Potential Domestic Producers

There are several companies and facilities located in the U.S. that have either already
begun producing cellulosic biofuel for use as transportation fuel, heating oil, or jet fuel at a
commercial scale,679 or are anticipated to be in a position to do so in 2023-2025. The RFS
program provides a strong financial incentive for domestic cellulosic biofuel producers to sell
any fuel they produce for domestic consumption.680 To date nearly all cellulosic biofuel
produced in the U.S. has been used domestically. This, along with the significant incentives
provided by the high cellulosic RIN prices, gives us a high degree of confidence that cellulosic
biofuel RINs will be generated for all cellulosic biofuel produced by such domestic commercial
scale facilities. To generate RINs, each of these facilities must be registered with EPA under the
RFS program and comply with all the regulatory requirements. This includes using an approved
RIN-generating pathway and verifying that their feedstocks meet the definition of renewable
biomass. Most of the domestic companies and facilities considered in our assessment of potential
cellulosic biofuel producers through 2023-2025 have already successfully completed facility
registration, and have successfully generated RINs.681 The remainder of this section presents a
brief description of each of the domestic companies (or group of companies for cellulosic
CNG/LNG producers, new producers of ethanol from corn kernel fiber, and renewable
electricity) that EPA considered and/or believes may produce commercial-scale volumes of RIN
generating cellulosic biofuel by the end of 2025. General information on each of these
companies or group of companies considered in our projection of the potentially available
volume of cellulosic biofuel in 2023-2025 is summarized in Table 6.1.1.4-1. We intend to
update this list of potential cellulosic biofuel producers considered in our projection of cellulosic
biofuel production using the most recent data available in the final rule.

Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG) Producers

In July 2014 EPA approved, as part of the "Pathways II" rule,682 a new cellulosic biofuel
pathway for CNG and LNG derived from biogas produced at landfills, separated MSW digesters,
municipal wastewater treatment facilities, agricultural digesters, and from the cellulosic
components of biomass processed in other waste digesters. The production potential for this type

679	For a further discussion of EPA's decision to focus on commercial scale facilities, rather than research and
development and pilot scale facilities, see the 2019 proposed rule (83 FR 32031, July 10, 2018).

680	According to data from EMTS, the average price for a 2021 cellulosic biofuel RINs sold in 2021 was $2.75.
Alternatively, obligated parties can satisfy their cellulosic biofuel obligations by purchasing an advanced (or
biomass-based diesel) RIN and a cellulosic waiver credit. The average price for a 2021 advanced biofuel RINs sold
in 2021 was $1.61 while the price for a 2021 cellulosic waiver credit is $2.23 (EPA-420-B-22-033).

681	Most of the facilities listed in Table 5.1.1.4-1 are registered to produce cellulosic (D3 or D7) RINs with the
exception of several of the producers of CNG/LNG derived from biogas and Red Rock Biofuels. EPA is unaware of
any outstanding issues that would reasonably be expected to prevent these facilities from registering as cellulosic
biofuel producers and producing qualifying cellulosic biofuel in 2023-2025.

682	7 9 FR 42128, July 18, 2014.

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of cellulosic biofuel is large and has increased at a rapid pace since 2014 due to the fact that
many U.S.-based entities currently capture or produce biogas. This means that in many cases
both historically and in some cases in future years the construction of new facilities capable of
capturing and/or producing biogas will not be required for facilities to begin generating
cellulosic biofuel (D3) RINs. In many cases, however, new equipment is necessary to upgrade
the biogas that is currently captured or produced to meet pipeline specifications, to compress the
gas for injection into a pipeline, and to build a stub line to connect to the natural gas pipeline
system. Given the required investment associated with these steps, we anticipate that many
facilities in the future may instead opt to generate renewable electricity from the biogas instead.

Corn Kernel Fiber to Ethanol Technologies

EPA is aware of several companies that have developed or are developing technologies to
enable existing corn ethanol plants to convert the cellulosic components present in the corn
kernel to ethanol. These technologies generally seek to use some combination of pre treatment
and enzymatic hydrolysis to convert the cellulose and hemicellulose present in the corn kernel to
simple sugars, and to then ferment these sugars to produce ethanol. Some of these technologies
are designed to convert the cellulosic components of the corn kernel to sugars and eventually to
ethanol simultaneously with the conversion of the corn kernel starch to ethanol. Other
technologies first convert the starch to ethanol and then separately convert the cellulosic
components remaining in the wet cake co-product of the corn starch ethanol process to sugars
and eventually to ethanol. EPA regulations currently contain a pathway (Pathway K in Table 1 to
40 CFR 80.1426(f)) that would allow ethanol produced in either manner to qualify for cellulosic
biofuel RINs, if all other regulatory requirements are satisfied.

A significant issue that must be resolved to register a facility to generate cellulosic
biofuel RINs for ethanol when both corn starch and corn kernel fiber are processed together is
the accurate quantification of the volume of ethanol produced from cellulosic feedstocks rather
than non-cellulosic feedstocks such as starch. In September 2022 EPA published updated
guidance on how to demonstrate that an analytical method for determining the cellulosic
converted fraction of corn kernel fiber co-processed with starch at a traditional ethanol facility.
Prior to publishing this guidance EPA registered a small number of facilities to generate
cellulosic RINs for ethanol produced from corn kernel fiber. These facilities are eligible to
generate cellulosic RINs for ethanol produced from CKF, provided they meet the requirements
of their registration. At this point it is unclear how many additional facilities will address the
technical issues necessary to produce ethanol from CKF by 2025.

Renewable Electricity Producers

With the regulatory provisions proposed for eRINs, it is expected that renewable
electricity produced from biogas will begin to be produced under the RFS program beginning in
2024. There are a large number of existing biogas to electricity producers that have been
operating for a number of years primarily at landfills and wastewater treatment plants, but also
increasingly in recent years at large animal feedlots with installed manure digesters. The quantity
of existing biogas to electricity production from such facilities already exceeds the projected use
of the light-duty vehicle fleet in 2024 and 2025. For 2024 and 2025 the potential renewable

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electricity volume under the program will therefore be limited not by the generation of electricity
from these facilities, but rather by the potential consumption in the light-duty vehicle fleet. While
we anticipate that the existing generation facilities will register under the RFS program we do
not anticipate the need for additional facilities to be constructed and registered under the program
until after 2025.

Fulcrum BioEnergy

Fulcrum BioEnergy has developed a technology to convert separated MSW into a
synthetic crude oil using a gasification and Fischer-Tropsch process.683 Fulcrum intends to
transport this synthetic crude oil, which EPA would consider to be a biointermediate, to an
existing petroleum refinery where it would be further processed into transportation fuel. Fulcrum
is currently constructing a facility designed to produce 11 million gallons of synthetic crude oil
in Storey County, Nevada. Construction of this facility started in May 2018.684 In May 2022
Fulcrum announced that this facility had begun producing syngas from a prepared waste
feedstock, and that their focus was now on producing liquid fuels from the syngas.685

6.1.1.3 Potential Foreign Sources of Cellulosic Biofuel

EPA's projection of cellulosic biofuel production through 2025 also considered cellulosic
biofuel that could be imported into the U.S.—specifically from all currently registered foreign
facilities under the RFS program. Currently, there are several foreign cellulosic biofuel
companies registered with EPA and with the potential to generate RINs for qualifying cellulosic
biofuel in 2025. These include facilities owned and operated by Enerkem, GranBio, and Raizen.
All of these facilities use fuel production pathways that have been approved by EPA for
cellulosic RIN generation provided eligible sources of renewable feedstock are used, the fuel is
used as transportation fuel in the U.S., and other regulatory requirements are satisfied. Given
this, we consider imports from these companies as potential sources of cellulosic biofuel.
Nonetheless, we also note that demand for the cellulosic biofuels they produce is expected to be
high in their own local markets.

By contrast, we believe that cellulosic biofuel imports from foreign facilities not
currently registered to generate cellulosic biofuel RINs are generally highly unlikely through
2025. This is due to the strong demand for cellulosic biofuel in local markets (often driven by
mandates or incentive programs in other countries, such as Canada's recently finalized Clean
Fuels Regulations686) and the time necessary for potential foreign cellulosic biofuel producers to
register under the RFS program and arrange for the importation of cellulosic biofuel to the U.S.
For purposes of our 2023-2025 projection of the rate of production of cellulosic biofuel we have
excluded potential volumes from foreign cellulosic biofuel production facilities that are not
currently registered under the RFS program.

683	Unless otherwise noted, all information in this paragraph from Fulcrum BioEnergy website: Sierra Biofuels
Plant: https://fulcruni-bioenergy.coni/facilities

684	Fulcrum BioEnergy Completes Construction of the Sierra Biofuels Plant: https://fu1crum-bioenergy.com/wp-
content/uploads/2021/07/2021-07-06-Sierra-Construction-Completion-Press-Release-FINAL.pdf

685	Fulcrum BioEnergy Successfully Starts Operations of its Sierra BioFuels Plant. News Release. May 24, 2022.

686	Tuttle, Robert. Canada Releases California-Style Fuel Rules to Cut Emissions. Bloomberg, June 29, 2022.

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Cellulosic biofuel produced at two foreign facilities (GranBio's and Raizen's Brazilian
facilities) have generated cellulosic biofuel RINs for fuel exported to the U.S. in previous years.
Another foreign facility (Enerkem's Canadian facility) has completed the registration process as
a cellulosic biofuel producer. Each of these facilities is described briefly below. However, based
on data available through EMTS no foreign facilities have generated cellulosic (D3) RINs for
imported liquid cellulosic biofuel since March 2019. Therefore, while we have considered these
facilities as potential sources of cellulosic biofuel we are not projecting any imports of cellulosic
biofuel through 2025. All of the potential cellulosic biofuel producers through 2025 are listed in
Table 6.1.1.4-1.

Enerkem

Enerkem has developed a commercial-scale technology capable of converting non-
recyclable waste to a variety of renewable chemicals and fuels, including both methanol and
ethanol.687 After feedstock preparation, Enerkem's feedstocks are gasified to produce a synthetic
gas (or syngas). Enerkem next purifies the syngas and processes it through a catalytic reactor to
convert the syngas into the desired products. Enerkem has developed their proprietary
technology over a period of 10 years before deploying it at commercial scale in Edmonton,
Canada.688 Enerkem's facility in Edmonton is designed to produce up to 13 million gallons of
cellulosic ethanol per year.689 This facility began production of methanol in 2015, with
production switching from methanol to ethanol in 2017.

Ensyn

Ensyn has developed a technology known as Rapid Thermal Processing (RTP) that
involves the non-catalytic thermal conversion of carbon-based solid feedstocks to liquid
products. This technology is currently being used to produce specialty chemicals and heating
fuels. The renewable fuel oil (RFO) produced using Ensysn's technology can be used for heating
and cooling applications, and Ensyn is currently exploring opportunities to sell biocrude to
petroleum refiners for co-processing with petroleum feedstocks. Ensyn is currently developing
projects in Canada,690 Brazil,691 and the United States692 with the intention of selling heating oil
and/or biocrude into the U.S. market.

GranBio

GranBio uses a hydro-thermal pretreatment and enzymatic hydrolysis process to convert
cellulosic biomass into ethanol.693 Construction of their first cellulosic ethanol production

687	"Technology," Enerkem Website. Accessed 5/15/2018. https://enerkem.com/about-us/technology/

688	Ibid

689	"Enerkem Alberta Biofuels," Enerkem Website. Accessed 5/15/2018. https://enerkem.com/facilities/enerkem-
alberta-biofuels/

690	"Cote Nord," Ensyn Website. Accessed 7/11/22. Available at: http://www.ensyn.coni/quebec.html.

691	"Aracruz Project," Ensyn Website. Accessed 7/11/22. Available at: http://www.ensyn.com/brazil.html.

692	"Georgia Project,: Ensyn Website. Accessed 7/11/22. Available at: http://www.ensyn.com/georgia.html.

693	"Who We Are," GranBio Website. Accessed May 15, 2018. http://www.granbio.com.br/en/conteudos/who-we-
are/

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facility was announced in mid-2012, and financing was completed in May 2013.694 In September
2014, GranBio announced that its first cellulosic ethanol facility became operational.695 The
facility uses sugarcane straw or bagasse as a feedstock and produces both ethanol and electricity,
depending on market conditions. The facility is located in Sao Miguel dos Campos, Alagoas,
Brazil and originally had a production capacity of approximately 21.5 million gallons (82 million
liters) of ethanol per year.696 Since 2016, GranBio has been implementing several equipment and
technology modifications at the plant, which will result in a production capacity of
approximately 15.8 million gallons (60 million liters) of ethanol per year.

Raizen

Raizen, a joint venture between Shell and Cosan, uses a technology developed by Iogen
Energy to convert sugarcane bagasse into ethanol. Raizen has constructed a facility co-located
with a first generation ethanol production facility in Piracicaba/SP Brazil designed to be capable
of producing approximately 10.5 million gallons of ethanol a year from biomass residues from
first generation sugarcane ethanol production.697 Construction of this facility began in November
2013, and the first phase, allowing for the conversion of C6 sugars into ethanol, was completed
in July 20 1 5.698 Further construction allowing for the conversion of both C5 and C6 sugars into
ethanol was completed in May 2016. Raizen began exporting cellulosic ethanol produced at this
facility to the United States in 2017, and has exported a total of 32 million liters of cellulosic
ethanol to the U.S. through the end of 2019.

6.1.1.4 Summary of Potential Sources of Cellulosic Biofuel in 2023-2025

General information on each of the cellulosic biofuel producers (or group of producers,
for producers of CNG/LNG derived from biogas, renewable electricity producers, and producers
ethanol from CKF) that factored into our projection of cellulosic biofuel production through
2025 is shown in Table 6.1.1.4-1. This table includes both facilities that have already generated
cellulosic RINs, as well as those that have not yet generated cellulosic RINs, but may do so by
the end of 2025. Since we are proposing regulations that would allow for the production of
qualifying cellulosic biofuel from eRINs, we have considered facilities intending to produce
cellulosic biofuel from eRINs in this table, and in our projections of liquid cellulosic biofuel
production for 2024 and 2025. Note that while we believe all these facilities have the potential to
produce or import cellulosic biofuel by the end of 2025, our projections of cellulosic biofuel
production do not include volumes from all of the listed facilities in all years, as we believe the
most likely volume of cellulosic biofuel produced or imported from some of these facilities is
zero.

694	Schill, Susanne R. "Financing Complete on Brazil's first commercial 2G Ethanol Plant," Ethanol Producer
Magazine. May 17, 2013.

695	"Who We Are," GranBio Website. Accessed May 15, 2018. http://www.granbio.com.br/en/conteudos/who-we-
are/

696	Ibid

697	"A track record of innovation." Iogen website. Accessed May 1, 2018.

698	Ibid

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Table 6.1.1.4-

Potential Producers of Cellulosic Biofuel for U.S. Consumption in 2023-2025

Company
Name

Location

Feedstock

Fuel

Facility
Capacity (Million
Gallons per

Year)699

Construction
Start Date

First
Production700

CNG/LNG
Producers

Various

Biogas

CNG/ LNG

Various

Various

Various

Enerkem

Edmonton, AL,
Canada

Separated MSW

Ethanol

10701

2012

September
2017702

Ethanol from

CKF
(registered)

Various

Corn Kernel Fiber

Ethanol

Various

Various

Various

Ethanol from
CKF (new)

Various

Corn Kernel Fiber

Ethanol

Various

Various

Various

Ensyn

Various

Woody Biomass

Pleating
Oil, Diesel,
Jet

Various

Various

Various

Renewable
Electricity
Producers

Various

Biogas

Electricity

Various

Various

Various

Fulcrum/
Marathon

Storey County, NV

Separated MSW

Diesel, Jet
Fuel

11

May 2018

2022

GranBio

Sao Miguel dos
Campos, Brazil

Sugarcane bagasse

Ethanol

21

Mid 2012

September 2014

QCCP/
Syngenta

Galva, IA

Corn Kernel Fiber

Ethanol

4

Late 2013

October 2014

Raizen

Piracicaba City,
Brazil

Sugarcane bagasse

Ethanol

11

January 2014

July 2015

699	The Facility Capacity is generally equal to the nameplate capacity provided to EPA by company representatives or found in publicly available information.
Capacities are listed in physical gallons (rather than ethanol-equivalent gallons). If the facility has completed registration and the total permitted capacity is lower
than the nameplate capacity, then this lower volume is used as the facility capacity.

700	Where a quarter is listed for the first production date EPA has assumed production begins in the middle month of the quarter (i.e., August for the 3rd quarter)
for the purposes of projecting volumes.

701	The nameplate capacity of Enerkem's facility is 10 million gallons per year. However, we anticipate that a portion of their feedstock will be non-biogenic
municipal solid waste (MSW). RINs cannot be generated for the portion of the fuel produced from non-biogenic feedstocks. We have taken this into account in
our production projection for this facility (See "November 2022 Liquid Cellulosic Biofuel Projections for 2023 - 2025 CBI").

702	This date reflects the first production of ethanol from this facility. The facility began production of methanol in 2015.

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6.1.2 Projected Liquid Cellulosic Biofuel Production

For our 2023-2025 liquid cellulosic biofuel projections, we use the same general
approach as we have in projecting these volumes in previous years. We begin by first
categorizing potential liquid cellulosic biofuel producers according to whether or not they have
achieved consistent commercial scale production of cellulosic biofuel to date. We refer to these
facilities as consistent producers and new producers, respectively. Next, we define a range of
likely production volumes for each year from 2023-2025 for each group of companies. Finally,
we use a percentile value to project from the established range a single projected production
volume for each group of companies for each year. As in the 2018-2022 final rules, we then
calculated percentile values for each group of companies based on the past performance of each
group relative to our projected production ranges.

We first separate the list of potential producers (listed in Table 6.1.1.4-1) into two groups
according to whether the facilities have achieved consistent commercial-scale production and
cellulosic biofuel RIN generation. As in the 2020-2022 RFS annual rule, we have not listed the
names of the companies that fall into each group due to the small number of companies in some
of the categories and the fact that some of the data used to calculate the ends of the range is
considered confidential business information by these companies.703 We next defined a range of
likely production volumes for each group of potential producers. The low end of the range for
each group of producers reflects actual RIN generation data over the last 12 months for which
data were available at the time our technical assessment was completed (June 2021 - May
2022).704 For potential producers that have not yet generated any cellulosic RINs, the low end of
the range is zero. For the high end of the range, we considered a variety of factors, including the
expected start-up date and ramp-up period, facility capacity, and the number of RINs the
producer expects to generate each year from 2023-2025.705 The projected range for each group
of companies is shown in Table 6.1.2-1.706

703	More information on the companies included in each group is contained in the memos "November 2022 Liquid
Cellulosic Biofuel Projections for 2023 - 2025 CBI".

704	We recognize that in some years cellulosic biofuel production from facilities that have achieved consistent
commercial scale production may be lower than the volume achieved in the previous 12 months. This has happened
several times since 2016. In these cases the methodology would suggest that using a negative percentile value
(indicating production in the coming year that is lower than the volume produced in the previous 12 months). By
considering the use of negative percentile values for facilities that have achieved consistent commercial scale
production we believe this methodology adequately accounts for this possibility.

705	As in our 2015-2022 projections, EPA calculated a high end of the range for each facility (or group of facilities)
based on the expected start-up date and a six-month straight-line ramp-up period. The high end of the range for each
facility (or group of facilities) is equal to the value calculated by EPA using this methodology, or the number of
RINs the producer expects to generate in 2023 - 2025, whichever is lower.

706	More information on the data and methods EPA used to calculate each of the ranges in these tables in contained
in "November 2022 Liquid Cellulosic Biofuel Projections for 2023 - 2025 CBI" memorandum from Dallas
Burkholder to EPA Docket EPA-HQ-OAR-2021-0324. We have not shown the projected ranges for each individual
company. This is because the high end of the range for some of these companies are based on the company's
production projections, which they consider confidential business information (CBI). Additionally, the low end of
the range for facilities that have achieved consistent commercial scale production is based on actual RIN generation
data in the most recent 12 months, which is also claimed as CBI.

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Table 6.1.2-1: Liquid Cellulosic Biofuel Projected Production Ranges (million ethanol-



Low End of

High End of

Category

the Range

the Range

2023

New Producers

0

0

Consistent Producers

1

7

2024

New Producers

0

24

Consistent Producers

1

7

2025

New Producers

0

60

Consistent Producers

1

7

a Rounded to the nearest million gallons.

After defining likely production ranges for each group of companies, we next determined
the percentile values to use in projecting a production volume for each group of companies. We
calculate the percentile values by comparing actual production data from 2016 through 2020
with the production ranges projected in the annual rules for those years. We chose the 2016-20
time period because the first full year in which EPA used the current methodology for
developing the range of potential production volumes for each company was 2016, while 2020 is
the most recent year for which we have both cellulosic RIN generation data and a prospective
projection of liquid cellulosic biofuel production.707

As in previous years, to calculate the percentiles within the projected ranges used to
project liquid cellulosic biofuel production for 2023-2025 we used the average percentile values
for each group of companies from 2016-2020. We considered weighting recent years more
heavily than previous years, but we have not done so. The disruptions in the cellulosic biofuel
industry caused by the COVID pandemic in 2020 suggest that we should not more heavily weigh
2020, even though this is the most recent year for which we have data. Alternatively, we
considered only considering the percentile values from 2016-2019 and excluding 2020 due to the
unforeseen impacts of the COVID pandemic. Excluding the percentiles from 2020 results in
slightly higher percentile values than those we calculate when including the 2020 data (the 9th
percentile for new producers and the 6th percentile for consistent producers). However, using the
slightly higher percentile values for consistent producers that results from excluding
consideration of 2020 has a very small impact on our projection of liquid cellulosic biofuel
production and no impact on the cellulosic biofuel volume for 2022 (which is rounded to the
nearest 10 million gallons).

For each group of companies and for each year from 2016-2020, Table 6.1.2-2 shows the
projected ranges for liquid cellulosic biofuel production (from relevant annual rules), actual

707 While we did project liquid cellulosic biofuel production for 2021 in the proposed rule, we did not finalize our
projection of cellulosic biofuel production for 2021 with the benefit of updated data and public comment. We have
therefore not included 2021 in our consideration of the percentile values used to project cellulosic biofuel production
in 2022.

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production, the percentile values that would have resulted in a projection equal to the actual
production volume, and the weighting factor used in each year.

Table 6.1.2-2: Projected and Actual Liquid Cellulosic Biofuel Production in 2016-2020
(million gallons)				







Actual





Low End of

High End of

Production

Actual



the Range

the Range

708

Percentile

New Producers709

2016

0

76

1.06

1st

2017

0

33

8.79

27th

2018

0

47

2.87

6th

2019

0

10

0.00

0th

2020

0

30

1.53

5th

Average3

N/A

N/A

N/A

8th

Consistent Producers710

2016

2

5

3.28

43rd

2017

3.5

7

3.02

-14th

2018

7

24

7.74

4th

2019

14

44

11.13

-10th

2020

10

36

0.52

-36th

Average3

N/A

N/A

N/A

-3rd

a We have not averaged the low and high ends of the ranges, or actual production, as we believe it is more
appropriate to consider the averages of the actual percentiles from 2016 - 2020 rather than calculating a percentile
value for 2016-2020 in aggregate.

Based upon this analysis, EPA has projected cellulosic biofuel production from new
producers at the 8th percentile of the calculated range and from consistent producers at the -3rd
percentile.711 These percentiles are calculated by averaging the percentiles that would have
produced cellulosic biofuel projections equal to the volumes produced by each group of
companies in 2016 - 2020. Prior to 2016, EPA used different methodologies to project available

708	Actual production is calculated by subtracting RINs retired for any reason other than compliance with the RFS
standards from the total number of cellulosic RINs generated.

709	Companies characterized as new producers in the 2014-2016, 2017, 2018, 2019, and 2020 final rules were as
follows: Abengoa (2016), CoolPlanet (2016), DuPont (2016, 2017), Edeniq (2016, 2017), Enerkem (2018, 2019,
2020), Ensyn Port Cartier (2018, 2019, 2020), GranBio (2016, 2017), IneosBio (2016), and Poet (2016, 2017) Red
Rock Biofuels (2020).

710	Companies characterized as consistent producers in the 2014-2016, 2017, 2018, and 2019 final rules were as
follows: Edeniq Active Facilities (2018, 2019, 2020), Ensyn Renfrew (2016 -2020), GranBio (2018-2020), Poet
(2018, 2019), Quad County Corn Processors/Syngenta (2016 - 2020), and Raizen (2019-2020).

711	The negative percentile we are using to project cellulosic biofuel production from consistent producers in 2022
means that we are projecting less cellulosic biofuel will be produced from these facilities than they produced over
the last 12 months for which data is available. We observed a similar pattern in 2017 and 2020, where liquid
cellulosic biofuel production from consistent producers fell from the prior year. This is generally because producing
liquid cellulosic biofuel at a commercial scale remains challenging, and many producers have gone out of business
not long after they began production.

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volumes of cellulosic biofuel and thus believes it inappropriate to calculate percentile values
based on projections from those years.712

We then used these percentile values, together with the ranges determined for each group
of companies discussed above, to project a volume for each group of companies in 2022. These
calculations are summarized in Table 6.1.2-3.

Table 6.1.2-3: Projected Volume of Liquid Cellulosic Biofuel in 2023-2025 (million ethanol-
equivalent gallons)					



Low End of
the Range3

High End of
the Range3

Percentile

Projected
Volume3

2023

Liquid Cellulosic Biofuel Producers;
New Producers

0

0

8th

0

Liquid Cellulosic Biofuel Producers;
Consistent Producers

1

7

-3rd

0

Total

N/A

N/A

N/A

0

2024

Liquid Cellulosic Biofuel Producers;
New Producers

0

24

8th

2

Liquid Cellulosic Biofuel Producers;
Consistent Producers

1

7

-3rd

0

Total

N/A

N/A

N/A

3

2025

Liquid Cellulosic Biofuel Producers;
New Producers

0

60

8th

5

Liquid Cellulosic Biofuel Producers;
Consistent Producers

1

7

-3rd

0

Total

N/A

N/A

N/A

5

a Volumes rounded to the nearest million gallons.

6.1.3 Projected Production of CNG/LNG Derived from Biogas

For 2023-2025, EPA is using the same industry wide projection approach as used for
2018-2022 based on a year-over-year growth rate to project production of CNG/LNG derived
from biogas used as transportation fuel.713 EPA calculated the year-over-year growth rate in
CNG/LNG derived from biogas by comparing RIN generation from June 2021 to May 2022 (the
most recent 12 months for which data are available) to RIN generation in the 12 months that

712	EPA used a similar projection methodology for 2015 as in 2016-2018, however we only projected cellulosic
biofuel production volume for the final 3 months of the year, as actual production data were available for the first 9
months. We do not believe it is appropriate to consider data from a year for which 9 months of the data were known
at the time the projection was made in determining the percentile values used to project volume over a full year.

713	Historically RIN generation for CNG/LNG derived from biogas has increased each year. It is possible, however,
that RIN generation for these fuels in the most recent 12 months for which data are available could be lower than the
preceding 12 months. Our methodology accounts for this possibility. In such a case, the calculated rate of growth
would be negative.

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immediately precede this time period (June 2020 to May 2021). The growth rate calculated using
this data is 13.1%. These RIN generation volumes are shown in Table 6.1.3-1.

Table 6.1.3-1: Generation of Cellulosic Biofuel RINs for CNG/LNG Derived from Biogas
(ethanol-equivalent gallons)		

RIN Generation (June
2020 - May 2021)

RIN Generation (June 2021
- May 2022)

Y ear-Over-Y ear
Increase

526,129,526

595,311,069

13.1%

EPA then applied this 13.1% year-over-year growth rate to the total number of 2021
cellulosic RINs generated and available for compliance for CNG/LNG. That is, in this rule, as in
the 2018-2022 final rules, we are multiplying the calculated year-over-year rate of growth by the
volume of CNG/LNG actually supplied in the most recent year for which data is available (in
this case 2021), taking into account actual RIN generation as well as RINs retired for reasons
other than compliance with the annual volume obligations. This provides a projection of the
production of CNG/LNG derived from biogas in 2022. This results in a projection of 636 million
ethanol-equivalent gallons of CNG/LNG derived from biogas in 2022. Since we are proposing
volumes for three future years, we do not have data which would allow for separate rates of
growth to project volumes for 2023-2025. Consequently, we applied the same rate of growth to
project the production of CNG/LNG derived from biogas in 2023-2025.

Table 6.1.3-2: 2022-2025 Projection of CNG/LNG Derived from Biogas (ethanol-equivalent
gallons)		

D3 RINs generated for CNG/LGN derived
from biogas in 2021

567,086,813

RINs retired for reasons other than
compliance with annual obligations

5,241,195

Net RINs generated in 2021

561,845,618

Growth rate

13.15%

Projected production of CNG/LNG derived
from biogas in 2022

635,723,522

Projected production of CNG/LNG derived
from biogas in 2023

719,315,741

Projected production of CNG/LNG derived
from biogas in 2024

813,899,622

Projected production of CNG/LNG derived
from biogas in 2025

920,920,477

In discussions with EPA a number of cellulosic biogas producers have argued that the
rate of growth observed in 2020 and 2021 was negatively impacted by relatively low cellulosic
RIN prices in 2019 and 2020 and challenges developing new cellulosic biogas production
facilities in 2020 and 2020 related to the COVID pandemic. These parties argued that the higher
growth rates observed in previous years were more reflective of the potential growth in cellulosic
biogas production in 2023-2025. Generation of cellulosic RINs for CNG/LNG derived from
biogas from 2015 (the first full year in which CNG/LNG derived from biogas was approved to

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generate cellulosic RINs) and 2021 (the last year for which complete data are available), and the
annual rate of growth for each year is shown in Table 6.1.3-3.

Table 6.1.3-3: Cellulosic RIN Generation (Million RINs) and Annual Growth Rate for
CNG/LNG Derived from Biogas					i	



2015

2016

2017

2018

2019

2020

2021

D3 RIN Generation

139.9

188.6

240.6

304.2

404.3

503.8

567.1

Annual Growth Rate

N/A

34.8%

27.6%

26.4%

32.9%

24.6%

12.6%

It is apparent in looking at this data that the observed rate of growth in RIN generation
for CNG/LNG derived from biogas was notably lower from 2019 to 2020 and from 2020 to 2021
than in previous years. While it is likely that lower RIN prices and the COVID pandemic were
factors in the lower observed growth rates, we would also expect that as this industry matures
and approaches the quantity of CNG and LNG used as transportation fuel the rate of growth
would decrease even in the absence of other external factors. At this time we are unable to
determine how much of the decrease in the rate of growth of CNG/LNG derived from biogas was
due to the low cellulosic RIN prices in 2019 and 2020 and the COVID pandemic vs. the
maturation of the industry and limitations on the quantity of these fuels used as transportation
fuel (discussed further below). Because of this, and because using data from the most recent 24
months as the basis for the rate of growth when projecting the production of CNG/LNG derived
from biogas for future years has produced reasonably accurate projections since 2018, we are
using data from the most recent 24 months to project the production of CNG/LNG derived from
biogas in 2023-2025. However, we have also calculated alternative projections of CNG/LNG
production in 2023-2025 using the average annual growth rate from 2015-2021 (all years for
which complete data are available) and 2015-2019 (all non-COVID years for which data are
available) in Table 6.1.3-4.

Table 6.1.3-4: Alternative Projections of CNG/LNG Derived from Biogas (million ethanol-
equivalent gallons)		

Time Period

Average
Growth Rate

Projected Production of CNG/LNG Derived from Biogas

2023

2024

2025

2015-2019

30.4%

955.4

1,245.8

1,624.5

2015-2021

26.3%

896.2

1,131.9

1,429.7

We then compared these projected volumes with the total volume of CNG/LNG expected
to be used as transportation fuel in 2023-2025. We are aware of several estimates for the
quantity of CNG/LNG that will be used as transportation fuel in 2022 that cover a wide range of
projected volume. EIA's 2022 AEO projects that 0.12 trillion cubic feet of natural gas will be
used in the transportation sector in 2023 and 2024 (approximately 1.62 billion ethanol-equivalent
gallons), increasing to 0.13 trillion cubic feet of natural gas in 2025 (approximately 1.75 billion
ethanol-equivalent gallons).714 A paper prepared by Bates White for the Coalition for Renewable

714 These values are from the projections for Motor Vehicles, Trains, and Ships in Table 13: Natural Gas Supply,
Distribution, and Prices in the 2022 AEO.

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Natural Gas presented an independent assessment of 1.53, 1.55, and 1.58 billion ethanol-
equivalent gallons used in 2023-2025.715

Separately, EPA projects that approximately 1.36 ethanol-equivalent gallons of
CNG/LNG will be used as transportation fuel in 2022. This estimate is based on the average
throughput at CNG/LNG refueling stations in California and the number of CNG/LNG stations
in operation according to the Alternative Fuels Data Center. The data used to make this
projection is summarized in Table 6.1.3-5. Due to significant variation in the annual increase in
the number of CNG/LNG refueling stations historically we have not used this information to
project the use of CNG/LNG in 2023-2025, however consumption would be expected to
increase as the number of operational refueling stations increases.

Table 6.1.3-5: Projected Consumption of CNG/L1N

G Used as Transportation Fuel in 2022

CNG/LNG used as transportation fuel in
California in 2021

303.2 million ethanol-equivalent gallons

CNG/LNG refueling stations in California in 2021

358 stations

Average annual throughput per station in
California in 2021

0.85 million ethanol-equivalent gallons

CNG/LNG refueling stations in the U.S. in 2022

1611 stations

Projected CNG/LNG used as transportation fuel in
the U.S. in 2022

1.36 billion ethanol-equivalent gallons

These estimates of the consumption of CNG/LNG used as transportation fuel are all
fairly similar, and all are greater than the volume of qualifying CNG/LNG derived from biogas
projected to be used in 2023-2025. Thus, the volume of CNG/LNG used as transportation fuel
would not appear to constrain the number of RINs generated for this fuel in these years. We note,
however, that using a higher rate of growth such as those used in our alternative projections of
the production of CNG/LNG derived from biogas are much closer to the estimates of the
quantity of CNG/LNG used as transportation fuel, and in some cases exceed these estimates.
Thus, even if the production of CNG/LNG in 2023-2025 can grow at a rate consistent with the
higher observed growth rate observed prior to 2020, RIN generation in these years may still be
limited to the quantity of CNG/LNG used as transportation fuel. In any case, the use of
CNG/LNG derived from biogas appears to be increasing at a greater rate than the use of
CNG/LNG as transportation fuel and is likely approaching the total volume of CNG/LNG used
as transportation fuel during the 2023-2025 time period. As the volume of CNG/LNG derived
from biogas approaches the total volume of CNG/LNG used as transportation fuel it may become
increasingly difficult to demonstrate the use of CNG/LNG derived from biogas as transportation
fuel. This factor could slow or ultimately limit the generation of cellulosic RINs from this fuel in
future years.

We believe that projecting the production of CNG/LNG derived from biogas using the
same methodology as in recent years appropriately takes into consideration the actual recent rate
of growth of this industry, and that this growth rate accounts for both the potential for future
growth and the challenges associated with increasing RIN generation from these fuels for 2023-

715 Renewable Natural Gas: Transportation Demand. Bates White Economic Consulting. February 2, 2022; Updated
April 29, 2022.

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2025. This methodology may not be appropriate to use as the projected volume of CNG/LNG
derived from biogas approaches the total volume of CNG/LNG that is used as transportation
fuel, as RINs can be generated only for CNG/LNG used as transportation fuel. We do not believe
that this is yet a constraint as our projection through 2025 as the volume of CNG/LNG derived
from biogas is still below the total volume of CNG/LNG that is currently used as transportation
fuel.

6.1.4 Projected Supply of Electricity Derived from Biogas

With this proposal we are seeking to put into place regulations to enable the renewable
electricity pathway to be used to generate RINs for the first time since approval. As with
CNG/LNG from biogas, the potential supply of qualifying renewable electricity from biogas is
bounded by both the production and use. Unlike biogas used in CNG/LNG, we anticipate the
ultimate constraint on volumes for renewable electricity to be electricity use in the light-duty EV
fleet for the timeframe of this action; with a proximate constraint of renewable electricity
generators registering for the program. The following sections describe the analysis and data
which support our assessment that the use of electricity by the light-duty fleet will be the limiting
factor for volumes in 2024 and 2025. Additionally, we describe the methods utilized for
projecting eRIN volumes, electrified vehicle activity, and renewable electricity generation.

Lastly, we present the analysis which forms the basis for the proposed revised equivalence value
for electricity in the RFS program.

6.1.4.1 Proj ecting eRIN Volumes

The incorporation of renewable electricity into the RFS program as part of this proposal
necessitated the development of a novel means of calculating eRIN generation and forecasting
volumes for renewable electricity in the program. In this section we describe the data and
methodology for projecting RIN volumes from renewable electricity in the RFS program.
Included in this discussion is the establishment of the initial parameters used in the RIN
generation equations for OEMs, acting as RIN generators, participating in the eRIN program.
Additionally, we provide our assessment of renewable electricity volumes for the 2024 and 2025
RFS years and discuss the potential economic value of the RINs associated with those volumes
for program participants.

6.1.4.1.1 Method for Calculating Electricity Used as Transportation Fuel

As described in Preamble Section VIII.F we are proposing to use a top-down methodology
for calculating the quantity of renewable electricity used as transportation fuel that is eligible for
RIN generation. Each participating OEM will perform the following calculations described for
their individual fleet716, but we have laid out the following derivation of proposed volumes to
describe the aggregate, national-level calculation for the use of renewable electricity as a
transportation fuel. Consequently, the following serves as an illustrative walk-through of the
process by which we determined the maximum volume of renewable electricity eligible for RIN
generation for each of the years for which RFS volumes have been established. At the highest
level the methodology can be expressed by the following equation:

716 "Examples of RIN generation under the proposed RFS eRIN provisions," available in the docket for this action.

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Population * Activity * Efficiency = Consumption

Where:

•	Population is the fleet size and disposition of all electric vehicles in the U.S. fleet

•	Activity is the average miles traveled on electricity by electric vehicles as discussed in
6.1.4.3

•	Efficiency is the average per mile energy consumption of electric vehicles

•	Consumption is the quantity of electricity consumed by the fleet

This is a simplified mathematical representation, but it serves as a useful foundation upon
which to add further detail and complexity to each of the equation terms. We next discuss each
of the terms in the simplified equation above in greater detail and present the data used for each
in calculating the national volume of renewable electricity eligible for RIN generation.

Population

In order to determine the total population of electrified vehicles in the U.S. fleet we
leveraged vehicle sales data that went back to model year 2011717 and then utilized projections
for electrified vehicle sales from EPA's recent light-duty vehicle rulemaking718 for the years
where sales data was not yet available. Once the eRIN program is up and running, the OEMs will
be submitting current electrified vehicle populations on a quarterly basis as a condition of RIN
generation; negating the need to rely on historical sales data and scrappage rates in the future.
The historical electrified vehicle sales and the projected sales are presented in Table 6.1.4.1-1.

717	https://www.anl.gov/esia/Hght-duty-electric-drive-vehicles-monthly-sales-updates for sales of 2011-2019 and
then https://www.energy.gov/energysavei7artic1es/new-p1ug-e1ectric-vehic1e-sa1es-united-states-neaiiy-doub1ed-
2020-2021 for sales years 2020-2021.

718	86 FR 74434 (December 30, 2021).

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Table 6.1.4.1.1-1: Electrified Vehicle Sales Data

Model Year

BEV Sales

PHEV Sales

2011

10,060

7,671

2012

14,650

38,584

2013

47,694

49,008

2014

63,416

55,357

2015

71,044

42,879

2016

86,731

72,837

2017

104,471

90,774

2018

238,816

122,491

2019

244,569

84,959

2020

230,612

65,737

2021

443,840

164,160

2022

831,296

109,396

2023

1,150,866

124,243

2024

1,621,250

121,880

2025

2,140,707

110,676

The next step in determining the relevant population for the years for which we projected
volumes was to adjust the sales numbers to reflect vehicle attrition and to aggregate the sales
data in a cumulative fashion to arrive at a projected total population for each year. Attrition rates
for electrified vehicles have not yet been well established or verified, so we took a conservative
approach and ascribed an assumed attrition rate of five percent per annum. Literature shows that
the average electric vehicle is 3.9 years old, and that 4-year-old vehicles in the U.S. fleet719 have
an attrition rate of 1.3%.720,721 Accounting for this attrition, the cumulative PHEV and BEV fleet
sizes are presented by year in Table 6.1.4.1.1-2.

719	In this case, the best available research only focuses on the U.S. fleet inclusive of EVs and ICEVs.

720	IHS Markit, https://news.ihsmarkit.coni/prviewer/re1ease only/icl/4759502

721	Antonio Bento, Kevin Roth, Yiou Zuo, "Vehicle Lifetime Trends and Scrappage Behavior in the U.S. Used Car
Market" (Jan. 18, 2016).

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Table 6.1.4.1.1-2: Cumulative EV Fleet with Attrition

Model Year

BEV

PHEV

2011

10,060

7,671

2012

24,207

45,871

2013

70,691

92,586

2014

130,572

143,314

2015

195,088

179,027

2016

272,064

242,913

2017

362,932

321,541

2018

583,601

427,955

2019

798,990

491,516

2020

989,653

532,677

2021

1,384,010

670,203

2022

2,146,106

746,089

2023

3,189,666

833,028

2024

4,651,433

913,256

2025

6,559,568

978,270

One additional adjustment to the population values must be performed in order to
translate the cumulative PHEV and BEV fleet numbers into the appropriate form for calculating
volumes for renewable electricity used as transportation fuel. Sales numbers are reported for the
entire calendar year of any given year i.e., the total sales of that vehicle type that occur sometime
prior to December 31st of the year in question. The issue for our purpose is that a vehicle sold in
the last quarter of the RFS year would not have been in the fleet, eligible for RIN generation, in
the first quarter of the RFS year. Consequently, absent better information regarding the
distribution of future vehicle sales, we have elected to assume that half of the current year sales
volume will be eligible to generate RINs for the entirety of the current year. The resulting
cumulative PHEV and BEV fleet sizes adjusted for ability to be eligible for RIN generation are
presented in Table 6.1.4.1.1-3.

Table 6.1.4.1.1-3: Effective Electrified Vehicle Fleet for RFS Program Years

RFS Year

BEV

PHEV

2021

1,211,573

614,757

2022

1,799,658

724,901

2023

2,721,539

808,211

2024

4,000,291

893,968

2025

5,721,787

968,594

Throughout this description of the population term we have kept BEVs separate from
PHEVs. This separation is required because of the unique powertrain and operational
characteristics possessed by each classification of electrified vehicles. The next section on
activity goes into further detail on these characteristics, but the result is that now we have arrived
at a more detailed expression for population in our simplified equation:

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Population = BEV _CFleetRFSy earX + PHEV _CFleetRFSyearX

Where:

•	BEV_CFleetRFSyearX is the cumulative fleet of BEVs is any given RFS year

•	PHEV_CFleetRFSyearX is the cumulative fleet of PHEVs is any given RFS year

Activity

Having determined the quantity and type of vehicles which makeup the population of our
consumption equation we next turn to determining the frequency at which those vehicle types are
used. In this proposal we have elected to use electric vehicle miles travelled (eVMT) as the
metric for evaluating the frequency of which each vehicle type is used. Chapter 6.1.4.3 presents
the derivations for eVMT for both BEV and PHEV vehicles based upon the all-electric range.
For the purposes of calculating aggregate, national-level use of renewable electricity as a
transportation fuel an eVMT value of 7,200 mi/yr was used for BEVs and 3,000 mi/yr was used
for PHEVs.

Activity. BEVActiVity = 7,200 m^/yr I PHEVActiVity = 3,000 m^/yr

As discussed in Preamble Section XIII.F. we are proposing to have OEMs submit either
eVMT or aggregated charging information as a condition of program participation and RIN
generation. This data will aid the EPA in validating the appropriateness of the values for activity
we have established in addition to allowing for future refinements and improvements to the eRIN
program. If the data collection process functions as intended, the intention will be for the agency
to update these activity values in a future action to reflect the real-world data collected on
electric vehicle usage.

Efficiency

The last term necessary to be defined in the consumption equation is the efficiency for
the two vehicle types we have specified for population and activity. We are proposing an
efficiency value (q) of 0.32 kWh/mi for both PHEV and BEV vehicles. This value was chosen
based on an evaluation of the certification data722 for BEVs and PHEVs as being a representative
average value for all electrified vehicles. Given the rapid increase in new BEV and PHEV
models being introduced it is apparent that there is a significant variation among vehicles and
that this average value may change over time. As discussed in Preamble Section VIII.F, we are
proposing to have the OEMs submit vehicle efficiency data by model as part of eRIN program
participation. This real world efficiency information will allow us to verify the 0.32 kWh/mi
value and update it as necessary in a future action.

Efficiency = r\BEV = r\PHEV = 0.32 kWh/mi

Consumption

722 The 2021 Automotive Trends Report, EPA-420-R-21-023, November 2021

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The simplified consumption equation originally laid out can now be rewritten with the
more detailed parameter names in the following fashion:

Consumption = (BEV _CFleetRFSyearX * BEV

Activity

+ (PHEV_CFleetRFSyearX * PHEVActivity
Or, with the known numerical values inserted:

Ibbv)
* ^phev)

Consumption = (BEV_CFleetRFSyearX * 7200 * 0.32)
+ (PHEV_CFleetRFSyearX * 3000 * 0.32)

Using the above equation along with the electrified vehicle populations yields values for
the gigawatt hours of electricity used as transportation fuel which will be eligible for RIN
generation for each corresponding RFS year.

Table 6.1.4.1.1-4: Electricity Eligible as Transportation Fuel [GWh]

RFS Year

BEV

PHEV

Total

2021

2,791

590

3,382

2022

4,146

696

4,842

2023

6,270

776

7,046

2024

9,217

858

10,075

2025

13,183

930

14,113

With the methodology to determine the volume of renewable electricity used as
transportation fuel eligible for RIN generation for each of the years for which RFS volumes
established, the values in Table 6.1.4.1.1-4 under the "Total" column for 2024 and 2025
represent the maximum amount of electricity used as transportation fuel which would be eligible
for RIN generation in this proposal.

6.1.4.1.2 Method for Setting Volumes for eRINs

The process for setting volumes for RINs from renewable electricity (eRINs) involves
comparing the calculated quantity of renewable electricity used as transportation fuel (calculated
in 6.1.4.1.1), the supply of qualifying renewable electricity, and the rate at which companies can
complete engineering reviews (ERs) for facilities producing qualifying renewable electricity. At
the most basic level, we are contrasting available supplies with calculated demand and setting the
volume at the lesser of the three. However, there are some additional considerations which serve
to slightly complicate the process. As laid out in the preamble, the statute requires that both the
"from qualifying renewable biomass" and "used as transportation fuel" aspects be met in order
for valid RIN generation to occur. We interpret this to mean that the quantity of qualifying
renewable fuel delivered to the vehicle must match the quantity of renewable fuel used as
transportation fuel by that vehicle.

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In Preamble Section XIII.F we outlined the need to account for losses in the transmission
and charging process in order to ensure that an adequate quantity of renewable electricity is
procured by an OEM to meet the electricity demand of their fleet. Unlike with liquid renewable
fuels, where very little volume is lost between production and dispensation into a vehicle's fuel
tank, there are appreciable and quantifiable losses in the process of getting electricity from the
point of generation to altering an electric vehicle's state of charge. The two sources of loss
included in this proposal are line losses, which account for resistive losses in the electricity
distribution system, and vehicle charging losses, which represent the collective losses associated
with AC to DC conversion, resistive losses, and battery hysteresis losses which occur during the
charging process. We have set the line loss rate at 5.3% in accordance with the reported national
average value for this parameter by the EPA eGRID Model723 for the year 2020. Further
discussion of the energy losses during electrical transmission is presented in Chapter 6.1.4.4. For
charging efficiency, we have set a value of 85%. The derivation of 85% as the charging
efficiency is also presented in Chapter 6.1.4.4.

These two sources of loss occur in series, which means that the inefficiencies compound
as the electricity moves from source to sink. Consequently, the transmission efficiency of 94.7%
(1-line loss rate of 5.3%) and the charging efficiency of 85% must be multiplied together,
yielding a total loss rate of approximately 19.5%. The implication of these losses is that 24.2%
more renewable electricity (kWh) will have to be generated than what is actually consumed in
the vehicles. Thus, the OEMs must procure 24.2% more renewable electricity than the amount of
electricity used as transportation fuel calculated for their fleet. For determining the proposed
eRIN volumes for 2024 and 2025, the consequence is that the amount of electricity used as
transportation fuel calculated for 2024 and 2025 in Table 6.1.4.1.1-4 must be multiplied by
24.2% to account for systemic inefficiencies when we compare renewable electricity supply to
demand as transportation fuel.

Table 6.1.4.1.2-1: Effect of Inefficiencies for Renewable E

ectricity

RFS Year

Electricity Eligible as Transportation Fuel
(GWh)

Procured Electricity
Required (GWh)

2021

3,382

4,201

2022

4,842

6,016

2023

7,046

8,754

2024

10,075

12,516

2025

14,113

17,533

As stated previously, in order to determine the potential volumes of eRINs in 2024 and
2025, a comparison of the required renewable electricity to be procured from Table 6.1.4.1.2-1
must be made with the projected supply of renewable electricity production, as well as the rate at
which these facilities can be properly registered in order to start generating RINs, as discussed in
Section 6.1.4.2.3. Table 6.1.4.2-3 presents the projected renewable electricity supply for the
years 2024 and 2025. Combining this table with the "Procured Electricity Required" column
from Table 6.1.4.1.2-1 yields the desired comparison between supply and demand presented in
Table 6.1.4.1.2-2.

723 eGRID 2019 Technical Guide, prepared by Abt Associates for US EPA Clean Air Markets Division, February
2021. See Section 3.5.

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Table 6.1.4.1.2-2: Comparison of Supply and Demanc

for Setting Volumes

Year

Qualifying
Electricity Supply
(GWh)

Procured
Electricity
Required (GWh)

Limiting Electricity
Quantity (GWh)

2024

22,314

12,516

12,516

2025

25,270

17,533

17,533

For these two years the demand side of the equation (i.e., the electricity consumed by the
electrified vehicle fleet) is a limiting factor on the quantity of eRINs which can be generated.
(However, as discussed in Chapter 6.1.4.2.3, the anticipated rate of engineering reviews to
enable the qualifying electricity supply to be brought into the program is projected to have it
actually be the limiting factor in eRIN generation in 2024 and 2025. In future years as the EV
fleet grows rapidly it is likely that qualifying renewable electricity generation will become the
limiting factor on eRIN generation. Assuming adequate revenue sharing agreements are
established between OEMs, renewable electricity generators and biogas producers we would
anticipate both the supply and demand for qualifying renewable electricity would grow in
concert in future years.

6.1.4.2 Biogas Electricity Generation Capacity

Another potential constraint on eRIN generation in 2024-5 is the biogas electricity
generation capacity. Existing production capacity is estimated to already exceed or meet the EV
fleet consumption capacity discussed in 6.1.4.1.

To develop estimates of current domestic biogas electricity generation capacity and
potential, we used six well-vetted and publicly available databases. The databases are discussed
further below. The total number of domestic facilities characterized by the six databases that may
produce biogas, which can be combusted to produce electricity after purification, is
approximately 1,700. By way of comparison, an estimate of the current total number of domestic
facilities producing and capturing biogas and converting the biogas to electricity in the U.S. is
2,200, according to the Environmental and Energy Study Institute (EESI). EESI also suggests
that 13,500 new facilities could be added to the 2,200.724

The databases used to develop estimates of the current and potential are:

1. U.S. EPA Livestock Anaerobic Digester Database (AgSTAR) Database

• Contains key information about anaerobic digester (AD) facilities situated on
livestock farms in the United States. Information in the AgSTAR Database is
compiled from a variety of sources. Data received for inclusion in the AgSTAR
Database are reviewed for reasonableness and are corroborated via other data sources
when possible. The program attempts to update information in the database, but it is
not exhaustive. The AgSTAR Database does not include data for every AD facility
situated on livestock farms in the United States.

724 Fact Sheet, Biogas: Converting Waste to Energy, Environmental and Energy Study Institute,
https://www.eesi.org/files/FactSheet Biogas 2017.09.pdf

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2.	U.S. EPA Landfill Methane Outreach Program (LMOP) Database

•	Contains key information about municipal solid waste (MSW) facilities and landfill
gas (LFG) energy projects in the United States. Information in the LMOP Database is
compiled from a variety of sources. Data received for inclusion in the LMOP
Database are reviewed for reasonableness and are corroborated via other data sources
when possible. The program attempts to update information in the database, but it is
not exhaustive. The LMOP Database does not include data for every MSW landfill in
the United States.

3.	U.S. EPA Landfill Methane Outreach Program (LMOP) Candidates Database

•	Contains key information about potential municipal solid waste (MSW) candidate
facilities in the United States. Candidate facilities are MSW facilities that:

o Currently accept waste or have been closed for five years or less,
o Have at least one million tons of waste, and

o Are not considered to be operational, under-construction, or planned project.

4.	Argonne National Laboratory (ANL) 2020 U.S. Renewable Natural Gas (RNG) Project

Database

•	Contains a comprehensive list of biogas projects that upgrade LFG for pipeline
injection or for use as vehicle fuel.

5.	U. S. EPA Clean Air Markets Division Electric Generation and Resource Database
(eGRLD) 2020

•	Contains facility locations, generation capacity, and emissions information for
various stationary sources

6.	Energy Lnformation Administration

6.1.4.2.1 Current Sources of Domestic Production

Estimates of the current domestic biogas-derived electric power generation capacity are
shown in Table 6.1.4.2.1-1, by specific database and discussed below.

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Table 6.1.4.2.1-1: Domestic I

•iogas-Derived Electric Power Generation Capacity Resources

Database

Facilities
Listed

Facility Type(s)

Reported
Generation
(GWh)

Data Characterization

AgSTAR
Database

316

-Agricultural
Digesters

805

Existing and Potential
Agricultural Anaerobic
Digestion

LMOP
Database

550

-Landfill
-MSW

10468

Existing MSW and
Landfills generating biogas
electricity or LFG

LMOP
Candidate
Database

481

-Landfill
-MSW

n/a

MSW and Landfill sites
without generation or LFG
gas collection capabilities

ANL 2020 U.S.
RNG Database

233

-Agricultural

Digesters

-Wastewater

Treatment Plants

-Landfills

-MSW

n/a

Compiled source by
Argonne National Labs of
different projects collecting
RNG from biogas in the
U.S.

EIA Electric
Power Annual
2020

n/a

-Other Waste
Biomass

1402

Records landfill gas,
biogenic municipal solid
waste, and other waste
biomass in terms of net
generation, but does not
include a facility count

Biogenic MSW

6093

U.S. EPA
CAMD Electric
Generation and
Resources
Database
(eGRID)

378

-Agricultural
Digesters

252

A modelled database using
the U.S. Greenhouse Gases
Sources and Sinks database
that records facility
locations, nameplate
capacity, and net generation.

Wastewater
Treatment

887

Landfills

11,196

There is no central authority or compilation of biogas to electricity resources in the U.S.,
but several databases, shown in Table 6.1.4.2.1-1, can be used in tandem to create an estimate of
biogas resources currently available. Viewed together, as in Table 6.1.4.2-2, it is clear that the
domestic generation capacity during the years 2024-2025 can provide more than the 17,533
GWh of renewable electricity required to be procured by OEMs to satisfy the needs of the EV
fleet in 2025. Likewise, EIA, LMOP, and AgSTAR data, combined with projections of how the
private sector will respond to the eRINs rulemaking, show that electricity generated from biogas
will not struggle to meet this power requirement.

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Table 6.1.4.2.1-2: Estimated Current Baseline Biogas and Biomass Resources

Source Sector

Current Utilized Capacity
(GWh)

Data Source

Agricultural Digestion

805

AgSTAR

Wastewater Treatment

887

eGRID

Landfill

11,196

eGRID

Biogenic MSW

6,093

EIA

Other Waste Biomass

1,402

EIA

Woody Biomass

38,543

EIA

Currently Allowable Total

20,383

-

Potential Total

58,926

-

Given the differences between these data sources, in order to estimate the current utilized
biogas electricity generation capacity we selected those sources for the various components that
provided the greatest specificity and perceived accuracy. We primarily use EIA and eGRID,
though we are using AgSTAR data for the agricultural anaerobic digestion source sector, as the
program maintains a detailed, frequently updated database on sites generating electricity from
swine, cattle, poultry, and dairy. Wastewater treatment plants and landfills capacity is taken from
Clean Air Market Divisions Electricity Generation and Resources Database (eGRID). It should
be noted that they only count net exporters to the grid in their database, and many wastewater
treatment plants are listed as net consumers despite having on-site electricity generation capacity.
They are most likely to currently be using their generated power for CHP or other on-site uses.
EIA is our best and most accurate data source for other source categories, namely biomass
products and biogenic municipal solid waste source sectors that, while they will contribute
during the span of this rule, are likely to play a more outsized role in the future of the program
after 2025. In sum, these resources are estimated to currently have a capacity of 20,383 GWh of
renewable electricity from biogas.

While this 20,383 GWh may be a good representation of the current generation capacity,
it does not necessarily reflect the generation capacity that can be expected to be available in 2024
and 2025. We use a conservative current year (2023) estimate of 50% participation in the eRINs
program for biogenic MSW,725 and assume that current year utilization of wastewater treatment
plant and landfill capacity will not exceed the capacity listed in eGRID, meaning that unlisted
capacity in the database from net electricity consumers will not be used in the program until later
years. This leaves us with a utilization shown in Table 6.1.4.2.1-3. We expect that utilization will
begin to include net importers and that generation capacity that remains unused for various
reasons will also be employed. Agricultural digesters will also begin to ramp up installed
capacity as the program matures due to the fact that many dairy and other farm biogas projects
are currently being built or planned.726 Biogenic MSW and other waste biomass are assumed to
increase participation linearly in the eRINs program up to 100% of their current capacity
utilization by 2025. We project increases in 2025 for wastewater treatment, agricultural
digesters, and landfills based on an assumption of linear growth to a hypothetical 2030 maximum

725	EIA records this category in their Electricity Power Annual but we cannot be certain that it all qualifies under
existing RFS pathways, thus a 50% estimate of qualifying biogas electricity power generation.

726	American Biogas Council Project Database, https://americanbiogascouncil.org/resources/biogas-projects

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potential capacity,727 which is based on potential capacity numbers from the Schatz Energy
Research Center 2021 report on biogas electricity growth.

Table 6.1.4.2.1-3: Participating Biogas Capacity During Program Implementation Years

Source Sector

2024

2025

Total Potential Capacity728

Agricultural Digester

805

1,166

16,938

WWTP

887

1,248

4,550

Landfill

15,000

15,361

33,710

Biogenic MSW

4,570

6,093

29,220

Total

22,314

25,270

84,418729

6.1.4.2.2 Assessment of Potential and Underreported Generation Capacity

Chapter 6.1.4.2.1 provides our assessment of the currently available qualifying electricity
production from biogas and provided a projection for what we believe the industry may be
capable of producing over the time horizon of this action. This section discusses two relatively
large additional sources where we believe relatively little effort would be required to provide
growth in the available supply of qualifying renewable electricity: utilization of installed
capacity and accounting for existing electricity production capacity occurring at facilities which
are net-consumers of electricity (e.g., wastewater treatment facilities). This is not intended to
serve as an economic or technical assessment of which facilities may be able to alter operational
behavior in response to the codification of the eRIN program, but rather to provide context based
on our work for where initial increases in renewable electricity production beyond the current
generating capacity may be expected.

The first topic to consider is the utilization of installed capacity. In several of the
databases on biogas sources of electricity we evaluated for this proposal, it was noted that
substantially higher quantities of electricity could be produced if the facilities were to operate at
a higher capacity factor. Take for example Figure 6.1.4.2.2-1, which provides a decade worth of
electrical production data from three of the EIA source categories for electricity generation
which may qualify under the eRIN program.

727	Younes, A., Barrientos C., Carman J., Johnson, K., Wallach, E., and Fingerman, K. (2021). Incorporating
Bioelectricity Under the Renewable Fuel Standard as A Pathway to Widespread Deployment of Electric Vehicles.
Humboldt, CA: Schatz Energy Research Center.

728	These are aggressive estimates from AgSTAR (Agricultural Digester) and SERC (all categories other than
Agricultural Digesters or Other Waste Biomass). No source estimates future growth of other waste biomass, an EIA
subcategory.

729	122,961 GWh with the addition of the upper estimate of woody biomass total potential capacity and the other
waste biomass category, rated at 38,543 GWh by EIA.

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Each of the source categories for electricity production reported by EIA have been in
decline the past 3-5 years. Although there may be additional factors which explain this reduction,
our interactions with stakeholders have highlighted that the economic pressures in the electrical
generation space brought on by the relatively low-cost availability of fossil natural gas have led
to a reduction in electrical production from biogas-sourced electricity. If their assessment of the
reduction in electricity production from biogas-sourced capacity is correct, it seems likely that
the financial incentive provided by participation in the eRIN program would enable biogas-
source electricity to, at a minimum, return to the levels seen only a few years ago.

Looking more closely at a particular dataset we evaluated, the Landfill Methane Outreach
Program Project Database, the aggregated actual production capacity of the facilities listed is
approximately 1,520 MW. However, the aggregated rated capacity of this same set of facilities is
approximately 1,930 MW. If it is the case that the primary reason why these facilities have not
been operating at or near their rated capacity is due to poor economic conditions, then
participation in the eRIN program may quickly result in a change in operations and consequently
result in a nearly 30% increase in electrical production from these facilities. Assuming a capacity
factor of 90% along with the reported rated capacity of these facilities suggests annual electricity
production of over 15,000 GWh is feasible.

The second issue relates to accounting for existing electricity production capacity
occurring at facilities which are net-consumers of electricity. We refer to this as underreporting
due to the fact that renewable electricity generators which produce electricity inside a larger
facility which is a net consumer of electricity, like a wastewater treatment plant, do not get
reported as production in the databases730 we utilized to assess biogas production capacity.
Information on the quantity of potentially RFS-qualifying electricity currently being generated
and consumed onsite at facilities which are net consumers of electricity has proven exceedingly
difficult to find and evaluate, unfortunately. However, we have had conversations with
stakeholders and have physically visited facilities where this dynamic is currently occurring. As
renewable electricity generators inside net electricity consuming facilities register for the eRIN

730 eGRID 2019 database maintained by US EPA Clean Air Markets Division.

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program we will begin to be able to assess the quantity and scope of this generation capacity, but
we proceed knowing that we may not have fully accounted for this capacity as part of our
baseline production assessment.

Finally, the estimates presented are only for onsite or direct use of biogas to electricity
facilities and therefore represent a conservative assessment of the available supply of qualifying
renewable electricity. There may also be additional supply available domestically and from
foreign producers of renewable electricity. For example, not included in our assessment is the
quantity of electricity which may be generated by merchant electricity generators who purchase
renewable natural gas (RNG) from the commercial pipeline system to cofire with fossil natural
gas. Absent the financial incentive that eRINs will provide for this new market behavior there
did not exist sufficient evidence on which to project the prevalence of this behavior once the
program is operational and the incentive is in place. Consequently, we did not include any
projection of merchant RNG-based generation capacity in our baseline assessment of available
biogas electricity supply despite the strong belief that it will come online as dictated by market
demand.

6.1.4.2.3 - Industry Registration Capacity

As discussed above in Chapters 6.1.4.2.1 and 6.1.4.2.2, the existing biogas electricity
generation capacity is projected to exceed the electricity demand from the EV fleet discussed in
Chapter 6.1.4.1 by a considerable margin in 2024 and 2025 such that the limiting factor on RIN
generation would be expected to be the demand from the EV fleet. However, this assumes that
there are no constraints associated with bringing that biogas electricity generation capacity into
the RFS program in 2024 and 2025. In reality, there will be a various marketplace constraints,
including, and perhaps most importantly, the ability for the biogas electricity generators to
complete the necessary independent 3rd party engineering reviews in order to register their
facilities under the RFS program. Based on stakeholder engagement and industry study, we
believe that engineering firm capacity to complete engineering reviews, which require an
engineer with a professional engineer license, will limit the rate at which biogas electricity
generation capacity can be used to generate RINs in 2024 and 2025. The result is that we believe
that the resulting biogas electricity generation will be less than the maximum growth rate
possible to keep up with electricity demand from the EV fleet, and be the limiting factor for 2024
and 2025.

To assess the rate at which the engineering reviews could be carried out, we evaluated the
current industry engineering review capacity, evaluated the additional capacity that would be
needed, projected how quickly this could occur, and then evaluated what impact that might have
on biogas electricity generation capacity in 2024 and 2025. We estimate that, under the current
RFS, 300 engineering reviews (ERs) are completed annually, mostly occuring in the second half
of the year due to the nature and timing of the current registration requirements. Assuming the
eRIN program is finalized in June of 2023, then the additional ERs will fall on top of the existing
cyclical swell in ERs. Given the very large number of biogas electricity generation facilities this
is expected to require nearly twice the current number of PEs to keep pace with the number of
facilities that would have to be registered to fully meet EV charging demand. Given that there
will be very little time in 2023 between the final rule being signed, its publication in the Federal

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Register, it becoming effective 60 days later, and the beginning of the eRIN program on January
1, 2024, we estimate that just 10 biogas electricity facilities will be able to be registered by the
end of 2023. As additional PEs enter the workforce, they gain efficiency in completing ERs, and
as they become more familiar with the new regulatory requirements for biogas electricity
facilities we assume that additional ERs will be possible on an ongoing basis in addition to the
already existing ER workload. Given the wide range in facility generation capacity, the largest
facilities have a disproportionate impact on biogas electricity generation. For the purposes of our
projections, we assume that the largest facilities eligible for electricity production will be the first
registered, as shown in Figure 6.1.4.2.3-1. Consequently, despite a low RIN volume projected at
the start of the program, even a modest increase in ERs would bring in a large eRIN volume. We
further enumerate our assumptions in Table 6.1.4.2.3-1 below, and the capacity values
corresponding to the ER rates are calculated by adding facilities to the total capacity number in
rank order.

Figure 6.1.4.2.3-1: Cumulative Capacity, By Addition of Rank Order

:soo

-^-Cumulative Capctiy 4MW|

Table 6.1.4.2.3-1: Engineering Review Rates and Biogas Electricity Capacity



Additional

Total







ER Rate, per

Facilities

Capacity



Year

month

Registered

[MW]

RIN Volumes

2023

2

10

268



2024

6

76

874.4

604,678,289

2025

10

196

1392.8

1,155,874,099

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6.1.4.2.4 Interplay Between Electricity Generation Capacity, Demand, and
Industry Registration Capacity

Throughout the preamble we have alluded to the current and potentially future interplay
between the capacity of qualifying renewable biogas electricity and the demand for electricity as
a transportation fuel by OEM electrified vehicle fleets, as well as the rate at which companies
can register eligible facilities Table 6.1.4.2.4-1 provides a summary of these figures based on our
analyses above.

Table 6.1.4.2.4-1: Comparison of Supply and Demand Facets for Setting Volumes

Year

Qualifying
Electricity Supply
(GWh)

Procured
Electricity
Required (GWh)

Projected Registered
Electricity Available
(GWh)

2024

22,314

12,516

8,023

2025

25,270

17,533

9,768

For these two years the demand side of the equation (i.e., the electricity consumed by the
electrified vehicle fleet) is a limiting factor on the quantity of eRINs which can be generated.
(However, as discussed in Chapter 6.1.4.2.3, the anticipated rate of engineering reviews to
enable the qualifying electricity supply to be brought into the program is projected to have it
actually be the limiting factor in eRIN generation in 2024 and 2025.). In future years as the EV
fleet grows rapidly it is likely that qualifying renewable electricity generation will become the
limiting factor on eRIN generation. Assuming adequate revenue sharing agreements are
established between OEMs, renewable electricity generators and biogas producers we would
anticipate both the supply and demand for qualifying renewable electricity would grow in
concert in future years.

RFS volumes are expressed in terms of "ethanol equivalent gallons" or RINs, and not
gigawatt hours of electricity. Consequently, the electricity values in Table 6.1.4.2.4-1 must be
translated into RINs in order to properly establish the cellulosic volume requirement from eRINs
for years 2024 and 2025. This translation is performed through the use of the equivalence value
(EqV) for electricity in the RFS program. In Chapter 6.1.4.4 we discuss the derivation of the
proposed revision of the EqV from the previous EqV of 22.6 kWh/RIN for electricity to what we
believe is a more representative EqV of 6.5 kWh/RIN. In Table 6.1.4.2.4-2, we have translated
the electricity quantities from Table 6.1.4.2.2-2 into RINs using the proposed, revised EqV of 6.5
kWh/RIN.

Table 6.1.4.2.4-2: Renewable Electricity Translated to RINs

RFS Year

Limiting Quantity of Electricity (GWh)

RINs (EqV = 6.5 kWh/RIN)

2024

8023

1,155,874,099

2025

9768

1,533,750,277

The final steps to setting the eRIN volume standards require translating the limiting
quantity of electricity back to the quantity of electricity used as transportation fuel and an
adjustment for initial practical program participation rates. In the comparison of qualifying
renewable electricity supply and procurement requirements in Table 6.1.4.1.2-2, the procurement

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requirement values were the limiting factor on the ultimate quantity of renewable electricity for
years 2024 and 2025. However, the procurement requirement values had been adjusted upward
to account for the systemic losses in the distribution system for renewable electricity and do not
directly represent the quantity of renewable electricity used as transportation fuel.

In Table 6.1.4.1.2-3, we present a summary of calculations and adjustments made in
establishing the proposed volumes for renewable electricity in the RFS program. The bottom line
numbers of 1.15 billion RINs for 2024 and 1.53 billion RINs for 2025 account for the vast
majority of the overall cellulosic volumes proposed in this action

Table 6.1.4.1.2-3: Summary of Maximum eRI

SI Volumes



2024

2025

EV Electricity Use (GWh)

10,075

14,113

RE Procurement Required "Demand" (GWh)

12,516

17,533

RE Production "Supply" (GWh)

15,973

18,138

Registration Rate Limited "Supply" (GWh)

8,023

9,768

Limiting Electricity Value (GWh)

8023

9768

Proposed eRIN Volume

600 million RINs

1.2 billion RINs

RIN Cost @ $3 per D3 RIN

$1.8 billion

$3.6 billion

The projected bottom line cost numbers for the program assuming $3 cellulosic RIN
valuations require some context in order to appreciate the potential magnitude of this program
for participants. For example, using the parameters for EVs we have established in this proposal,
along with a S3/D3 RIN value, the annual value of the RINs generated by a single EV is $838. If
the value of the eRIN were shared equally via contracts between the three parties: biogas
producer, renewable electricity generator, and OEM it would yield $279/party per year. The
OEM would receive S279/EV in their fleet. The renewable electricity generator would receive
$279 for the 2.3 MWh of electricity to power that EV throughout the year, a value of $121/MWh
just for the RIN generating environmental attributes, which would be in addition to their power
purchase agreement and any REC value they may secure. This is a substantial revenue compared
to typical wholesale electricity rates which are regularly between $30-50/MWh depending on the
location. Lastly, the biogas producer would receive $279 for supplying 5.14 MMBTU of biogas
for a unit value of $54/MMBTU. By comparison, spot prices for natural gas (which is not a truly
equitable comparison because biogas is not pipeline fungible) are up dramatically over the past
few months and currently are still only in the area of $6/MMBTU.

6.1.4.3 EV Fleet Electricity Consumption Capacity

The light-duty EV fleet electricity consumption capacity is growing rapidly, with many
more models of both battery electric vehicles (BEVs) and plug-in hybrid electric vehicle
(PHEVs) being offered for sale every year and sales projected to increase. Consequently, the
electricity consumption capacity of the EV fleet is projected to grow rapidly over time. However,
at the same time, the electricity consumption capacity of the existing fleet is still rather limited,
being dominated by the more limited EV sales in years past. The electricity consumption
capacity itself can be estimated using just a few basic pieces of information, the vehicle miles
travelled (VMT) of the EVs, the fraction of VMT operating on electricity (the electricity utility

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factor), the efficiency of the vehicles (kWh/mi) and the population of each category of electrified
vehicle. In order to convert this electricity consumption capacity into the ethanol equivalent
volumes needed for the RFS program, another factor needed is then the equivalence value for
electricity. Each of these factors is discussed below.

VMT is a measure of total miles driven over a given timespan. It is a useful metric to
determine vehicle utilization, especially when compared to their theoretical range. VMT can be
compared against Electric Vehicle Miles Traveled (eVMT) to see how BEVs and PHEVs utilize
their electric range. This can also be described by a vehicle's utility factor, which is equivalent to
the fraction of time a vehicle spends driving using its electric battery. The average annual VMT
in the U.S. is 11500 miles,731 while average annual eVMT for BEVs and PHEVs is currently
7200 miles and 3,000 miles, respectively. Table 6.1.4.3-1 shows these averages by year. We
collected cumulative fleet VMT each year from 2014 to 2020, and then compared the cumulative
VMT of internal combustion engine vehicles (ICEV) against electric vehicles.732 This data
represents a large fleet of vehicles monitored by the EPA OTAQ Light Duty Vehicle Center
using onboard diagnostic data, inclusive of various models of ICEV, BEV, and PHEV.

Table 6.1.4.3-1: Light Duty Vehicle Fleet Annual Cumulative VMT and eVMT

Year

Gas (PHEV) VMTa (miles)

BEV eVMT (miles)3

2014

82,596

51,027

2015

70,280

41,886

2016

55,239

32,987

2017

41,200

28,577

2018

28,988

19,117

2019

16,269

10,107

2020

7,823

4,674

Average Annual

11,500

7,200

a Rounded to the nearest whole number

eVMT

UF =	

VMT

Where:

UF = utility factor

eVMT= vehicle miles travelled while operating on electric power
VMT = vehicle miles travelled, either on electric power or ICE-driven

6.1.4.3.1 eVMT for BEVs

All BEVs have a utility factor of 1, as they are always running on battery power.
Different models of BEVs have different all-electric range, and thus while their utility factor is

731	Federal Highway Administration, Highway Statistics 2020, Table VM-1

732	IHS VMT from Light Duty Vehicle Center Dataset.

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shared across models, VMT differs greatly. The average eVMT observed for BEVs is 7,200
miles per year, as reported in Table 6.1.4.3-1.

6.1.4.3.2 eVMT for PHEVs

Utility Factor (UF) refers to the fraction of time spent in a charge depleting mode for a
BEV or PHEV in relation to vehicle range. SAE in 2009 developed a set of UF curves and
methods for calculating these metrics based on the electric range of EVs.733As a comparison,
SAE calculated generic UF curves for 5 different scenarios- 4 regarding different charging
behavior for BEVs and 1 for PHEVs that was generated from the Department of Transportation
National Highway Transportation Survey in 2009. Figure 6.1.4.3.2-1 shows how these generic
utility factor curves compare against recorded data/34

Figure 6.1.4.3.2-1: SAE Utility Factor Curves

Utility Factor Compilation Comparison

a 1	1	1

D	*0	TOO	150	200	250	iOO

Range (Miles)

Idaho National Laboratory and the Electronic Power Research Institute have also
conducted small scale studies using onboard diagnostics to track when vehicles are operating on
their batteiy and when they are operating using their ICE. Similarly, the California Air Resources

733	R) Utility Factor Definitions for Plug-In Hybrid Electric Vehicles Using Travel Survey Data, J2841 SEP2010.

734	The proposal would allow these utility factors to be updated on an ongoing basis in the future based on data
proposed to be required to be provided by the vehicle manufacturers.

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Board published data submitted to them by OEMs in the 2017 Clean Cars Midterm Review that
showed what percentage of total driving time was spent on electric power. Figure 6.1.4.3.2-2 is a
compilation of all these studies, and shows that theoretically, while PHEV UF can scale up to
over 90% in ideal scenarios,735 most real world PHEVs utilize their electric range much less,
especially as annual VMT increases.

Figure 6.1.4.3.2-2: Utility Factor Chart of Reviewed Literature Sources

Utility Factor

120
100
80
60
40
20
0

• • „

£

5000

10000
VMT

15000

20000

•	EPRI PHEV

¦	EPRIBEV

¦	INLBEV

•	INLPHEV

¦	CARBBEV

•	CARB PHEV

•	LDV Average
PHEV Total

For the purposes of this proposal we have omitted the EPRI study data, as all data was
obtained from a single geographic area and several samples sizes numbered fewer than five
vehicles, making it unlikely to represent national vehicle travel behavior. Figure 6.1.4.3.2-3 and
Table 6.1.4.3.2-3 show a predictive curve (shown as a dotted line), compared against the SAE
calculated curve, that PHEVs operating during 2024 and 2025 under the eRINs program will
likely mirror, using vehicle electric range to project the national PHEV utility factor.736 The
California Air Resources Board (CARB) and Idaho National Lab data follows a curve with the
equation:

UF = 0.379 In(REV) - 0.878

Where Rev is the all-electric, or charge-depleting, range of a vehicle, in miles.

This equation is similar to one put forth by CARB in SB 498 on zero-emission vehicle
fleets.737

UF = 0.305 ln(/?£y) - 0.537

735	Seshadri Srinivasa Raghavan & Gil Tal (2022) Plug in hybrid electric vehicle observed utility factor: Why the
observed electrification performance differ from expectations, International Journal of Sustainable Transportation,
16:2, 105 136, DOI: 10.1080/15568318.2020.1849469.

736	As discussed in Preamble Section VIII.F, we would intend to update this value in the future based on data
collected as part of this proposed program.

737	CA SB 498, Appendix C, https://ww2.arb.ca.gov/sites/default/files/2019-
12/SB%20498%20Appe.ndix%20C%20-%20auantification%20120919.pdf

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Figure 6.1.4.3.2-3: PHEV Utility Factor as a Function of All-Electric Range

PHEV Utility Factor

0.9
fJ.S
0-7
0,6









v *)31c
RJ =



























y

.

























































/

_ *













/

















«





























- -SAE PHEV fleet tIF

Electric Range CARB/JNL
HJEV

0	20	40

60 SO 100 120 140
Rajlgi: (Miles)

Table 6.1.4.3.2-1: PHEV Model Utility Factor and All-Electric Range

Study

PHEV Model

Electric
Range

Utility

Factor

INL

Chevrolet Volt

53

0.74

INL

Ford C-Max Energi

20

0.33

INL

Ford Fusion Energi

26

0.35

INL

Honda Accord

15

0.22

INL

Toyota Prius

25

0.16

CARB

BMW 13 Rex

126

0.93

CARB

Chevrolet Volt

53

0.70

CARB

Ford Fusion Energi

26

0.30

CARB

Ford C-Max Energi

20

0.31

CARB

Honda Accord

15

0.21

CARB

Toyota Prius

25

0.15

When deciding on a representative value utility factor for PHEV eVMT to use for
projecting volumes of renewable electricity, we chose to take a conservative approach. Our
eVMT value for PHEVs is 3,000 electric miles traveled per year and corresponds to a utility
factor of approximately 0.25. We received CB1 data from a few OEMs which served to validate
our chosen eVMT of 3,000 electric miles travelled per year and feel confident that it is
representative of the use patterns of legacy PHEVs in the fleet. As the use data collection process
proposed as a requirement for RIN generation begins to generate data to inform this estimate, we
will affirm or revise this value in future rules.

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6.1.4.4 Equivalence Value for Renewable Electricity

This section presents data and analysis supporting our proposed revision to the RIN
equivalence value (EQV) for electricity used as transportation fuel. This electricity must be
produced from qualifying biomass sources, which currently includes biogas from landfills or
waste digesters. This biogas may also earn RINs through use as RNG in CNG/LNG vehicles. As
described in Preamble Section VIII.I, to determine the revised EQV we estimated the energy
losses that occur through both the RNG and electricity supply chains and used this information to
compute the number of kWh of EV battery charge that corresponds to 1 RIN (77,000 Btu) of
RNG onboard a CNG vehicle. This assessment required consideration of electricity generation,
transmission, and EV battery charging as well as biogas cleanup, compression, and transport
processes. Both the point of measure (POM) for determining RINs and the losses along the
energy supply chains are important elements in our approach to determining the revised EQV.

6.1.4.4.1 Point of Measure

Point of measure (POM) refers to the point in the energy supply chain where metering
occurs for the purpose of generating RINs. Figure 6.1.4.4.1-1 considers how one unit of biogas
energy is diminished by various types of losses as it moves through the pathways for EV
charging (blue) or direct use in CNG/LNG vehicles (yellow).

Figure 6.1.4.4.1-1: Illustration of the Impact of Point-Of-Measure for Landfill Gas Used for
either Electric Vehicles or CNG/LNG Vehicles

In both paths, the POM (identified by the red box) identifies the point in the distribution
chain where the fuel is transferred to the vehicle. Metering fuel consumption at this POM is
convenient since it takes advantage of the data collection infrastructure that is already in place in
the form of fuel dispensers and electric meters. However, this POM produces a very different

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measure of available energy for electricity than it does for RNG. In the case of electricity, the
conversion from biogas chemical energy to electricity occurs upstream of POM in the electric
generator, and this step results in a significant loss of available energy. In the case of RNG, there
is no upstream conversion and thus only minor losses of available energy before the POM. The
result is that the apparent energy use in the electrical pathway is heavily discounted relative to
the RNG pathway. In effect, this arrangement POM gives credit to RNG for energy that will
become waste heat in the vehicle without providing a similar credit for renewable electricity. In
an effort to put them on more equitable footing, we summed up the energy losses between the
two POMs and incorporated those into the proposed EQV. The following two subsections assess
these losses in more detail.

6.1.4.4.2 Energy Losses in Biogas-to-CNG-Vehicle Pathway

We considered losses in three aspects of the CNG vehicle pathway: source biogas
cleanup, pipeline distribution, and compression. We assumed landfill gas as the input for our
review of the initial cleanup steps, as this currently represents the majority of RNG production.
According to an Argonne National Labs (ANL) report on landfill gas facilities,738 pre-
purification steps such as adsorption and chemical oxidation are used remove corrosive hydrogen
compounds and non-methane organics like ketones and siloxanes, as well as water vapor. At this
stage, the gas stream may be used for on-site power generation but will typically contain a
significant fraction of CO2 that must be removed before natural gas pipeline injection or CNG
vehicle refueling. Removal of CO2 is typically accomplished by some combination of pressure-
swing adsorption, aqueous amine absorption, cryogenic distillation, and membrane separation.
All of these processes require additional energy inputs in the form of compression, heating,
and/or cooling.

ANL provides an overall estimate of 94.4% for efficiency for gas processing operations
based on information from eight project sites. They report a range of 91% to 97%, with larger
facilities tending to be at the higher end of the range. Facilities that use all their gas to produce
electricity may incur fewer processing losses, since less cleanup is required. However, from this
dataset, it is not possible to break out more detailed estimates for sites that export generated
electricity to the grid versus those that solely produce RNG for vehicles.

Pipeline Distribution

After gas cleanup to meet pipeline specifications, the gas undergoes additional
compression and then is injected to a natural gas distribution system. In this system, the gas may
travel through hundreds of miles of pipes and several re-compression stations before being
pulled off for use at a vehicle refueling station. Since it would be very difficult to account for
myriad sources and destinations, we took a high-level approach to estimating losses in the
natural gas distribution system by using data from EIA's U.S. Natural Gas Consumption by End

738 M. Mintz, J. Han, M. Wang, and C. Saricks, "Well-to-Wheels Analysis of Landfill Gas-Based Pathways and
Their Addition to the GREET Model," Center for Transportation Research, Energy Systems Division, Argonne
National Laboratory. 2010. Report ANL/ESD/10-3.

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Use table.739 Specifically, we used five-year averages over 2016-2020 for the total gas delivered
to end users and the total gas consumed for all uses. The ratio of these two figures shows an
overall distribution system efficiency of 91.4% in delivering produced gas to end users. The
losses include leaks as well as internal usage for gas-powered compressors and other equipment.

Some RNG producers may dispense part or all of their fuel through an on-site refueling
station, or another nearby facility (e.g., a school bus depot) that receives the fuel via truck instead
of pipeline. We do not have data on energy use or losses from these types of storage and
shipment processes, but expect they could be higher or lower than pipelining on a per-Btu basis,
depending on specific details of the processes.

Gas Compression

At various points during the processes of cleanup, distribution, and vehicle fueling, gas
compression is required. For the purposes our analysis, we simplified this into two compression
steps. The first step boosts the gas from atmospheric pressure, representing the starting point of
landfill or digester collection, to 200 psi, a typical operating pressure of local distribution
systems.740 This operation would be performed by relatively large volume compressors with an
efficiency estimate of 80%, doing work amounting to 2,290 Btu per ethanol-gallon equivalent
(EGE). The second step is compression from 200 psi to 4000 psi, the typical refueling pressure
of CNG vehicles. Since this occurs at the refueling station with smaller and intermittently-
operated equipment, ANL uses an efficiency of 65% for this process. The work total in this step
is estimated at 3,270 Btu per EGE. In making the compression energy estimate, we assumed
single-stage ideal isothermal compression, adjusted with the efficiency figures above. Note that
the compression energy charge in the first step is also applied to fuel that represents the
downstream distribution losses in an effort to come up with a comprehensive energy estimate.
The ANL efficiency estimate for biogas cleanup does include some compression within those
processes, however, additional compression is expected before pipeline injection. Variations in
this input represent a source of uncertainty in the compression energy computations.

After considering biogas cleanup, compression, and distribution processes, our analysis
indicates a range of 93,500 to 99,700 Btu of energy is required to deliver 1 RIN (77,000 Btu) to
the vehicle. The next three subsections assess energy transfer through the electricity delivery
pathway.

6.1.4.4.3 Energy Losses in Biogas-to-Electricity Pathway

A major component in the supply of energy to electric vehicles is conversion of chemical
energy, in this case from biogas or landfill gas, to electricity. This occurs by combusting the fuel
in a piston or turbine engine that turns an electric generator. These devices typically have energy
conversion efficiencies in the range of 20 to 30 percent. A significant number of these are part of
combined-heat-and-power (CHP) installations that recover engine exhaust heat to make steam
for secondary generation systems, which can in some cases double the overall conversion

739	U.S. Natural Gas Consumption by End Use, U.S. Department of Energy, Energy Information Administration.
June 2021.

740	See Section 3.7.1 of Mintz, et al. cited above.

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efficiency. To estimate an overall efficiency value, we used nameplate generation and heat rate
data for gas-fired electrical generators contained in the EPA's eGRID2019 database.741 From this
data, we computed an average facility heat rate of 11,850 Btu of fuel energy consumed per kWh
generated. Dividing 3,412 Btu, the heat energy equivalent of one kWh of electrical energy, by
11,850 Btu fuel per kWh, gives an overall biogas electrical generation efficiency of 28.8%.

Electricity Transmission and Distribution

For liquid and gaseous fuels in the RFS program, we have historically assumed that
negligible energy loss occurs between the points of production and use. This assumption is based
on industry practices for leak tracking and repair, the fact that vapor losses from liquids like
gasoline and ethanol represent a very small amount of overall fuel energy content. In contrast,
the distribution of electricity has significant measurable losses which occur between the points of
generation and use. The electrical distribution system consists of transformers, lines, and
switchgear that move electrical power from generators to end users, over hundreds or thousands
of miles. Transmission of electricity through lines creates resistive losses, akin to friction in a
mechanical system, that increase with the square of the magnitude of electric current flow.
Transformers at power generation facilities step up voltage for long-distance transmission to
reduce the current required and the related line losses. At the receiving end, voltages are reduced
by step-down transformers for local distribution circuits and again for delivery to end users. In
addition to the line losses, there are resistive and inductive losses in transformers and corona
losses at points of high electric field density.

For this analysis, we used the Grid Gross Loss (GGL) figures from EPA's eGRID2019
database. To compute GGL, eGRID starts from Total Disposition, Direct Use, Exports, and
Estimated Losses data reported by the US Energy Information Administration at the state level,
and aggregates those to the regional grid interconnect level. The following equation is applied to
compute the GGL as a fraction of total distributed power:

Grid Gross Loss = Estimated Losses / [(Total Disposition without Exports) - Direct Use]

In this data, Total Disposition is equal to total generation, Exports is power sent over
state lines, and Direct Use represents power used by the utilities themselves and thus doesn't
enter the distribution system. Using this methodology, the GGL for the U.S. overall is 5.3%.
More detail is available in the eGRID Technical Guide.742

Electric Vehicle Battery Charging

For liquid and gaseous fuels in the RFS program we have historically assumed that
essentially no losses occur in the vehicle fueling process. Unlike simply transferring a liquid
from on tank to another there are potentially substantial losses associated with getting electricity
from the gird into a vehicle. One of the largest components affecting energy losses in powering
electric vehicles in battery charging. During the charging process, electrical energy is converted

741	eGRID 2019 database maintained by US EPA Clean Air Markets Division.

742	eGRID 2019 Technical Guide, prepared by Abt Associates for US EPA Clean Air Markets Division, February
2021. See Section 3.5.

347


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from the standard supply at 240 volts AC to a DC voltage that matches the charging
requirements of the vehicle battery pack, typically between 300-500 volts DC. The vehicle's
charge controller has battery monitoring algorithms that adjust the voltage and current being
applied to the battery pack to optimize the charging rate for pack temperature and other
parameters. These conversion and control systems are high-power electronic devices that have
resistive and inductive losses in their wiring, transformers, and semiconductor components that
are of sufficient consequence to warrant their inclusion in the calculation of a revised
equivalence value for renewable electricity. In addition, the battery pack has internal resistance
at component junctions (e.g., cells and buses) and due to ion migration and charge transfer
processes that result in some of the charging energy being lost as heat.

We reviewed the literature in an effort to make a quantitative estimate of charging
efficiency. Work published by Idaho National Labs in 2017 made detailed measurements of
charging efficiency and other parameters from eight EVs and PHEVs and found efficiencies
ranging from about 82% for Level 1 charging up to about 92% for Level 2.743 Sears, et al.,
collected data over a six-month period in 2013 from four vehicles (two Nissan Leafs and two
Chevrolet Volts) owned and operated by volunteer participants in Vermont, USA. The study
found efficiencies varying from 74% to 91% across 114 charging events, depending on ambient
temperature, state-of-charge at start and end of charging, and whether Level 1 or Level 2
charging equipment was used.744 In a 2020 study by Kostopoulos, et al., analysis of charging
events for a BMW i3 showed a range of efficiencies between 80% and 88% depending on the
state of charge.745 Kieldsen, et al., published work in 2016 that attempted to compare different
measurement methods using three vehicles (Nissan Leaf, Peugeot iOn, Renault Zoe), including
CAN bus data reports and direct probes into the vehicle wiring.746 Results showed a wide range
of 70 to 90%, depending on the measurement method and the charging rate. Taken together, we
interpret these sources to indicate a range of 80-90% charging efficiency for a fleet average.

Combining the efficiencies for electricity generation and transmission with battery
charging we get a range of 21.8-24.5% of input biogas energy making its way into the EV
battery.

6.1.4.4.4 Computation of Revised Equivalence Value

As outlined above, our determination of a revised equivalence value for biogas-derived
electricity retains the current regulatory approach for the CNG/LNG vehicle pathway, wherein
77,000 Btu of RNG corresponds to 1.0 RIN, and then applies energy loss data for the supply

743	Scoffield, D., Smart, J., Carlson, B. (2017). Overview of INL Vehicle/Grid Integration Research. Presentation to
Idaho National Lab Advanced Vehicles Group, document # INL/MIS-17-41441.

744	J. Sears, D. Roberts and K. Glitman, "A comparison of electric vehicle Level 1 and Level 2 charging efficiency,"
2014 IEEE Conference on Technologies for Sustainability (SusTech), 2014, pp. 255-258, doi:
10.1109/SusTech.2014.7046253.

745	Kostopoulos, ED; Spyropoulos, GC; Kaldellis, JK, "Real-world study for the optimal charging of electric
vehicles," Energy Reports, Volume 6, 2020, pp 418-426, doi: 10.1016/j.egyr.2019.12.008.

746	Kieldsen, A., Thingvad, A., Martinenas, S., & Sorensen, T. M. (2016). "Efficiency Test Method for Electric
Vehicle Chargers," In Proceedings of EVS29 - International Battery, Hybrid and Fuel Cell Electric Vehicle
Symposium

348


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chains of electricity and RNG. This approach is summarized in Figure 6.1.4.4.4-1. The equations
below describe our upper and lower estimates based on available data.

99,700 Btu * 0.288 * (1 - 0.053) « 0.90 / 3,412 Btu per kWh = 7.2 kWh per RIN

93,500 Btu n 0.288 x (1 - 0.053) n 0.80 / 3,412 Btu per kWh = 6.0 kWh per RIN

Using AX I As overall estimate for biogas cleanup efficiency of 94.4% indicates that
96,100 BTU of input energy is required to deliver 1 RIN (77,000 Btu) of RNG to the vehicle.
Combining this value with a central estimate of charging efficiency of 85% gives our proposed
value of 6.5 kWh per RIN. This value would ensure that biogas used to make electricity is
appropriately credited relative to biogas used to make RNG for CNG/LNG vehicles.

96,100 Btu x 0.288 * (1 - 0.053) » 0.85 / 3,412 Btu per kWh = 6.5 kWh per RIN
Figure 6.1.4.4.4-1: Assessment of Losses Across Pathways for CNG Vehicle Fueling and

6.1.5 Projected Rate of Cellulosic Biofuel Production for 2023-2025

After projecting production of cellulosic biofuel from liquid cellulosic biofueis,
CNG/LNG derived from biogas, and eRINs EPA combined these projections to project total
cellulosic biofuel production for 2023-2025. These projections are shown in Table 6.1.4-1.

Using the methodologies described in this section, we project that 0.72 billion ethanol equivalent
gallons of qualifying cellulosic biofuel will be produced in 2023, 2.06 billion ethanol-equivalent
gallons will be produced in 2024, and 2.88 billion ethanol-equivalent gallons will be produced in
2025.

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Table 6.1.5-1: Projected Volume of Cellulosic Biofuel in 2023-2025

Projected Volume in 2023 (million
ethanol-equivalent gallons)

Projected Volume

Liquid Cellulosic Biofuel

0

CNG/LNG Derived from Biogas

719.3

eRINs

0

Total3

720



Projected Volume in 2024 (million
ethanol-equivalent gallons)

Projected Volume3

Liquid Cellulosic Biofuel

3

CNG/LNG Derived from Biogas

813.9

eRINs

600

Total3

1,420



Projected Volume in 2025 (million
ethanol-equivalent gallons)

Projected Volume3

Liquid Cellulosic Biofuel

5

CNG/LNG Derived from Biogas

920.9

eRINs

1,200

Total3

2,130

a Rounded to the nearest 10 million gallons.

As discussed in Chapter 6.1.4, this projection does not include any volume of cellulosic
ethanol produced from corn kernel fiber from facilities that are not currently registered as
cellulosic biofuel producers.

6.2 Biomass-Based Diesel

Since 2010 when the biomass-based diesel (BBD) volume requirement was added to the
RFS program, production of BBD has generally increased. The volume of BBD supplied in any
given year is influenced by a number of factors including production capacity, feedstock
availability and cost, available incentives, the availability of imported BBD, the demand for
BBD in foreign markets, and other economic factors. From 2010 through 2015 the vast majority
of BBD supplied to the U.S. was biodiesel. While biodiesel is still the largest source of BBD
supplied to the U.S. since 2015, increasing volumes of renewable diesel have also been supplied.
Production and import of renewable diesel are expected to continue to increase in future years.
There are also very small volumes of renewable jet fuel and heating oil that qualify as BBD,
however as the vast majority of BBD is biodiesel and renewable diesel we have focused on these
fuels in this section. This section presents available data on biodiesel and renewable diesel
production, import, and use in previous years, describes our assessment of the rate of production
and use of qualifying biomass-based diesel biofuel in 2023-2025, and describes some of the
uncertainties associated with those volumes.

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6.2.1

Production and Use of Biomass-Based Diesel in Previous Years

As a first step in considering the rates of production and use of BBD in future years we
review the volumes of BBD produced domestically, imported, and exported in previous years.
Reviewing the historic volumes is useful since there are a number of complex and inter-related
factors beyond simple total production capacity that could affect the supply of advanced
biodiesel and renewable diesel. These factors include, but are not limited to, the RFS volume
requirements (including the BBD, advanced biofuel, and total renewable fuel requirements), the
availability of advanced biodiesel and renewable diesel feedstocks,747 the extension of the
biodiesel tax credit, tariffs on imported biodiesel, import and distribution infrastructure, and
other market-based factors. While historic data and trends alone are insufficient to project the
volumes of biodiesel and renewable diesel that could be provided in future years, historic data
can serve as a useful reference in considering future volumes. Production, import, export, and
total volumes of BBD are shown in Table 6.2.1-1.

747 Throughout this chapter we refer to advanced biodiesel and renewable diesel as well as advanced biodiesel and
renewable diesel feedstocks. In this context, advanced biodiesel and renewable diesel refer to any biodiesel or
renewable diesel for which RINs can be generated that satisfy an obligated party's advanced biofuel obligation (i.e.,
D4 or D5 RINs). While cellulosic diesel (D7) can also contribute towards an obligated party's advanced biofuel
obligation, these fuels are included instead in the projection of cellulosic biofuel presented in Chapter 6.1. An
advanced biodiesel or renewable feedstock refers to any of the biodiesel, renewable diesel, jet fuel, and heating oil
feedstocks listed in Table 1 to 40 CFR 80.1426 or in petition approvals issued pursuant to 40 CFR 80.1416, that can
be used to produce fuel that qualifies for D4 or D5 RINs. These feedstocks include, for example, soybean oil; oil
from annual cover crops; oil from algae grown photosynthetically; biogenic waste oils/fats/greases; non-food grade
corn oil; camelina sativa oil; and canola/rapeseed oil (See pathways F, G, and H of Table 1 to 80.1426).

351


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Table 6.2.1-1: BBD (D4) Production, Imports, and Exports from 2012 to 2021748 (million
gallons)3									



2014b

2015b

2016

2017

2018

2019

2020

2021

Domestic Biodiesel
(Annual Change)

1,297
(-67)

1,245
(-52)

1,581
(+336)

1,552
(-29)

1,841
(+289)

1,706
(-135)

1,802
(+96)

1,699
(-103)

Imported Biodiesel
(Annual Change)

130

(-23)

261
(+131)

562
(+301)

462
(-100)

175
(-287)

185
(+10)

209
(+24)

208
(-1)

Exported Biodiesel
(Annual Change)

72
(-5)

73
(+1)

89

(+16)

129
(+40)

74

(-55)

76
(+2)

88

(+12)

90
(+2)

Total Biodiesel
(Annual Change)0

1,355
(-85)

1,433
(+78)

2,054
(+621)

1,885
(-169)

1,942
(+57)

1,815
(-127)

1,924
(+109)

1,817
(-107)

Domestic
Renewable Diesel
(Annual Change)

149
(+79)

169
(+20)

231
(+62)

252
(+21)

282
(+30)

454
(+172)

472
(+18)

780
(+308)

Imported
Renewable Diesel
(Annual Change)

130
(-15)

120
(-10)

165
(+45)

191
(+26)

176
(-15)

267
(+91)

280
(+13)

362
(+82)

Exported
Renewable Diesel
(Annual Change)

15

(+10)

21
(+6)

40

(+19)

37
(-3)

80

(+43)

145
(+65)

223
(+78)

241
(+18)

Total Renewable
Diesel

(Annual Change)0

264
(+154)

268
(+4)

356
(+88)

406
(+50)

378
(-28)

576
(+198)

529
(-47)

900
(+371)

Total BBDd
(Annual Change)

1,619
(-31)

1,701
(+82)

2,412
(+711)

2,293
(-119)

2,322
(+29)

2,393
(+71)

2,457
(+64)

2,721
(+264)

a All data from EMTS. EPA reviewed all advanced biodiesel and renewable diesel RINs retired for reasons other
than demonstrating compliance with the RFS standards and subtracted these RINs from the RIN generation totals for
each category to calculate the volume in each year. This table does not include D5 or D6 biodiesel and renewable
diesel. These fuels are discussed in Chapters 6.4 and 6.7, respectively.
b RFS required volumes for these years were not established until December 2015.
c Total is equal to domestic production plus imports minus exports.
d Total BBD includes some small volumes (<10 million gallons per year) of D4 jet fuel.

Since 2014, the year-over-year changes in the volume of advanced biodiesel and
renewable diesel used in the U.S. have varied greatly, from a low of 119 million fewer gallons
from 2016 to 2017 to a high of 711 million additional gallons from 2015 to 2016. As discussed
previously, these changes were likely influenced by multiple factors. This historical information
does not by itself demonstrate that the maximum previously observed annual increase of 709
million gallons of advanced biodiesel and renewable diesel would be reasonable to expect in a
future year, nor does it indicate that greater increases are not possible. Significant changes have
occurred in both the fuel and feedstock markets (discussed further below) that will impact the
rates of growth of biodiesel and renewable diesel production and use in future years. Rather,

748 Similar tables of biodiesel and renewable diesel production, imports, and exports presented in previous annual
rules included advanced (D5) biodiesel and renewable diesel. This table only contains volumes of biodiesel and
renewable diesel that qualifies as BBD (D4). Advanced (D5) biodiesel and renewable diesel are covered in Chapter
6.4.

352


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these data illustrate both the magnitude of the changes in biomass-based diesel in previous years
and the significant variability in these changes.

This data also shows the increasing importance of renewable diesel in the BBD pool. In
2014 approximately 16% of all BBD was renewable diesel, and the remaining 84% was
biodiesel. However, in the last 5 years all of the net growth has been in renewable diesel volume.
By 2021 production and imports of renewable diesel had increased not only in absolute terms
(from 264 million gallons in 2014 to 927 million gallons in 2021), but also as a percentage of the
BBD pool. In 2021 approximately 34% of all BBD was renewable diesel, while the remaining
66% was biodiesel. As discussed further in the following sections, we expect that renewable
diesel will represent an increasing percentage of total BBD in future years.

The historic data indicates that the biodiesel tax policy in the U.S. can have a significant
impact on the volume of biodiesel and renewable diesel used in the U.S. in any given year. The
availability of this tax credit also provides biodiesel and renewable diesel with a competitive
advantage relative to other biofuels that do not qualify for the tax credit.

While the biodiesel blenders tax credit has applied in each year since 2010, it has
historically only been prospectively in effect during the calendar year in 2011, 2013, 2016, and
2020-2022, while other years it has been applied retroactively. Years in which the biodiesel
blenders tax credit was in effect during the calendar year (2013, 2016, 2020, and 2021) generally
resulted in significant increases in the volume of BBD used in the U.S. over the previous year
(629 million gallons, 711 million gallons, 63 million gallons,749 and 291 million gallons
respectively). However, following the large increases in 2013 and 2016, there was little to no
growth in the use of advanced biodiesel and renewable diesel in the following years. Data from
2018 and 2019 suggests that while the availability of the tax credit certainly incentivizes an
increasing supply of biodiesel and renewable diesel, supply increases can also occur in the
absence of the tax credit, likely as the result of the incentives provided by the RFS program, state
LCFS programs, and other economic factors.

Another important factor highlighted by the historic data is the tariffs imposed by the
U.S. on biodiesel imported from Argentina and Indonesia. In December 2017 the U.S.
International Trade Commission adopted tariffs on biodiesel imported from Argentina and
Indonesia.750 According to data from EIA,751 no biodiesel has been imported from Argentina or
Indonesia since September 2017, after a preliminary decision to impose tariffs on biodiesel
imported from these countries was announced in August 2017. As a result of these tariffs, total
imports of biodiesel into the U.S. were significantly lower in 2018 than they had been in 2016
and 2017. The decrease in imported biodiesel did not, however, result in a decrease in the
volume of advanced biodiesel and renewable diesel supplied to the U.S. in 2018. Instead, higher
domestic production of advanced biodiesel and renewable diesel, in combination with lower
exported volumes of domestically produced biodiesel, resulted in an overall increase in the
volume of advanced biodiesel and renewable diesel supplied in 2018 and subsequent years.

749	This is the volume increase in 2020, which was impacted by the COVID pandemic.

750	"Biodiesel from Argentina and Indonesia Injures U.S. Industry, says USITC," Available at:
https://www.usitc.gov/pfess room/news release/2017/er 120511876.htm

751	See "EIA Biodiesel Imports" available in docket EPA-HQ-OAR-2021-0324.

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6.2.2 Biomass-Based Diesel Production Capacity and Utilization

One of the factors considered when projecting the rate of production of BBD in future
years is the production capacity. Domestic biodiesel production capacity, domestic biodiesel
production, and the utilization rate of the existing biodiesel production capacity each year is
shown in Figure 6.2.2-1. Active biodiesel production capacity in the U.S. as reported by EIA has
experienced modest growth in recent years, from approximately 2.1 billion gallons in 2012 to
just over 2.5 billion gallons in 20 1 9.752 As of June 2022, active biodiesel production capacity has
decreased slightly since then, to approximately 2.2 billion gallons in 2022, While production
of biodiesel has generally increased during this time period, significant excess production
capacity remains, with facility utilization remaining below 75% through 2021. EPA data on total
registered biodiesel production capacity in the U.S., which includes both facilities that are
producing biodiesel and idled facilities, is much higher, approximately 3.9 billion gallons. Active
biodiesel capacity as reported by EIA is the aggregate production capacity of biodiesel facilities
that produced biodiesel in any given month, while the total registered capacity based on EPA
data includes all registered facilities, regardless of whether they are currently producing biodiesel
or not. These data suggest that domestic biodiesel production capacity is unlikely to limit
biodiesel production in future years, and that factors other than production capacity are currently
limiting domestic biodiesel production.

Figure 6.2.2-1: U.S. Biodiesel Production Capacity, Production, and Capacity Utilization

3.00

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.012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
¦ Production Capacity	Production Volume ^^—utilization


-------
diesel production has increased along with production capacity in recent years, and capacity
utilization at domestic renewable diesel production facilities has been high, approximately 84%
from 2017-2021. Further, much of the unused capacity was likely the result of facilities ramping
up new capacity to full production rates. Unlike the biodiesel industry, in which unused
production capacity has persisted for many years, since 2017 production of renewable diesel
neared or exceeded the production capacity from the previous year.

Figure 6.2.2-2: U.S. Renewable Diesel Production Capacity, Production, and Capacity
Utilization

1,600	1 00%

2012 2013 2014 2015 2016 2017 201S 2019 2020 2021 2022

Production Capacity	Production Volume ^^^Utilization

Renewable diesel production capacity and actual production values are from EMTS data and EIA Monthly Biofuels
Capacity and Feedstock Update. Capacity utilization is calculated by dividing actual production by the total
production capacity.

A number of parties have announced their intentions to build new renewable diesel
production capacity with the potential to begin production of renewable diesel by the end of
2025. These new facilities include new renewable diesel production facilities, expansions of
existing renewable diesel production facilities, and the conversion of units at petroleum
refineries to produce renewable diesel. A list of the facilities expected to begin producing
renewable diesel by 2025, as well as existing facilities expected to complete expansions by 2025,
based on publicly available data is shown in Table 6.2.2-1.

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Table 6.2.2-1: New Renewable Diesel Production Capacity in the U.S. Through 2022

Facility Name

Location

Capacity
(MGY)

Start Date (Actual
or Expected)

HollyFrontier Artesia755

Artesia, NM

110

2022

Bakersfield Renewables756

Bakersfield, CA

230

2022

New Rise Renewables757

Reno, NV

43

2022

Diamond Green Diesel758

Port Arthur, TX

470

2022

Marathon Martinez759

Martinez, CA

260

2022

Marathon Martinez Expansion760

Martinez, CA

470

End 2023

Phillips 66 Rodeo Phase 2761

Rodeo, CA

680

Q1 2024

Next Renewable Fuels762

Port Westward, OR

575

2024

REG Geismar Expansion763

Geismar, LA

250

2024

World Energy764

Paramount, CA

340

2025

If all these facilities were completed according to their current schedules these facilities
would increase domestic renewable diesel production capacity by nearly 3.5 billion gallons per
year by 2025. However, feedstock limitations (discussed in Chapter 6.2.3) may not support all of
these facilities. As several of these projects are still in the planning stages and have not yet begun
construction, it is possible that some of these projects may be delayed or cancelled. Thus, it is
unlikely that the domestic renewable diesel production will reach the nearly 5 billion gallons
implied by the sum current production capacity and the new renewable diesel projects with the
intention to begin production by 2025. Nevertheless, it appears unlikely that domestic production
capacity will limit renewable diesel production through 2025. Rather it is more likely that the
feedstock limitations discussed in Chapter 6.2.3 may limit production.

755	Kotrba, Ron. Cheyenne renewable diesel unit fully operational, but HollyFrintier takes start-up slow. Biobased
Diesel Daily. February 24, 2022.

756	Cox, John. Owner of renewable fuels refinery settles injection well violations. Bakerfield.com. June 17, 2022.

757	Kotrba, Ron. Reno renewable diesel project works out deal with Twain to complete construction. Biobased
Diesel Daily. April 5, 2022.

758	Diamond Green Diesel Website. Accessed June 27, 2022. Available at: https://www.diamondgreendiesel.com/

759	Voegele, Erin. Marathon provides update on Martinez conversion project. Biodiesel Magazine. May 3, 2022.

760	Voegele, Erin. Marathon provides update on Martinez conversion project. Biodiesel Magazine. May 3, 2022.

761	Phillips 66 Makes Final Investment Decision to Convert San Francisco Refinery to a Renewable Fuels Facility.
Phillips 66 News Release. May 11, 2022.

762	Kotrba, Ron. Oregon approves key permit for $2 billion renewable diesel project. Biobased Diesel Daily. March
25, 2022.

763	Renewable Energy Group Breaks Ground on Geismar, Louisiana Renewable Diesel Expansion and Improvement
Project. Renewable Energy Group Website. Accessed June 27, 2022. Available at:

https://www.regi.com/resources/press-releases/renewable-energy-group-breaks-ground-on-geismar-louisiana-
renewable-diesel-expansion-and-improvement-project.

764	Air Products Teaming Up with World Energy to Build $2 Billion Conversion of Sustainable A viation Fuel (SAF)
Production Facility in Southern California. Air Products Website. Accessed June 27, 2022. Available at:
https://www.airproducts.com/news-center/2022/04/0422-air-products-and-world-energy-sustainable-aviation-fuel-
facility-in-california.

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6.2.3 Availability of Biomass-Based Diesel Feedstocks

Another key factor in considering the rate of production of BBD through 2025 is the
availability of qualifying feedstocks. To assess the availability of feedstocks for producing BBD
through 2025 we first reviewed the feedstocks used in previous years. This review of feedstocks
used in previous years can provide information about the feedstocks most likely to be used in
future years, as well as the likely increase in the availability of these feedstocks in future years.
A summary of the feedstocks used to produce BBD from 2012 through 2021 is shown in Figure
6.2.3-1.

Figure 6.2.3-1: Feedstocks Used To Produce BBD in the U.S. (2014-2021)765

¦I

2014 2015 2016 2017 2018 2019 2020 2021
¦ FOG ¦ Soybean Oil ¦ Com Oil Canola Oil

Domestic BBD production from fats, oils, and greases (FOG) in the U.S. has generally
increased from 2014 through 2021 at an average annual rate of approximately 20 million gallons
(35 million RINs) per year. These feedstocks are generally by-products of other industries.
Assessments submitted by commenters on the 2020-2022 RFS annual rule generally agree that
the domestic supply of these feedstocks will increase only slightly in future years,766 We expect
that in future years production of BBD from FOG will continue to increase at approximately the
historical rate as the availability of FOG increases with population. It is possible that greater
demand for feedstocks for BBD production could result in the diversion of greater quantities of
FOG to BBD production at the expense of other markets that currently use FOG feedstocks.
Alternatively, it could also result in greater collection of FOG that is currently sent to landfills or
wastewater treatment systems, but we do not expect significant increases in the collection rates
of FOG for BBD production through 2025.

Production of BBD from distillers corn oil has also generally increased through 2021.
The most significant increases in the volume of BBD produced from distillers corn occurred

765	Based on EMTS data

766	See comments from the Advanced Biofuels Association (EPA-FIQ-OAR-2021-0324-0476) and the Clean Fuels
Alliance America (EPA HQ-OAR 2021-0324-0458) on the 2020- 2022 RFS annual rule.

3,500

3,000

2,500

i 2,000

c
o

= 1,500

1,000

500

357


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through 2018 as more corn ethanol plants installed equipment to produce distillers corn oil and
corn ethanol production expanded. However, production of BBD from this feedstock has been
fairly consistent at about 250 - 300 million gallons (400-500 million RINs) per year since 2017.
Total production of distillers corn oil in the U.S. in 2020 was approximately 2 million tons,767 or
enough corn oil to produce about 530 million gallons (approximately 800 million RINs) of BBD.
This suggests that distillers corn oil could be used to produce over 200 million gallons of
additional BBD, but that would require shifting distillers corn oil from other existing uses, which
would then have to be backfilled with other new sources.768 It is also possible that domestic
production of distillers corn oil could increase in future years for a variety of reasons, including
new varieties of corn with higher oil content, greater extraction rates, or increased ethanol
production for domestic or international markets. As with increased FOG collection, however,
we do not expect these changes to significantly increase the domestic supply of corn oil in 2025.

The remaining volume of BBD has been produced from canola oil and soybean oil.
Production of BBD from canola oil has fluctuated in recent years from a high of approximately
180 million gallons (300 million RINs) in 2016 to a low of approximately 120 million gallons
(170 million RINs) in 2015. Production of BBD from canola oil averaged approximately 160
million gallons (240 million RINs) each year from 2018 to 2021. Total production of canola oil
reached a high of approximately 1.8 billion pounds in the 2019/2020 agricultural marketing year,
or enough canola oil to produce approximately 240 million gallons of BBD.769 Canola oil
production has ranged between 1.5 and 2.0 billion pounds from 2013/2014 and 2021/2022.770
Significant increases in canola oil production in the U.S. through 2025 are unlikely due to both
the relatively poor economic return on canola in many parts of the U.S. and the lack of additional
crush capacity for soft seed vegetable oil crops like canola. An additional 4 billion pounds of
canola oil, or enough to produce approximately 500 million gallons of BBD, were imported in
2020/2021. It is unclear how much of this imported canola oil would be able to qualify as
renewable biomass under the statutory definition, and thus available to be used to produce
qualifying BBD under the RFS program.771 A recently proposed pathway that would allow for
the generation of RINs for renewable diesel produced from canola oil could increase demand for
canola oil for biofuel production if this pathway were finalized. Conversely, increasing biofuel
demand in Canada is likely to impact the quantity of canola oil available to U.S. biofuel
producers. Consistent with the relatively small and stable domestic production of canola oil and
relatively consistent use of canola oil for biofuel production in the U.S., we are not projecting
any growth in the domestic availability of canola oil for biofuel production through 2025, though
imported canola oil (or imported biofuels produced from canola oil) may be a potential source of
increased biofuel supply in these years.

The largest source of BBD production in the U.S. historically has been soybean oil. Use
of soybean oil to produce biodiesel increased from approximately 5.1 billion pounds in the

767	USDA Grain Crushings and Co-Products Production 2021 Summary. March 2022. Available at:
https://www.nass.usda.gov/Publications/rodays Reports/reports/cagcan22.pdf

768	For a discussion of backfilling when oil is removed from dried distillers grains, see 83 FR 37735 (August 2,
2018).

769	U.S. Canola oil production data sourced from USDA's Oil Crops Yearbook (https://www.ers.usda.gov/data-
products/oil-crops-yearbook/).

770	Ibid.

771	CAA section 211 (o) (1) (I).

358


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2013/2014 agricultural marketing year to approximately 8.85 billion pounds in the 2020/2021
agricultural marketing year.772 During this time period the percentage of all soybean oil produced
in the U.S. used to produce biodiesel increased from approximately 25% in 2013/2014 to
approximately 35% in 2020/2021. As a point of reference, if all the soybean oil produced in the
U.S. in 2020/2021 (25 billion pounds) were used to produce BBD, this quantity of feedstock
could be used to produce approximately 3.3 billion gallons of BBD. Thus, BBD production from
soybean oil could more than double if it were all shifted from its other existing uses, including
food, and backfilled with other new sources such as palm oil, potentially impacting the GHG
benefits.

Additional soybean oil production in future years could come from several sources. The
first potential source of additional soybean oil is increased crushing of soybeans in the U.S.
Soybean crushing is the process by which whole soybeans are converted into soybean oil and
soybean meal. The percentage of U.S. soybean production that has been crushed has varied from
a low of 44% in the 2016/2017 agricultural year to a high of 61% in the 2019/2020 marketing
year.773 Higher soybean crushing rates produce greater quantities of soybean oil from the same
soybean crop.

Strong demand for vegetable oil has already resulted in increasing domestic crushing of
soybeans. Recent data from USDA indicates that soybean crushing reached record levels in
December 2021.774 USDA estimates of soybean crush capacity, after accounting for necessary
down time at crush facilities, range from 2.45-2.6 billion bushels per year.775 The high end of
this range represents an increase of about 0.4 billion bushels of soybean crush relative to the
estimated quantity of soybeans crushed in the 2020/2021 agricultural marketing year.776
Increasing soybean crushing by 0.4 billion bushels per year would increase soybean oil
production by approximately 4.6 billion pounds, assuming an oil yield of 11.6 pounds per bushel,
consistent with the soybean oil yield per bushel of soybeans crushed in recent years.777 This
increase in soybean oil production could be used to produce approximately 600 million gallons
of biodiesel and renewable diesel if this entire quantity of soybean oil was used solely for
production of these fuels. In addition, a number of companies have recently announced plans to
build new soybean crushing facilities, or expand existing facilities.778 In comments on the 2020-
2022 RFS annual rule the American Soybean Association noted at least 13 announcements for
the expansion of soybean crush facilities or new facilities.779 They estimated that these projects

772	U.S. Soybean oil production and use data sourced from USDA's March 2022 Oil Crops Yearbook
(https://www.ers.usda.gov/data-products/oil-crops-yearbook/). The agricultural marketing year for soybeans runs
from September to August.

773	U.S. Soybean crushing data sourced from USDA's Oil Crops Yearbook (https://www.ers.usda.gov/data-
products/oil-crops-yearbook/).

774	Ates, Aron M. and Bukowski, Maria. Oil Crops Outlook: February 2022. USDA Economic Research Service.
February 11, 2022.

775	Ibid

776	USDA Economic Research Service. Oil Crops Data: Yearbook Tables. March 25, 2022.

777	Ibid.

778	Demarre-Saddler, Holly. Cargill Plans US Soy Processing Operations Expansion. World-Grain.com. March 4,
2021.

779	See comments from the American Soybean Association on the RFS Annual Rule (EPA-HQ-OAR-2021-0324-
0471).

359


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could increase soybean crushing by 15%.780 Any soybean oil production from these facilities if
they come online by 2025 would further increase the quantity of soybean oil available for biofuel
production or other uses. Increasing the domestic crush of soybeans would likely result in a
decrease in the quantity of soybeans exported to other countries and could also result in
increased soybean cultivation in the U.S.

The USDA Agricultural Projections to 2031 project increasing domestic soybean oil
production through 2025, largely as a result of an increased crushing of soybeans. USDA
projects that domestic soybean oil production will increase by approximately 1.4 billion pounds
from 2022 (26.0 billion pounds) to 2025 (27.4 billion pounds).781 If this entire increase in
soybean oil production were used to produce biodiesel or renewable diesel, it would result in an
increase of approximately 180 million gallons of biofuel from 2022 to 2025, or an increase of
approximately 60 million gallons per year.

Figure 6.2.3-2: Soybean Oil Production and Soybean Oil Used for Biofuel Production

30,000

25,000

"S 20,000
c

Q

^ 15,000
o

^ 10,000
5,000

2015 2016 2017 201S 2019 2020 2021 2022 2023 2024 2025

• Soybean Oil Production (Actual)
¦ Soybean Oil for Biofuels (Actual)

•Soybean Oil Production (Projected)
•Soybean Oil for Biofuels (Projected)

Actual data from USDA Oil Crops Yearbook; Projected data from USDA Agricultural Projections to 2031

In addition to increased soybean crushing, additional quantities of soybean oil could be
made available for biofuel production from decreased exports and/or increased imports of
soybean oil. From the 2011/2012 agricultural marketing year through the 2020/2021 agricultural
marketing year approximately 10% of the soybean oil produced in the U.S. was exported.782
Soybean oil exports in 2020/2021 are estimated at approximately 1.7 billion pounds, or enough
soybean oil to produce approximately 225 million gallons of biodiesel or renewable diesel.783

780	Ibid.

781	USDA Agricultural Projections to 2031. February 2022. For each year EPA converted soybean oil production
projections to calendar year prices by weighting production in the first agricultural marketing year (e.g., 2022/2023
for the 2023 price) by 0.25 and production in the second agricultural marketing year (e.g., 2023/2024 for the 2023
price) by 0.75.

782	USDA Economic Research Service. Oil Crops Data: Yearbook Tables. March 25, 2022.

783	Ibid.

360


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Soybean oil imports have been relatively small (300-400 million pounds)784 in recent years,
likely due to the tariff on soybean oil imports.785 As with other potential sources of BBD
feedstock with existing markets, increasing BBD production by decreasing exports and/or
increasing imports of soybean oil would require shifting these feedstocks from existing markets
including food supply in the U.S. and abroad and then backfilling with other new supplies such
as palm oil or other vegetable oils produced in foreign countries, potentially impacting the GHG
benefits.

Finally, additional vegetable oil feedstocks in future years could come from international
sources. The most recent WASDE report from USDA project that global production of vegetable
oils will be approximately 212 million metric tons in the 2021/2022 agricultural marketing
year.786 This quantity of vegetable oil, if converted to fuel, would result in approximately 61
billion gallons of biodiesel and/or renewable diesel. The vast majority of this is used for food and
other purposes and could not be readily used to supply advanced biodiesel and renewable diesel
to the U.S.787 Furthermore, much of this vegetable oil is also likely to be from palm oil that does
not currently have an approved pathway under the RFS program except for the portion that could
be produced under the program's grandfathering provisions. However, the large global
production of vegetable oil suggests that increased imports of vegetable oil, or biodiesel and
renewable diesel produced from vegetable oil (discussed in Chapter 6.2.4), may be made
available to markets in the U.S. in future years.

While the global production of vegetable oils far exceeds the quantity of vegetable oil
used for biofuel production there is significant demand for vegetable oils in other markets such
as for food, animal feed, and oleochemical production. Recent prices for vegetable oils suggest
that the market for vegetable oils has tightened in recent years, with demand for vegetable oils
increasing relative to supply. From 2013/2014 through 2019/2020 the price for soybean oil
generally ranged from $0.30 - $0.40 per pound.788 In 2020/2021 soybean oil prices increased to
$0.57 per pound. Soybean oil prices reached a high of approximately $0.87 per pound in April
2022, before falling to approximately $0.56 per pound in July 20 2 2.789 Soybean oil prices are
decreasing slightly from 2022/2023 ($0.51 per pound) through 2025/2026 ($0.48 per pound).790

784	Ibid

785	Harmonized Tariff Schedule of the United States (2020) Revision 19.

786	United States Department of Agriculture World Agricultural Supply and Demand Estimates. June 10, 2022.

787	These reasons include the demand for vegetable oil in the food, feed, and industrial markets both domestically
and globally; constraints related to the production, import, distribution, and use of significantly higher volumes of
biodiesel and renewable diesel; and the fact that biodiesel and renewable diesel produced from much of the
vegetable oil available globally may not qualify as an advanced biofuel under the RFS program.

788	USDA Economic Research Service. Oil Crops Data: Yearbook Tables. March 25, 2022.

789	Nasdaq Soybean Oil Price. Accessed 7/14/2022. Available Online: https://www.nasdaq.com/market-
a c I: iv i ty / c ommodities/zl

790	USDA Agricultural Projections to 2031. February 2022.

361


-------
Figure 6.3.2-3: Soybean Oil Price

T3
C

o

CL

$0.70
$0.60
SO 50
$040

Qj $0.30

CL		

-iA

$0.20
$0.10
$-

^	^	^	N#	/	,/	,/	^	,/	,/

^ T?% -pN # # -V° -v°	a° # # -v°

Reported Soybean Oil Price	Projected Soybean Oil Price

Actual data from USDA Oil Crops Yearbook; Projected data from USDA Agricultural Projections to 2031

While increased soybean oil demand for biofuel production is likely a contributing factor
to the higher soybean oil prices observed in recent years it is not the only, or even the primary
factor. The current high prices have also been affected by poor weather conditions in South
America and Malaysia over the past year, which has negatively impacted global vegetable oil
production. In 2021 there was drought in Argentina and Brazil (two of the largest exporters of
soybeans and soybean oil),.791 At the same time, palm oil production in Malaysia was impacted
by flooding caused by a typhoon.792

Despite these current high prices for vegetable oil, the data discussed above indicate that
there will be some additional supply of vegetable oil to enable increasing production of biofuels
from vegetable oils in future years. We project small increases in the availability of FOG and
distillers corn oil, consistent with historical trends. Increasing crushing of soybeans domestically
together with better harvest conditions in South America and Southeast Asia are projected to
result in an increased supply of vegetable oil. These projected vegetable oil production increases
are limited, however, and suggest that the availability of feedstocks, particularly qualifying
feedstocks under the RFS program, could be a limiting factor for biodiesel and renewable diesel
production through 2025.

6.2.4 Imports and Exports of Biomass-Based Diesel

In evaluating the likely rate of production of BBD through 2025 we also examined BBD
imports and exports in previous years. While imports and exports of BBD may not directly
impact the rate of production of BBD in the U.S., they do impact the volume of these fuels
available to obligated parties. We therefore think that the volume of these fuels that may be

791	Wilson, Nick. Oil Prices Surge - Vegetable Oil That Is. Marketplace.org. February 17, 2022.

792	Ibid.

362


-------
imported and exported in future years is a relevant consideration as we require volumes through
2025 under the RFS program.

Since 2014 biodiesel imports have generally averaged about 200 million gallons per year,
with the exception of 2015-2017. During this time (2015-2017) biodiesel imports from Argentina
surged, with biodiesel imported from Argentina responsible for 64% of all biodiesel imports in
these three years. In August 2017, the U.S. announced preliminary tariffs on biodiesel imported
from Argentina and Indonesia.793' These tariffs were subsequently confirmed in April 2018.794
Since the time the preliminary tariffs were announced, EI A has not reported any biodiesel
imported from these countries,795 After the imposition of these tariffs, imports of biodiesel from
other countries has increased marginally; however, the biggest effect of these tariffs has been a
decrease in the total volume of imported biodiesel to approximately 200 million gallons during
2018-2021.

Figure 6.2.4-1: Biodiesel and Renewable Diesel Imports (2014-2021)

800

2014 2015 2016 2017 201S 2019 2020 2021

¦ Biodiesel Imports ¦ Renewable Diesel Imports

Biodiesel and renewable diesel imports based on data from EMTS

Renewable diesel imports have generally increased since 2014, with larger increases
observed in recent years. A significant factor in the increasing imports of renewable diesel
appears to be the California Low Carbon Fuel Standard (LCFS), as the vast majority of the
renewable diesel consumed in the U.S. (including both domestically produced and imported
renewable diesel) has been consumed in California.791' We expect that, as the carbon intensity

793	82 FR 40748 (August 28, 2017).

794	83 FR 18278 (April 26, 2018).

795	See EIA data on biodiesel imports by country, available at:

https://www.eia.gov/dnav/pet/pet move impcus a2 nus EPOORDB imO mbbl a.htm

796	Data from California's LCFS program indicates that approximately 940 million gallons of renewable diesel were
consumed in California in 2021, the most recent year for which data are available

(https://ww3.arb.ca.gov/fuels/lcfs/dashboard/dashboard.htm). Data from EMTS indicates that 960 million gallons of
renewable diesel were consumed in the U.S. in 2021, including both renewable diesel that generated BBD RINs and
advanced RINs.

363


-------
requirements in California's LCFS program continue to decrease, and as similar LCFS programs
are taken up in other states (e.g., Oregon and Washington), these programs, in conjunction with
the RFS program and the federal tax credit, will continue to provide an attractive market for
domestically produced and imported renewable diesel.

Exports of RIN generating biodiesel, based on EMTS data, have been fairly consistent
since 2014, generally ranging between 70 and 100 million gallons per year. According to EMTS
data, renewable diesel exports increased with domestic renewable diesel production, reaching
over 200 million gallons in 2020 and 2021. Increasing exports of renewable diesel reflect the
existence of biofuel mandates and significant financial incentives creating high demand in other
countries that the U.S. must compete with. As one example, Canada recently finalized new Clean
Fuel Regulations that require increasing volumes of low-carbon fuels in future years.797 At this
time, it is difficult to project whether renewable diesel exports will continue to increase in future
years or alternatively return to the low levels observed through 2017.

The fact that there are both imports and exports of BED simultaneously also suggests that
there are efficiencies associated with importing into and exporting from certain parts of the
country as well as economic advantages associated with the use of BED from different
feedstocks in different foreign and domestic markets. One factor likely supporting simultaneous
imports and exports of biodiesel and renewable diesel is the structure of the biodiesel tax credit.
Since the U.S. tax credit for biodiesel and renewable diesel applies to fuel either used or
produced in the U.S. it applies equally to fuel whether it is used in the U.S. or exported.
Furthermore, by importing foreign produced biodiesel and renewable diesel for domestic use and
then exporting domestically produced biodiesel and renewable diesel to other countries parties
are able to claim the biodiesel tax credit on both the imported and the exported volumes.

Figure 6.2.4-2: Biodiesel and Renewable Diesel Exports (2014-2021)

350
300
250

c
o

15 200

13

c

° 150

100
50

Mill

2014 2015 2016 2017 2018 2019 2020 2021
¦ Biodiesel Exports ¦ Renewable Diesel Exports

Biodiesel and renewable diesel exports based on data from EMTS

797 Tuttle, Robert. Canada Releases California-Style Fuel Rules to Cut Emissions. Bloomberg, June 29, 2022.

364


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6.2.5 Projected Rate of Production and Use of Biomass-Based Diesel

Based on the factors discussed in the preceding sections, we have projected domestic
BBD production and net BBD imports through 2025. Our analyses indicate that production
capacity and the ability to distribute and use biodiesel and renewable diesel are unlikely to
constrain BBD production through 2025 (see Chapters 6.2.2, 7.3, and 7.4 for further discussion
on biodiesel and renewable production capacity and impacts on infrastructure). Further, the
significant increase in renewable diesel production capacity projected through 2025, in
combination with the decreasing biodiesel operational capacity observed in recent years,
suggests that increases in BBD production are more likely to be renewable diesel rather than
biodiesel.

The factor that appears most likely to constrain BBD production in 2023-2025 is the
availability of feedstock. Our projections of BBD production through 2025 are therefore based
on our projections of the availability of feedstocks for BBD production. As discussed in Chapter
6.2.2, we expect small increases in the availability of fats, oils, and greases or distillers corn oil
for biofuel production through 2025, consistent with the trends observed in past years. We also
project that additional volumes of vegetable oils, including canola oil and soybean oil, may be
available in future years. The higher vegetable oil prices observed in recent years (relative to
previous years) suggest that demand for vegetable oils is increasing faster than vegetable oil
production. We project that vegetable oil production will increase in future years due to a variety
of factors, including increased soybean crushing in the U.S. and increased production of oilseed
crops in South American and Southeast Asia.

We have projected the domestic production and net imports of BBD separately by fuel
type (biodiesel and renewable diesel) and feedstock. To project biodiesel and renewable diesel
production from fats, oils and greases, distillers corn oil, and canola oil we have used a linear
regression based on the quantities of these fuels supplied from 2016-2021. Domestic production
and imports of biodiesel was projected in the same way (using a linear regression of the quantity
of biodiesel form soybean oil from 2016-2021). The domestic production and net imports of
these fuels from 2016-2021, and the equations used to project the domestic production and net
imports from 2023-2025 based on a linear regression of the historical data are shown in Table
6.2.5-1.

Table 6.2.5-1: Domestic Proc

uction and Net Imports of E

}BD (2016-2021; million RINs)

Fuel

Feedstock

2016

2017

2018

2019

2020

2021

Equation

Biodiesel

Canola Oil

447

362

321

334

397

403

-2.86*Year +6,151

Biodiesel

DCO

259

285

382

315

271

295

1.95*Year- 3,634

Biodiesel

FOG

595

508

349

563

517

553

-7.64*Year+ 15,990

Biodiesel

Soybean Oil

1,779

1,673

1,562

1,510

1,700

1,432

-48.88*Year + 100,271

Renewable Diesel

DCO

101

110

100

133

103

195

13.71*Year- 27,540

Renewable Diesel

FOG

480

577

517

752

716

1,029

97.20*Year- 195,527

To project domestic production and imports of renewable diesel produced from soybean
oil we used a different methodology. This is because there has been no discernable trend in the
use of soybean oil for biofuel production from 2016-2021. Instead, the use of soybean oil for
biofuel production has fluctuated significantly. These fluctuations appear to be based on a

365


-------
number of factors, including the availability of the federal tax credit and the incentives for BBD
production provided by the RFS program and California's LCFS program. We therefore do not
expect that production of renewable diesel in previous years provides a good basis for projecting
production and net imports of this fuel in future years.

To project the domestic production and net imports of renewable diesel produced from
soybean oil in 2023-2025 we first projected the quantity of this fuel that would be used to meet
the 2022 RFS volume obligations. In the RIA for the 2020-2022 RFS annual rule EPA projected
that 5,555 million RINs of BBD would be supplied in 2022 to meet the required volumes in that
year. We then subtracted the projected supplies of biodiesel (all feedstocks) and renewable diesel
from feedstocks other than soybean oil calculated using the methodology described in the
preceding paragraph from the 5,555 million RINs of BBD projected to be supplied in 2022 to
meet the required volumes to project the quantity of renewable diesel produced from soybean oil
in 2022. Projected changes to the production and net imports of renewable diesel produced from
soybean oil from the projected volume in 2022 were based on the projected increases in soybean
oil production in USDA's Agricultural Projections to 2031. We projected domestic production
and net imports of renewable diesel from soybean oil in 2023-2025 by adding the projected
increase in soybean oil production relative to 2022 in each year plus the projected decrease in
domestic production and net imports of biodiesel produced from soybean oil to the quantity of
renewable diesel produced from soybean oil projected for 2022. This calculation assumes that all
increases in soybean oil production relative to 2022 are used for biofuel production. The
calculations to project the domestic production and net imports of renewable diesel produced
from soybean oil are shown in Table 6.2.5-2.

A summary of all of the projected volumes of BBD from 2022-2025 is shown in Table
6.2.5-3. We note that the projected domestic production and net imports of renewable diesel
produced from soybean oil presented in Table 6.2.5-2 and 3 are slightly different that the
candidate volumes for this fuel presented in Chapter 3. The differences range from
approximately 80 million gallons in 2023 to approximately 240 million gallons in 2025. These
differences are the result of slightly different methodologies used in these chapters. In Chapter 3
we projected the fuel types that were most likely to be used to meet the candidate volumes. In
this chapter we projected that renewable diesel produced from soybean oil would be used to
satisfy the total demand for biodiesel and renewable diesel after accounting for the projected
volumes of these fuels produced from these feedstocks. In this chapter, as described above, we
have projected renewable diesel based on the projected increase in soybean oil production. These
numbers suggest that renewable diesel volumes that exceed the candidate volumes may be
possible, however we note that these projections, particularly in 2025, are subject to uncertainty
and that requiring higher volumes of biodiesel and renewable diesel would likely result in higher
vegetable oil prices and increased demand for imported vegetable oils.

366


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Table 6.2.5-2: Projected Domestic Production and Net Imports of Renewable Diesel
Produced from Soybean Oil (million gallons)			



2023

2024

2025

RD Production and Imports in 2022

1,008

1,008

1,008

Increase in Soybean Oil Production (relative to 2022)

68

131

184

Change in Soybean Oil Biodiesel (relative to 2022)

-33

-65

-98

Projected RD Production and Imports

1,108

1,205

1,290

Table 6.2.5-3: BBD Production and Net Imports (2022-2025; million gallons)3

Year

2022

2023

2024

2025

Biodiesel

Canola Oil

240

240

240

240

DCO

210

210

210

210

FOG

360

350

350

340

Soybean Oil

960

930

890

860

Renewable Diesel

DCO

100

110

120

120

FOG

600

660

710

770

Soybean Oil

1,010

1,110

1,200

1,290

BBD Total

All Feedstocks13

3,480

3,600

3,730

3,840

a Rounded to the nearest 10 million gallons
b Numbers may not add due to rounding

6.3 Imported Sugarcane Ethanol

The predominant available source of advanced biofuel other than cellulosic biofuel and
BBD has historically been imported sugarcane ethanol. Imported sugarcane ethanol from Brazil
is the predominant form of imported ethanol and the only significant source of advanced ethanol.
However, data through 2021 demonstrates considerable variability in imports of sugarcane
ethanol.

367


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Figure 6.3-1: Historical Sugarcane Ethanol Imports

800

700

600

500

' 400

300

200

100

tt

I I

i I ¦ i i I I i

rNfNrNfNrNfNrNfNfNfNrslfNrslfNPvlfNrNfN

Source: "US Imports of Brazilian Fuel Ethanol from EIA - February 2022." Includes imports directly from Brazil
and those that are transmitted through the Caribbean Basin Initiative and Central America Free Trade Agreement
(CAFTA).

Moreover, data from EIA indicates that all 2019 - 2021 ethanol imports entered the U.S.
through the West Coast. We believe that these imports were likely used to help refiners meet the
requirements of the California Low Carbon Fuel Standard (LCFS), which provide significant
additional incentives for the use of advanced ethanol beyond the RFS.

As noted in previous annual standard-setting rulemakings, the high variability in
historical ethanol import volumes makes any projection of future imports uncertain.798 However,
import volumes for more recent years are likely to provide a better basis for making future
projections than import volumes for earlier years. To address these issues, in the final rulemaking
which established the volume requirements for 2022 we used a different methodology for
making projections of future ethanol imports than we had used in previous years.799 Specifically,
we used a weighted average of import volumes for all years where the weighting was higher for
more recent years and lower for earlier years. The weighting factor for any given year's volume
was twice as large as the weighting factor for the previous year's volume. This approach
provided a better predictor of future imports of sugarcane ethanol than either simple averages of
historical volumes or a trendline based on historical volumes.

We have again used this methodology in this proposed rulemaking to estimate the
volumes of imported sugarcane ethanol that could be expected in the future. The volumes and
weighting factors we are using are shown in Table 6.3-1. The resulting weighted average is 110
million gallons. As we are projecting volumes for 2023-2025 for this proposal, and this is the
latest data available, the same projection would apply for all three years.

798	See, e.g., 85 FR 7032-33 (February 6, 2020) and 87 FR 39600 (July 1, 2022).

799	See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).

368


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Table 6.3-1: Annual Advanced Ethanol Imports and Weighting Factors

Year

Imported advanced
ethanol3 (million gallons)

Weighting factor

2014

64

0.0078125

2015

89

0.015625

2016

34

0.03125

2017

74

0.0625

2018

78

0.125

2019

196

0.25

2020

185

0.5

2021

60

1

a Based on RINs generated for imported ethanol and assigned a D-code of 5 according to EMTS.

As noted above, the future projection of imports of sugarcane ethanol is inherently
imprecise, and actual imports in years 2023 - 2025 could be lower or higher than 110 million
gallons. Factors that could affect import volumes include uncertainty in the Brazilian political
climate, weather and harvests in Brazil, world ethanol demand and prices, constraints associated
with the E10 blendwall in the U.S., world demand for and prices of sugar, the cost of sugarcane
ethanol relative to that of corn ethanol, and the impact of the novel virus COVID-19 on
transportation fuel prices and demand.

6.4 Other Advanced Biofuel

In addition to cellulosic biofuel, imported sugarcane ethanol, and BBD, there are other
advanced biofuels that can be supplied in the years after 2022. These other advanced biofuels
include non-cellulosic CNG, naphtha, heating oil, renewable diesel co-processed with petroleum,
and domestically produced advanced ethanol. However, the supply of these fuels has been
relatively low in the last several years.

Table 6.4-1: Historical Supply of Other Advanced Biofuels (million ethanol-equivalent





Domestic

Heating



Renewable



Year

CNG/LNG

Ethanol

Oil

Naphtha

Diesel (D5)

Total

2014

20

26

0

12

15

73

2015

0

25

1

24

8

58

2016

0

27

2

27

8

64

2017

2

25

2

32

9

70

2018

2

25

3

31

40

101

2019

5

24

3

37

58

127

2020

5

23

3

33

86

150

2021

6

26

2

32

98

164

We have used the same weighted averaging approach (see Table 6.3-1) for other
advanced biofuels as we have used for sugarcane ethanol to project the supply of these other
advanced biofuels. Based on this approach, the weighted average of other advanced biofuels is
146 million RINs. This volume of other advanced biofuel is composed of 25 million RINs of

369


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domestic advanced ethanol, 81 million RINs of co-processed renewable diesel, and 80 million
RINs of other advance biofuels (non-cellulosic RNG, heating oil, and naphtha). We have used
these values in our candidate volumes for all three of the years addressed in this proposed
rulemaking, 2023 - 2025. We do not believe the available data and the methodology we
employed can reasonably be used to project future volumes that change over time for other
advanced biofuels.

We recognize that the potential exists for additional volumes of advanced biofuel from
sources such as jet fuel, liquefied petroleum gas (LPG), butanol, and liquefied natural gas (as
distinct from CNG), as well as non-cellulosic CNG from biogas produced in digesters. However,
since they have been produced, if at all, in very small amounts in the past, we do not believe the
market will make available substantial volumes from these sources in the timeframe of this
rulemaking (2023 - 2025).800

6.5 Total Ethanol Consumption

In order to properly analyze possible future volume targets for the different categories of
renewable fuel, it was necessary to separately estimate volumes by fuel type and feedstock. For
ethanol, the process of making such estimates is complicated by the fact that there are constraints
on total ethanol consumption, a topic we discuss further in Chapter 7.5. It was therefore
necessary to estimate the total volume of ethanol that is projected to be consumed in the 2023—
2025 timeframe.

The total volume of ethanol consumed is the net result of ethanol used in E10, El 5, and
E85, while accounting for some small volume of ethanol-free gasoline (E0). In previous
rulemakings we have estimated volumes of these individual blends for the purpose of projecting
total ethanol consumption.801 However, the projection of E0, El5, and E85 for future years has
been hampered by a lack data on nationwide consumption of each individual blend. For the
purposes of this rulemaking, we have developed an alternative method that we believe is both
more accurate and avoids the need to estimate volumes separately for E0, El5, and E85. This
method, presented in Chapter 6.5.1, correlates historical poolwide ethanol concentration derived
from EIA data with the number of stations that have offered El 5 and E85.

For the purposes of estimating the costs of renewable fuel, however, it is helpful to
account for the different distribution practices required for different gasoline-ethanol blends.
Thus, for cost purposes only, we have projected volumes of El 5 and E85 for 2023-2025 using
aggregate consumption data from USDA's Biofuels Infrastructure Partnership (BIP) program.
This analysis is presented in Chapter 6.5.2, and yields lower total volumes of ethanol than we
believe would actually be consumed in 2023-2025. For this reason, the estimated volumes of
El5 and E85 are relevant for cost estimation purposes only and are not used in any other
analyses discussed in this DRIA.

800	Less than 1 million gallons of these other renewable fuels were produced in the years prior to 2021. In 2021, 8
million gallons of D4 jet fuel was produced, but it is difficult to project volumes of jet fuel for 2022 based on data
from this single year.

801	For instance, see "Estimates of E15 and E85 volumes in 2017," completed for use in the 2017 standards
rulemaking (81 FR 89746, December 12, 2016. See relevant discussion on page 89777).

370


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6.5.1 Estimation of Ethanol Consumption for Analysis of Target Volumes

The national average ethanol concentration of gasoline rose above 10.00% in 2016 and
has continued to increase since then.

Figure 6.5.1-1: Poolwide Ethanol Concentration

10.6%

! 10.4%

~o

& 10.2%
on

1Z 10.0%
o

JS 9.8%
oj

£ 9.6%
S 9.4% !

Q_

£ 9.2%
° 9.0%
8 8%





















































10.08%



10.25%

10.36%













10.02%

~



10.20%









9.83%





10.13%















9.65%

3.75%



9.91%















3.335^

^.61%





































































































2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Source: Ethanol consumption from Table 10.3 of EIA's Monthly Energy Review, gasoline consumption from Table
3.5 of EIA's Monthly Energy Review.

As the average ethanol concentration approached and then exceeded 10.00%, the gasoline
pool became saturated with E10, with a small, likely stable volume of E0 and small but
increasing volumes of El 5 and E85. The average ethanol concentration can exceed 10.00% only
insofar as the ethanol in El5 and E85 exceeds the ethanol content of E10 and more than offsets
the volume of E0. As a result, one would expect a strong correlation between ethanol
concentration and the number of retail service stations offering El 5 and E85.

To evaluate this proposition, we calculated the annual average number of stations
offering El 5 and E85. For El 5, annual averages were based on interpolations of the data
provided by Prime the Pump (see Figure 7.5.3-2), while for E85 annual averages were calculated
from the monthly estimates provided by DOE's Alternative Fuel Data Center (see Figure 7.5.2-
2). The results are shown in Table 6.5.1-1.

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Table 6.5.1-1: Annual Average Number of Stations Offering Higher Level Ethanol Blends



El5 stations

E85 stations

2013

36

2,616

2014

88

2,713

2015

145

2,932

2016

308

3,091

2017

777

3,251

2018

1,376

3,567

2019

1,838

3,717

2020

2,180

3,841

2021

2,458

4,063

Examination of these sets of data suggested that the El 5 station data was nonlinearly
correlated with poolwide ethanol concentration, while the E85 station data was roughly linearly
correlated.

Figure 6.5.1-2: Correlations Between E15 and E85 Stations and Poolwide Ethanol
Concentration

10.-10%
10.10%

e

¦2 If). 7094
£

H 10.10%

y
c

2 iaoo%

o

£ 9.90%
9 80%
9.70%

10.40%

10,30%

c

2

I

a KU'W

u

c

S 10.00%

a
c

5 9.90%
9S0%

9.70%

1,000 1,500 2-000
E15 stations

2300

1,/OD J,900 i.im 3,30D 3.S00 i./O) 3,000 4,100 43O0

ESS stations

Based on these observations, we applied a least-squares regression to the ethanol
concentration using the natural logarithm of the number of El 5 stations and a linear term for the
number of E85 stations as the independent variables. The result was the following equation:

Ethanol concentration (%) = (5.328x10 4) m ln(E15 station count)

+ (2.224x10 6) x (E85 station count)

+ 0.08994

Given that this regression has an r squared value of 0.95, it represents a strong basis for
projecting the poolwide ethanol concentration for 2023-2025.

Using the projected number of El 5 and E85 stations discussed in Chapters 7.5.3 and
7.5.2, the regression equation above yields the ethanol concentration projections shown in Table
6.5.1-2.

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Table 6.5.1-2: Projected Poolwide Ethanol Concentration



El5 stations

E85 stations

Ethanol concentration

2023

3,818

4,511

10.44%

2024

4,567

4,689

10.49%

2025

5,146

4,866

10.53%

The projected ethanol concentration can then be combined with total projected gasoline
energy demand from EIA's Annual Energy Outlook (AEO) 2022 to estimate total ethanol
consumption.

Table 6.5.1-3: Projected Total Ethanol Consumption



Projected ethanol
concentration

Gasoline energy
demand (Quad Btu)a

Projected ethanol
consumption (million
gallons)13

2023

10.44%

16.8067

14,590

2024

10.49%

16.7825

14,640

2025

10.53%

16.7396

14,669

a See AEO2022 Table 2, "Delivered Energy Consumption, All Sectors," "Motor Gasoline"
b Based on the energy-to-volume conversion factors for denatured ethanol and BOB (Blendstock for Oxygenate
Blending) found in AEO2022 Table 68.

6.5.2 Estimation of Gasoline Blend Volumes for Cost Purposes

For the purposes of estimating costs only, we projected the volumes of El 5 and E85 that
may be consumed in 2023-2025. These volume projections were based on data collected by
USDA through their BIP program and made available to EPA.802 While this data includes only a
subset of all El 5 and E85 stations, it is considerably more comprehensive than the alternatives.
For instance, the BIP data covers almost 800 retail stations in 19 states. The only other data of
which we are aware on El5 sales at retail is from two states (Iowa and Minnesota) 803 804 while
the data of which we are aware on E85 sales at retail is from six states (Iowa, Minnesota,
California, New York, Kansas, and North Dakota).805

USDA collected data on sales of El 5 and E85 over a six-year period ending in 2020.
However, the BIP program was not completed until the end of 2018 and the largest number of
respondents to the survey occurred in 2019 and 2020. Moreover, there was a noticeable decrease
in El 5 and E85 consumption in 2020 that was consistent with the decrease in all gasoline
consumption brought about by the COVID pandemic, and which may not be representative of
future years. As a result, we would expect that the data collected for 2019 and 2020 would be
more representative of the country as a whole than the data collected for 2015-2018. Between
these two years, we chose to use BIP data from 2019, as opposed to 2020, for our analyses for

802	"Communication with USDA on the BIP program 1-19-22," available in the docket.

803	Iowa Department of Revenue, https://tax.iowa.gov/report-category/retailers-annual-gallons. See, for instance
"Iowa Department of Revenue - 2021 Retailers Fuel Gallons Annual Report."

804	Minnesota Commerce Department, https://mn.gov/coninierce/consumers/your-vehicle/clean-energy.jsp. See, for
instance, "Minnesota Commerce Department - 2022 Minnesota E85 & Mid-Blends Station Report."

805	See discussion of data sources in "Estimate of E85 consumption in 2020," available in the docket.

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2020-2022. The BIP per-station sales volumes for 2019 reflect rising volumes over the prior
several years and are somewhat higher than for 2020.

We recognize that in 2019 the 1 psi waiver applied to El 5, but that it would not apply in
20 2 3-20 2 5.806,807 The 1 psi waiver could have resulted in higher sales volumes in 2019 than
would have been the case if the 1 psi waiver had not applied. As a result, the use of BIP data on
El 5 sales volumes in 2019 may overestimate the potential for sales in 2023-2025 when the lpsi
waiver does not apply. However, there are reasons to believe that the use of data from 2019 is
appropriate for 2023 - 2025. To begin with, El5 sales volumes per station have increased in
previous years, and thus could continue to increase in the future as well. The BIP demonstrates
an increasing trend that is disrupted only by the results for 2015 when only 8 retail stations
reported El5 sales volumes (compared to 767 in 2019), and for 2020 when the pandemic reduced
sales volumes of all fuels.

Figure 6.5.2-1: Per-Station E15 Sales Volumes from BIP Program

160,000
150,000

l—

S 140,000

P1"

1_

130/000

c
o


-------
Figure 6.5.2-2: Per-Station El5 Sales Volumes in Minnesota

35,000

lilLr)U">LniD^D
-------
Table 6.5.2-2: Projected Volume of E85



E85 stations

E85 sales volumes

Annual E85 sales

Ethanol in Excess



per year per station

volumes (mill gal)

of E10 (mill gal)

2023

4,511

78,342

353

233

2024

4,689

78,342

367

242

2025

4,866

78,342

381

252

These are the volumes used to estimate distribution costs associated with El5 and E85 for
2023-2025 as discussed in Chapter 10.1.4.

As we noted above, we do not use these El5 and E85 estimates to assess total ethanol
volumes or for any purpose other than estimating costs.809 We note, however, that the El 5 and
E85 volume projections shown in Tables 6.5.2-1 and 6.5.2-2 correspond to lower total ethanol
consumption than the volumes shown in Table 6.5.1-3. Below we explain how we identified this
discrepancy, why we chose to use estimates from EIA for total ethanol consumption rather than
those derived from the E15 and E85 estimates shown in Tables 6.5.4-1 and 6.5.4-2, and why we
nonetheless believe it is reasonable to use these El 5 and E85 estimates for purposes of our costs
analyses.

Total ethanol consumption can be calculated in a bottom-up fashion by combining the
estimates of El 5 and E85 with an estimate of E10. An estimate of E10 consumption, in turn, can
be back-calculated from an estimate of E0 and total gasoline energy demand derived from the
EIA's 2022 Annual Energy Outlook. As noted above, this exercise produces an amount of total
ethanol consumption that is somewhat less than our projection of total ethanol consumption
shown in Table 6.5.1-3.

As for El5 and E85, there is very little available data on the consumption of E0. Iowa's
Department of Revenue has collected data on E0 sales at retail for many years, but it is unclear
how representative Iowa E0 sales are of the entire nation. For instance, the pattern of
consumption of E0 in Iowa does not appear to have followed the nationwide consumption pattern
of total gasoline since 2012.

809 Our proposed approach to projecting total ethanol consumption as discussed in Chapter 6.5.1 does use a
projection of the number of stations offering E15 and E85, but does not involve any projection of separate volumes
for E15 or E85.

376


-------
Figure 6.5.2-3: EO Consumption in Iowa

290

270

= 250

TO

o 230

210

190

170

150































•	

	

|



















\
\

\

















Jk

\



















%









































155,000

150,000 —

145,000 'g

140,000

135,000 £
o

(_i

130,000 .1

125,000 60

120,000

- 115,000

110,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

EO data source: See, for instance, "2020 Retailers Fuel Gallons Annual Report," available in the docket.
https://tax.iowa.gov/reports.

Gasoline consumption data source: "MER March 2022 Table 3.5," available in the docket.

Moreover, EO sales in Iowa in 2020 represented about 15% of total gasoline sales, a
proportion that is much too high to be representative of the nation as a whole. For instance, 15%
of total gasoline consumption in 2020 would mean that 18.6 billion gallons of gasoline would
have been sold as EO.810 Given that total ethanol consumption was 12.7 billion gallons in
2020s11, 18.6 billion gallons of EO would have required that 37.9 billion gallons of El 5 be
consumed.8h: As there were about 2,180 retail stations offering E15 in 2020 (see Table 6.5.1-1),
the sale of 37.9 billion gallons of E15 would have required each station to sell 17 million gallons
of El 5 in 2020. This is far more than the total volume of gasoline sold by the largest retail
stations.

Nevertheless, the Iowa data represents the only available estimate of actual EO sales
volumes. Therefore, we used Iowa data to estimate that the average per-station sales of EO were
128,642 gal/year.8 JJ For the total number of retail stations in the U.S. that offer EO, we used the
estimate provided by Pure-gas.org on January 7, 2022, which was 16,544 stations. The result was
an estimate of 2,128 million gallons of EO.

We were able to confirm that 2,128 million gallons of EO is consistent with data collected
by the RFG Survey Association. That data indicated that 1.44% of sampled gasoline blends sold

810	According to Table 3.5 of EIA's Monthly Energy Review, total gasoline consumption in 2020 was 123.73 billion
gallons.

811	Table 10.3 of EIA's Monthly Energy Review

812	Assumes that E85 Consumption was 312 million gallons in 2020. See Table 5.5.4 2 of the Regulatory Impacts
Analysis associated with the final rule establishing the applicable standards for 2020 - 2022. See 87 FR 39600 (July
1,2022).

813	"2020 Retailers Fuel Gallons Annual Report," available in the docket.

377


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in 2021 was EO.814 Insofar as this proportion is representative of the nation as a whole, 1.44%
corresponds to about 1,940 million gallons of EO, based on EIA's estimate of 134.75 billion
gallons of gasoline sold in 2021.815 Since 1,940 million gallons is very similar to 2,128 million
gallons, we had confidence that 2,128 million gallons is a reasonable estimate of EO
consumption.

Estimates of EO, El 5, and E85 consumption, combined with total gasoline energy
demand from AEO2022, allowed us to calculate the consequent volume of E10 consumed as
shown in Table 6.5.2-3.

Table 6.5.2-3: Estimating

510 Consum]

ption



E0
(mill gal)

E15a
(mill gal)

E85b
(mill gal)

Gasoline energy
(Quad Btu)

E10c
(mill gal)

2023

2,128

561

353

16.8067

136,643

2024

2,128

671

367

16.7825

136,323

2025

2,128

756

381

16.7396

135,871

a Assumes that the denatured ethanol concentration of E15 is 15%.

b Assumes that the denatured ethanol concentration of E85 is 74%, consistent with the assumption made by EIA.
c Assumes that the denatured ethanol concentration of E10 is 10.1%, based on data collected by the RFG Survey
Association indicating that the average ethanol concentration was 9.9% in 2021, and assuming 2% denaturant.

We could then derive the total volume of ethanol consumed as a function of the projected
volumes of El 5 and E85.

Table 6.5.2-4: Projected Total Ethanol Consumption Derived From E15 and E85 Volumes



El

15

E85

El

10

Total
ethanol

Fuel

Ethanol

Fuel

Ethanol

Fuel

Ethanol

2023

561

84

353

261

136,643

13,801

14,146

2024

671

101

367

272

136,323

13,769

14,141

2025

756

113

381

282

135,871

13,723

14,118

a Assumes that the denatured ethanol concentration of E15 is 15%.

b Assumes that the denatured ethanol concentration of E85 is 74%, consistent with the assumption made by EIA.
c Assumes that the denatured ethanol concentration of E10 is 10.1%, based on data collected by the RFG Survey
Association indicating that the average ethanol concentration was 9.9% in 2021, and assuming 2% denaturant.

The total ethanol consumption calculated as a function of projected E0, E10, El 5, and
E85 (Table 6.5.2-4) can then be compared to the total ethanol consumption calculated as a
function of projected poolwide ethanol concentration (Table 6.5.1-3). The results are shown in
Table 6.5.2-5.

814	"National Fuels Survey Program Ethanol Data for the 2021 Compliance Period," available in the docket.

815	"STEO Jan 2022 Table 4a," available in the docket.

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Table 6.5.2-5: Comparison of Pro

ected Total Ethanol Consumption (million gal



Based on projected
ethanol concentration

Based on projected
ethanol blend volumes

Difference

2023

14,590

14,146

-444 (3.0%)

2024

14,640

14,141

-499 (3.4%)

2025

14,669

14,118

-551 (3.8%)

We do not know why ethanol consumption based on projected ethanol concentration
differs so much from the ethanol consumption based on projected ethanol blend volumes. We
hypothesize that these differences may be the result of errors in estimates of EO, the possibility
that the data collected through the BIP program may not be representative of the nation as a
whole, underestimates of the total gasoline demand, or some combination of the three.
Regardless, we believe that the BIP data represents the best available source of information on
sales of E15 and E85, and that the estimates of E15 and E85 consumption shown in Tables 6.5.2-
1 and 6.5.2-2 are a reasonable basis for estimating distribution costs for these two blends. We are
not aware of better sources of data or clearly superior methodologies to estimating El 5 and E85
use. As such, we have done the best we can with the limited information available to us. We
acknowledge the significant limitations in the data available to us and the uncertainties this
creates for our estimates. In any event, as shown in Chapter 10, the costs unique to El5 and E85
relative to E10 (associated with distribution, including blending and retail costs) reflect only a
small portion of the costs of ethanol and a miniscule portion of the total costs associated with the
candidate volumes. Thus, even were we to estimate significantly different El 5 and E85 volumes,
that would have very limited impacts on our assessments of costs and no impact on our
provisional judgment with respect to the appropriate volumes to propose.

6.6 Corn Ethanol

As described in more detail in Chapter 1.7, total domestic ethanol production capacity
increased dramatically between 2005 and 2010, and increased at a slower rate thereafter. In
2020, production capacity had reached 17.4 billion gallons.816,817 This production capacity was
significantly underused in 2020 due to the COVID-19 pandemic, which depressed gasoline
demand in comparison to previous years. Actual production of ethanol in the U.S. reached 12.85
billion gallons in 2020, compared to 14.72 billion gallons in 2019.818

The expected annual rate of future commercial production of corn ethanol will be driven
primarily by gasoline demand as most gasoline is expected to continue to contain 10% ethanol in
the foreseeable future. Commercial production of corn ethanol is also a function of exports of
ethanol and to a much smaller degree the demand for E0, El5, and E85. While production of
corn ethanol may be limited by production capacity in the abstract, it does not appear that
production capacity will be a limiting factor in 2023-2025 for meeting the candidate volumes.

As described in Chapter 6.5.1, we estimated total ethanol consumption for 2023-2025 by
extrapolating from historical poolwide ethanol concentration and the number of retail stations

816	"2021 Ethanol Industry Outlook - RFA," available in docket EPA-HQ-OAR-2021-0324.

817	"Ethanol production capacity - EIA April 2021," available in docket EPA-HQ-OAR-2021-0324.

818	"RIN supply as of 3-22-21," available in docket EPA-HQ-OAR-2021-0324.

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offering El 5 and E85. This total volume is a combination of corn ethanol, cellulosic ethanol, and
advanced ethanol. Our estimate of corn ethanol consumption for 2023-2025 for the purposes of
estimating the mix of biofuels that could be made available is shown in Table 6.6-1.

Table 6.6-1: Calculation of Projected Corn Ethanol Consumption for 2023-2025 (million



2023

2024

2025

Total ethanol

14,590

14,640

14,669

Imported sugarcane ethanol

110

110

110

Domestic advanced ethanol

25

25

25

Corn ethanol

14,455

14,505

14,534

Total production of corn ethanol in 2023-2025 is likely to be higher than the
consumption levels shown in Table 6.6-1 because the U.S. has exported significant volumes in
recent years. For instance, in 2021 ethanol export volumes were 1.25 billion gallons.819

6.7 Conventional Biodiesel and Renewable Diesel

While the vast majority of conventional renewable fuel supplied in the RFS program has
been corn ethanol, there have been smaller volumes of conventional biodiesel and renewable
diesel used in the U.S. in some years. Conventional biodiesel and renewable diesel can only be
produced at facilities grandfathered under the provisions of 40 CFR 80.1403 as there currently
exist no valid RIN-generating pathways for the production of conventional (D6) biodiesel or
renewable diesel. These biofuels are not required to meet the 50% GHG reduction threshold to
qualify as BBD under the statutory definition, but the feedstocks used to produce grandfathered
biodiesel or renewable diesel must still meet the regulatory definition of renewable biomass, and
the biofuel produced must meet all other statutory and regulatory requirements. The quantity of
conventional biodiesel and renewable diesel consumed each year from 2014-2021 is shown in
Table 6.7-1.

Table 6.7-1: Conventional Biodiesel and Renewable Diesel Used in the U.S. (million gallons)



2014

2015

2016

2017

2018

2019

2020

2021

Domestic D6 Biodiesel

1

0

0

0

0

0

0

0

Domestic D6 Renewable

0

0

0

0

0

0

0

0

Diesel

















Imported D6 Biodiesel

52

74

113

0

0

0

0

0

Imported D6 Renewable

2

86

45

2

0

0

0

0

Diesel

















All D6 Biodiesel and

55

160

158

2

0

0

0

0

Renewable Diesel

















In 2014-2016 the volume of conventional biodiesel and renewable diesel used in the U.S.
was relatively small, but still significant. Use of these fuels in the U.S. dropped to very low
levels in 2017 and has been less than 1 million gallons per years from 2018-2021. Nearly all of

819 "Fuel Ethanol Exports by Destination from EIA 6-27-22," available in the docket.

380


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the conventional biodiesel and renewable diesel used in the U.S. has been imported, with the
only exception being one million gallons of domestically produced biodiesel in 2014. However,
conventional (D6) RINs have continued to be generated for biodiesel and renewable diesel in
recent years. From 2018 through 2021 the volumes of renewable diesel for which conventional
biofuel RINs were generated each year (in million gallons) were 107, 116, 76, and 135
respectively. These RINs were retired for reasons other than compliance with the annual volume
obligations, suggesting that they were used outside of the U.S. or for purposes other than
transportation fuel.

The potential for conventional biodiesel and renewable diesel production and use in the
U.S. is far greater than the quantity of these fuels actually supplied in previous years. The total
production capacity of registered grandfathered biodiesel and renewable diesel producers is over
3 billion gallons in the U.S., with an additional 0.6 billion gallons internationally. Feedstock
availability does also not appear to be a limiting factor, as USDA estimates that approximately
212 million metric tons of vegetable oil will be produced globally in the 2021/2022 agricultural
marketing year.820 This quantity of vegetable oil could be used to produce approximately 61
billion gallons of biodiesel and renewable diesel.821 While much of this vegetable oil is currently
used in non-biofuel markets, any of this vegetable oil that meets the regulatory definition of
renewable biomass could be used to produce conventional biodiesel or renewable diesel at a
grandfathered facility so long as it meets all other RFS program requirements. The quantity of
conventional biodiesel and renewable diesel that could be supplied to the U.S. in 2023-2025 is
not without limit, but this data suggests that large quantities of this fuel are being or could be
produced,822 and that the use of these fuels in the U.S. is largely a function of demand for this
fuel in the U.S. versus other markets.

820	USDA World Agricultural Supply and Demand Estimates. June 10, 2022.

821	This calculation assumes one gallon of biodiesel or renewable diesel can be produced from 7.6 pounds of
vegetable oil.

822	The OECD-FAO Agricultural Outlook 2021-2030 projects global biodiesel consumption to reach approximately
50 billion liters (about 13.2 billion gallons) in 2022.

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Chapter 7: Infrastructure

This chapter analyzes the impact of renewable fuels on the distribution infrastructure of
the U.S. The CAA indicates that this assessment must address two aspects of infrastructure:

1.	Deliverability of materials, goods, and products other than renewable fuel.

2.	Sufficiency of infrastructure to deliver and use renewable fuel.

This chapter begins by addressing the sufficiency of infrastructure to deliver and use
different types of renewable fuels. We then address how the use of renewable fuels affects the
deliverability of materials, goods, and products other than renewable fuel.

Note that while we are projecting higher volumes of renewable fuel consumption relative
to the No RFS baseline, in analyzing the impacts of the candidate volumes on infrastructure we
have considered whether the candidate volumes would require additional infrastructure relative
to the infrastructure that currently exists. We believe that the existing infrastructure is the
relevant point of reference for the No RFS baseline since it is unlikely that the infrastructure
enabling and supporting consumption of renewable fuel in 2022 would change even if we did not
establish volume requirements for future years, at least not in the 2023-2025 timeframe. The
number of vehicles that can consume particular renewable fuels, pipelines, storage tanks, fuel
delivery vehicles, and retail service stations generally change only on longer timescales, and only
insofar as the outlook for renewable fuel demand changes. Therefore, this chapter discusses
infrastructure impacts primarily in terms of the changes that might be needed or expected to
occur in 2023-2025 in comparison to their recent or current status.

7.1 Biogas

Renewable biogas infrastructure considerations differ from those for other biofuels not
only because it is a gas rather than a liquid, but also because renewable biogas can be processed
to be physically identical to natural gas, which is used for many purposes including
transportation.823 Natural gas was used in CNG/LNG vehicles for many years prior to the
introduction of renewable biogas. The RFS program allows RINs to be generated for renewable
biogas that is fungible with the wider natural gas pool, provided that a contract is in place to
demonstrate that the same volume of natural gas is used for transportation purposes and all other
regulatory requirements are met.824 As the cost of running spur pipelines for anything beyond
short distances becomes prohibitively expensive, only those biogas sources that are in relatively
close proximity to the existing natural gas pipeline infrastructure are likely to be developed.

Once connected to the natural gas pipeline network, renewable biogas uses the existing natural
gas distribution system and CNG/LNG vehicle refueling infrastructure, and is used in the same
CNG/LNG vehicle fleet as natural gas. According to data from the DOE Alternative Fuels Data

823	Growth in biogas may require investment in additional gas cleanup operations prior to pipeline injections,
particularly in California where pipeline standards currently preclude the injection of most biogas. The potential for
such biogas cleanup costs are discussed in Chapter 10.1.2.5.1.

824	See 40 CFR 80.1426(f).

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Center, there are currently approximately 1,500 public and private CNG fueling stations and
approximately 100 public and private LNG refueling stations in the U.S.825

Once the processed biogas is in the gas pipeline, it is virtually indistinguishable from
natural gas. However, expanding CNG/LNG vehicle infrastructure to support growth in the
renewable biogas beyond the current level of CNG/LNG used in the transportation sector—
estimated at 1.4-1.75 billion ethanol-equivalent gallons of CNG/LNG per year in 2023-2025—
would represent a substantial challenge.826 The incentives for increasing the use of CNG/LNG in
the transportation sector, including incentives from the RFS program and state programs such as
the California LCFS program, may be insufficient to cause a substantial increase in the
CNG/LNG vehicle fleet and refueling infrastructure. CNG/LNG vehicles are predominately used
in fleet applications where there is a unique situational advantage (e.g., a natural gas supplier's
utility fleet or landfill's waste hauler fleet). In addition, it would be more challenging to establish
the necessary contracts to demonstrate that natural gas was used in CNG/LNG vehicles outside
of fleet operations. The cost associated with removing the impurities in renewable biogas to
make it suitable for use in CNG/LNG vehicles and to facilitate its fungible transportation in the
natural gas distribution system could also be a barrier to its expanded use. Nevertheless, we do
not expect infrastructure to constrain the use of CNG/LNG derived from biogas to levels below
those projected to be available in Chapter 6.1.3.

7.2 Electricity

Infrastructure considerations for electricity differ from biofuel infrastructure, as
generation, transmission, and distribution all have unique requirements. Furthermore, renewable
electricity generating units and EV charge stations also have their own considerations, all of
which play a role in electricity eligible under the RFS program.

Much of the electricity generation capacity that is eligible under the RFS program is
already exporting electricity to the grid. This means that much of the hardware required for a
grid connection is already in place, and while capital expenditure for these connections can be
expensive, much of the capacity in 2023-2025 will come from existing facilities that have
already invested in the necessary equipment, such as grid protection hardware and a step-up
transformer in order for electricity to be exported to the commercial transmission grid. There are
six interconnects in North America that facilitate electricity reliably to customers within their
territory, spanning the U.S., Canada, and Mexico. This interconnect, composed of over 700,000
circuit miles of transmission lines,827 have delivered power to consumers before and during the
life of the RFS program. While transmission losses across long distances may contribute to less
electricity delivered to EVs compared to what is generated, it is likely to not affect the candidate
volumes for biogas to electricity.

825	AFDC Alternative Fueling Station Locator.

https://afdc.energy.gov/stations/#/ana1yze?fue1=LNG&fue1=CNG&access=pub1ic&access=private&country=US.
Data current as of September 20, 2022.

826	See Chapter 6.1.3 for further discussion of the estimated use of CNG/LNG as transportation fuel in 2023-2025
and Chapter 10.1.4 for discussion of the costs associated with refueling stations.

827	Assessing HVDC Transmission for Impacts of Non-Dispatchable Generation,
https://www.eia.gov/ana1ysis/studies/e1ectricity/hvdctransnnssion/pdf/transnnssion.pdf

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One of the crucial components of the biogas-to-electricity pathway under the RFS
program relies on EV charging, either through public or private charging stations. Over 80% of
EV charging occurs in private residences, while 20% occurs at public charging stations. There
are currently approximately 50,000 public and private charging station locations and 130,000
public and private electric vehicle supply equipment (EVSE) ports in the U.S.828 Access to
public chargers near highways and other high-volume routes is being expanded to support the
growth of EVs and so we do not expect charging infrastructure to constrain the generation or
expansion of renewable electricity to the candidate volumes.

7.3 Biodiesel

The RFS2 rule projected that 1.5 billion gallons of biodiesel would be used in 2017 and
1.82 billion gallons would be used in 2022 to meet the statutory biofuel volume requirements.829
We noted that biodiesel plants tended to be more dispersed than ethanol plants, thereby
facilitating delivery to local markets by tank truck and lessening the need to distribute biodiesel
to over long distances. Biodiesel imports also helped to serve coastal markets. We projected that
as biodiesel volumes grew, there would be more need for long-distance transport of
domestically-produced biodiesel. We estimated that such long-distance transport would be
accomplished by manifest rail and, to a lesser extent, by barge, since the economy of scale would
not justify the use of unit trains. We estimated that biodiesel and biodiesel blends would not be
shipped by pipeline to a significant extent due to concerns over potential contamination of jet
fuel that is also shipped by pipeline.

In 2010, much of the biodiesel blending was taking place at facilities downstream of
terminals, such as storage facilities operated by individual fuel marketers. We projected that this
would take place to a lesser extent as volumes grew with most biodiesel being blended at
terminals to the 5% (B5) blend level that is approved for use in diesel engines by all
manufacturers for distribution to retail and fleet fueling facilities. We acknowledged that the
expansion of biodiesel volumes could pose issues for petroleum terminals, but that these issues
could be resolved.830 Since vehicle refueling infrastructure is compatible with biodiesel blends
up to 20% (B20), we estimated that there would be no changes needed at retail and fleet facilities
to accommodate the projected increase in biodiesel use.

There are significant instances where actual biodiesel production and use have developed
differently than we projected in the RFS2 rule. Most importantly, biodiesel consumption reached
over 2 billion gallons in 2016 and has remained between 1.8-2 billion gallons per year from
2017-2021, largely exceeding the 1.82 billion gallons that we projected would be used in
2022.831 Another significant difference is that much biodiesel blending is taking place
downstream of terminals at fuel marketer storage facilities and even at fuel retail facilities.

828	AFDC Alternative Fueling Station Locator.

https://afdc.energy.gov/stations/#/analyze?fuel=HLHC&access=public&access=private&country=US. Data current
as of September 20, 2022.

829	See Chapter 1.2.2 of the RFS2 Regulatory Impact Analysis (EPA-420-R-10-006).

830	There is additional difficulty in storing and blending biodiesel because of the need for insulated and/or heated
equipment to prevent cold flow problems in the winter. This issue is typically not present for B5.

831	Biodiesel consumption numbers based on EMTS data.

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One factor that could somewhat ease biodiesel transportation to terminals is the fact that
in some limited cases, shipment of low-level biodiesel blends up to 5% is currently taking place
on some petroleum product pipelines that do not also carry jet fuel.832 If the transportation of
biodiesel blends via pipeline were expanded more broadly, this change could significantly reduce
the cost of biodiesel distribution. However, jet fuel is a significant product on much of the
petroleum pipeline system and concern over biodiesel contamination of jet fuel remains a
significant limitation on the ability to expand the shipment of biodiesel blends by pipeline.
Industry is currently investigating whether jet fuel can tolerate higher levels of biodiesel
contamination, which may allow low-level biodiesel blends to be shipped on pipelines that also
carry jet fuel.833 Finally, there appears to be substantial volumes of B10-B20 being used despite
the fact that a significant number of vehicle manufacturers only warranty their engines for up to
B5.834 This has resulted in an uneven distribution of biodiesel use across the nation, with some
parts using more than 5% while other locales use little or no biodiesel.835

While we are projecting that the candidate volumes for 2023-2025 would require
substantial biodiesel volumes relative to the No RFS baseline, we are also projecting small
decreases in the volume of biodiesel relative to the 2022 baseline. Rather, the expansion of BBD
is projected to occur through renewable diesel, as discussed in Chapter 7.4. As such, we do not
anticipate any challenges associated with the infrastructure to distribute and use biodiesel
through 2025.

However, it is possible that domestic biodiesel production and/or biodiesel imports may
increase in 2023-2025. Domestic biodiesel production capacity is significantly higher than
current production levels.836 A review of monthly biodiesel imports suggests that import
infrastructure can support significantly higher volumes of imports.837 For example, over 700
million gallons of biodiesel was imported in 2016.838 Monthly import data suggests that 1.3
billion gallons per year of imports could be supported using the existing infrastructure if we were
to assume that the 112 million gallons of biodiesel imports that took place in December 2016
could be maintained year-round. Some additional expansion in import infrastructure may also
occur through 2025. Therefore, we do not believe that domestic production capacity or import
infrastructure constraints would be a substantial impediment to an expansion in biodiesel
volumes at current levels.839

832	Ethanol, Biofuels, and Pipeline Transportation. Association of Oil Pipelines and American Petroleum Institute.
https://www.apLorg/~/media/files/oil-and-natural-gas/pipeline/aopl api ethanol transportation.pdf

833	An ASTM task group is seeking additional data to address negative comments on a 2018 ballot to increase the
limit on biodiesel contamination in jet fuel from 50 mg/kg to 100 mg/kg. The ASTM limit on biodiesel
contamination of jet fuel was last revised in 2015. Revised ASTM Standard Expands Limit on Biofuel
Contamination in Jet Fuels, ASTM New Release, February 2, 2015.

834	See Pilot Flying J Fuel Offerings, Memorandum to EPA Docket EPA-F1Q-OAR-2021-0427.

835	See Average Biodiesel Blend Level By State Based on EIA Data, Memorandum to EPA Docket EPA-HQ-OAR-
2021-0427.

836	See Chapter 6.2.

837	EIA, U.S. Imports of Biodiesel 2009 thorough 2021.

838	Ibid.

839	The expansion of biodiesel imports to the extent discussed above is for purposes of the infrastructure analyses
only. There would be significant challenges in obtaining foreign produced biodiesel volumes to approach such a
substantial increase in imported biodiesel. See Chapter 1.4.2.

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We anticipate that if biodiesel production and imports increase significantly, investment
in the infrastructure to transport biodiesel from the points of production to locations where it can
be consumed would be needed. These investments would primarily be associated with securing
sufficient downstream biodiesel storage and the requisite number of rail cars and tank trucks
suitable for biodiesel transport.840

Expanding biodiesel blending infrastructure to accommodate significantly higher
biodiesel volumes may also pose challenges. Many terminals that have yet to distribute biodiesel
would likely need to install the infrastructure. All vehicle refueling infrastructure is compatible
with B20 blends, thereby easing the expansion to retail of biodiesel blends made at terminals.
However, significant infrastructure changes would be needed to biodiesel storage and blending
facilities downstream of terminals and at retail facilities if substantial additional volumes of
biodiesel blends were to be made downstream of terminals.

Further, the cold flow of petroleum-based diesel dispensed to vehicles must often be
improved in the winter through the addition of #1 diesel fuel and/or cold-flow improver
additives. Biodiesel blends tend to have poorer cold flow performance than straight petroleum-
based diesel fuel. This requires the use of additional cold-flow improvers and sometimes limits
the biodiesel blend ratio that can be used under the coldest conditions.841 Biodiesel cold flow
properties are dependent on the source of the feedstock with biodiesel produced from palm oil
being subject to wax formation at higher temperatures than soy-based biodiesel.842 Thus,
additional actions are necessary to ensure adequate cold-flow performance of palm-based
biodiesel blends compared to soy-based biodiesel. Such additional actions may be uneconomical
in some cases.843 Therefore, a substantial increase in the use of biodiesel, especially biodiesel
produced from palm oil, during the winter may be a challenge.

7.4 Renewable Diesel

The RFS2 rule projected that the volume of "drop-in" cellulosic and renewable diesel
fuel would range from 0.15-3.4 billion gallons in 2017 and 0.15-9.5 billion gallons in 2022.844
Such fuels are referred to as drop-in fuels because their physical properties are sufficiently
similar to petroleum-based diesel to be fungible in the common diesel fuel distribution system.845
Thus, little change is needed to the fuels infrastructure system to support the use of drop-in
biofuels. The RFS2 rule projected that the distribution infrastructure could expand in a timely
fashion to accommodate that projected range of growth in drop-in cellulosic and renewable
diesel fuel.846

840	Biodiesel rail cars and to a lesser extent tank trucks must often be insulated and or heated during the winter to
prevent cold flow problems. The use of such insulated/heated vessels is sometimes avoided by shipping pre-heated
biodiesel.

841	B5 blend levels can typically be maintained.

842	Biodiesel Cold Flow Basics, National Biodiesel Board, 2014.

843	Evaluation and enhancement of cold flow properties of palm oil and its biodiesel, Puneet Verma, et.al., Biofuel
Research Laboratory, Indian Institute of Technology, Elsevier Energy Reports, January 2016.

844	See Chapter 1.2.2 of the RFS2 Regulatory Impact Analysis (EPA-420-R-10-006).

845	Such drop-in fuels are typically blended with petroleum-based diesel prior to use.

846	See Chapter 1.6 of the RFS2 Regulatory Impact Analysis (EPA-420-R-10-006).

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In practice, much of the renewable diesel produced in the U.S. has been transported by
truck, rail, and ship, rather than by pipelines. This is in part due to the location of the renewable
diesel production and demand and the lack of available pipelines to transport renewable diesel
from production sites to demand centers. Renewable diesel can generate credits under state
LCFS programs, and the magnitude of this incentive, especially in California, has caused most
renewable diesel production in the U.S. to be shipped in segregated batches to California rather
than being blended into diesel where it is produced. Regulatory challenges have also limited the
transportation of renewable diesel via pipeline. Product transfer document (PTD) requirements
for fuel shipped by pipeline and fuel pump labeling requirements often require that the blend
level be indicated, but the concentration would often be uncertain in a fungible distribution
system. Transportation of renewable diesel via common carrier pipelines can make documenting
the use and blend levels of renewable diesel difficult, if not impossible.

The projected increase in domestic renewable diesel production through 2025 is
significant both relative to the No RFS and 2022 baselines.847 We expect that much of this new
renewable diesel will also be used in California and other states with state incentive programs
(e.g., Oregon). Renewable diesel produced in California will likely be distributed locally, and
much of the renewable diesel produced on or near the Gulf Coast is likely to be transported via
ship. The remaining renewable diesel production facilities are not located near the coast, and we
therefore project that the fuel they produce will likely be transported via truck and/or rail to
markets where the fuel is used. This may require some expansion to the existing infrastructure,
such as additional rail cars to transport renewable diesel. The fact that the new or expanding
renewable diesel production facilities are generally located in the western U.S., relatively close
to California and Oregon, likely reduces the impact of distributing these fuels on the
transportation infrastructure, though this may be somewhat offset by the need to transport
feedstocks to the renewable diesel production facilities. While some adjustments will likely be
needed to accommodate the expected increase in renewable diesel production, we do not expect
that these adjustments will inhibit the growth of renewable diesel production or appreciably
impact transportation networks in the U.S. more broadly.

7.5 Ethanol

We are projecting that the candidate volumes for 2023-2025 would require moderate
ethanol volume increases relative to the No RFS baseline and smaller increases relative to the
2022 baseline. The increases relative to the No RFS baseline are associated predominately with
the use of higher-level ethanol blends such as El 5 and E85, as E10 is economical to be blended
in the absence of the RFS program. However, since gasoline demand is projected to increase
slightly in 2023 relative to 2022, E10 is also expected to increase in 2023-2025 when considered
relative to 2022.

The infrastructure needed to deliver ethanol includes that required for distribution of
denatured ethanol from production facilities to terminals, storage and blending equipment, and
distribution of gasoline-ethanol blends to retail service stations. With regard to infrastructure
needed to use ethanol, essentially all retail service stations are certified to offer E10 and all
vehicles and equipment are designed to use E10. As a result, any infrastructure-related impacts

847 See Chapter 6.2.

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on the use of ethanol in 2023-2025 are associated with service station storage and dispensing
equipment for higher-level ethanol blends such as El 5 and E85, and the vehicles capable of
using those blends. The majority of the El 5 and E85 volume projected to be used in 2023-2025
is already being used in 2022; consequently, the infrastructure is already in place. However, the
expanded volume in 2023-2025 would require additional infrastructure, primarily the expansion
of retail stations as discussed below.

Based on our analysis below of the sufficiency of infrastructure to deliver and use
ethanol, we have determined that there are constraints associated with El 5 and E85 that limit the
rate of future growth in their consumption. These constraints are appropriately reflected in our
projections of total ethanol consumption in Chapter 6.5, since those projections represent only
moderate changes in the nationwide average ethanol concentration in comparison to earlier
years.848

7.5.1 Ethanol Distribution

To support the RFS2 rule, ORNL conducted an analysis of potential distribution
constraints that might be associated with attaining the statutory volume targets through 2022.849
The ORNL analysis analyzed ethanol transport pathways from production to blending facilities
at terminals by rail, waterways, and roads, and projected that most ethanol would require long-
distance shipment to demand centers. The primary mode of long-distance transport in 2010 was
via manifest rail and, to a lesser extent, by barge, although transport by unit train was beginning
to spread. ORNL projected that rail would continue to be the predominate means of long-
distance ethanol transport through 2022, with a substantial increase in the use of unit trains and
continued supplemental transport by barge. ORNL concluded that there would be minimal
additional stress on most U.S. transportation networks overall to distribute the increased biofuel
volumes.

However, ORNL stated that there would be considerable increased traffic along certain
rail corridors due to the shipment of biofuels that would require significant investment to
overcome the resulting congestion. We concluded that these investments could be made to
increase the capacity of the effected rail corridors without undue difficulty, and that therefore the
infrastructure system to the blending terminal could accommodate the projected increased
volume of ethanol in a timely fashion.850

To update and expand upon the analysis of distribution infrastructure upstream of retail
that was conducted for the RFS2 rule, EPA contracted with ICF International Inc. ("ICF") to
conduct a literature review, background research, and stakeholder interviews to characterize the
impacts of distributing ethanol and other biofuels.851 The 2018 ICF report determined that the
conclusions from the 2009 ORNL analysis have largely turned out to be accurate based on an
absence of indicators of distribution constraints up to and including the blending terminal. ICF

848	A nationwide average ethanol concentration above 10.00% can only occur insofar as there is consumption of E15
and/or E85.

849	"Analysis of Fuel Ethanol Transportation Activity and Potential Distribution Constraints," ORNL, March 2009.

850	See Chapter 1.6 of the RFS2 Regulatory Impact Analysis (EPA-420-R-10-006).

851	Impact of Biofuels on Infrastructure, Report for EPA by ICF International Inc., January 2018.

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noted that there were instances when the ethanol industry went through rapid expansion where
the rail industry was not able to fully accommodate the expansion of inter-regional trade in
ethanol. However, ICF found no evidence to suggest that rail congestion from shipment of
biofuel was a persistent or common problem at the time that the study was completed. Likewise,
ICF found no evidence that marine networks, including those used for import and export, were
experiencing significant issues in accommodating increased volumes of biofuels. Consistent with
the 2010 analysis, ICF stated that the expansion of ethanol and biodiesel volumes could pose
issues for petroleum terminals, but that these issues could be resolved. While ICF indicated that
there likely had been negative impacts on rural and highway transportation networks surrounding
ethanol production facilities, ICF also determined that these impacts could be mitigated with
network infrastructure planning and increased funding for road maintenance. ICF noted these
increased costs would be small in comparison to broader maintenance costs for roads and that the
road network could accommodate substantial growth in the movement of biofuels.

Based on the ICF study and our own assessment of the implementation of the RFS
program, we conclude that the response of the ethanol distribution infrastructure system
upstream of retail has largely unfolded as we projected in the RFS2 rule. Ethanol imports to
coastal demand centers have helped to satisfy local demand. Ethanol transport over long
distances is primarily being accomplished by unit train and, to a lesser extent, by manifest rail
and barge. Materials compatibility issues continue to prevent ethanol and ethanol blends from
being shipped in petroleum product pipelines. Tank trucks are used to distribute ethanol to
markets close to the ethanol production facility and from rail receipt facilities to more distant
markets. Petroleum terminals have installed the necessary ethanol receipt, storage, and blending
infrastructure. Intermodal facilities, such as those that transfer ethanol directly from rail cars to
tank trucks, are also being used to ease the burden on terminals.

7.5.2 Infrastructure for E8 5

E85 is permitted to be used only in designated FFVs. As of 2020, there were about 28
million registered light-duty FFVs in the U.S., representing about 10% of all spark-ignition
vehicles.852 However, the number of registered FFVs is expected to decline in the coming years.
For instance, the total number of FFV model offerings has been declining in comparison to its
historical maximum in 2014.

852 "FFV registrations from AFDC December 2021" and "DOT National Transportation Statistics Table 1-11,"
available in the docket.

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Source: Alternative Fuels Data Center. See "Light-Duty AFV HEV and Diesel Model Offerings by Technology-Fuel
March 2022," availablein the docket.

The number of registered FFVs in the in-use fleet is changing consistent with the reduced
offerings. While the registered FFV count continued to increase during 2016-2020, the rate of
increase has slowed, as shown in Table 7.5.2-1. If FFV offerings remain at their 2020 levels or
continue to decrease, we would expect the number of FFVs in the in~use fleet to begin
decreasing after 2020.

Table 7.5.2-1: Change in Light-Duty FFV Registration Counts

Year

% change in FFV counts
compared to previous year

2017

10.0%

2018

6.4%

2019

4.5%

2020

1.6%

Source: Alternative Fuels Data Center. See "Change in Light-Duty Vehicle Registration Counts March 2022,"
available in the docket.

E85 is sold at retail stations where the pumps, underground storage tanks, and associated
equipment has been certified to operate safely with the high ethanol concentrations.8 '3 As shown
in Figure 7.5.2-2, stations offering E85 have increased steadily since about 2005. By June 2022,
the total number of stations offering E85 had reached 4,476.

853 "UST System Compatibility with Biofuels," EPA 510-K-20-001, July 2020.

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Figure 7.5.2-2: Number of Public and Private Retail Service Stations Offering E85a



4500
m 4000

00

g5 3500
£

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ro

5 2000

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£ 1500

Z 1000
500





























































































































































c

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

a Data through 2007 is annual, whereas data for 2008 and later is monthly.

Source: Department of Energy's Alternative Fuels Data Center (AFDC). https://afdc.energy.gov/stations/states. See,
e.g., "AFDC - Alternative Fueling Station Counts by State 10-13-22," available in the docket.

Grant programs such as the USDA Biofuels Infrastructure Partnership (BIP) and the
ethanol industry's Prime the Pump program, in addition to individual company efforts, have
helped to fund the expansion of E85 offerings at retail stations. The combined effect of these
efforts ensured ongoing growth in the number of stations offering E85.

Although the total number of retail stations in the U.S. has varied, as shown in Figure
7.5.2-3, the fraction of those stations offering E85 has steadily increased. By the end of 2020, the
fraction of retail stations offering E85 had reached 2.7%, as seen in Figure 7.5.2-4.

Figure 7.5.2-3: Total Number of Retail Stations in the U.S.

155,000

130,000

125,000

OrH(Nm^Lni£r-.ooCT>OrHr\im^iniDr-ooCTio
OOOOOOOOOOrHrHrHrHrHrHrHrHrHrHfM

ooooooooooooooooooooo

(N(NrJ(N(N(NN(NlN(N(N(N(N(NN(NlNr>J(N(N(N

Source: Table 4.24, Transportation Energy Data Book, Edition 40.

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Figure 7.5.2-4: Fraction of Retail Stations Offering E85

3.0%

The above two factors—the small and declining fraction of vehicles capable of
consuming E85 and the low, albeit modestly growing, number of retail stations that offer E85—
represent significant infrastructure constraints on the market's ability to deliver and use E85 in
the near future. While the applicable standards under the RFS program could theoretically
provide some incentive for retail station owners to upgrade their equipment to offer E85, there is
little direct evidence that the RFS program has operated in this capacity in the past.

The BIP program was in effect from 2016-2018, while its successor program—the
Higher Blends Infrastructure Incentive Program (HBIIP)—effectively began at the beginning of
2021. While a higher growth rate in the number of E85 stations is not readily apparent in these
years compared to previous years in Figure 7.5.2-2, an analysis of growth rates on shorter
timescales suggests that these programs did have a moderate impact on growth rates. Therefore,
for purposes of making projections of future growth in E85 stations, we applied a least-squares
regression to a weighted data set wherein each successive year was given greater weight than the
previous year: 2021 data was given a weighting of 12, 2020 data was given a weighting of 11,
and so on back to 2010. This approach led to an average growth rate of 178 E85 stations per
year. Using this growth rate, we estimated the total number of retail stations offering E85 in
2023-2025, as shown in Table 7.5.2-2.

Table 7.5.2-2: Projected Average Number of Stations Offering E85a

Year

Stations

2023

4,511

2024

4,689

2025

4,866

a Annual average, not year-end.

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7.5.3

Infrastructure for El 5

El5 is permitted to be used only in MY2001 and newer light-duty motor vehicles.854 The
infrastructure needed to support the use of El 5 includes blending and storage equipment at
terminals, certified storage and dispensing equipment at retail service stations, and the vehicles
that are permitted to use El 5. While the majority of service stations currently offering El 5 do so
through blender pumps—which can produce El5 on demand for consumers through the
combination of E10 (or EO) and E85855—the number of terminals offering preblended El 5
directly to service stations has been increasing.856 The first terminals started to offer preblended
E15 in 2016, and as of June 2022 E15 is offered at 99 terminals, accounting for about 7% for all
U.S. terminals.857 858

As shown in Figure 7.5.3-1, the fraction of the in-use fleet that is MY2001 and newer has
increased steadily since El 5 was approved in 2011, and with it the fraction of all gasoline
consumed by highway vehicles that is consumed by MY2001 and newer vehicles.

Figure 7.5.3-1: Fraction of In-Use Fleet and In-Use Gasoline Consumption for MY2001 and
Newer

Source: Values calculated using annual retail vehicle sales of cars and trucks (Tables 4.6 and 4.7), survival rates
(Table 3.15), miles per year per vehicle by age (Table 9.11), and fuel economy by model year (Table 4.12) from the
Transportation Energy Data Book, Edition 40, ORNL, February 2022.

Based on the two modes of El 5 production (terminals and blender pumps at retail
stations), and the fact that the majority of in-use vehicles are legally permitted to use E15, it

854	7 6 FR 4662 (January 26, 2011).

855	According to Prime the Pump, 1,771 out of 2,302 stations offering E15 at the end of 2020 used blender pumps.

856	"Terminal Availability of E15 Grows as EPA Prepares to Remove RVP Barrier," available in the docket.

857	https://growthenergy.org/resources/retailer-hub. See also "Retailer Hub Growth Energy 92421," available in the
docket.

858	Total number of active fuel terminals was 1,330 as of 3/31/22 per the Internal Revenue Service.
https://www.irs.gov/businesses/small-businesses-self-emploved/terminal-control-number-tcn-terminal-locations-
directory. See "Actual Fuel Terminals as of 3-31-22," available in the docket.

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appears that the primary constraint on the consumption of El 5 in the near term is likely the
number of retail stations that offer it. Since El 5 was not approved for use until 2011, there were
no retail stations offering it before 2011. Since the vast majority of the existing retail
infrastructure (including the entire system of tanks, pipes, pumps, dispensers, vent lines, and pipe
dope) is not confirmed to be entirely compatible with El 5, growth in the number of retail
stations offering El5 is dependent on investments in retail outlets to convert them to El5
compatibility or make them compatible when newly constructed. In cases wherein a retail station
already offers E85 through a blender pump, there may be little or no investments needed for new
equipment, and the decision to offer El 5 may depend largely on the perceived economic benefit
of doing so. For other station owners, the costs can be substantial. Growth in the number of
stations offering El5 was slow until the BIP and Prime the Pump programs began providing
funding for station conversions in 2016.

Figure 7.5.3-2: Number of Retail Service Stations Offering El 5

3000
2500
2000
1500
1000
500
0

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23

Source: "Prime the Pump Infrastructure Update - Sept 2021," available in the docket.

USDA followed up its BIP program with the HBIIP program, which also provides funds
to help retail service station owners to upgrade or replace their equipment to offer biofuels. This
program effectively began in 2021 and is estimated to take three years to complete.

There may also be resistance to expanded offerings of El 5 due to concerns about
liability.859 These liability concerns fall into two areas: the use of retail storage and dispensing
equipment that is not compatible and/or not approved for El5, and consumers that refuel
vehicles and engines not designed and/or approved for its use. With regard to equipment
compatibility, even if much of the existing equipment at retail is compatible with El 5 as argued
in studies from the National Renewable Energy Laboratory (NREL)860 and Stillwater
Associates,861 compatibility with El 5 is not the same as being approved for El 5 use. Under EPA
regulations, parties storing ethanol in underground tanks in concentrations greater than 10% are

859	See, e.g., "PMMA comments on the proposed 2014 - 2016 standards rule 7-27-15," available in the docket.

860	K. Moriarty and J. Yanowitz, "El 5 and Infrastructure," National Renewable Energy Laboratory, May
2015. Attachment 3 of comments submitted by the Renewable Fuels Association.

861	Stillwater Associates, "Infrastructure Changes and Cost to Increase RFS Ethanol Volumes through Increased El5
and E85 Sales in 2016," July 27, 2015. Submitted with comments provided by Growth Energy.

394


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required to demonstrate compatibility of their tanks with the fuel through one of the following
methods:862

•	A certification or listing of underground storage tank system equipment or
components by a nationally recognized, independent testing laboratory such as
Underwriter's Laboratory.

•	Written approval by the equipment or component manufacturer.

•	Some other method that is determined by the agency implementing the new
requirements to be no less protective of human health and the environment.

The use of any equipment to offer El 5 that does not satisfy these requirements, even if
that equipment is technically compatible with El 5, would pose potential liability for the retailer.
This issue is of particular concern for underground storage tanks and associated hardware, as the
documentation for their design and the types of materials used, and even their installation dates,
is often unavailable. As existing underground storage tank systems reach the end of their
warranties or are otherwise in need of repair or upgrade, there is an opportunity for retail station
owners to install new systems that are compatible with El5. For instance, tanks installed earlier
than 1990 have reached the end of their warranties and should be replaced to safely store fuel.

With regard to retailer concerns about litigation liability for El5 misfueling related to
vehicles not designed and/or approved for use with El5, we note that EPA regulations are
designed to address potential misfueling. These regulations require pump labeling, a misfueling
mitigation plan, surveys, PTDs, and approval of equipment configurations, providing consumers
with the information needed to avoid misfueling.863 In addition, the portion of vehicles not
designed and/or approved for El 5 use continues to decline. MY2000 and earlier light-duty
vehicles represent less than 10% of the in-use fleet, and just slightly over 5% of miles traveled.
Vehicles designed and warranted by manufacturers to be fueled on El 5 are likewise representing
an ever-increasing portion of the in-use fleet.

In sum, the relatively small, albeit growing, number of stations offering El 5 represents a
significant constraint on the expansion of El 5 through 2025. While the applicable standards
under the RFS program could theoretically provide some incentive for retail station owners to
upgrade their equipment to offer El5, there is little direct evidence that the RFS program has
operated in this capacity in the past.

In order to project the number of retail stations that may offer El 5 through 2025, we first
separated the effects of USDA's BIP and HBIIP programs from all other efforts, including both
private efforts and those funded by the ethanol industry's Prime the Pump program. The BIP
program was responsible for the conversion of 841 retail stations from 2016-2018.864 During this
time, El 5 stations were also increasing as a result of other efforts, bringing the total number of
E15 stations to 1,630, as shown in Figure 7.5.3-2. Of this total, 841 are estimated to have been
the result of the BIP program, while the remaining 789 El 5 stations were the result of other

862	"UST System Compatibility with Biofuels," available in the docket.

863	See, e.g., 40 CFR 1090.1420 and 1090.1510.

864	"Biofuel Infrastructure Partnership - original grants & projections" and "Communication with USDA on the BIP
program 11-15-21," available in the docket.

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efforts. The HBIIP program effectively began in 2 0 21.865 Given its similarity to the BIP
program, we have assumed that it would likewise take three years to complete and would result
in 841 new El 5 stations. From these estimated impacts of the BIP and HBIIP programs, we were
able to back-calculate the growth in El 5 stations that can be attributed to private initiatives,
including Prime the Pump.

Table 7.5.3-1: Historical Breakdown of E15 Stations



Total3

BIPb

HBIIPC

PTP + private
efforts

December 2012

2

0

0

2

December 2013

70

0

0

70

December 2014

105

0

0

105

December 2015

184

0

0

184

December 2016

431

183

0

248

December 2017

1,122

563

0

559

December 2018

1,630

841

0

789

December 2019

2,045

841

0

1,204

July 2020

2,208

841

0

1,367

December 2020

2,302

841

0

1,461

September 2021

2,536

841

75

1,620

a "Prime the Pump Infrastructure Update - Sept 2021".
b Assumes linear growth from 2016-2018.

c Assumes that 841 new E15 stations will ultimately be created, with linear growth from 2021-2023.

We observed that the growth due to private efforts appears to be linear after December
2016 and therefore used a least-squares regression to estimate this trend through 2025, as shown
in Figure 7.5.3-3.

865 The availability of grants and procedures for applying for them were announced in May 2020. See "USDA
Announces $100 Million for American Biofuels Infrastructure," available in the docket.

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Figure 7.5.3-3: Growth in E15 Stations Due to Private Initiatives

3,500
3,000
2,500
2,000
1,500
1,000
500





















































*

s

s



Least-squares regression:
Stations = 298.286 x Year-









601238









s

s

s























*



















-J



















	j



<













	(

!	<

	«

y

j

















Using the available information on the BIP and HBIIP programs and the projection
shown in Figure 7.5.3-3, we were able to estimate the breakdown of El 5 stations for 2023-2025,
as shown in Figure 7.5.3-4. The projected total number of E15 stations for 2023-2025 is shown
in Table 7.5.3-2.

Figure 7.5.3-4: Projected Breakdown of E15 Stations

2020

2021	2022	2023	2024

¦ PTP + private ¦ BIP ¦ HBIIP 1.0 ¦ HBIIP 2.0

2025

Table 7.5.3-2: Pro jected Average Number of Stations Offering E15a

Year

Stations

2023

3,818

2024

4,567

2025

5,146

a Annual average, not year-end.

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7.6 Deliverability of Materials, Goods, and Products Other Than Renewable
Fuel

The distribution of renewable fuels relies on the same rail, marine, and road infrastructure
networks that are used to deliver materials, goods, and products other than renewable fuels.
Therefore, we evaluated whether the use of renewable fuels would impact the deliverability of
other items that rely on these infrastructure networks.

The 2009 ORNL study of biofuel distribution for the RFS2 rule concluded that there
would be minimal additional stress on most U.S. transportation networks overall due to increased
biofuel volumes.866 This indicates that the shipment of the statutory biofuel volumes could be
accommodated without impacting the deliverability of other items. However, as discussed in
Chapter 7.5.1, ORNL noted that significant investment would be needed to overcome congestion
on certain rail corridors. The 2018 ICF study of impacts of distributing ethanol and other biofuels
determined that the conclusions from the 2009 ORNL analysis have largely turned out to be
accurate based on an absence of indicators of distribution constraints.867 However, ICF noted
that there were instances when the ethanol industry went through rapid expansion where the rail
industry was not able to fully accommodate the expansion in inter-regional trade in ethanol.
During these periods, the volume of ethanol permitted to be shipped along the sensitive rail
corridors was limited to mitigate the congestion. However, ICF found no evidence to suggest that
rail congestion from shipment of biofuel was a persistent or common problem at the time of the
study's completion in 2018.

Likewise, ICF found no evidence that the shipment of biofuels has had a negative impact
on marine networks. While ICF indicated that there likely have been negative impacts on rural
and highway transportation networks surrounding ethanol production facilities, it also
determined that these impacts can be mitigated with network infrastructure planning and
increased funding for road maintenance. ICF noted these increased costs are small in relation to
broader maintenance costs for roads and that the road network can accommodate substantial
growth in the movement of biofuels.

Based on both the ORNL study and the more recent ICF study, there appears to be
minimal overall impact on transportation infrastructure from the distribution of biofuels, and the
system appears to have been able to resolve localized instances of increased stress on the system
in a timely fashion. As a result, we believe that the candidate volumes would not impact the
deliverability of materials and products other than renewable fuel.

As part of considering impacts of biofuels on the deliverability of other items, we also
considered constraints on the deliverability of feedstocks used to produce renewable fuel. We do
not anticipate constraints that would make the candidate volumes difficult to achieve. For
instance, biogas for CNG/LNG vehicles will be delivered through the same pipeline network
used to distribute natural gas.868 Since that biogas will be displacing natural gas used in
CNG/LNG vehicles, we do not expect a net increase in total volume of biogas + natural gas

866	"Analysis of Fuel Ethanol Transportation Activity and Potential Distribution Constraints," ORNL, March 2009.

867	Impact of Biofuels on Infrastructure, Report for EPA by ICF International Inc., January 2018.

868	See Chapter 7.1.

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delivered. Similarly, we do not anticipate that renewable electricity used as transportation fuel
will result from an increase in renewable electricity generation from biogas, but rather from a
diversion of existing renewable electricity generation from non-transportation uses to
transportation.869 Consequently, we do not believe that there would be an increase in the
production of biogas for use in generating renewable electricity.

As shown in Table 3.1-3, there would be an increase in corn ethanol consumption in
2023-2025 in comparison to 2022. However, the projected corn ethanol volumes are about 14.5
billion gallons, which is the same volume of corn ethanol consumed in 2018.870 Since the corn
collection and distribution network functioned without difficulty in 2018, there is no reason to
believe that it would not function similarly in 2023-2025. Moreover, there may in fact be no
change in domestic corn ethanol production if the increased consumption results from a
reduction in exports.871

We estimate that the use of FOG for the production of biofuel will increase by 53 and 59
million gallons, respectively, from 2023 to 2024 and 2024 to 2025 (equivalent to 90 and 100
million RINs as shown in Table 3.1-3). The projected increase in the use of FOG for biofuel
production is consistent with the trend observed from 2016-2021. This increase is a very small
fraction of the total amount of FOG produced. According to LMC International, the total
production volume of all animal fats and used cooking oil was about 2.7 billion gallons in
20 20.872 An annual increase of about 60 million gallons represents only 2% of total 2020
production. FOG is collected and distributed through a diverse network of trucking companies,
and this increase would represent a very small portion of their activities. As a result, we do not
anticipate any hindrances to the deliverability of FOG for the production of renewable diesel in
2023-2025.

Total soybean oil use for the production of BBD is projected to decrease slightly from
2023-2025 (see Table 3.1-3; soybean oil use in 2023 includes that needed to meet the proposed
supplemental standard of 250 million RINs). In light of this projected decrease, we do not
anticipate any shortage in the supply of soybeans or other oilseeds. We also expect that the
soybean crushing capacity will be sufficient to supply the necessary quantities of soybean oil,
and that there will be sufficient infrastructure to distribute biodiesel and renewable diesel to the
markets where these fuels are used.

869	See Chapter 7.2.

870	"RIN Supply as of 2-17-22," available in the docket.

871	See Chapter 6.6.

872	"The Outlook for Increased Availability & Supply of Sustainable Lipid Feedstocks in the U.S. to 2025,"
attachment to comments submitted by Clean Fuels Alliance America. For 2020, Diagram 10 indicates about 7.55
mill tonnes of total animal fats was produced, while Diagram 11 indicates that about 1.85 mill tonnes of UCO was
produced. Conversion factor of 7.66 lb/gal leads to a total of 2.7 billion gallons.

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Chapter 8: Other Factors

The CAA directs EPA to consider the impact of the use of renewable fuels on "other"
factors, including job creation, the price and supply of agricultural commodities, rural economic
development, and food prices. This chapter addresses the enumerated "other" factors.873 We
focus our analysis on the biofuels that are projected to have the largest changes relative to the No
RFS baseline: corn ethanol, biodiesel and renewable diesel (from soybean oil, FOG, and corn
oil), and biogas.874

8.1 Job Creation

This chapter provides greater detail on our evaluation of impacts of renewable fuels on
job creation. Attempting to attribute increases or decreases in employment to a single variable
such as domestic renewable fuel use is fraught with complexity. Even considering just the
biofuel production facilities themselves, there are confounding factors that include biofuel
import/export activity, shifts in agricultural commodity prices, and varying demand for
coproducts. Assessing the impacts on indirectly affected industries is even more difficult.
Recognizing this challenge, we chose to focus the analysis on the economic sectors that have the
closest association with biofuel use—biofuel production and agriculture. We acknowledge that
changes in indirect employment (e.g., service sectors, transportation, construction, etc.) can also
be associated with renewable fuel use, but due to the level of effort and uncertainty involved
with indirect effects, they were excluded from the scope of this analysis. We also recognize that
this analysis does not estimate the net employment effects, as increases in employment in some
sectors may be offset by unemployment in other sectors.

8.1.1 Fuel Production
8.1.1.1 Ethanol Production

We projected the impact of the candidate volumes on employment at ethanol production
facilities using an assessment by John Urbanchuk prepared for the Renewable Fuels Association
(RFA).875 Urbanchuk estimates that the total number of direct, full-time-equivalent jobs for
domestic corn ethanol production in 2021 was 8,942 across the 208 plants that RFA found to be
operating that year. The total nameplate capacity of those plants is reported at 17.7 billion
gallons, suggesting an average plant size of 85 million gallons per year and an average employee
concentration of 0.51 jobs per million gallons capacity.

The EIA Annual Fuel Ethanol Production Capacity Report provides plant count and total
nameplate capacity values for historical calendar years. The data currently available show a total
nameplate capacity of 17,380 million gallons of ethanol produced by 192 plants that reported

873	As we explain in Preamble Section II, we also consider several other factors besides those enumerated in the
statute.

874	The impacts evaluated in this chapter are for volume increases for 2023-2025 compared to the No RFS baseline,
as shown in Table 3.2.-2.

875	Urbanchuk, J. ABF Economics. "Contribution of the Ethanol Industry to the Economy of the United States in
2021," February 3, 2022.

400


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themselves as operational.876 The average plant size using these figures is 91 million gallons per
year, which gives the same average employee concentration of 0.51 jobs per million gallons
capacity using Urbanchuk's total direct employment.

In 2018, Ethanol Producer Magazine made available data on the capacity and number of
employees at each of 65 corn ethanol facilities.877 These plant capacities generally compare well
with those reported by EIA, deviating by less than 3% when averaged on a state-by-state basis.
For these 65 facilities, we examined employee concentration as a function of production
capacity. The results show a nonlinear decreasing trend in employee concentration with
production capacity, suggesting economies of scale are associated with labor in ethanol plants.
Figure 8.1.1.1-1 shows this data fit with an exponential trendline, and includes the Urbanchuk-
based estimate of employee concentration of 0.51 plotted at the national average facility size of
85 million gallons per year. The Urbanchuk value shows good agreement with the correlation fit
line.

Figure 8.1.1.1-1: Correlation Between Employee Concentration and Facility Size for Corn-
Ethanol Facilities

c
o

2.0
1.8

Employees per million gal/yr capacity
= 8.30(million gal/yr capacity)-0-6

15 1.5	R2 = 0.72

(5

.9 1.3

t 1.0


-------
The increases in ethanol volume evaluated in this rule generally represent increased
consumption of higher-level ethanol blends (e.g., El 5 and E85). The connection between greater
domestic consumption of ethanol and domestic production of ethanol is unclear, as significant
quantities of ethanol have been exported to foreign markets in recent years. The volume of
ethanol that would be consumed in 2023-2025 under the No RFS baseline is significantly less
than the domestic ethanol production capacity, and less than domestic ethanol production in
2021. Thus, it is possible that a decrease in ethanol consumption in the absence of the RFS
program could result in a decrease in domestic ethanol production, or alternatively could simply
result in increased ethanol exports.

8.1.1.2	Biodiesel Production

To project the impact of the candidate volumes on employment at biodiesel production
facilities, we primarily relied on information from a 2019 study by LMC International on the
economic impact of the biodiesel industry prepared for the National Biodiesel Board.878 In this
report, LMC stated that a typical biodiesel production facility in the U.S. has a production
capacity of 40-60 million gallons per year and directly employs 40-50 people, though they note
that there is considerable variation in the facility capacity and direct employment at domestic
biodiesel facilities. This information suggests an employee concentration of approximately 1 job
per million gallons of biodiesel production capacity. Relative to the No RFS baseline, we project
that the candidate volumes would result in higher employment in biodiesel production facilities
by 1,041, 1,008, and 975 jobs in 2023, 2024, and 2025 respectively.

8.1.1.3	Renewable Diesel Production

As described in Chapters 3 and 6, we have seen significant growth in renewable diesel
production through 2021 and project that the candidate volumes would result in significantly
higher volumes of renewable diesel in 2023-2025 relative to the No RFS baseline. Table 3.2-2
shows increases of 1.2-1.5 billion gallons of renewable diesel annually from 2023-2025 relative
to the No RFS baseline. Production of this fuel is expected to come from a mix of expansions at
existing facilities, construction of new facilities, and conversions of process trains at existing
petroleum refineries. At this time, we do not have employment data specific to renewable diesel.
However, we expect that these operations would have comparable employment needs compared
to the petroleum refining that they displace. Consequently, we anticipate little net change in
employment due to renewable diesel.

8.1.1.4	RNG Production

As described in Chapters 3 and 6, we project continued growth of CNG/LNG derived
from biogas as a result of the candidate volumes in 2023-2025. Sources of this fuel are expected
to be a mix of landfills and agricultural digesters. While collection of landfill gas has been
required by solid waste regulations for many years, increased credit generation under the RFS
program is expected to cause additional employment related to upgrading and maintenance of

878 LMC International. "The Economic Impact of the Biodiesel Industry on the U.S. Economy." August 2019.

402


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gas cleanup and pipeline interconnect equipment.879 We also project that the construction and
operation of new agricultural digesters and digesters at wastewater treatment facilities would
result in additional employment.

An analysis by the Coalition for Renewable Natural Gas (CRNG) using 2021 data
showed that an average of 24 jobs were created for every 1 million ethanol-equivalent gallons
increase in production of CNG/LNG derived from biogas.880 The data indicated that 30% of
these jobs were related to the operation of these facilities and 70% were related to construction.
These factors were applied to the projected volume increases of CNG/LNG derived from biogas
in 2022-2025, resulting in the employment impacts shown in Table 8.1.1.4-1. These impacts are
based on the average facility producing CNG/LNG derived from biogas in 2021, and the
employment estimates therefore implicitly assume that the average employment at facilities in
2023-2025 are equal to the average employment at facilities in 2021. The construction
employment figures assume that the construction jobs occur in the year of the volume increase.
The actual employment impacts for 2023-2025 may be slightly higher or lower depending on the
types of new facilities that produce CNG/LNG derived from biogas (e.g., landfills, wastewater
treatment facilities, or agricultural digesters) and the sizes of these facilities.

Table 8.1.1.4-1: Change in Employment in RNG Production Relative to the No RFS
Baseline

Year

Construction
Jobs

Operations
Jobs

Total Jobs

2023

1,462

626

2,088

2024

1,596

1,310

2,906

2025

1,798

2,081

3,879

8.1.2 Agricultural Employment

Job creation in the agricultural sector, beyond the fuel production activities discussed
above, is expected primarily in the areas of production and transportation of crops serving as
biofuel feedstocks. Because CNG/LNG derived from biogas is produced from waste or
byproduct materials (e.g., separated MSW, wastewater, and agricultural residue), we expect the
projected increases in the production of CNG/LNG derived from biogas to have very little
impact on employment related to feedstock production. As noted above, we are projecting higher
volumes of ethanol, biodiesel, and renewable diesel production for 2023-2025 relative to the No
RFS baseline. The primary feedstocks projected to be used to produce these fuels are corn and
soybean oil.881

Gauging the impact that increased use of renewable fuels has had on employment in the
agricultural sector is challenging for several reasons, including, but not limited to, seasonality,
production of a wide array of products, and the broad nature of employment in the sector, which

879	Jaramillo and Matthews, Environmental Science & Technology 2005 39 (19), 7365-7373.

880	CRNG. Economic Analysis of the U.S. Renewable Natural Gas Industry. December 2021.

881	We are also projecting that lesser quantities of FOG and corn oil would be used to produce biodiesel and
renewable diesel in 2023-2025, but since these feedstocks are wastes or co-products of other industries, we do not
expect their increased use to impact agricultural employment.

403


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stretches from field hands to equipment production. To try to understand this better, we
examined available data on agricultural employment over the past several decades, with no
pretense of ascribing causation for observed trends to particular volumes of renewable fuels.

Some of the most consistently sourced data available on hired farmworkers is made
available by the National Agricultural Statistics Service (NASS).882 We used a combination of
annual and seasonal reports to track the number of harvest season (October) workers hired
directly by farm operators over the past two decades. This data is presented in Figure 8.1.2-1.

Figure 8.1.2-1: Number of Harvest Season Farm Workers

950

900


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Figure 8.1.2-2: Employment in Agriculture and Support Activities

Thousand jobs
1.400 t

Livestock support

2001 I 2003 I 2005 I 2007 I 2009 i 2011 I 2013 I 2015 I 2017 I 2019 I
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Note; Employment is measured as the annual average number of full- and part-time jobs.
Data do not cover smaller farm employers in those States that exempt them from
participation in the unemployment insurance system.

Source; USOA, Economic Research Service using data from U.S. Department of Labor,
Quarterly Census of Employment and Wages, as of June 2, 2021

This data from USD A shows that employment in crop production and crop support
activities have increased by about 3% and 20%, respectively, over the past decade. As with the
NASS data in Figure 8.1.2-1, the lack of crop-specific data makes drawing associations with
biofuel production veiy difficult. We observe that the lowest employment levels reported in the
LJSDA data for crop production workers coincide with the 2008-2009 recession and that it was
not until 2015 that the number of such jobs returned to the pre-recession levels. Looking at this
data set, it is difficult to see any clear impact of increased renewable fuel production among
broader economy-wide factors.

8.2 Rural Economic Development

Changes in biofuel production can have economic development impacts on rural
communities and financial impacts on farmers. We are projecting significantly higher
consumption of ethanol, biodiesel, renewable diesel, and CNG/LNG derived from biogas in
2023-2025 relative to the No RFS baseline. As discussed in Chapter 8.1.1.1, the impact of the
proposed volumes for 2023-2025 on domestic ethanol production are uncertain. In the absence
of the RFS program domestic ethanol production could continue at a level at or near current
production volumes with increasing ethanol exports or alternatively domestic ethanol production
could decrease. In light of these uncertainties, we are not projecting any significant changes in
rural economic development related to the ethanol volumes we are projecting in 2023-2025.

For biodiesel and renewable diesel, we expect that much of the rural economic impacts in
2023-2025 would be related to the production of feedstocks for these fuels. We project that most
of the increase in biodiesel and renewable diesel production in 2023-2025 would be produced
from soybean oil, with lesser volumes from FOG and corn oil. Some of this soybean oil is

405


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expected to come from additional soybean production and crushing, which may bring some
revenue increases to rural communities.

The increased production of CNG/LNG derived from biogas is expected to result in
additional rural economic activity. Using factors derived from a 2021 analysis by CRNG, we
estimated that each additional million RINs of CNG/LNG is associated with $0.88 million in
economic activity related to gas upgrading and facility administration activities.884 This factor
suggests that the candidate volumes would result in $77 million, $161 million, and $255 million
in economic activity in 2023, 2024, and 2025, respectively, relative to the No RFS baseline. That
analysis also indicated that 76% of facilities under construction in 2021 were agricultural waste
digesters, which are likely to be located in rural areas. While the total economic impact in rural
areas is unknown, the fact that the majority of CNG/LNG facilities under construction in 2021
were agricultural waste digesters suggests that much of this economic activity is likely to be in
rural areas.

8.3 Supply of Agricultural Commodities

Changes in biofuel production can have an impact on the supply of agricultural
commodities. As discussed above, we project an increase in consumption of ethanol, biodiesel,
renewable diesel, and CNG/LNG derived from biogas in 2023-2025 relative to the No RFS
baseline. These volume increases suggest the potential for associated increases in underlying
crop production; however, the magnitude of the potential impact cannot be estimated with any
certainty. Biogas is not produced from agricultural commodities and therefore is not expected to
affect their supply or price.

For historical context, Figure 8.3-1 shows trends in corn production and uses from 1995—
2021.885 This data suggests domestic corn production has grown steadily at a 25-year average
rate of around 2%, or 250 million bushels per year, with no apparent correlation to ethanol
production volumes.

884	CRNG. Economic Analysis of the U.S. Renewable Natural Gas Industry, December 2021.

885	USDA ERS Feed Grains Data Yearbook, March 2022 (Tables 4 and 31).

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Figure 8.3-1: Corn Production and Usage

Between 2005-2010, additional corn required to satisfy increasing ethanol production
was sourced primarily by diversion from animal feed until overall production caught up. Supply
of corn to food uses continued to grow steadily during this period, despite increased consumption
as ethanol feedstock. Exports also remained relatively steady, except for a drop in exports
corresponding to weather-related supply disruptions and elevated prices in 2011-2012. Animal
feed use began to rebound after 2014 when growth in ethanol production slowed and prices
stabilized. Another factor contributing to the longer-term shift of animal feed away from whole
corn was the increasing substitution with DDGS, a byproduct of ethanol production. Considering
historical trends over the past two decades indicating the ability of production to rise to meet
demand, the modest increases in ethanol volumes associated with this rule are likely to have no
or only a small short-term impact on the supply of corn to food, exports, or other uses.

Figure 8.3-2 shows that soybean production has risen steadily over time, similar to the
trend for corn production.886 Roughly 80% of this growth since 2005 is associated with rising
exports of soybeans, which have nearly dou bled over that period. Domestic crushing of beans
has grown by 24% since 2005, which mirrors the same relative growth in production of the crush
products, soy meal and oil, as shown in Figure 8.3-2. This figure also shows that exports of soy
meal nearly doubled during this time, which together with the growth in whole bean exports,
presents a picture consistent with expansion of meat production internationally.88' (Worldwide,
over 95% of beans are eventually crushed for meal and oil.)

886	USDA ERS Oilcrops Data Yearbook, Soy Tables, March 2022.

887	USDA ERS Oilcrops Data Yearbook, Soy Tables, March 2022.

407


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Figure 8.3-2: Soybean Production and Usage

160
140
120
100

I/)

c
£

§ 80

40
20
0

1980 1985 1990 1995 2000 2005 2010 2015 2020

Figure 8.3-3: Soy Meal Production and Usage

	total prod

domestic use

export













































































J



















1980 1985 1990 1995 2000 2005 2010 2015 2020

As shown in Figure 8.4-2, soybean oil production has generally increased since 2005
with much of this increase being used for biodiesel production. This increase in soybean oil
production has been due to both increasing domestic soybean crush and increasing yields of
soybean oil per bushel of soybeans crushed. While the use of soybean oil for biofuel production
has increased significantly since 2005, the relative value relationship between the oil and meal
crush products remained relatively stable through 2020, with meal representing about 70% of the
total soybean value. This suggests that demand for meal has historically been the primary driver
for increased soybean crushing. Soybean exports have also increased at a much faster rate than
the increase in soybean crushing. In terms of overall soybean production, the primary driver for

408


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growth in soybean production and planted acres since 2005 has clearly been rising exports, with
crushing of beans for meal and oil being a distant second.

8.4 Price of Agricultural Commodities

Agricultural commodities are bought and sold on an international market, where prices
are determined by trends and upsets in worldwide production and consumption. Renewable fuels
are only one factor among many (e.g., droughts and storm damage) in determining commodity
prices. Thus, models that attempt to project prices at specific times in the future, or in reaction to
specific demand perturbations, necessarily contain high levels of uncertainty. This chapter
reviews historical trends and presents key observations from the literature.

In the U.S., corn and soybeans are generally only harvested once per year, and therefore
storage is a critical factor in the supply chain. After harvest, grain stores are replenished and then
drawn down throughout the year. In recent years, about 15% of the previous year's overall corn
production is typically still in storage at the time of the new harvest.888 If demand rises after
harvest, stocks may be drawn down faster than expected. Conversely, if demand decreases,
stocks accumulate into the next season.

Storage also has the effect of dampening price shocks in years when harvests are smaller
than expected. In 2012, a drought year, corn stocks fell to the lowest levels since 2000, putting
upward pressure on futures prices, which in turn served as a market signal to induce more corn
planting in the upcoming season. Work done by Informa Economics for RFA in 2016 examined
the historical relationship between corn usage, stocks, and futures prices.889 Figure 8.4-1 shows
the strong correlation between futures prices and the stock-to-usage ratio, illustrating that the
latter is a key driver of market signals. More generally, crop prices are influenced by an array of
factors from worldwide weather patterns to biofuel policies to international tariffs and trade
wars.

888	USDA ERS Feed Grains Data Yearbook, March 2022 (Table 4).

889	Informa Economics IEG. "The Impact of Ethanol Industry Expansion on Food Prices: A Retrospective
Analysis " November 2016 https://d35tlsvewk4d42.cloudfront.net/file/975/Retrospective-of-Impact-of-Ethanol-

o n-Food-P rices-20.1.6. pdf.

409


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igure 8.4-1: Corn Ending Stocks / Use Ratio Versus Futures Price

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To make more specific quantitative estimates of the impact of increased biofuel
production on corn prices, we considered two meta-studies. Condon, etal. reviewed 29
published papers in 2015 and found a central estimate of 3-5% increase in corn prices per billion
gallons of ethanol,890 Focusing only on scenarios where a supply response is included gives a
result of 3%. A supply response refers to scenarios where farmers can respond to price signals in
subsequent year(s) and plant additional crops to meet a larger demand. This is appropriate, as the
scope of the analysis is biofuel policy (rather than something unforeseen like weather shocks). A
similar meta-analysis was done in 2016 by FAPRI-Missouri that considered several newer
studies.891 This paper found an increase of $0.19 per bushel per billion gallons, or $0.15 if a
supply response is included, a figure that is generally consistent with the 3% impact above if
applied to the corn price in 2016.

We are projecting higher corn ethanol consumption in 2023-2025 (an additional 706-840
million gallons per year) as a result of the candidate volumes than would occur under the No
RFS baseline. We note, however, that in recent years domestic ethanol production has exceeded
consumption, with significant volumes being exported. This trend appears very likely to continue
during 2023-2025, as our projected consumption volumes remain below USDA's projected

890	Condon, Nicole, Klemick, Heather and Wolverton, Ann, (2013), Impacts of Ethanol Policy on Corn Prices: A
Review and Meta-Analysis of Recent Evidence, No. 201305, NCEE Working Paper Series, National Center for
Environmental Economics, EPA, https://EconPapers.repec.Org/RePEc:nev:wpaper:wp201305.

891	Food and Agricultural Policy Research Institute. Literature Review of Estimated Market Effects of U.S. Corn
Starch Ethanol. 2016. FAPRI-MU Report #01-16.

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production for these years.892 This history of significant export volumes makes it difficult to
project the impact of the No RFS baseline.

It is possible that a decrease in domestic corn ethanol consumption would result in an
increase in exports and minimal change in domestic production volumes. Were this to occur we
would expect little to no net change in domestic corn demand, and thus corn prices.

Alternatively, it is possible that a decrease in consumption would result in a decrease in domestic
corn ethanol production. In this case we would expect a decrease in corn demand and corn
prices. To illustrate the potential impact of the candidate volumes on corn prices, we have
calculated the projected impact in 2023-2025 assuming that these volumes result in an increase
in domestic corn ethanol production relative to the No RFS baseline. The projected price impacts
are calculated using a value from the literature of 3% increase per billion gallons of corn ethanol
produced, as described above. Because the USDA Agricultural Projections show corn use for
ethanol production at quantities that appear similar to the candidate volumes for 2023-2025, we
have projected lower corn prices for the No RFS baseline, rather than assuming the corn prices in
these projections represent a No RFS case and projecting higher prices for the candidate
volumes. The projected impact of the candidate volumes on corn prices relative to the No RFS
baseline are shown in Table 8.4-1.

Table 8.4-1: Projected Impact on Corn Prices Relative to the No RFS Baseline



2023

2024

2025

Corn Price Percent Increase per Billion Gallons of Ethanol

3%

3%

3%

Corn Price (Candidate Volumes); $/bushela

$4.60

$4.37

$4.13

Corn Price Increase per Billion Gallons of Ethanol; $/bushel

$0.14

$0.13

$0.13

Corn Ethanol Increase; billion gallons

0.706

0.776

0.840

Corn Price Increase; $/bushel

$0.10

$0.10

$0.10

Corn Price (No RFS Baseline); $/bushel

$4.50

$4.27

$4.23

a Corn prices are from the June 2022 WASDE. Prices represent the average price for a calendar year. For corn, the
price is calculated using 1/3 of the price for the first agricultural marketing year (e.g., 2022/2023 for 2023) and 2/3
of the price for the second agricultural marketing year (e.g., 2023/2024 for 2023).

With biodiesel and renewable diesel production, the commodity input of interest is
soybean oil, which has an indirect link to bean production. Oil is produced by crushing, which
also creates soy meal, and the supply and prices of these move independently from each other.
The crush quantities vary from year to year, depending on the crush margin, which is defined as
the sum of oil and meal price minus the bean price. Oversupplying either oil or meal markets can
cause prices to fall, decreasing the crush margin. Thus, the degree of passthrough of oil price
increases to bean prices, which may then influence acres planted, is not straightforward. Figure
8.4-2 shows historical trends in soybean oil prices alongside allocation to biofuel and other uses,
based on data taken from the USDA Oilcrops Yearbook. 893 Use in domestic biofuel rose from
0.8 million tons in 2005 to over 4.4 million tons in 2021. Other domestic uses also increased
steadily through 2005, decreased slightly from 2005-2010, and have remained relatively
consistent since 2010. Exports of soybean oil play a minor role and have remained fairly
consistent over the past decade. Noting the lack of correlation between soybean oil price and its

892	USDA Agricultural Projections to 2031. February 2022.

893	USDA ERS Oilcrops Data Yearbook, Soy Tables, March 2022.

411


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use in biofuel production historically, we conclude that the price of soybean oil is influenced by
a number of factors occurring in the broader economy, including rising petroleum prices, supply
chain disruptions on a range of inputs (e.g., fertilizer), weather-related shortages of vegetable oils
internationally, as well as general price inflation. In particular, while increased soybean oil
demand for biofuel production was likely a contributing factor to the sharp price increase in
soybean oil prices in 2020 and 2021, poor weather conditions in South America and Malaysia
were also a significant factor.894

Figure 8.4-2: Soybean Oil Price and Allocation to Biofuel and Exports

16

14

12

g 10

£

I 8

I 6

4
2
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1980	1990	2000	2010	2020

There are relatively few quantitative studies on the impacts of BBD production on
soybean oil and bean prices, and they show a wide range of results. This is in part because these
studies have included a variety of different policy combinations, none of which separated out just
the impact of the RFS program on BBD demand. Ethanol demand could impact the soybean
markets even in the absence of increased demand for BBD from the RFS program due to
increased competition for cropland and other inputs. The largest impacts are estimated when the
BBD obligations are modeled jointly with the conventional and cellulosic ethanol obligations.
Given that actual cellulosic ethanol volumes have been far below those modeled, we focus on the
studies that included only a conventional ethanol obligation. The range of soybean price impacts
indicated by these studies is 1.8-6.5% per billion gallons of BBD, from which we take a central
value of 4.2%.895-896'897

To project the impact on crude soybean oil prices, we used a value of 16C per pound of
oil per billion gallons of BBD produced from soybean oil. This figure was derived from
modeling work published by Babcock, et al., and is the same figure used for other cost estimates

894	Wilson, Nick. "Oil Prices Surge - Vegetable Oil That Is." Marketplace.org. February 17, 2022.

895	Babcock, B. A. 2012. The impact of US biofuel policies on agricultural price levels and volatility. China
Agricultural Economic Review 4:407-426.

896	J. Huang, J. Yang, S. Msangi, S. Rozelle, and A. Weersink. 2012. Biofuels and the poor: Global impact pathways
of biofuels on agricultural markets. Food Policy 37:439-451.

897	Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10 006. February 2010.

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in this rule.898 As with corn ethanol, we have assumed that the soybean oil prices in the USDA
Agricultural Projections to 2031 represent projected prices of the candidate volumes since they
project soybean oil used for biofuel production at quantities that appear similar to the candidate
volumes for 2023-2025. We have projected lower soybean oil prices for the No RFS baseline,
rather than assuming the soybean oil prices in these projections represent the No RFS baseline
and projecting higher prices for the candidate volumes. The projected impacts of the candidate
volumes on soybean oil prices are shown in Table 8.4-2.

Table 8.4-2: Projected Impact on Soybean Oil Prices Relative to the No RFS Baseline



2023

2024

2025

Soybean Oil Price (Candidate Volumes); $/pounda

$0.52

$0.50

$0.48

Soybean Oil Price Increase per Billion Gallons of Biofuel;
$/pound

$0.16

$0.16

$0.16

Soybean Oil Biofuel Increase; billion gallons

2,017

1,983

1,955

Soybean Oil Price Increase; $/pound

$0.32

$0.32

$0.31

Soybean Oil Price (No RFS Baseline); $/pound

$0.20

$0.18

$0.17

a Soybean oil prices are from the June 2022 WASDE. Prices represent the average price for a calendar year. For
soybean oil, the price is calculated using 1/4 of the price for the first agricultural marketing year (e.g., 2022/2023 for
2023) and 3/4 of the price for the second agricultural marketing year (e.g., 2023/2024 for 2023).

Analysis published by Irwin at the University of Illinois indicates that soybean oil prices
often move separately from meal and bean prices, and that the latter two are closely correlated.899
In recent years soybean oil prices appear to have increased significantly relative to soybean meal
prices, as shown in Figure 8.4-3.

898	Babcock BA, Moreira M, Peng Y, 2013. Biofuel Taxes, Subsidies, and Mandates: Impacts on US and Brazilian
Markets. Staff Report 13-SR 108. Center for Agricultural and Rural Development, Iowa State University.

899	Irwin, S. "The Value of Soybean Oil in the Soybean Crush: Further Evidence on the Impact of the U.S. Biodiesel
Boom." FarmdocDaily (7): 169, Department of Agricultural and Consumer Economics, University of Illinois at
Urbana-Champaign, September 14, 2017.

413


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Figure 8.4-3: Relative Soybean Oil and Soybean Meal Value

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Table 8.4-3: Projected Impact on Prices of Other Commodities Relative to the No RFS
Baseline



2023

2024

2025

Price Change Factor Relative to Corn Price Change3

Sorghum; $/bushel

0.93

0.93

0.93

Barley; $/bushel

0.88

0.88

0.88

Oats; $/bushel

0.72

0.72

0.72

Distillers Grains; $/ton

0.018

0.018

0.018

Projected Price Impact

Sorghum; $/bushel

$0.09

$0.09

$0.10

Barley; $/bushel

$0.08

$0.09

$0.09

Oats; $/bushel

$0.07

$0.07

$0.07

Distillers Grains; $/ton

$3.41

$3.55

$3.72

a These factors were developed in conjunction with USDA in the 2012 evaluation of the use of the general waiver
authority. See "Methodology for Estimating Impacts on Food Expenditures, CPI for Food and CPI for All Items,"
available in the docket.

8.5 Food Prices

The above impact on commodity prices may in turn have a ripple impact on food prices
and the many other products produced from these commodities. Since the candidate volumes are
projected to have a relatively small impact on the overall world commodity markets, and since
the cost of these commodities tends to be a relatively small component in the cost of food, the
projected impact of this rule on food prices is relatively modest. Further, we note that the
projected impact of the candidate volumes on food prices does not represent a cost, but rather a
transfer, since higher food prices that result from higher commodity prices represent increased
income for feedstock producers (e.g., corn and soybean farmers).901

To project the impact of the candidate volumes on food prices, we used a methodology
developed in conjunction with USDA in assessing requests from the governors of several states
to reduce the 2012 RFS volumes using the general waiver authority.902 This methodology
generally uses estimates of the impact of biofuel volumes on commodity prices (e.g., corn,
soybean oil, etc.) to calculate the estimated impacts on total food expenditures. For context, this
estimated change in food expenditures is then compared to total food expenditures. Finally, the
ratio of the estimated change in food expenditures to the total food expenditures is used to
estimate the change in food expenditures for the average consumer unit and the consumer units
in the lowest income quintile.

In Chapter 8.4, we presented estimates of the impact of the candidate volumes on
commodity prices relative to the No RFS baseline. These estimates are the starting point for our

901	In other words, food price impacts represent the movement of money within society (from consumers of foods to
the producers of foods) as opposed to additional costs that society as a whole incurs. We note that while the CAA
specifically directs EPA to calculate the impacts on "food prices," as opposed to calculating the impact on the cost
to consumers of food. We acknowledge that these market interactions are affected by deadweight losses, but we
have not estimated the proportion of deadweight losses to transfers in this rule.

902	7 7 FR 70752 (November 27, 2012).

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estimate of the impact of the RFS volumes on food prices. From those, we projected the impact
of commodity prices on total food expenditures, which are shown in Table 8.5-1. We assumed
that changes in commodity prices are fully passed on to consumers at the retail level, and
therefore we can project changes in total food expenditures by multiplying the quantity of these
commodities used for food and feed. Feed use is included to capture the effects of the change in
the price of the commodity on livestock producers' production costs, and ultimately the effects
on retail livestock prices.903

We recognize that projecting that the price of distillers grains increases proportionally to
the price of corn may over-state the impact of this rule on these commodities and ultimately on
food prices. It is possible increasing demand for biofuels may result in an over-supply of
distillers grains, as it is a co-product of biofuel production. Thus, while biofuel production may
increase the prices of corn and food produced from corn, it may not increase the price of
distillers grains. This could mitigate the overall impact of this rule on food prices. At this time,
we do not have sufficient data to project how increasing demand for corn for biofuel production
would impact the price of distillers grains. If the price for distillers grains increases less than the
price of corn (or if it decreases) in response to increased demand for biofuels, we would expect a
smaller impact on food prices than what we have estimated for the candidate volumes.

This methodology assumes no response by producers or consumers to changes in
commodity prices and therefore may overstate the change in food expenditures. However,
previous research suggests that demand for food is very inelastic and therefore this methodology
should provide a close approximation of the change in food expenditures.904 Our estimates of the
increase of food expenditures only reflect expenditures in the U.S. Because of the integrated
nature of agricultural commodity markets, the projected increases in agricultural commodity
prices may also impact food prices and expenditures globally. We have not attempted to quantify
these global impacts.

903	This methodology includes the expected price impact on all crops used as animal feed and does not account for
the livestock produced for the export market or imported meat or animal products.

904	Okrent, Abigail M., and Julian M. Alston. The Demand for Disaggregated Food-Away-From-Home and Food-at-
Flome Products in the United States, ERR-139, USDA, Economic Research Service, August 2012.

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Table 8.5-1: Changes in Food Expenditures Relative to the No RFS E

laseline



Commodity Price
Change

Quantity Used for
Food and Feed3

Change in
Expenditures

Changes in Foot

Expenditures in 2023

Corn

$0.10 per bushel

7,230 million bushels

$690 million

Grain Sorghum

$0.09 per bushel

88 million bushels

$8 million

Barley

$0.08 per bushel

162 million bushels

$14 million

Oats

$0.07 per bushel

143 million bushels

$10 million

Soybean Oil

$0.32 per pound

14.4 billion pounds

$4,631 million

Distillers Grains

$3.41 per short ton

44.6 million short tons

$152 million

Total

N/A

N/A

$5,504 million

Changes in Foot

Expenditures in 2024

Corn

$0.10 per bushel

7,335 million bushels

$729 million

Grain Sorghum

$0.09 per bushel

85 million bushels

$8 million

Barley

$0.09 per bushel

165 million bushels

$14 million

Oats

$0.07 per bushel

125 million bushels

$9 million

Soybean Oil

$0.32 per pound

14.5 billion pounds

$4,593 million

Distillers Grains

$3.55 per short ton

44.6 million short tons

$158 million

Total

N/A

N/A

$5,511 million

Changes in Foot

Expenditures in 2025

Corn

$0.10 per bushel

7,438 million bushels

$774 million

Grain Sorghum

$0.10 per bushel

82 million bushels

$8 million

Barley

$0.09 per bushel

167 million bushels

$ 15 million

Oats

$0.07 per bushel

109 million bushels

$8 million

Soybean Oil

$0.31 per pound

14.6 billion pounds

$4,559 million

Distillers Grains

$3.72 per short ton

44.6 million short tons

$166 million

Total

N/A

N/A

$5,530 million

a Quantity used for food and feed calculated based on the USDA Agricultural Projections to 2031 (February 2022).
Prices represent the average price for a calendar year. Calendar year prices are calculated using a ratio based on the
number of months in the calendar year in each agricultural marketing year. In general, the quantity use for food and
feed is the sum of the quantities projected for Feed and Residual and Food, Seed & Industrial. For corn, we
subtracted the quantity used for Ethanol & by-products from this total. The quantity of distillers grains was
calculated based on the production of 17 pounds of distillers grains for every bushel of corn used to produce ethanol.
Finally, the quantity of soybean oil is equal to the amount listed for food, feed & other industrial and the quantity of
soybean meal is the total quantity of domestic disappearance.

Finally, we compared the estimated change in food expenditures to total food
expenditures as reported by the Bureau of Labor and Statistics in their 2020 survey.905 We used
the ratio of the estimated change in food expenditures to the total food expenditures to estimate
the change in food expenditures for the average consumer unit (household) and the consumer
units in the lowest and second-lowest income quintiles, as shown in Tables 8.5-2 and 3. In this
analysis we have assumed the same price effects on all foods when in fact the price impacts on
foods consumed by low and high income groups may be affected differently. Additionally, lower

905 Bureau of Labor and Statistics - Consumer Expenditures in 2020: Table 1, Quintiles of income before taxes:
Annual expenditure means, shares, standard errors, and coefficients of variation. 2021.

417


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price elasticities for lower-income consumers mean that the welfare effects of these changes
could be aggravated for lower-income groups.

Table 8.5-2: Percent Change in Food Expenditures Relative to the No RFS Baseline



2023 Estimate

2024 Estimate

2025 Estimate

Number of Consumer Units (thousands)

131,234

131,234

131,234

Food Expenditures per Consumer Unit

$7,316

$7,316

$7,316

Total Food Expenditures

$960 billion

$960 billion

$960 billion

Change in Food Expenditures

$5,504 million

$5,511 million

$5,530 million

Percent Change in Food Expenditures

0.57%

0.57%

0.58%

Table 8.5-3: Change in Food Expenditures per Consumer Unit Relative to the No RFS
Baseline



2023

2024

2025

All

Consumer Units

Food Expenditures

$7,316

$7,316

$7,316

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$41.94

$41.99

$42.14

Lowest Quinti

e Income Consumer Units

Food Expenditures

$4,099

$4,099

$4,099

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$23.50

$23.53

$23.61

Second-Lowest Quintile Income Consumer Units

Food Expenditures

$5,380

$5,380

$5,380

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$30.84

$30.88

$30.99

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Chapter 9: Environmental Justice

Executive Order 12898 (59 FR 7629; February 16, 1994) establishes federal executive
policy on environmental justice (EJ). Its main provision directs federal agencies, to the greatest
extent practicable and permitted by law, to make EJ part of their mission by identifying and
addressing, as appropriate, disproportionately high and adverse human health or environmental
effects of their programs, policies, and activities on minority populations and low-income
populations in the U.S. EPA defines EJ as the fair treatment and meaningful involvement of all
people regardless of race, color, national origin, or income with respect to the development,
implementation, and enforcement of environmental laws, regulations, and policies. Executive
Order 14008 (86 FR 7619; February 1, 2021) also calls on federal agencies to make achieving EJ
part of their missions "by developing programs, policies, and activities to address the
disproportionately high and adverse human health, environmental, climate-related and other
cumulative impacts on disadvantaged communities, as well as the accompanying economic
challenges of such impacts." It also declares a policy "to secure environmental justice and spur
economic opportunity for disadvantaged communities that have been historically marginalized
and overburdened by pollution and under-investment in housing, transportation, water and
wastewater infrastructure and health care." EPA also released technical guidance906 (hereinafter
"EPA's Technical Guidance") to provide recommendations that encourage analysts to conduct
the highest quality analysis feasible, recognizing that data limitations, time and resource
constraints, and analytic challenges will vary by media and circumstance.

When assessing the potential for disproportionately high and adverse health or
environmental impacts of regulatory actions on minority populations, low-income populations,
tribes, and/or indigenous peoples, EPA strives to answer three broad questions:

1.	Is there evidence of potential EJ concerns in the baseline (the state of the world absent the
regulatory action)? Assessing the baseline will allow EPA to determine whether pre-
existing disparities are associated with the pollutant(s) under consideration (e.g., if the
effects of the pollutant(s) are more concentrated in some population groups).

2.	Is there evidence of potential EJ concerns for the regulatory option (s) under
consideration? Specifically, how are the pollutant(s) and its effects distributed for the
regulatory options under consideration?

3.	Do the regulatory option(s) under consideration exacerbate or mitigate EJ concerns
relative to the baseline? It is not always possible to quantitatively assess these questions,
though it may still be possible to describe then qualitatively.

EPA's Technical Guidance does not prescribe or recommend a specific approach or
methodology for conducting an EJ analysis, though a key consideration is consistency with the
assumptions underlying other parts of the regulatory analysis when evaluating the baseline and
regulatory options. Where applicable and practicable, EPA endeavors to conduct such an
analysis. Going forward, EPA is committed to conducting an EJ analysis for rulemakings based
on a framework similar to what is outlined in EPA's Technical Guidance, in addition to
investigating ways to further weave EJ into the fabric of the rulemaking process.

906 https://www.epa.gov/sites/default/fLles/2016-06/documents/ejtg 5 8 18 vS.l.pdf

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9.1 Proximity Analysis of Facilities Participating in the RFS Program

As of October 2022, there were 342 registered RIN generating facilities in the U.S. There
were also 146 petroleum refineries producing transportation fuel. These facilities are spread out
across the U.S., with the addition of 3 petroleum facilities in Hawaii and 5 petroleum facilities in
Alaska, Our analysis looks at the demographic composition of communities near these facilities
nationally, for the subset of facilities located in rural areas, and by EPA Region (Figure 9.1-1)
and major fuel type—in this case, petroleum, renewable diesel, biodiesel, ethanol, and RNG.

This proximity-based analysis did not include facilities that generate renewable electricity from
biogas, as there were none of these facilities participating in the RFS program as of 2022, and as
discussed in Chapter 3, this rule is not expected to result in any additional renewable electricity
generated from biogas in 2023-2025 than would occur in the absence of the RFS program.

For data on demographic characteristics near each facility, we use block group level data
from the 2016 - 2020 American Community Survey. Areal apportionment is used to attribute
these data to uniform buffers of 1 .3 , and 5-mile distances around each RIN-generating facility.
Because the demographic composition of urban areas dominates the national average, we also
examine facilities located in rural areas separately. We define a rural block group as one whose
centroid does not intersect with Census polygons of urban areas/clusters. We then characterize a
facility as being located in a rural area if 50% or more of the population within 3 miles live in
rural block groups.

Figure 9.1-1: Map of EPA Regions



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SC

JFL \

Headquarters

m

420


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As the RFS is a national program, it is difficult to track facility-by-facility responses to
the candidate volumes, so this demographic analysis focuses on baseline characteristics of
communities near RIN-generating production facilities. We examined near-facility demographics
in order to bring a quantitative lens to our qualitative observations. As this rule would displace
petroleum fuels—primarily gasoline and diesel—with biofuels, it is expected that communities
near facilities that produce biofuels may experience an overall increase in criteria pollutant
exposure, while those near petroleum refineries could see the opposite if refineries react to the
candidate volumes by decreasing production.3

Table 9.1-1 shows the demographic composition of communities within 1, 3 and 5 miles
of these facilities compared to the national average. As seen below, at the 5 mile buffer radius,
approximately 10 percent of the U.S. population lives near one or more RIN-generating facility.
These near-facility communities can generally be characterized as having a greater than average
percent non-white population, regardless of the distance buffer utilized. The Hispanic population
living near these facilities is nearly double the national average. The percent Black population is
1.25 times the national average. In addition, these communities tend to have a higher than
average unemployment rate, a lower median income, a higher percent with less than a high
school education, and a higher percent living lx and 2x below the federal poverty line compared
to the national average.

Table 9.1-1: Near-Facility Demographics Compared to National Average

Demographic

1 mi

3 mi

5 mi

Nationwide

Total Population (millions)

1.0

12.2

32.8

326.6

% Rural Population

11.0

8.1

7.8

26.6

% White

63.2

60.3

60.0

70.4

% Black

16.1

16.0

16.3

12.6

% American Indian and Alaska Native

0.8

0.7

0.7

0.8

% Asian

4.3

6.1

6.5

5.6

% Native Hawaiian and Other Pacific Islander

0.4

0.4

0.3

0.2

% Other (Including Two or More)

15.2

16.5

16.1

10.3

% Hispanic

31.2

34.7

34.1

18.2

Median Income ($2020)

$58,411

$63,945

$66,529

$73,181

% lx Poverty Line

18.5

16.7

15.9

12.5

% 2x Poverty Line

40.3

37.3

35.8

29.1

Unemployment Rate

7.0

6.5

6.3

5.4

% Less than High School Education

12.1

12.0

11.4

7.8

Table 9.1-2 presents the demographic characteristics of communities near 236 RIN-
generating facilities located in rural areas (or about 48 percent of all RIN-generating facilities).
Many biofuel facilities are located in rural areas in order to be close to feedstock crops. They
play a role in rural job creation as further discussed in Chapters 8.1 and 8.3. In general, the
demographic composition of rural communities that host RIN-generating facilities is similar to
the rural national average, with the exception of a substantially higher than average percent
Hispanic populations. People of two or more races and those living at or beneath lx and 2x the

421


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federal poverty line are slightly higher than nationwide rural average, and the median income is
slightly lower.

Table 9.1-2: Near-Facility Demographics of Rural Facilities

Demographic

1 mi

3 mi

5 mi

Nationwide

Total Population (millions)

0.1

0.5

1.7

86.9

% Rural Population

85.3

82.3

61.9

100

% White

86.4

84.2

80.9

84.2

% Black

5.8

6.7

6.9

7.0

% American Indian and Alaska Native

0.5

0.6

0.7

1.5

% Asian

1.1

1.5

2.6

1.6

% Native Hawaiian and Other Pacific Islander

0.1

0.2

0.3

0.1

% Other (Including Two or More)

6.2

6.8

8.6

5.6

% Hispanic

12.4

13.9

18.5

9.0

Median Income ($2020)

$63,259

$65,346

$66,886

$68,372

% lx Poverty Line

11.3

12.0

12.6

11.3

% 2x Poverty Line

30.2

29.7

31.0

27.9

Unemployment Rate

4.6

4.4

4.6

4.8

% Less than High School Education

9.0

8.6

9.0

7.7

Tables 9.1-3.1 through 3.10 show the demographic composition of communities near
these biofuel and petroleum facilities by EPA region as shown in Figure 9.1-1. These community
demographics are compared to regional averages. We present this information using a 3 mile
distance buffer, though trends are similar at the 1 and 5 mile distances.

Table 9.1-3.1: Region 1 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

7



Total Population [millions]

0.3

14.8

% Rural Population

7.5

25.0

% White

68.5

79.8

% Black or African American

14.9

6.8

% American Indian and Alaska Native

0.4

0.3

% Asian

4.0

4.9

% Native Hawaiian and Other Pacific Islander

0.1

0.0

% Other (Including Two or More)

12.1

8.1

% Hispanic

19.3

11.3

Median Income [2020$]

$63,395

$85,923

% Low Income (Below lx Poverty Line)

15.6

9.6

% Low Income (Below 2x Poverty Line)

33.6

21.8

Unemployment Rate

6.5

5.2

% Less than High School Education

7.1

6.0

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Table 9.1-3.2: Region 2 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

16



Total Population [millions]

0.6

28.4

% Rural Population

4.8

13.2

% White Alone

52.5

63.3

% Black or African American

19.2

14.8

% American Indian and Alaska Native

0.4

0.3

% Asian

3.4

8.9

% Native Hawaiian and Other Pacific Islander

0.0

0.0

% Other (Including Two or More)

24.5

12.6

% Hispanic

43.3

19.5

Median Income [2020$]

$69,340

$83,720

% Low Income (Below lx Poverty Line)

12.7

12.1

% Low Income (Below 2x Poverty Line)

33.2

26.1

Unemployment Rate

5.9

5.9

% Less than High School Education

11.8

8.3

Table 9.1-3.3: Region 3 Near Facility Demogra

phics Compared to Regional Averag



Within 3 miles

Region

Number of Facilities

21



Total Population [millions]

0.8

30.8

% Rural Population

7.4

27.7

% White

57.3

70.4

% Black or African American

33.1

17.6

% American Indian and Alaska Native

0.2

0.2

% Asian

3.8

4.8

% Native Hawaiian and Other Pacific Islander

0.0

0.0

% Other (Including Two or More)

5.5

6.9

% Hispanic

5.0

8.4

Median Income [2020$]

$53,629

$80,003

% Low Income (Below lx Poverty Line)

19.7

10.9

% Low Income (Below 2x Poverty Line)

39.0

25.0

Unemployment Rate

7.8

5.4

% Less than High School Education

7.7

6.6

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Table 9.1-3.4: Region 4 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

42



Total Population [millions]

1.0

66.3

% Rural Population

8.4

34.9

% White

47.1

68.9

% Black or African American

43.2

21.4

% American Indian and Alaska Native

0.3

0.4

% Asian

1.1

2.6

% Native Hawaiian and Other Pacific Islander

0.0

0.1

% Other (Including Two or More)

8.2

6.6

% Hispanic

26.7

13.0

Median Income [2020$]

$44,532

$61,927

% Low Income (Below lx Poverty Line)

24.1

14.1

% Low Income (Below 2x Poverty Line)

49.3

33.0

Unemployment Rate

8.5

5.7

% Less than High School Education

13.1

8.3

Table 9.1-3.5: Region 5 Near Facility Demogra

phics Compared to Regional Averaj



Within 3 miles

Region

Number of Facilities

99



Total Population [millions]

1.5

52.5

% Rural Population

14.8

30.1

% White

73.4

78.1

% Black or African American

14.3

11.4

% American Indian and Alaska Native

0.4

0.4

% Asian

2.6

3.6

% Native Hawaiian and Other Pacific Islander

0.1

0.0

% Other (Including Two or More)

9.2

6.5

% Hispanic

11.3

8.3

Median Income [2020$]

$58,621

$69,979

% Low Income (Below lx Poverty Line)

17.4

12.1

% Low Income (Below 2x Poverty Line)

36.5

27.8

Unemployment Rate

5.9

5.4

% Less than High School Education

8.4

6.2

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Table 9.1-3.6: Region 6 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

105



Total Population [millions]

2.5

42.4

% Rural Population

10.3

30.4

% White

60.6

69.0

% Black or African American

22.1

13.6

% American Indian and Alaska Native

0.9

1.6

% Asian

2.7

3.9

% Native Hawaiian and Other Pacific Islander

0.1

0.1

% Other (Including Two or More)

13.5

11.8

% Hispanic

44.1

31.2

Median Income [2020$]

$57,184

$65,936

% Low Income (Below lx Poverty Line)

19.6

14.8

% Low Income (Below 2x Poverty Line)

43.1

33.9

Unemployment Rate

7.0

5.6

% Less than High School Education

14.5

9.6

Table 9.1-3.7: Region 7 Near Facility Demogra

phics Compared to Regional Averag



Within 3 miles

Region

Number of Facilities

77



Total Population [millions]

0.6

14.1

% Rural Population

18.8

40.6

% White

81.4

83.9

% Black or African American

7.7

7.6

% American Indian and Alaska Native

0.6

0.5

% Asian

2.6

2.4

% Native Hawaiian and Other Pacific Islander

0.1

0.1

% Other (Including Two or More)

7.5

5.4

% Hispanic

10.3

7.3

Median Income [2020$]

$57,183

$66,202

% Low Income (Below lx Poverty Line)

15.9

11.5

% Low Income (Below 2x Poverty Line)

35.6

28.5

Unemployment Rate

4.8

4.2

% Less than High School Education

7.2

5.8

425


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Table 9.1-3.8: Region 8 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

39



Total Population [millions]

1.0

12.1

% Rural Population

8.6

30.7

% White

81.5

83.8

% Black or African American

2.1

2.7

% American Indian and Alaska Native

1.7

2.3

% Asian

2.5

2.4

% Native Hawaiian and Other Pacific Islander

0.7

0.3

% Other (Including Two or More)

11.5

8.4

% Hispanic

21.5

15.2

Median Income [2020$]

$72,331

$77,609

% Low Income (Below lx Poverty Line)

11.3

10.0

% Low Income (Below 2x Poverty Line)

28.6

25.3

Unemployment Rate

4.2

4.2

% Less than High School Education

6.5

4.9

Table 9.1-3.9: Region 9 Near Facility Demogra

phics Compared to Regional Averag



Within 3 miles

Region

Number of Facilities

55



Total Population [millions]

3.6

51.0

% Rural Population

2.2

11.3

% White

50.4

58.0

% Black or African American

6.9

5.7

% American Indian and Alaska Native

0.7

1.3

% Asian

13.1

13.5

% Native Hawaiian and Other Pacific Islander

0.6

0.7

% Other (Including Two or More)

28.3

20.9

% Hispanic

56.3

36.6

Median Income [2020$]

$75,139

$82,933

% Low Income (Below lx Poverty Line)

14.4

12.5

% Low Income (Below 2x Poverty Line)

34.7

29.2

Unemployment Rate

7.0

6.3

% Less than High School Education

15.6

10.2

426


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Table 9.1-3.10: Region 10 Near Facility Demographics Compared to Regional Average



Within 3 miles

Region

Number of Facilities

27



Total Population [millions]

0.4

14.2

% Rural Population

9.5

27.7

% White

62.1

77.5

% Black or African American

7.0

2.9

% American Indian and Alaska Native

1.6

1.9

% Asian

12.2

6.5

% Native Hawaiian and Other Pacific Islander

2.4

0.6

% Other (Including Two or More)

14.8

10.7

% Hispanic

13.5

12.7

Median Income [2020$]

$75,937

$78,170

% Low Income (Below lx Poverty Line)

12.2

10.8

% Low Income (Below 2x Poverty Line)

27.6

26.2

Unemployment Rate

5.3

5.2

% Less than High School Education

6.6

5.8

Overall, we see similar trends at the regional level as compared to the overall national
picture. In some regions, there appear to be less stark demographic disparities compared to the
regional average, while in other cases, more so. Since biofuel and petroleum facilities are
particularly concentrated in Regions 5, 6, and 7 (281 facilities) we use them to illustrate these
differences. Regions 5 and 7 have slightly elevated percent Hispanic and Black populations near
the biofuel facility compared to their regional averages, while percent Hispanic and Black
populations are 1.4 and 1.7 times the regional average in Region 6, respectively. Populations
living near these facilities also tend to have lower median incomes, a greater percent living in
poverty or with less than a high school education.

The analysis above does not differentiate by type of facility. As stated above, the effects
of this rule will not be felt evenly by different demographic groups, but the greatest contributing
factor to what communities may experience is what type of facility they are near. While the EPA
is unable to ascertain how facilities may respond to changes in required volumes of different RIN
categories, the 2023-2025 volumes are greater than those in 2020-2022. Increases in required
biofuel volumes will mean, generally, an increase in biofuel production at biofuel facilities and a
decrease in petroleum production at refineries that make gasoline or diesel, all else equal. Biofuel
directly displaces conventional transportation fuel. Communities near ethanol facilities, biodiesel
and renewable diesel facilities, and RNG facilities may see increases in criteria pollutants.
Conversely, communities near petroleum refineries may see reductions in air emissions as
producers respond to increasing RFS volumes. It is not practicable to assess what facilities may
or may not specifically experience any changes directly attributable to the RFS. In spite of these
limitations, we examine the demographic composition of communities that may be affected by
fuel type in Table 9.1-4. Results are shown for the 3 mile distance buffer.

Regardless of facility type, nearby communities have higher percent Black population
than the national average, particularly near biodiesel and petroleum facilities; percent Black

427


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populations are 1.7 and 2.3 times the national average, respectively. Percent Hispanic
populations near RNG, biodiesel, and petroleum facilities are also almost or more than double
than the national average. The median incomes of communities near biodiesel, ethanol, and
renewable diesel facilities are nearly $20,000 or more lower than the national median income,
while communities near RNG and petroleum facilities have a median income that are lower than
the national median by almost $10,000 and $1,000, respectively. Most of the communities near
different facility types, other than those producing RNG, have a higher unemployment rate than
the national average. All experience higher rates of poverty than the national average. A higher
proportion of these populations compared to the national average also do not have at least a high
school education.

Table 9.1-4: Facility Demographics Within 3 Miles By Fuel Production Type



Biodiesel
Facilities

Ethanol
Facilities

Petroleum
Facilities

Renewable

Diesel
Facilities

RNG
Facilities

National
Average

Number of Facilities

72

85

146

9

176



Total Population
[millions]

1.9

0.7

6.0

0.2

3.4

326.6

% Rural Population

8.3

20.7

4.3

11.0

11.7

26.6

% White

60.8

68.9

57.8

63.7

62.5

70.4

% Black or African
American

21.2

17.9

13.9

28.3

15.9

12.6

% American Indian
and Alaska Native

0.5

0.5

0.9

0.6

0.7

0.8

% Asian

2.8

3.3

6.9

1.4

7.3

5.6

% Native Hawaiian
and Other Pacific
Islander

0.2

0.2

0.5

0.1

0.3

0.2

% Other (Including
Two or More)

14.6

9.3

20.1

5.8

13.4

10.3

% Hispanic

34.6

15.0

43.3

17.6

24.8

18.2

Median Income
[2020$]

$54,428

$55,725

$63,842

$51,606

$71,935

$73,181

% Low Income
(Below lx Poverty
Line)

19.2

17.7

17.3

19.6

13.8

12.5

% Low Income
(Below 2x Poverty
Line)

42.0

38.2

38.6

42.5

32.0

29.1

Unemployment Rate

6.9

6.7

7.0

8.9

5.4

5.6

% Less than High
School Education

12.3

8.4

13.9

10.4

9.2

7.8

428


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9.2 Non-GHG Air Quality Impacts

There is evidence that communities with EJ concerns are impacted by non-GHG
emissions. Numerous studies have found that environmental hazards such as air pollution are
more prevalent in areas where racial/ethnic minorities and people with low socioeconomic status
(SES) represent a higher fraction of the population compared with the general
population.907'908'909,910 Consistent with this evidence, a recent study found that most
anthropogenic sources of PM2.5, including industrial sources, and light- and heavy-duty vehicle
sources, disproportionately affect people of color.911

Emissions of non-GHG pollutants such as PM, NOx, CO, SO2, and air toxics occur
during the production, storage, transport, distribution, and combustion of petroleum-based fuels
and biofuels. Some communities with EJ concerns are located near petroleum refineries,
biorefineries, and on-road sources of pollution. For example, analyses of communities in close
proximity to petroleum refineries have found that vulnerable populations near refineries may
experience potential disparities in pollution-related health risk from that source.912 There is also
substantial evidence that people who live or attend school near major roadways are more likely
to be of a minority race, Hispanic ethnicity, and/or low SES. 913>914>915 For this rule, EPA has not
quantitatively assessed the cumulative risks to certain demographics near biorefineries, but is
evaluating the extent to which this type of analysis could be done for future rulemakings.

Although proximity to an emissions source is a useful indicator of potential exposure, it
is important to note that the impacts of emissions from both upstream and tailpipe sources are not
limited to communities in close proximity to them. As a result of regional transport and
secondary formation of pollutants in the air, the effects of both potential increases and decreases
in emissions from the sources affected by this rule might also be felt many miles away, including
in communities with EJ concerns downwind of sources. The spatial extent of these impacts from
upstream and tailpipe sources depends on a range of interacting and complex factors, including
the amount of pollutant emitted, atmospheric chemistry and meteorology.

907	Mohai, P.; Pellow, D.; Roberts Timmons, J. (2009) Environmental justice. Annual Reviews 34: 405-430.
https://doi.org/10.1146/annurev-environ-082508-094348

908	Rowangould, G.M. (2013) A census of the near-roadway population: public health and environmental justice
considerations. Trans Res D 25: 59-67. http://dx.doi.Org/10.1016/j.trd.2013.08.003

909	Marshall, J.D., Swor, K.R.; Nguyen, N.P (2014) Prioritizing environmental justice and equality: diesel emissions
in Southern California. Environ Sci Technol 48: 4063-4068. https://doi.org/10.1021/es405167f

910	Marshall, J.D. (2000) Environmental inequality: air pollution exposures in California's South Coast Air Basin.
Atmos Environ 21: 5499-5503. https://doi.Org/10.1016/j.atmosenv.2008.02.005

911	C. W. Tessum, D. A. Paolella, S. E. Chambliss, J. S. Apte, J. D. Hill, J. D. Marshall (2021). PM2.5 polluters
disproportionately and systemically affect people of color in the United States. Sci. Adv. 7, eabf4491.

912	U.S. EPA (2014). Risk and Technology Review - Analysis of Socio-Economic Factors for Populations Living
Near Petroleum Refineries. Office of Air Quality Planning and Standards, Research Triangle Park, North Carolina.
January.

913	Rowangould, G.M. (2013) A census of the U.S. near-roadway population: public health and environmental
justice considerations. Transportation Research Part D; 59-67.

914	Tian, N.; Xue, J.: Barzyk. T.M. (2013) Evaluating socioeconomic and racial differences in traffic-related metrics
in the United States using a GIS approach. J Exposure Sci Environ Epidemiol 23: 215-222.

915	Boehmer, T.K.; Foster, S.L.; Flenry, J.R.; Woghiren-Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to
major highways - United States, 2010. Morbidity and Mortality Weekly Report 62(3): 46-50.

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The manner in which biofuel producers and markets respond to the candidate volumes in
this rule could have non-GHG exposure impacts for communities living near facilities that
produce biofuels. Chapter 4.1 summarizes what is known about potential air quality impacts of
the candidate volumes assessed for this rule. We expect that small increases in non-GHG
emissions from biofuel production and small reductions in petroleum-sector emissions would
lead to small changes in exposure to these non-GHG pollutants for people living in the
communities near these facilities. This is of some concern, as we noted in Chapter 4.1 that
communities living within 10 km of biorefineries were shown to be at a higher risk of adverse
respiratory outcomes. However, we do not have the information needed to understand the
magnitude and location of facility-specific responses to the candidate volumes, and therefore we
are unable to evaluate impacts on air quality in EJ communities near these facilities. We
therefore recommend caution when interpreting these broad, qualitative observations.

9.3 Water & Soil Quality Impacts

We conducted an analysis to estimate the impacts associated with the candidate volumes
on water and soil quality in Chapter 4.4. Though soil quality is not among the statutory factors
required to be analyzed under the set authority in the CAA,916 it is discussed in conjunction with
water quality because it can have direct impacts on water quality. EPA defines water quality as
the condition of water to serve human or ecological needs, while USDA defines soil quality as
the ability of soil to function, including its capacity to support plant life. The ways in which this
rule could potentially impact water and soil is by creating an incentive for land use and
management changes, primarily through the encouragement of biofuels produced from corn and
soybeans. An increase in demand for corn and soybeans for biofuel production has historically
caused the conversion of natural grasslands to cropland.917 This land use change has negative
consequences for soil quality in that it can increase soil erosion, depletion of SOM (soil organic
matter), and loss of soil carbon. These negative impacts on soil quality then translate into
negative impacts on water quality like increased soil erosion, which causes sedimentation and
murky water conditions. Nutrient leaching can result in excessive algae growth and hypoxia (low
oxygen levels in the water), which then has negative consequences on aquatic organisms as
described in Chapter 4.4.2.3.

As discussed in Chapter 4.4, the candidate volumes have the potential to incentivize
increases in crop production, and by extension adverse impacts on soil and water quality. This
does not apply to biogas used to generate electricity or produce RNG, as they are making use of
waste streams of processes driven by other phenomena.918,919,920,921 97% of all RINs generated
via biogas-related pathways came from wastewater treatment plants, agricultural digesters, or

916	CAA section 211 (o) (2) (B) (ii).

917	See Chapter 4.3.2.

918	Melvin, A.M.; Sarofim, M.C.; Crimmins, A.R., "Climate benefits of U.S. EPA programs and policies that
reduced methane emissions 1993- 2013", Environmental Science & Technology, 2016, in press.
http://pubs.acs.org/doi/pdf/10.1021/acs.est.6b00367. DOI 10.1021/acs.est.6b00367.

919	81 FR 59332 (August 29, 2016).

920	https://www. epa. gov/agstar/benefits- anaerob ic- d igestion.

921

https://www.resourcerecoveiydata.org/Potential Power of Renewable Energy Generation From Wastewater and
Biosolids Fact Sheetpdf.

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landfill methane capture. The RFS program does not affect human, animal, or solid waste
production, and in fact incentivizes the collection of these products, improving local soil and
water quality. However, the magnitude of both this impact and that of other biofuels is difficult
to estimate as it would require more information on the correlation between RFS-driven changes
in biofuel volumes and feedstock usage and where any increases in those feedstocks occur (e.g.,
domestically vs internationally, and on what acres), the cultivation practices applied to those
acres (e.g., fertilizer and pesticide use, use of cover crops in the non-growing season, crop
rotations, etc.), as well as modeling to evaluate the magnitude of any runoff occurring from those
acres. Additionally, we would need additional information on the impacted populations in order
to evaluate the EJ concerns: where are the populations that are already being impacted most, who
resides in those areas, how are they using the water, and how are the changes in water quality
and availability impacting those uses and, thereby, those populations. For these reasons, we are
unable to assess the degree of impact the candidate volumes may have. However, going forward,
we would like to better understand the relationship between the RFS volume standards and land
use/land management decisions.

Any negative impacts on aquatic life have the potential to also negatively impact
populations that rely on fish or other aquatic life, like shrimp or crawfish, for sustenance or
income. According to a study by Beveridge, et al., fish is a very nutritious food for humans with
high quality animal protein, essential fatty acids, and micronutrients.922 Many American Indian
tribes, minority populations, and some low-income populations rely on local food sources—
including fish and other aquatic life—to supplement their diets. To better understand these high-
risk populations, we conducted a literature review to identify population groups most likely to
fall under the high-risk category for mercury exposure based on higher-than-average fish
consumption as part of the RIA for the Mercury and Air Toxics Standards rule.923 These
population groups are the same ones that would be most affected by any adverse impact the RFS
program has on fisheries and aquatic life due to their heavy reliance on fishing for sustenance.
This review included six high-risk population groups, including African-American and white
low-income recreational and subsistence fishers in the Southeast, female low-income
recreational and subsistence fishers, Hispanic and Laotian subsistence fishers, and
Chippewa/Ojibwe Tribe members in the Great Lakes area.924 American Indian tribes also rely on
recreational fisheries for income, as explained by the U.S. Department of the Interior.925 The fish
populations depend on healthy water systems to thrive. If these aquatic ecosystems are
negatively impacted by agricultural runoff and nutrient leaching, they could suffer from algae
blooms or become hypoxic, making it impossible for fish to survive and endangering the human
populations that rely on them. Additionally, any increased use of nitrogen rich fertilizers, as are

922	Beveridge, M. C., Thilsted, S. H., Phillips, M. J., Metian, M., Troell, M., & Hall, S. J. (2013). Meeting the food
and nutrition needs of the poor: the role of fish and the opportunities and challenges emerging from the rise of
aquaculture. Journal of fish biology, 83(4), 1067-1084. https://doi.org/10.llll/jfb.12187

923	Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards. EPA-452/R-11-011. December
2011.

924	Id.

925	U.S. Department of the Interior, Working with Native American Tribes, available at

https://www.fws.gov/southeast/our-services/native-american-tribes: see also, U.S. Department of the Interior, Native
American Trust Responsibilities, available at https://www.fws.gov/southwest/fisheries/native_american_trust.html,
and U.S. Department of the Interior, Indian Affairs, Branch of Fish, Wildlife, and Recreation, available at
https://www.bia.gov/bia/ots/division-natural-resources/branch-fish-wildlife-recreation.

431


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applied to approximately 98% of corn acres (see Table 4.4.2.1-1), could result in nitrates
leaching into groundwater that may be used for human consumption, particularly in areas with
loamy and sandy soil conditions. Nitrate filtration is an expensive process that low-income
communities may not have access to. Additionally, where groundwater wells are employed in
rural areas, the concern of disproportionate impact on vulnerable populations may increase. In
this way, if and to the extent the candidate volumes adversely affect water quality, they could
potentially have disproportionately severe negative impacts on EJ communities within American
Indian tribes and other low income populations that rely on local fisheries as a source of food or
income or that may not be able to afford costly water filtration systems to address nitrate
contamination in their drinking water.

9.4 Impacts on Fuel and Food Prices

Costs are also relevant to an EJ analysis when communities are expected to face
economic challenges due to impacts of a regulation (E.O. 14008). For instance, if prices for basic
commodities such as food and fuel increase as a result of a rulemaking, lower-income
households may be differentially affected since these goods and services may make up a
relatively larger share of their income, and they are less able to adapt or substitute away from
them.

As part of the analyses conducted for this rule, we estimated the impact on food prices.
These impacts are attributed to increases in corn and soy prices associated with the candidate
volumes. Both the literature926,927 and our analysis in Chapter 10 indicate corn and soy are a
relatively small proportion of most foods purchased and consumed in the U.S., and the overall
food price impacts are relatively small as a percentage of total food expenditures. We estimate
that the candidate volumes would affect gasoline prices by 0.6C/gal in 2023, 1.8C/gal in 2024,
and 3.1 ct/gal in 2025. Diesel prices would rise by 14.1 ct/gal in 2023, 14.4ct/gal in 2024, and
14.9ct/gal in 2025. Food prices would rise from these volumes by 0.57% in 2023 and 2024, and
0.58% in 2025, relative to the No RFS baseline. These impacts are discussed in greater detail in
Chapters 8.4 (price of agricultural commodities), 8.5 (food price impacts), and 10 (fuel price
impacts).

The projections of the impact associated with the candidate volumes on food and fuel
prices are ultimately derived from projections of the impact on widely traded commodities such
as corn, soybeans, gasoline, and diesel. We therefore do not expect that the impact on food and
fuel prices would vary for different parts of the country. However, changes in food and fuel
prices could have a disproportionate impact on populations that spend a larger share of their
income on food and fuel. According to data collected via the Consumer Expenditure Survey
from the Bureau of Labor and Statistics, consumer units with income in the lowest 20% spend a
greater portion of their total expenditures on food and fuel (see Table 9.4-1). Thus, even though

926	Hayes, D.J., B.A. Babcock, J.F. Fabiosa, S. Tokgoz, A. Elobeid, T.H. Yu, F. Dong, C.E. Hart, E. Chavez, S. Pan,
M. Carriquiry, and J. Dumortier. 2009. "Biofuels: Potential Production Capacity, Effects on Grain and Livestock
Sectors, and Implications for Food Prices and Consumers." Working paper 09-WP 487. Center for Agricultural and
Rural Development, Iowa State University.

927	Taheripour, Farzad, et al. "Economic Impacts of the U.S. Renewable Fuel Standard: An Ex-Post Evaluation."
Frontiers in Energy Research, vol. 10, 2022, https://doi.org/10.3389/fenrg.2022.749738.

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we expect that the effects on the prices for food and fuel to increase proportionally for all
consumers, we also expect that these price impacts, though small, would have a larger impact on
lower-income communities where food and fuel expenditures are a greater portion of total
expenditures.

Table 9.4-1: Proportion of Total Expenditures on Food and Fuel26



All

Lowest 20%

Second-lowest



Consumer

Consumer

20% Consumer



Units

Unit Income

Unit Income

Total expenditures

$61,350

$28,782

$39,846

Food expenditures

$7,316

$4,095

$5,380

% of total expenditures on food

11.9%

14.3%

13.5%

Fuel expenditures

$1,568

$814

$1,254

% of total expenditures on fuel

2.6%

2.8%

3.1%

% Women

53%

65%

56%

% Black

13%

19%

15%

% With a High School Degree or Less

30%

49%

41%

Assuming no changes in income available to spend on goods, nor changes to the bundles
of goods consumed, the RFS program would cause the lowest quintile of consumer units to
spend $4,166, or 14.5% of their income on food (versus 14.3% currently), while the second
lowest quintile of consumer units would spend $5,473, or 13.7% of their income on food (versus
13.5% currently), by 2025. This is shown in year by year increments below in Table 9.4-2.

These consumer units would also see increases to their total expenditures on fuel as a
result of the RFS program, increasing to $816 for the lowest quintile of consumer units and
$1,257 for the second-lowest quintile of consumer units in 2023, $823 and $1,267 in 2024, and
$834 and $1,285 in 2025, respectively.27,28

Table 9.4-2: Year By Year Change in Food Expenditures per Consumer Unit Relative to
the No RFS Baseline



2023 2024

2025

All

Consumer Units

Food Expenditures

$7,316

$7,316

$7,316

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$41.94

$41.99

$42.14

Lowest Quinti

e Income Consumer Units

Food Expenditures

$4,099

$4,099

$4,099

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$23.50

$23.53

$23.61

Second-Lowest Quintile Income Consumer Units

Food Expenditures

$5,380

$5,380

$5,380

Percent Impact on Food Expenditures

0.57%

0.57%

0.58%

Projected Food Expenditure Increase

$30.84

$30.88

$30.99

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This would result in a 2.5% increase in fuel expenditures for the lowest and second
lowest quintile consumer units, corresponding to 2.9% and 3.2% (versus 2.8% and 3.1%
currently), respectively, of each quintile's consumer unit total expenditures. These effects, while
minor, will fall disproportionately on low-income consumers, women, people of color, and those
without a high school degree.

9.5 Greenhouse Gas Impacts

In 2009, under the "Endangerment and Cause or Contribute Findings for Greenhouse
Gases Under Section 202(a) of the Clean Air Act" (hereinafter the "Endangerment Finding"),
EPA considered how climate change threatens the health and welfare of the U.S. population. As
part of that consideration, we also considered risks to minority and low-income individuals and
communities, finding that certain parts of the U.S. population may be especially vulnerable based
on their characteristics or circumstances. These groups include economically and socially
disadvantaged communities; individuals at vulnerable life stages, such as the elderly, the very
young, and pregnant or nursing women; those already in poor health or with comorbidities; the
disabled; those experiencing homelessness, mental illness, or substance abuse; and/or Indigenous
or minority populations dependent on one or limited resources for subsistence due to factors
including but not limited to geography, access, and mobility.

Scientific assessment reports produced over the past decade by the U.S. Global Change
Research Program (USGCRP),928,929 the Intergovernmental Panel on Climate Change

928	USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment,
Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C.
Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.

929	USGCRP, 2016: The Impacts of Climate Change on Human Health in the United States: A Scientific
Assessment. Crimmins, A., J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. Eisen, N. Fann, M.D.
Hawkins, S.C. Herring, L. Jantarasami, D.M. Mills, S. Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S. Global
Change Research Program, Washington, DC, 312 pp. http://dx.doi.Org/10.7930/.I0R49NQX.

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(IPCC),930,931,932,933 and the National Academies of Science, Engineering, and Medicine934,935
add more evidence that the impacts of climate change raise potential EJ concerns. These reports
conclude that poorer or predominantly non-white communities can be especially vulnerable to
climate change impacts because they tend to have limited adaptive capacities and are more
dependent on climate-sensitive resources such as local water and food supplies, or have less
access to social and information resources. Some communities of color, specifically populations
defined jointly by ethnic/racial characteristics and geographic location, may be uniquely
vulnerable to climate change health impacts in the U.S. In particular, USGCRP (2016) found
with high confidence that vulnerabilities are place- and time-specific, that particular life stages
and ages are linked to immediate and future health impacts, and that social determinants of
health are linked to greater extent and severity of climate change-related health impacts.

9.6 Effects on Specific Populations of Concern

EJ populations of concern, such as individuals living in socially and economically
disadvantaged communities (e.g., living at or below the poverty line or experiencing
homelessness or social isolation) or those who have been historically marginalized or
overburdened are at greater risk of health effects from climate change. This is also true with
respect to people at vulnerable life stages, specifically women who are pre- and perinatal, or are
nursing; in utero fetuses; children at all stages of development; and the elderly. Per the Fourth

930	Oppenheimer, M., M. Campos, R.Warren, J. Birkmann, G. Luber, B. O'Neill, and K. Takahashi, 2014: Emergent
risks and key vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and
Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel
on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee,
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and
L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 1039
1099.

931	Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M. Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso,
2014: Food security and food production systems. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability.
Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea,
T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken,
P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York,
NY, USA, pp. 485-533.

932	Smith, K.R., A.Woodward, D. Campbell-Lendrum, D.D. Chadee, Y. Honda, Q. Liu, J.M. Olwoch, B. Revich,
and R. Sauerborn, 2014: Human health: impacts, adaptation, and co-benefits. In: Climate Change 2014: Impacts,
Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth
Assessment Report of the Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J.
Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S.

Kissel,A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA, pp. 709-754.

933	IPCC, 2018: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C
above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the
global response to the threat of climate change, sustainable development, and efforts to eradicate poverty [Masson-
Delmotte, V., P. Zhai, H.-O. Portner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Pean, R.
Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press

934	National Research Council. 2011. America's Climate Choices. Washington, DC: The National Academies Press.
https:// do L org/10.17228/12781.

935	National Academies of Sciences, Engineering, and Medicine. 2017. Communities in Action: Pathways to Health
Equity. Washington, DC: The National Academies Press, https://doi.org/10.17228/24824.

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National Climate Assessment (NCA4), "Climate change affects human health by altering
exposures to heat waves, floods, droughts, and other extreme events; vector-, food- and
waterborne infectious diseases; changes in the quality and safety of air, food, and water; and
stresses to mental health and well-being."936 Many health conditions such as cardiopulmonary or
respiratory illness and other health impacts are associated with and exacerbated by an increase in
GHGs and climate change outcomes, which is problematic as these diseases occur at higher rates
within vulnerable communities. Importantly, negative public health outcomes include those that
are physical in nature, as well as mental, emotional, social, and economic.

To this end, the scientific assessment literature, including the aforementioned reports,
demonstrates that there are myriad ways in which these populations may be affected at the
individual and community levels. Individuals face differential exposure to criteria pollutants, in
part due to the proximities of highways, trains, factories, and other major sources of pollutant-
emitting sources to less-affluent and traditionally marginalized residential areas. Outdoor
workers, such as construction or utility workers and agricultural laborers, who are frequently part
of already at-risk groups, are exposed to poor air quality and extreme temperatures without relief.
Furthermore, individuals within EJ populations of concern face greater housing and clean water
insecurity and bear disproportionate economic impacts and health burdens associated with
climate change effects. They tend to have less or limited access to healthcare and affordable,
adequate health or homeowner insurance. Finally, resiliency and adaptation are more difficult for
economically disadvantaged communities. They have less liquidity, individually and
collectively, to move or to make the types of infrastructure or policy changes to limit or reduce
the hazards they face. Finally, due to systemic challenges, affected communities may lack the
resources necessary to advocate for resources that would otherwise aid in resiliency and hazard
reduction and mitigation.

The assessment literature cited in EPA's 2009 and 2016 Endangerment Findings, as well
as USGCRP (2016), also concluded that certain populations and people in particular life stages,
including children, are most vulnerable to climate-related health effects. The assessment
literature produced from 2016 to the present strengthens these conclusions by providing more
detailed findings regarding related vulnerabilities and the projected impacts youth may
experience. These assessments—including NCA4 and USGCRP (2016)—describe how
children's unique physiological and developmental factors contribute to making them
particularly vulnerable to climate change. Impacts to children are expected from heat waves, air
pollution, infectious and waterborne illnesses, and mental health effects resulting from extreme
weather events. In addition, children are among those especially susceptible to allergens, as well
as health effects associated with storms, and floods. More generally, these reports note that
extreme weather and flooding can cause or exacerbate poor health outcomes by affecting mental
health because of stress; contributing to or worsening existing conditions, again due to stress or
also as a consequence of exposures to water and air pollutants; or by impacting hospital and

936 Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, G. Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L.
White-Newsome, 2018: Human Health. In Impacts, Risks, and Adaptation in the United States: Fourth National
Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, pp. 539-571.
doi: 10.7930/NCA4.2018.CH14

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emergency services operations.937 Further, in urban areas in particular, flooding can have
significant economic consequences due to effects on infrastructure, pollutant exposures, and
drowning dangers. The ability to withstand and recover from flooding is dependent in part on the
social vulnerability of the affected population and individuals experiencing an event.938
Additional health concerns may arise in low-income households, especially those with children,
if climate change reduces food availability and increases prices, leading to food insecurity.

USGCRP (2016) also found that some communities of color, low-income groups, people
with limited English proficiency, and certain immigrant groups (especially those who are
undocumented) live with many of the factors that contribute to their vulnerability to the health
impacts of climate change. While difficult to isolate from related socioeconomic factors, race
appears to be an important factor in vulnerability to climate-related stress, with elevated risks for
mortality from high temperatures reported for Black or African American individuals compared
to white individuals after controlling for factors such as air conditioning use. Moreover, people
of color are disproportionately exposed to air pollution based on where they live, and
disproportionately vulnerable due to higher baseline prevalence of underlying diseases such as
asthma, so climate exacerbations of air pollution are expected to have disproportionate effects on
these communities.

Native American Tribal communities possess unique vulnerabilities to climate change,
particularly those communities impacted by degradation of natural and cultural resources within
established reservation boundaries and threats to traditional subsistence lifestyles. Tribal
communities whose health, economic well-being, and cultural traditions depend upon the natural
environment will likely be affected by the degradation of ecosystem goods and services
associated with climate change. The IPCC's Fifth Assessment Report of the Intergovernmental
Panel on Climate Change (AR5) indicates that losses of customs and historical knowledge may
cause communities to be less resilient or adaptable.939 NCA4 noted that while Indigenous
peoples are diverse and will be impacted by the climate changes universal to all Americans, there
are several ways in which climate change uniquely threatens Indigenous peoples' livelihoods and
economies.940 In addition, there can be institutional barriers (including policy-based limitations
and restrictions) to their management of water, land, and other natural resources that could
impede adaptive measures. For example, Indigenous agriculture in the Southwest is already
being adversely affected by changing patterns of flooding, drought, dust storms, and rising
temperatures leading to increased soil erosion, irrigation water demand, and decreased crop
quality and herd sizes. The Confederated Tribes of the Umatilla Indian Reservation in the

937	USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment,
Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C.
Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.

938	National Academies of Sciences, Engineering, and Medicine. 2019. Framing the Challenge of Urban Flooding in
the United States. Washington, DC: The National Academies Press, https://doi.org/10.17226/25381.

939	Porter et al., 2014: Food security and food production systems.

940	Jantarasami, L.C., R. Novak, R. Delgado, E. Marino, S. McNeeley, C. Narducci, J. Raymond-Yakoubian, L.
Singletary, and K. Powys Whyte, 2018: Tribes and Indigenous Peoples. In Impacts, Risks, and Adaptation in the
United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling,
K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program,
Washington, DC, USA, pp. 572-603. doi: 10.7930/NCA4.2018.CH15.

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Northwest have identified climate risks to salmon, elk, deer, roots, and huckleberry habitat.941
Housing and sanitary water supply infrastructure are vulnerable to disruption from extreme
precipitation events. Confounding the general Indigenous response to natural hazards are
limitations imposed by policies such as the Dawes Act of 1887 and the Indian Reorganization
Act of 1934, which ultimately restrict Tribal peoples' autonomy regarding land-management
decisions through Federal trusteeship of certain Tribal lands and mandated Federal oversight of
management decisions.

Additionally, NCA4 noted that Indigenous peoples are subject to institutional racism
effects, such as poor infrastructure, diminished access to quality healthcare, and greater risk of
exposure to pollutants. Consequently, Indigenous people often have disproportionately higher
rates of asthma, cardiovascular disease, Alzheimer's disease, diabetes, and obesity. These health
conditions and related effects (e.g., disorientation, heightened exposure to PM2.5, etc.) can all
contribute to increased vulnerability to climate-driven extreme heat and air pollution events,
which may be exacerbated by stressful situations, such as extreme weather events, wildfires, and
other circumstances.

NCA4 and AR5 also highlighted several impacts specific to Alaskan Indigenous Peoples.
Coastal erosion and permafrost thaw will lead to more coastal erosion, exacerbated risks of
winter travel, and damage to buildings, roads, and other infrastructure. These impacts on
archaeological sites, structures, and objects that will lead to a loss of cultural heritage for
Alaska's Indigenous people. In terms of food security, NCA4 discussed reductions in suitable ice
conditions for hunting, warmer temperatures impairing the use of traditional ice cellars for food
storage, and declining shellfish populations due to warming and acidification. While NCA4 also
noted that climate change provided more opportunity to hunt from boats later in the fall season or
earlier in the spring, the assessment found that the net impact was an overall decrease in food
security.

941 Confederated Tribes of the Umatilla, Indian Reservation, 2015. Climate Change Vulnerability Assessment.
Nasser, E., Petersen, S., Mills, P. (eds). Available online: www.ctuir.org.

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Chapter 10: Estimated Costs and Fuel Price Impacts

The statute directs EPA to assess the impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods in using the reset authority. In
this chapter, we assess the social costs of renewable fuels, the social costs of the petroleum fuels
which the biofuels replace, the fuel economy effect based on each fuel's energy density, and the
impacts of this rule on social costs, the costs to consumers of transportation fuel, and the costs to
transport goods.

The costs are analyzed for the proposed renewable fuel volumes in 2023 through 2025
relative to a No RFS baseline. Costs are also calculated for the proposed incremental increase in
renewable fuel volumes relative to the year 2022 renewable fuel volumes established in the
recent 2020-2022 final rule.942 In both cases, costs are in 2021 dollars. Chapter 2 contains a
summary of the baseline volumes, and Chapter 3 contains the candidate volumes analyzed.
Chapters 10.4.2.1 and 10.4.3.1 contain the change in candidate volumes relative to the No RFS
and 2022 baselines, respectively, as well as the estimated change in fossil fuel volumes displaced
by the change in volume of renewable fuels.943

10.1 Renewable Fuel Costs
10.1.1 Feedstock Costs

For most renewable fuels, the feedstock costs are a primary contributing factor to the cost
to produce and use the renewable fuels. We first estimate the production cost for these feedstocks
prior to providing information for the production, distribution and blending costs for the various
renewable fuels.

In calculating feedstock costs, we used projections of feedstock prices for 2023 through
2025 from multiple sources, including EIA and USDA.944 We also made adjustments to account
for differences between these projections. Specifically, the projected feedstock prices are
adjusted to account for different crude oil prices used by USDA than those projected by EIA, and
to adjust the projected nominal prices to constant year 2021 dollars.945

In addition, recently geopolitical factors have caused petroleum prices to spike well
above their recent price norms, but these recent petroleum price increases are not reflected in the
cost analysis since they are not reflected in the underlying price projections from EIA and USDA

942	8 7 FR 39600 (July 1, 2022).

943	The spreadsheet used to estimate the costs for the candidate volumes relative to the No RFS and 2022 volumes is
available in the docket for this action.

944	USDA Agricultural Projections to 2031; Long Term Projections Report; February 2022

945	Crude oil prices affect the cost for growing renewable fuels feedstocks, the cost to transport them to the
renewable fuels production plants, the cost for transporting the produced renewable fuels from the plant to market,
and may impact the cost for producing the renewable fuels. Because USDA agricultural price projections were based
on lower crude oil price projections than that by EIA, the USDA agricultural price projections may have
underestimated the agricultural prices that would be consistent with the EIA petroleum price projections. Therefore,
the USDA price projections for both corn and soybean oil were adjusted in an attempt to remove this potential bias
in the cost analysis.

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available at this time. We provide a sensitivity analysis at a higher crude oil price to demonstrate
the impact of higher crude oil prices. The supply issues related to the aftermath of the COVID-19
pandemic and these other geopolitical factors increases the uncertainty that price projections
precisely reflect the cost of producing and using these renewable fuels and ultimately increases
the uncertainty in conducting this cost analysis. The final rule cost analysis will rely on the most
recent price projections that are available.

10.1.1.1 Corn and Corn Ethanol Plant Byproducts

The price of corn is the most important input to estimating the cost of corn ethanol. Table
10.1.1.1-1 shows the derivation of the corn prices used in this cost analysis, which adjusts the
projected prices for crude oil price differences and for inflation. To help to explain the derivation
in the discussion below, we refer to the relevant row # in the Table.

As a starting point we used future corn price projections from USDA. We started with the
2023 through 2025 USDA projected corn prices (row #1).946 However, the USDA corn prices are
reported in nominal dollars, reflecting the inflated value of the dollars in those years. The first
adjustment we made was to convert those USDA corn prices reported in nominal dollars into the
2021 dollars used across this cost analysis (row #2). 947

Next, we made an adjustment to account for the different crude oil price projections that
USDA used (row #3) compared to those projected by EIA (row #5).948 Because EIA is the U.S.
reference organization for projecting petroleum prices, we adjusted the USDA inflation-adjusted
corn prices to put them on the same basis with the petroleum costs which are based on EIA crude
oil prices. To do so, we first adjusted the crude oil prices used by USDA (row #3) to 2021 dollars
(row #4). Then we used a regression of corn prices and crude oil prices to estimate the corn
prices at USDA crude oil prices adjusted to 2021 dollars (row #6) and the corn prices at the EIA
crude oil prices (row #6), to enable an adjustment of USDA corn prices to be consistent with the
EIA crude oil prices. The regression of corn prices and crude oil prices is based on monthly corn
prices between April 2008 and September 2017, which yielded the following equation:949

Corn Price ($/bushel) = Crude Oil Price ($/bbl) x 0.0366 + 1.81

The corn prices estimated by this regression was not used directly for the cost analysis
because farmers are more efficient at producing corn today than in the past, and corn production
is likely to be on a different supply/demand point on the corn price curve as evidenced by
today's higher corn prices. Instead, the difference in regressed corn prices (row #8) was added to
the USDA corn prices adjusted to 2021 dollars (row #2) to derive the final adjusted corn prices

946	USDA Agricultural Projections to 2031; Long Term Projections Report; February 2022.

947	USDA reports estimated future inflation rates which are used for the nominal dollar to 2021$ adjustment.

948	There seems to be an association between the renewable fuels feedstock costs and crude oil prices (regression
analysis reveals an R-squared of 0.56 for corn and crude oil). Since USDA estimated renewable fuel feedstock
prices based on lower crude oil prices, adjusting their renewable fuel feedstock prices higher to be consistent with
EIA crude oil prices better syncs the two price projections and leads to a better estimate of costs.

949	The years from 2008 to 2017 were chosen because of the wide range in crude oil prices which existed over this
time period, and a 10 year time period was chosen to provide enough data for a quality regression.

440


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(row #9) subsequently used as an input value for estimating corn ethanol costs as shown in Table
10.1.1.1-1.

Table 10.1.1.1-1: Derivation of Corn Feedstock Production Costs ($/bushel for corn, $/bbl

for Crude Oil







Row #

2023

2024

2025

Corn Prices

USDA Nominal $

1

4.80

4.50

4.30



USDA 2021$

2

4.61

4.24

3.97

Crude Oil

USDA Nominal $

3

59.0

58.6

59.3

Prices

USDA 2021$

4

52.8

51.4

51.0



EIA2021$

5

57.9

62.9

64.0

Regressed

Based on USDA 2022

6

3.74

3.69

3.68

Corn Prices

Based on EIA 2022 (Jan
STEO)

7

3.93

4.11

4.15

Corn Prices

Difference in Regressed Corn
Prices EIA - USDA

8

0.19

0.42

0.48

Corn Prices

Adjusted USDA 2021$

9

4.80

4.66

4.45

Both the inflation and crude oil price adjustment are modest, and their effects cause
offsetting effects. Also, these adjustments are well within the recent variation in corn prices.

Since corn ethanol plants also produce byproducts which can be sold for additional value,
we also estimated the prices for those byproducts, specifically DDGS and corn oil, which is
estimated below in Chapter 10.1.1.2. Since USDA does not estimate future prices for DDGS,
these were obtained by agricultural price projections made by the University of Missouri, Food
and Agricultural Policy Research Institute (FAPRI).950 The FAPRI DDGS projected prices are
reported in nominal dollars, so we adjusted the price projections to 2021 dollars. Table 10.1.1.1-
2 summarizes DDGS prices used in the cost analysis.

Table 10.1.1.1-2: DDGS Prices (2021 dollars)

Year

DDGS Prices ($/dry ton)

2023

162.2

2024

159.7

2025

156.6

10.1.1.2 Soybean and Palm Oil Prices

Soybean oil, waste fats, oils, and greases (FOG), corn oil, and palm oil were identified in
Chapter 2 as the feedstocks for producing biodiesel and renewable diesel fuel. Soybean oil price
projections made by USDA are used as a starting point for this cost analysis.951

950	U.S. Agricultural Market Outlook, Food and Agricultural Policy Research Institute (FAPRI); FAPRI-MU Report
#02-22; March 2022.

951	USDA Agricultural Projections to 2031; Long Term Projections Report; February 2022.

441


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We followed the same methodology we used for corn prices described above, but for soy
oil prices this process is summarized in Table 10.1.1.2-1 and the description that follows
references the rows in that Table to aid in understanding. The first step required converting
USDA projected soy oil prices in nominal dollars (row #1) to 2021 dollars (row #2), and then
adjusting for the differences in crude oil prices (row #4 for USDA in 2021 dollars) and EIA (row
#5). When adjusting for the differences in crude oil prices, a regression of monthly soy oil and
crude oil prices between January 2012 and September 2017 yielded the following equation:952

Soy Oil Price ($/lb) = Crude Oil Price ($/bbl) x 0.259 + 19.06

The soy oil prices (row #6) based on USDA crude oil prices and soy oil prices (row #7)
based on EIA crude oil prices were not used in the cost analysis directly. Rather the difference in
regressed soy oil prices (row #8) was added to the adjusted USDA soy prices (row #2) to derive
the adjusted soy oil prices (row #9).

Table 10.1.1.2-1: Derivation of Soy Oil Feedstock Production Costs (cents/pound for soy oil,
$/bbl for crude oil)	





Row #

2023

2024

2025

Soy Oil Prices

USDA Nominal $

1

54.5

51.0

49.0



USDA 2021$

2

52.4

48.0

45.2

Crude Oil

USDA Nominal $

3

59.0

58.6

59.3

Prices

USDA 2021$

4

52.8

51.4

51.0



EIA2021$

5

57.9

62.9

64.0

Regressed Soy

Based on USDA 2021

6

32.7

32.4

32.3

Oil Prices

Based on EIA 2021

7

34.1

35.4

35.7

Soy Oil Prices

Difference in
Regressed Soy Oil
Prices EIA - USDA

8

1.3

3.0

3.4

Soy Oil Prices

Adjusted USDA 2021$

9

53.7

51.0

48.6

Neither USDA nor FAPRI project future corn oil, FOG, or palm oil prices. Instead, future
prices for these oils were estimated based on the historical differences between them and
soybean oil's spot prices.953 Corn oil, FOG, and palm oil spot prices were compared to soybean
oil spot prices between January 2012 and September 2017. During this time period, vegetable oil
prices varied by over a factor of two, so this time period included both low and high vegetable
oil prices. Over that time period, soybean oil averaged 38.3 cents per pound (ranged from 33 to
70 cents per pound), and palm oil averaged 30.5 cents per pound (22 to 55 cents per pound),
respectively. The palm oil to soybean oil ratio is 0.80, and this ratio was used for establishing
palm oil prices relative to USDA projected soybean oil prices. A similar comparison was made
for corn oil and FOG, and these were priced at 82 percent and 78 percent of soybean oil,
respectively.

952	There seems to be an association between the renewable fuels feedstock costs and crude oil prices (regression
analysis reveals an r-squared of 0.73 for soybean oil and crude oil). Since USDA estimated renewable fuel feedstock
prices based on lower crude oil prices, adjusting their renewable fuel feedstock prices higher to be consistent with
EIA crude oil prices better synchronizes the two price projections and leads to a better estimate of costs.

953	USDA Yearbook Tables by the Economic Research Service, downloaded March 2021.

442


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The additional demand for vegetable oils associated with this rulemaking is expected to
increase the price for those oils. A previous review of increased demand for soybean oil on
soybean oil prices found that increases of 200 million gallons of soybean oil increased the
soybean oil price by 0.032 dollars per pound.954 This price increase estimate was used to adjust
the soybean oil prices for this analysis based on the estimated increase of soybean oil demand
under this proposed rulemaking. The baseline soy oil price is based on the soy oil demand prior
to the promulgation of the 2020-2022 RFS final rule, so the adjustment to soy oil prices includes
accounting for that forecasted increase in soy oil demand in that rule.955 A similar adjustment
was made for the estimated increased demand for palm oil. The volume of the global palm oil
market is nearly 6 times greater than the U.S. soybean oil market, so the adjustment to the palm
oil prices is assumed to be one sixth that for soy, or 0.005 dollars per pound for each 200 gallon
increase in palm oil demand. Similar adjustments are made for FOG and corn oil, the markets of
which are one-tenth and one-fifth the size of the soy oil market, respectively. The projected soy
and palm oil prices in the baseline and resulting from the increased demand for the candidate
volume that are used in this cost analysis are summarized in Table 10.1.1.2-2.

Table 10.1.

2-2: Projected Vegetable Oil Production Costs (2021 dollars/pound)



Base Prices

Projected Vegetable Oil Prices



Soybean Oil

Soybean Oil

FOG

Corn Oil

Palm Oil

2023

53.7

67.3

55.1

45.1

42.8

2024

51.0

63.2

60.4

43.3

40.6

2025

48.6

59.0

66.5

41.7

38.7

10.1.1.3 Biogas

For this analysis we assume that biogas is produced at landfills and collected to prevent
the release of methane gas as required by regulation, and then flared, burned to produce
electricity, or upgraded for use as natural gas. Since the biogas is a waste gas from existing
landfills, we assumed no feedstock cost for biogas. The cost of the necessary steps to collect,
purify, and distribute the biogas are all discussed under the sections discussing production and
distribution costs.

10.1.2 Renewable Fuels Production Costs

This section assesses the production costs of renewable fuels, including the feedstock
costs described above as well as the capital, fixed, and operating costs. We generally express the
production costs on a per-gallon basis for the renewable fuels being produced. The one exception
is biogas which is reported on a per-million BTU basis and also on a per ethanol-equivalent
volume basis.

954	Shelby, Michael; Cost Impacts of the Final 2019 Annual Renewable Fuel Standards; Memorandum to EPA Air
and Radiation Docket EPA-HQ-OAR-2018-0167.

955	8 7 FR 39600 (July 1, 2022).

443


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Detailed cost summaries presented for each renewable fuel in this section are based on
2023 cost inputs.956 All the costs summarized in this section for all years are calculated in a
spreadsheet which is available in the docket for this rulemaking.957

10.1.2.1 Cost Factors

10.1.2.1.1 Capital and Fixed Costs

The economic assumptions used to amortize capital costs over the production volume of
renewable fuels are summarized in Table 10.1.2.1.1-1. These capital amortization cost factors are
used in the following section for converting the one-time, total capital cost to an equivalent per-
gallon cost.958 The resulting 0.11 capital cost amortization factor is the same factor used by EPA
in the cost estimation calculations made for other rulemakings and technical

papers.

959,960,961,962,963

Table 10.1.2.1.1-1: Economic Cost Factors Used in Calculating Capital Amortization
Factors











Resulting





Economic

Federal and

Return on

Capital

Amortization

Depreciation

and Project

State Tax

Investment

Amortization

Scheme

Life

Life

Rate

(ROI)

Factor

Societal Cost

10 Years

15 Years

0%

7%

0.11

Capital costs were adjusted to 2021 dollars for this analysis. The cost of installing capital
decreased in 2020 due to the pandemic, and then seemed to have increased dramatically in 2021
likely due to production and distribution "bottleneck" issues created by the pandemic. Basing
capital cost on either 2020 or 2021 capital cost factors would likely misrepresent the cost of
capital moving forward.964 Instead, a regression of Chemical Engineering Plant Index (CEPI)

956	Table 10.1.2.2-1, Table 10.1.2.4-1, Table 10.1.2.5-3, Table 10.1.2.5-4, Table 10.1.2.5.1-1, Table 10.1.2.5.2-2,
10.1.2.5.2-3, and 10.1.2.5.2-4.

957	RFS Cost Analysis for Set September 2022.xls.

958	The capital amortization factor is applied to the aggregate capital cost to create an amortized annual capital cost
which occurs each and every year for the 15 years of the economic and project life of the unit. The depreciation rate
of 10% and economic and project life of 15 years are typical for these types of calculations. The 7% return on
investment and the zeroing out of Federal and State taxes is specified by the Office of Management and Budget for
these calculations (Office of Management and Budget; Circular A-4; Regulatory Impact Analysis: A primer;
https://www.reginfo.gov/pub1ic/jsp/UtiHties/circu1ar-a-4 regulatoiy-inipact-analysis-a-prinier.pdf).

959	Regulatory Impact Analysis - Control of Air Pollution from New Motor Vehicles: Tier 2 Motor Vehicle
Emissions Standards and Gasoline Sulfur Control Requirements, EPA420-R-99-023, December 1999.

960	Cost Estimates of Long-Term Options for Addressing Boutique Fuels; Memorandum from Lester Wyborny to the
Docket; October 22, 2001.

961	Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control
Requirements; EPA420-R-00-028; December 2000.

962	Final Regulatory Analysis: Control of Emissions from Nonroad Diesel Engines; EPA420-R-04-007; May 2004.

963	Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis; EPA-420-R-10-006; February 2010.

964	For newly constructed renewable diesel plants for 2021 and 2022, the ordering of equipment or equipment
purchases may have occurred in 2020 when capital costs are low, and other aspects of the capital costs such as its

444


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capital cost factors from 2015 to 2019 was used to estimate a capital cost inflation factor to
adjust capital costs to 2021 dollars, and this capital cost factor (640) is consistent with historical
increases in capital cost inflation factors—about a 2% per year increase.

Fixed operating costs include the maintenance costs, insurance costs, rent, laboratory
charges and miscellaneous chemical supplies.965 Maintenance costs can range from 1% to 8% for
industrial processes.966 We estimated the aggregated annual fixed operating costs to be 5.5% of
the capital costs for all renewable fuels production facilities.

10.1.2.1.2 Utility and Fuel Costs

Variable operating costs are those costs incurred to run the renewable fuel production
plants on a day-to-day basis, and are based on the unit throughput. The most obvious of the
variable costs are utilities (electricity, natural gas, and water) which are required to operate the
renewable fuels plants. Natural gas is consumed for heating process streams, including
feedstocks which must be heated prior to being sent to reactors and distillation columns for
separating coproducts. Electricity is necessary to run pumps, compressors, plant controls and
other plant operations. Water can be necessary as part of the process (reaction medium), or used
in heat exchangers and cooling towers.

Projected electricity and natural gas prices are based on national average values from
Energy Information Administration's (EIA) 2022 Annual Energy Outlook.967 The cost of process
water is generally quite minimal, but a cost is estimated for it nonetheless since renewable fuels
technologies can use fairly large quantities.968,969The utility costs used for the cost analysis are
summarized in Table 10.1.2.1.2-1.

Table 1C

.1.2.1.2-1: Summary of Utility Cost Factors (nominal dollars)3

Year

Natural Gas
(S/1000 cf)

Electricity
(c/kWhr)

Water
(S/1000 gals)

2023

4.72

7.10

3.0

2024

4.37

6.86

3.0

2025

4.19

6.78

3.0

a c/kWh is cents per kilowatt-hour; $/l000 cf is dollars per thousand standard cubic feet; $/l000 gallons is dollars
per thousand gallons.

installation could have occurred in 2021, so a highly inflated capital cost inflation factor for 2021 would likely not
accurately represent the average of capital installation costs for a new facility being installed for 2021 or 2022. For
this reason, a more average cost of capital adjustment is more appropriate.

965	Peters, Max S., Timmerhaus, Klaus, D.; Plant Design and Economics for Chemical Engineers 3rd Edition;
McGraw Hill; 1980.

966	McNair, Sam Budgeting for Maintenance: A Behavior-Based Approach, Life Cycle Engineering, 2011.

967	Annual Energy Outlook 2022, Energy Information Administration, March 2022;

h I: tps: //www. e ia. gov/o u 1:1 oo ks/s t:e o

968	Haas, M.J, A process model to estimate biodiesel production costs, Bioresource Technology 97 (2006) 671-678.

969	Water and Wastewater Annual Escalation Rates for Selected Cities across the United States, Office of Energy
Efficiency and Renewable Energy, Department of Energy; September 2017.

445


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10.1.2.2 Corn Ethanol Production Costs

Corn ethanol plant input and output information were based on a 2019 survey of corn
ethanol plants, although some plant information was sourced from an older analysis.970,971
Capital costs were based on a review of corn ethanol construction costs for a 100 million gallon
per year drymill corn ethanol plant in 2016. For this analysis the capital costs were scaled to the
U.S. average sized corn ethanol plant with a nameplate capacity of 85 million gallons per year
assumed to operate at 90% of nameplate capacity, therefore producing 76 million gallons of
ethanol per year.972 Since the capital cost is based on the total construction cost of already
constructed corn ethanol plants, no contingency cost factors are applied to the capital costs. The
survey information estimates the quantity of DDGS produced by corn ethanol plants. Corn prices
are farm gate prices and a transportation spreadsheet was used to estimate a cost of 6 cents per
bushel to transport the corn to a corn ethanol plant.973 Of the corn ethanol plants in the 2012
survey, 74% were separating and selling corn oil so selling corn oil was assumed for 70% of the
plant capacity. Table 10.1.2.2-1 contains the plant demand and outputs and capital costs for corn
ethanol plants.

Table 10.1.2.2-1: Corn Ethanol Plant Demands, Production Levels, and Capital Costs for
2023 (2021 dollars)	

Category of Plant
Input/Output

Plant

Inputs/Outputs

Cost per Input

Cost (MM$)

Cost ($/gal)

Ethanol Yield

2.86 Gal/Bushel

4.86 $/bushel

130

1.70

DDG Yield

11.4 Lbs/Bushel

162 $/ton

-25

-0.32

Corn Oil Yield

0.77 Lbs/Bushel

43 cents/lb

-8.8

-0.12

Thermal Demand

22,480 BTU/Gal

3.49 $/1000 cf

5.8

0.08

Electricity Demand

0.63 kWh/Gal

7.1 c/kwh

3.4

0.04

Water Use

2.7 Gal/Gal

$3/1000 gals

0.6

0.01

Labor Cost

0.07 $/Gal

-

5.3

0.07

Capital Cost (2020
dollars,

76 million Gals/Yr)

2.34 $/Gal Plant



25.5

0.33

Capital cost



Annual Fixed Cost

5.5% of Total
Capital Cost



12.8

0.17

Denaturant

2 volume percent



0.4

0.01

Total Cost





148

1.94

The projected corn ethanol social production cost for an 85 million gallon capacity
ethanol plant is $1.94 per gallon of denatured ethanol for 2023, $1.89 for 2024, and $1.85 for
2025. The downward trend in estimated per-gallon production costs reflect the expected
downward trend in corn prices.

970	Lee, Uisung; Retrospective analysis of the U.S. corn ethanol industry for 2005 - 2019; implications for
greenhouse gas emission reductions;: Biofpr; May 4, 2021.

971	Mueller, Steffen; 2012 Corn Ethanol: Emerging Plant Energy and Environmental Technologies; April 29, 2013.

972	Irwin, Scott; Weekly Output: Ethanol Plants Remain Barely Profitable; 3/16/2018.

973	Edwards, William; Grain Truck Transportation Cost Calculator (a3-29graintransportation.xlsx version
1.4 82017); Iowa State University.

446


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10.1.2.3 Biodiesel Production Costs

Biodiesel production costs for this rule were estimated using an ASPEN cost model
developed by USDA for a 38 million gallon-per-year transesterification biodiesel plant
processing degummed soybean oil as feedstock. Details on the model are given in a 2006
technical publication by Haas.974,975 Although dated, this model likely still provides
representative cost estimates because the process is fairly simple and unlikely to have changed
over time, and consequently its cost are likely to be fairly stable over time as well. Furthermore,
the biodiesel costs are primarily (>80%) determined by the feedstock prices.

The biodiesel process comprises three separate subprocesses:

1.	Transesterification to produce fatty acid methyl esters (biodiesel) and coproduct
glycerol (glycerine);

2.	Biodiesel purification to meet biodiesel purity specifications; and

3.	Glycerol recovery.976

For the transesterification process modeled by Haas, soybean oil is continuously fed
along with methanol and a catalyst sodium methoxide to a stirred tank reactor heated to 60 C.
After a residence time of 1 hour, the contents exit the reactor and the glycerol is separated using
a centrifuge and sent to a glycerol recovery unit. The methyl ester stream, which contains
unreacted methanol and catalyst, is sent to a second reactor along with additional methanol and
catalyst. Again, the reactants reside in the second stirred tank reactor for 1 hour heated to 60 C.
The products from of the second reactor are fed to a centrifuge which again separates the
glycerol from the other reactants. The reaction efficiency is assumed to be 90% in each reactor,
consistent with published reports, resulting in 99% combined conversion in both reactors.

The methyl ester is purified by washing with mildly acidic (4.5 pH) water to neutralize
the catalyst and convert any soaps (sodium or potassium carboxylic acids) to free fatty acids. The
solution is then centrifuged to separate the biodiesel from the aqueous phase. The remaining
water in the biodiesel is removed by a vacuum dryer to a maximum 0.05% of water by volume.

The glycerol can have a high value if it can be purified to U.S. Pharmacopia (USP) grade
to enable using this material for food or medicine. However, this purification process is
expensive. Most biodiesel plants create a crude glycerol (glycerine) grade, which is 80%
glycerol, and sell the crude glycerol for further refining by others. To create the crude glycerol,
the various glycerol streams are combined and treated with hydrochloric acid to convert the
soaps to free acids, allowing removal by centrifugation and sending to waste. The glycerol
stream is then neutralized (pH brought back up to neutral) with caustic soda. Methanol is
recovered from this stream by distillation and the methanol is recycled back into the process. The

974	Haas, M.J, A process model to estimate biodiesel production costs, Bioresource Technology 97 (2006) 671-678.

975	Since 2006 when the HAAS biodiesel plant survey was conducted, biodiesel plants may have achieved improved
energy efficiency, but also experienced increased costs to improve product quality and expand the quality of
feedstocks they can process.

976	Haas, M.J, A process model to estimate biodiesel production costs, Bioresource Technology 97 (2006) 671-678.

447


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glycerol stream is distilled to remove it from the remaining water, which is recycled back into
the process. The glycerol is now at least 80% pure, adequate to sell as crude glycerol.

We made a series of adjustments to the Haas model output. The capital cost is adjusted
from 2006 dollars to 2021 dollars using a ratio of the capital cost index from the Chemical
Engineering Cost Index. This adjustment increased installed capital cost from $11.9 million to
$14.5 million. Fixed operating costs are estimated to comprise 5.5% of the plant cost. Prices
were found on the Web for methanol,977 sodium methoxide,978 hydrochloric acid,979 sodium
hydroxide,980 and glycerine.981 The value of methanol is from a Methanex report plus 15 cents
per gallon distribution costs.982 Prices for sodium methoxide, hydrochloric acid, and sodium
hydroxide are all bulk prices from a chemicals supplier.983

The value of the glycerin co-product has been volatile due to a large increase in
production in biodiesel facilities that has been balanced at times by new uses. Glycerine has
traditionally been used for petrochemical-based products, but there is increased demand in
personal care and other consumer products as the standard of living increases in many parts of
the world. Some facilities are even experimenting with using it as a supplemental fuel.984 We can
expect that new uses for glycerin will continue to be found as long as it is plentiful and cheap.
We use recent cost information of about 10 cents per pound for glycerine.985

Table 10.1.2.3-1 also shows the production cost allocation for the soybean oil-to-
biodiesel facility. Production cost for biodiesel is primarily a function of feedstock price, with
other process inputs, facility, labor, and energy comprising much smaller fractions.

977	Methanex; current North America prices plus 15 c/gal for shipping; https://www.methanex.coni/our-

1:3 usiness/pr icing; August 2018

978	Alibaba;

https://www.aHbaba.coni/trade/search?fsb=y&IndexArea=product en&CatId=&SearchText=sodium+methoxide;
August 2018.

979	Alibaba;

https://www.alibaba.coni/trade/search?IndexArea=product en&CatId=&fsb=y&SearchText=hydroch1oric+acid;
August 2018.

980	eBioChem; http://www.ebiocheni.eom/Search/search/cate2/name/cate/0/keywords/sodium%2520hydroxide/;
August 2018.

981	Perez, Leela Landress; US crude glycerine prices could dip as spring nears;

https://www.icis.com/explore/resources/news/2018/Q2/14/10193613/us-crude-glycerine-prices-could-dip-as-spring-
nears; February 14, 2018.

982	Methanex Methanol Price Sheet; US Gulf Coast; May 31, 2018

983	h11ps://www. a 1 ibaba.com.

984	Yang, Fangxia; Value-added uses for crude glycerol - a byproduct of biodiesel production; Biotechnology for
Fuels; March 14, 2012.

985	US crude glycerine prices could dip as spring nears; ICIS News; February 14, 2018.

448


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Table 10.1.2.3-1: Biodiesel Production Cost for 2023 (year 2

)21 dollars)







Thousand





Unit Demands

Cost per Unit

Dollars

$/gal

Soybean Oil Feed

76,875 (1000 lb)

67 cents/lb

51,730

5.17

Methanol

7422 (1000 lb)

1.48 $/gal

1,708

0.17

Sodium Methoxide

927 (1000 lb)

$2000/ton

927

0.09

Hydrochloric Acid

529 (1000 lb)

$200/MT

48.1

0.005

Sodium Hydroxide

369 (1000 lb)

$420/ton

77.5

0.008

Water

2478 (1000 lb)

$3/1000 gals

1.2

0.00

Glycerine

9000 (1000 lb)

10 cents/lb

(900)

(0.09)

Natural Gas

66.9 million cf

$3.49/1000cf

234

0.023

Electricity

1008 kW

7.10 cents/kWh

627

0.063

Labor







0.05

Capital Cost 2006$

11.35 ($million)

-

-

-

Capital Cost 2021$

14.54 ($million)



1,600

0.16

Fixed Cost



5.5%

800

0.08

Total Cost





56,854

5.74

As shown in Table 10.1.2.3-1, biodiesel produced from soybean oil is estimated to cost
5.74 cents per gallon in 2023. The estimated biodiesel production cost for all vegetable oil types
and for all three years is summarized in Table 10.1.2.3-2.

Table 1C

.1.2.3-2: Summary of Estimated Biodiesel Production Costs ($/gal)

Year

Soy Oil

Corn Oil

FOG

Palm

2023

5.74

4.03

4.80

3.85

2024

5.41

3.88

5.20

3.68

2025

5.09

3.76

5.67

3.53

10.1.2.4 Renewable Diesel Production Costs

The renewable diesel process converts plant oils or rendered fats into diesel or jet fuel
using hydrotreating. The process reacts hydrogen over a catalyst to remove oxygen from the
triglyceride molecules in the feedstocks oils via a decarboxylation (removal of a carbon molecule
double-bonded to an oxygen molecule producing carbon dioxide) and hydro-oxygenation
reaction, yielding some light petroleum products, carbon dioxide, and water as byproducts. The
reactions also saturate the olefin bonds in the feedstock oils, converting them to paraffins, and
may also isomerize some paraffins. Depending on process operating conditions, the yield of
product which can be blended into diesel fuel is typically between 90-95% by volume, with the
rest being naphtha and light fuel gases (primarily propane). In total, the volumetric yield is
greater than 100% of the feed due to the cracking that occurs over the hydrotreating catalyst.
Besides the renewable diesel product, propane (light gas output), water and carbon dioxide are
also produced. The byproducts created from that first reactor are separated from the renewable
diesel in a separation unit.

449


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For this cost analysis we chose to focus on stand-alone renewable diesel production. We
found a project cost estimate by Diamond Green which was $1,100 million for a standalone 400
million gallon per year facility. This large plant size and its associated capital costs were scaled
down to a 220 million gallon per year plant size which is more typical of the renewable diesel
fuel plants being built for start-up through 20 2 2.986 The capital cost for this smaller renewable
diesel fuel plant is estimated to be $768 million.

In addition to feedstock and facility costs, another significant cost input is hydrogen. We
used an estimate provided by Duke Biofuels for our hydrogen consumption estimate for
producing renewable diesel. On average, vegetable and waste oil feedstocks require 2,000
SCF/bbl of feedstock processed.987 Hydrogen costs are estimated based on hydrogen production
by a steam methane reforming hydrogen plant.988

Table 10.1.2.4-1: Hydrogen Plant Costs (Based on 32 million cubic feet per day)



Unit Demands

Cost per Unit

Cost

Million Dollars

$/thousand FT3

Feed Natural Gas

0.247 mmBTU

3.49 $/mmBTU

24.8

2.37

Fuel Gas for Heat

0.14 mmBTU

3.49 $/mmBTU

14.0

1.34

Power

0.798 KWh

7.10 c/KWh

5.66

0.54

Catalyst



4.8 cents



0.04

Capital Cost

$50 MM in 2006









$80 MM in 2021



13.5

1.29

Fixed Cost



5.5%

5.3

0.51

Total Cost







6.09

Based on our cost analysis, hydrogen is estimated to cost $6.09 per thousand standard
cubic feet. The estimate assumes a dedicated hydrogen plant producing for the renewable diesel
facility of 220 million gallons per year being modeled for this cost analysis.

Our yield estimates as summarized in Table 10.1.2.4-2 were derived from material
presented by UOP and Eni at a 2007 industry conference, which describes producing renewable
diesel in a grass roots standalone production process inside a refinery.989 Despite the age of the
reference, the underlying chemistry is unlikely to have changed appreciably.

986	The typical renewable diesel plant size is based on volume-weighting the renewable diesel capacity data in Table
6.2.2-1. The cost for the smaller sized renewable diesel plant is scaled using a six-tenths factor which captures the
higher per gallon cost of a smaller sized plant. The cost scaling is calculated using the following equation: (new
plant size/original plant size) raised to the 0.6 power and multiplied by the capital cost of the original plant size.

987	Conversation with Mike Ackerson, Duke Biofuels, May 2020.

988	Gary, JH, Handwerk, GE; 2001 Petroleum Refining Technology and Economics, 4th edition, Marcel Dekker.

989	A New Development in Renewable Fuels: Green Diesel, AM-07-10 Annual Meeting NPRA, March 18-20, 2007.

450


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Table 10.1.2.4-2: Input and Output from Renewable Diesel Plant

Vegetable Oil input

100 gal

Hydrogen

4760 SCF

Renewable diesel output (main product)

93.5 gal

Naphtha output (co-product)

5 gal

Light fuel gas output (co-product)

9 gal

We derived a cost of 6.9 cents/gallon of renewable diesel product to cover other costs:
utilities, labor, and other operating costs.990 Finally, the total cost per gallon was estimated at
$6.38. Table 10.1.2.4-3 provides more details for the process assumed in this analysis and
summarizes the total and per-gallon costs for the year 2023.

Table 10.1.2.4-3: Renewable Diesel Production Cost Estimate for a Greenfield 220 Million

Gallons/Yr Plant Processing Soy Oil in 2023 (2(

21 Dollars)

Stream



Estimated value

MM$/yr

$/gal

Soy Oil input

235 MMgals/yr

67.0c/lb

1216

5.53

Naphtha output

4.0 MMgals/yr

1.45 c/gal

(17.1)

(0.08)

Light fuel gas output

7.2 MMgals/yr

73 c/gal

(15.5)

(0.07)

Hydrogen input

4760 scf/100
gals

$6.09/thousand
standard cubic feet

68.2

0.31

Other Operating Costs





15.2

0.07

Capital Costs (2021 dollars)



$825 million

90.8

0.41

Fixed Costs



5.5%

45.4

0.21

Total Costs





1403

6.38

A number of announced renewable diesel projects projected to start-up in 2023 through
2026 are conversions of petroleum refineries to produce renewable diesel fuel. The existing
hydrotreating units, fired heaters, heat exchangers, control and instrumentation equipment,
hydrogen plants and tank storage at these refineries is expected to be repurposed for the storage
of feedstocks and the production and storage of renewable diesel. There will likely still need to
be some additional engineering and construction costs to adapt the existing refinery equipment to
produce renewable diesel fuel. Adapting a hydrotreater to process vegetable oil requires
modifications for higher heats of reaction, increased depressurization and perhaps some changes
in metallurgy.991 These modifications are estimated to cost about one third the cost of a new
renewable diesel hydrotreater, or $270 million, instead of $825 million for a 220 million gallon
per year plant. The lower capital cost is due to the avoidance of many investments needed in a
greenfield plant, including the hydrotreater itself, the hydrogen plant, a heater and cooling,
tankage electrical switchgear, buildings, roads, fencing etc. 992 993

990	Estimated based on the utility cost for an FCC naphtha hydrotreater; Control of Air Pollution from Motor
Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards Final Rule; Regulatory Impact Analysis; US
Environmental Protection Agency; March 2014.

991	Chan, Erin; Converting a petroleum diesel refinery for renewable diesel fuel; Flydrocarbon Processing; April
2021.

992	Chan, E., Converting a petroleum diesel refinery for renewable diesel; Special Focus: Clean Fuels; April 2021.

993	Lane, Robert; Renewable Diesel Interest Accelerates; August 26, 2020.

451


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It is very challenging to accurately estimate the portion of the future renewable diesel
production which will be produced by these converted refineries as opposed to new greenfield
plants because of the large number of announced renewable diesel projects and the significant
uncertainty of which of these projects will move forward. Because these converted refineries will
require much less capital investment prior to producing renewable diesel fuel, these refinery
conversion projects are more likely to move forward than greenfield projects. Despite the
relatively large capital cost savings associated with the refinery conversion, the impact on the
overall cost to produce renewable diesel fuel is nevertheless modest because most of the cost of
producing renewable diesel fuel is the feedstock cost. For example, renewable diesel produced
from soybean oil by a converted petroleum refinery is estimated to cost $6.09/gallon versus
$6.38/gallon for a greenfield renewable diesel plant. Table 10.1.2.4-4 summarizes the estimated
cost information for a refinery converted to produce renewable diesel fuel.

Table 10.1.2.4-4: Renewable Diesel Production Cost Estimate for a Refinery Converted to

Produce 220 Million Gallons/Yr Plant Processing Soy Oil in 2023 (2(

21 Dollars



Stream



Estimated value

MM$/yr

$/gal

Soy Oil input

235 MMgals/yr

67.0c/lb

1216

5.53

Naphtha output

4.0 MMgals/yr

1.45 c/gal

(17.1)

(0.08)

Light fuel gas output

7.2 MMgals/yr

73 c/gal

(15.5)

(0.07)

Hydrogen input

4760 scf/100
gals

$6.09/thousand
standard cubic feet

68.2

0.31

Other Operating Costs





15.2

0.07

Capital Costs (2021 dollars)



$825 million

27.2

0.12

Fixed Costs



5.5%

45.4

0.21

Total Costs





1340

6.09

The difference between the low and high production costs is solely due to the difference
in capital costs. For refineries converting their refineries to produce renewable diesel, the
amortized capital cost is estimated to be only $0.12 per gallon, while the greenfield plant's
estimated capital cost is $0.41 per gallon. As a very rough estimate, half of the future domestic
renewable fuel production is estimated to be produced by these converted refineries, and when
the refinery conversions are averaged with the greenfield plants, this results in the $6.23
estimated production cost for 2023. The estimated renewable diesel production cost for all
vegetable oil types and for all three years is summarized in Table 10.1.2.4-5.

Table 1C

1.2.4-5 Summary of Estimate!

Year

Soy Oil

Corn Oil

FOG

Palm

2023

6.23

4.41

5.23

4.22

2024

5.88

4.24

5.65

4.03

2025

5.52

4.10

6.14

3.85

Renewable Diesel Production Costs ($/gal)

452


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10.1.2.5 Biogas

10.1.2.5.1 Using Biogas as CNG/LNG

Biogas is the result of anaerobic digestion of organic matter, including municipal waste,
manure, agricultural waste, and food waste.994 The primary product of this anaerobic digestion of
waste is methane, which is the primary component of natural gas. Thus, once biogas is cleaned
up by removing various contaminants, it can be used by processes that normally use natural
gas.

The largest source of biogas, which is already being collected to avoid releasing methane
into the environment, is from landfills.996 Since landfill gas is the largest source of biogas
available for the motor vehicle fleet, this cost analysis makes the simplifying assumption that the
biogas will solely be provided by landfills.

While in some cases biogas can be used in local fleet vehicles which are operated at the
landfill site, in most cases, a new pipeline would need to be constructed to transport the cleaned
up biogas to a nearby common carrier pipeline. Gas is then pulled off the pipeline at downstream
locations and compressed into CNG or liquified into LNG for use in motor vehicles. Tracking
the use of the biogas in motor vehicles occurs by proxy through contracts and/or affidavits rather
than through a system designed to ensure that the same methane molecules produced at the
landfill are used in CNG/LNG vehicles.

One of the costliest aspects of using biogas is its cleanup. Biogas contains large amounts
of carbon dioxide, nitrogen, and other contaminants such as siloxanes which cannot be tolerated
if it is to be put into a natural gas pipeline or used by fleet vehicles at the landfill site. We
estimated a cost for cleaning up landfill biogas using Version 3.5 of the Landfill Gas Energy
Cost Model (LFGcost-Web) ,997>998 The throughput volume of landfill gas was estimated to be
600 standard cubic feet per minute based on a survey of biogas production facilities.999 The cost
estimates from the Model excluded the gas collection and control system infrastructure at the
landfill, as EPA expects that landfills that begin producing high BTU gas in 2021 are very likely
to already have this infrastructure in place, and that this infrastructure would be used regardless
to control methane emissions. The equations from the LFGcost-Web model for biogas collection
and clean-up are summarized in Table 10.1.2.5.1-1. We included a cost for biogas collection at
the landfill which amounts to $1.1 per thousand standard cubic feet.1000 Distribution and retail
costs are estimated for biogas in Chapter 10.1.4.3.

994	Wikipedia. Accessed April 2021; https://en.wikipedia.org/wiki/Biogas.

995	LeFevers, Daniel; Landfill Gas to Renewable Energy; Hill Briefing; April 26, 2013.

996	Biomass Explained, Landfill Gas and Biogas; US Energy Information Administration; February 1, 2019;
www.eia.gov/energyexplained/index.php?page=bioiniass biogas

997	The current version of this model and user's manual dated March 2021 are downloadable from the LMOP
website: https://www.epa.gov/lmop

998	This cost estimate does not include the cost for complying with California's more stringent natural gas pipeline
specifications designed to address harmful contaminants in some sources of biogas.

999	Economic Analysis of the US Renewable Natural Gas Industry; The Coalition of Renewable Natural Gas;
December 2021.

1000	LFG Energy Project Development Handbook - Project Economics and Financing; Chapter 4.

453


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Table 10.1.2.5.1-1: Biogas Cleanup Costs (600 scf/min)



Cost Factors (2019$)

million
dollars
(2021$)

$ per thousand
cubic feet
(2021$)

Interconnection

$400,000

0.42

0.15

Capital Costs

6,000000*e(000°3*ft3/min)

7.57

2.64

Operating and
Maintenance

250 * ft3/min +148,000

0.90/yr

2.85

Electricity Costs

0.009 kWh/ft3

0.30/yr

0.96

Total





6.60

10.1.2.5.2 Using Biogas to Produce Electricity

We also estimate the cost for producing electricity from biogas in an electricity
generation set (genset) facility co-located at the biogas production site. As discussed in Chapter
6.1.4, the quantity of biogas already being used to produce electricity is sufficient to satisfy the
electric vehicle market during the years of this proposed rulemaking, so we do not include any
biogas-to-electricity production and distribution costs in our estimated cost to comply with this
proposed rulemaking. However, we nevertheless analyze and present the costs of using biogas to
produce electricity in order to allow for a comparison to other renewable fuel costs and provide
an indication of the costs of production costs in years after this proposed program (i.e., 2026+)

We identified several different scenarios for gen sets installed at biogas source sites for
producing renewable electricity. The biogas source sites analyzed here are landfills and
agricultural digesters with a range of different size genset units which consume biogas at
different rates. Table 10.1.2.5.2-1 summarizes the genset unit scenarios and their associated
biogas consumption rates that we analyzed.

Table 10.1.2.5.2-1: Biogas to Renewable Electricity Scenarios Ana

yzed for Costs

Biogas Source

Small Ag Digester

Large Ag Digester;
Small Landfill

Medium
Landfill

Large
Landfill

Genset Capacity

150 KW

1.6 MW

5 MW

15 MW

Biogas Consumption
(SCF/min)

84

216

590

2025

Genset Type

Small Reciprocating
Engine Genset

Standard Reciprocating Engine Genset

We obtained genset cost information which allowed us to estimate the electricity
generation cost for each scenario.1001 This information is presented in Table 10.1.2.5.2-2 for a
genset installed at a small agricultural digester, and in Table 10.1.2.5.2-3 for a genset installed at
a medium sized landfill. Similar calculations were conducted for two other configurations, a
large agricultural digester/small landfill and a large landfill, with the results for all configurations

1001 Landfill Gas Energy Cost Model (LFCcost-Web) version 3.5 - Users Manual; Environmental Protection
Agency; March 2021.

454


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summarized in Table 10.1.2.5.2-4. While each genset unit is capable of operating on average at
over 90 percent of capacity, as shown in Figure 10.1.2.4.2-1, landfill biogas production changes
over time as biogas emissions first increase after the landfill is first created, reach a peak, and
then decline.1002 To account for changing biogas emissions rates over time, we assume that the
genset is sized to process the anticipated maximum methane emissions from the landfill, but then
these genset units would be underutilized at other times during its lifetime. To account for this
issue, we assume that gensets average 75% of their total biogas consumption capacity over their
lifetime. While we do not have any data for agricultural digesters, we believe that these facilities
would also have varying rates of biogas production over time depending on changes in herd size
and operating conditions. Thus we have applied the same 75% assumption to them.

Figure 10.1.2.5.2-1: Example of LFG Generation, Collection, and Utilization Curve in
LFGcost-Web

Landfill Qas Generation, Collection, and Utilisation Curve

Year

	Gas Generation		Gas Collection		Gas Utilization

The cost information provided in Tables 10.1.2.5.2-2 and 3 is based on 2008 dollars,
which are adjusted to 2021 dollars. One cost advantage of using biogas for producing electricity
compared to using it directly as compressed natural gas in vehicles is that the biogas only needs
minor clean-up (i.e., removing excess moisture content and particulates) before feeding it to a
genset to produce electricity.1003 Thus, the feed biogas for electricity generation is assumed to
cost $1.1 per thousand cubic feet to represent the landfill gas production cost as described in the
biogas section, but would not incur the $6.6 per thousand cubic feet clean-up costs.

1002	Landfill Gas Energy Cost Model (LFCcost-Web) version 3.5 - Users Manual; Environmental Protection
Agency; March 2021.

1003	Renewable Natural Gas Production; Alternative Fuels Data Center; Department of Energy
https://afdc.energy.gov/fuels/natural gas renewable.html#:~:text=With%20minor%20cleanup%2C%20biogas%20c
an.to%20a%20higher%20puritv%20standard.; downloaded June 2022.

455


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Table 10.1.2.5.2-2: Cost for a 150 kW Generation Set for a Small Ag Digester (net
electricity production 128 kW)*			



Cost Category (2008 dollars)

Cost (Thousand
dollars/yr)

c/kWh (2021
dollars)

Installed Capital Cost

2300 x KW capacity

$42.2

3.76

Annual O&M Cost**

0.024 x kWh

$29.3

2.61

Fuel Use Rate

36FT3/kWh

$62.8

5.58

Total Cost



$134.3

11.95

* Capable of operating at 93% of capacity, but assumed to typically operate at 75% of capacity due to variable
biogas production; parasitic efficiency is 93%.

" O&M = operating and maintenance costs.

Table 10.1.2.5.2-3: Cost for a 5 MW Generation Set for a Medium Size Landfill (net
electricity production 3.5 MW)*			



Cost Category (2008 dollars)

Cost (million
dollars/yr)

c/kWh (2021
dollars)

Installed Capital Cost

1300 x KW capacity +1,100,000

$8.5 million

3.04

Interconnect

0.025 x kWh

$278,000

0.10

Annual O&M Cost**

11,290 Btu/kWh



2.69

Fuel Use Rate

36 ft3/kWh

$713/million ft3

2.70

Total Cost





8.54

* Capable of operating at 93% of capacity, but assumed to typically operate at 75% of capacity due to variable
biogas production; parasitic efficiency is 93%.

" O&M = operating and maintenance costs.

Table 10.1.2.5.2-4 summarizes the estimated electricity production costs for the various
different scenarios for gensets installed at biogas source sites for producing renewable electricity.

Table 10.1.2.5.2-4: Summary of Renewable Electricity Production Costs from Biogas
Feedstocks (c/kWh)	

Biogas Source

Production Cost

Small Ag Digester

11.95

Large Ag Digester; Small Landfill

9.04

Medium Landfill

8.54

Large Landfill

8.18

10.1.3 Blending and Fuel Economy Cost

Certain renewable fuels, namely gasoline, biodiesel, and renewable diesel, are typically
blended into petroleum fuels. There are costs and in some cases cost savings associated with
such blending. In addition, these renewable fuels have relatively lower energy per gallon leading
to lower fuel economy (miles driven per gallon). In this section, we consider blending and fuel
economy costs for ethanol blended as E10, El5, and E85, as well as for biodiesel and renewable
diesel.

456


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10.1.3.1 Ethanol

10.1.3.1.1 E10

Ethanol has physical properties when blended into gasoline which affect its value as a
fuel or fuel additive. Ethanol has a very high octane content, a high blending Reid Vapor
Pressure (RVP) at low concentrations, and is low in energy content relative to the gasoline pool
that it is blended into. Ethanol has essentially zero sulfur or benzene, adding to ethanol's value
because refineries must meet sulfur and benzene fuel regulations. Each of these properties can
have a different cost impact depending on the gasoline it is being blended into (reformulated
gasoline (RFG) versus conventional gasoline (CG), winter versus summer gasoline, premium
versus regular, and blended at 10% versus El 5 or E85). These physical properties are also valued
differently from a refiner's perspective compared to that of the consumer. Refiners value
ethanol's octane because they can lower the octane of the gasoline the ethanol is being blended
into, reducing their refining costs. Refiners dislike ethanol's high blending RVP when blending
ethanol in gasoline (usually RFG) at 10% because they must remove some low value gasoline
blendstock material (usually butane) to accommodate the ethanol if the gasoline they are
producing does not receive a 1 psi RVP waiver. However, refiners are not concerned about
ethanol's low energy content when blending it into gasoline since they sell gasoline on volume,
not energy content, and consumers do not appear to demand a discount for E10. Rather, this is
usually just an issue for the consumers who do not travel as far on a gallon of fuel with lower
energy content. Depending on the fuel they are purchasing, the lower energy content will be
either obvious to consumers (i.e., E85), impacting their purchase decisions, or not (i.e., E10;
most consumers do not notice its lower energy content in comparison to E0, particularly now that
almost all gasoline is E10). Since this is a social cost analysis which incorporates all the costs to
society, the fuel economy effect is included in the overall cost estimates, although not included
with the blending value estimated in this section.

Ethanol's total blending value is estimated in two different steps based on the output from
two different refinery modeling cases conducted by ICF/Mathpro.1004 In the first step, ethanol's
blending value is estimated while blended into E10 conventional and reformulated gasolines.
The blending value (derived primarily from octane, but also reflecting its low sulfur and benzene
content and RVP cost) of ethanol at 10% was estimated for the purpose of estimating ethanol's
RVP cost. The refinery modeling cases were for a 2020 year case assuming that crude oil would
be priced at $72/bbl.1005 By averaging the costs separately for conventional and reformulated
gasolines, the refinery modeling output from the first case allowed us to estimate ethanol's
volatility cost for blending ethanol into E10 reformulated gasoline. The refinery modeling output
from the second case, which modeled ethanol's removal from the conventional gasoline pool,
allowed us to estimate ethanol's replacement cost—replacing both its volume and octane and
including the cost of installing the capital necessary to replace ethanol's octane and volume.

1004	EPA's contract was with ICF Incorporated, LLC, which in turn retained Mathpro for some aspects of the work.

1005	The crude oil price has a first order effect on the blending value and volatility cost for blending ethanol into
gasoline. Since the crude oil price used in the refinery modeling cost analysis is about the same as the projected
crude oil price for 2021 and 2022, it was not necessary to adjust ethanol's estimated blending cost to any other dollar
value.

457


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The refinery modeling output from the first modeling case is summarized in Tables
10.1.3.1.1-1 and 2, which summarize the refinery model's marginal blending values (also termed
shadow prices) for both ethanol and gasoline.

Table 10.1.3.1.1-1: Refinery Model's Ethanol Value (c/gal)a



PADD 1

PADD 2

PADD 3

PADD 4

PADD 5

Ethanol

Summer

Winter

Summer

Winter

Summer

Winter

Summer

Winter

Summer

Winter

RFG





















Premium

188

196

193

199

193

184





102

202

Regular

197

202

203

206

203

190





108

205

CG with





















Waiver





















Premium

218

196

214

199

213

184

211

190

225

201

Regular

96

85

94

86

94

80

93

82

233

205

CG No





















Waiver





















Premium

190

0

















Regular

200

0

















7.8 RVP





















with Waiver





















Premium





217

0

215

0

216

0

274

0

Regular





225

0

225

0

226

0

268

0

7.8 RVP No





















Waiver





















Premium

189

222





193

184









Regular

198

142





202

189









7.0 RVP





















with Waiver





















Premium





218

0













Regular





226

0













7.0 RVP No





















Waiver





















Premium





















Regular





















a Premium means premium grade gasoline; regular means regular gasoline grade. Values are reported for each
gasoline grade/type produced in each PADD. Blank cells mean that the gasoline type/grade is not produced in that
PADD.

458


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Table 10.1.3.1.1-2: Refinery Model's Gasoline Value (c/gallon)"



PADD 1

PADD 2

PADD 3

PADD 4

PADD 5



Summer

Winter

Summer

Winter

Summer

Winter

Summer

Winter

Summer

Winter

Gasoline





















RFG





















Premium

196

182

191

179

190

171





199

183

Regular

189

178

186

175

183

168





190

180

CG with





















Waiver





















Premium

192

182

188

179

187

172

178

167

173

182

Regular

185

178

182

175

181

168

172

163

164

179

CG No





















Waiver





















Premium

192

181

















Regular

185

177

















7.8 RVP





















with Waiver





















Premium





190

178

189

171

180

167

192

0

Regular





184

174

183

168

174

163

182

0

7.8 RVP No





















Waiver





















Premium

195

0





189

172









Regular

188

0





183

168









7.0 RVP





















with Waiver





















Premium





191

179













Regular





186

175













7.0 RVP No





















Waiver





















Premium





















Regular





















a Premium means premium grade gasoline; regular means regular gasoline grade. Values are reported for each
gasoline grade/type produced in each PADD. Blank cells mean that the gasoline type/grade is not produced in that
PADD.

Ethanol's blending value is calculated by subtracting gasoline's marginal value from
ethanol's marginal value for the same category of gasoline in Tables 10.1.3.1.1-1 and 2. For
example, ethanol's value for blending with regular grade summertime CG with the waiver is
$96.14 per barrel, compared to the gasoline which is $77.89 per barrel. Thus, the refinery model
values ethanol $18.25 per barrel more than gasoline, or about $0.43 per gallon. Table 10.1.3.1.1-
3 summarizes the calculated blending values for ethanol in summer gasoline after the blending
values for the various PADDs were volume-weighted together and the costs were converted over
to cents per gallon.1006

1006 The summertime ethanol blending values for California RFG were very negative, which the contractor thought
could be due to low butane prices. Regardless of the cause, these negative ethanol blending costs were considered
outliers and, thus, were not included in our average of ethanol blending costs.

459


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Table 10.1.3.1.1-3: Ethanol's Blending Value in Summer Gasoline ($/gal assuming a crude
oil price of $72/bbl))		

Gasoline Type

Gasoline Grade

Summer

CG

Regular

0.32

Premium

0.20

RFG

Regular

0.11

Premium

0.01

Ethanol's volatility cost for blending into RFG is estimated by subtracting ethanol's
blending value in reformulated gasoline from ethanol's blending value in conventional gasoline.
Thus, ethanol's volatility's cost is 21 and 19 cents per gallon in regular and premium grade
gasolines, respectively.

The results from the first modeling cases summarized in the first step demonstrate
ethanol's considerable blending value on a day-to-day basis in the marketplace. However, it does
not capture the full blending value of ethanol were a refiner to be faced with the cost of replacing
it in the gasoline pool (i.e., if it were not part of the available fuel volume and octane supply and
other sources of volume and octane supply had to replace it). This situation was modeled in the
second step which relies on refinery modeling cases in which ethanol is removed from the
conventional gasoline pool, and thus provided an estimate of ethanol's replacement cost. As
shown in Tables 10.1.3.1.1-4 and 5, this second case revealed that ethanol's very high octane and
volume would require significant investment at refineries to replace and this is reflected in
ethanol's much higher blending value when accounting for these additional costs.

Table 10.1.3.1.1-4 summarizes ethanol's marginal costs by different gasoline types and
refinery regions for both the reference case (all gasoline with ethanol) and the low biofuel cases
(conventional gasoline without ethanol) which replaced ethanol in the gasoline pool with refinery
sourced alternatives. Two different ethanol replacement cases were modeled: "Low Biofuel #1"
is a reformate-centric case while "Low Biofuel #2" is an alkylate centric case.1007 The much
lower marginal values for PADD 1 can be explained because Mathpro allowed PADD 3
refineries to satisfy PADD l's need for replacing ethanol's volume and octane through its
exports into the PADD 1 after initial refinery model runs showed PADD l's marginal costs for
replacing ethanol were exceedingly high.

1007 Reformate is a gasoline blendstock produced by a refinery unit named the reformer. Reformers react a low-
octane stream from the crude distillation tower which boils in the gasoline boiling range over a catalyst to convert
(reform) low octane hydrocarbons to aromatic compounds which are very high in octane. Alkylate is a gasoline
blendstock produced by a refinery unit named the alkylation unit. The alkylation unit reacts isobutylene with
isobutane and normal butane in acid to branched chain paraffins which are high in octane.

460


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Table 10.1.3.1.1-4: Gasoline Marginal Values for Reference Case and Ethanol Marginal
Values for the Low-Biofuel Cases ($/barrel assuming crude oil priced at $72/bbl)a	

PADD of
Gasoline
Origin

Type

Grade

Gasoline Marginal
Values

Ethanol Marg

inal Values

Low-Biofuel #1
Reformate Centric

Low-Biofuel #2
Alkylate Centric

Summer

Winter

Summer

Winter

Summer

Winter

PADD 1

RFG

Prem

95.737

83.936

108.37

100.88





Reg

91.452

81.349

115.98

105.97





Conv

Prem

92.680

83.890

123.02

100.87





Reg

88.927

81.346

136.43

105.88





PADD 2

RFG

Prem

88.087

81.685

132.42

110.28

113.45

96.62

Reg

84.803

79.771

145.38

116.02

122.86

101.61

Conv

Prem

85.549

81.248

149.08

110.41

126.74

96.25

Reg

82.457

79.447

161.21

115.79

135.55

100.93

PADD 3

RFG

Prem

85.424

78.308

121.69

94.72

118.51

89.77

Reg

81.863

76.395

134.67

98.45

131.29

94.48

Conv

Prem

83.644

78.784

133.95

95.13

129.37

89.91

Reg

79.975

76.755

146.78

98.46

142.00

94.55

PADD 4

RFG

Prem

79.756

77.014

135.5

115.2

150.1

103.1

Reg

77.367

75.066

149.0

124.0

168.1

110.0

Conv

Prem

81.785

82.073

136.5



151.2



Reg

81.702

81.993

150.1



169.2



PADD 5

RFG

Prem

96.890

83.676

37.68

96.05





Reg

91.607

82.013

62.46

97.37





Conv

Prem

77.631

82.999

118.14

98.01





Reg

73.384

81.116

126.14

97.68





a Low biofuel case means no biofuel in the conventional gasoline pool.

The difference between ethanol and gasoline marginal values is calculated, converted to
cents per gallon, and then volume-weighted to summarize them on a national average basis by
gasoline grade and season in Table 10.1.3.1.1-5.

Table 10.1.3.1.1-5: Marginal Ethanol Replacement Cost by Gasoline Grade and Season
(cents/ethanol gallon, crude oil priced at $72/bbl) 	





Low Biofuel #1
Reformate- centric

Low Biofuel #2
Alkylate- centric





Summer

Winter

Summer

Winter

Conv.

Prem

124.58

50.79

112.04

32.65

Reg

165.11

66.83

144.23

48.19

Although the ethanol replacement cost was based on a refinery modeling case when
ethanol was solely removed from conventional gasoline, it would likely be about the same for

461


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reformulated gasoline (RFG) as well, so we assumed that they were the same for RFG.1008
However, it is necessary to add in ethanol's volatility cost for RFG, which for ethanol's removal
would be a cost savings. The 21 and 19 cent per gallon volatility cost for regular and premium
gasoline, respectively, is subtracted from ethanol's replacement cost to estimate the ethanol
replacement cost for RFG. The ethanol replacement costs for both CG and RFG are shown in
Table 10.1.3.1.1-6. The ethanol replacement costs are then further aggregated to national, year-
round averages for each octane replacement scenario and summarized at the bottom of the table.

Table 10.1.3.1.1-6: Aggregated Ethanol Marginal Replacement





Low Biofuel #1

Low Biofuel #2





Reformate- centric

Alkylate

-centric





Summer

Winter

Summer

Winter



Prem

124.58

50.79

112.04

32.65

Conv.

Reg

165.11

66.83

144.23

48.19



Prem

105.58

50.79

93.04

32.65

RFG

Reg

144.11

66.83

123.23

48.19



82.23

68.65

}ost (cents/gallon)

Refiners would pursue the lowest cost means to produce their fuels. Therefore, for
evaluating the cost of using ethanol in gasoline at 10 volume percent, the lower cost, alkylate-
centric cost of 68.65 cents per gallon was used for ethanol's blending cost for ethanol blended as
E10. This 68.65 cents per gallon cost represents ethanol's average nationwide blending
replacement cost in U.S. gasoline. This can be thought of as the additional value or cost savings
per gallon of ethanol that results from blending 10% ethanol into gasoline today.

10.1.3.1.2 Higher Level Ethanol Blends

While there is a considerable blending cost savings associated with blending ethanol as
E10, there currently is not a savings for blending ethanol as El5 or E85. The blending costs for
higher level ethanol blends is considerably different from that for E10 in large part due to the
inability in most instances to take advantage of the octane benefit associated with the additional
ethanol. Furthermore, the 1 psi RVP waiver which applies for blending E10 gasoline in summer
conventional gasoline does not apply to blending El 5, requiring a lower RVP and therefore
higher cost gasoline blendstock. However, this is only an added cost in the summer and only in
conventional gasoline areas.

There have been, and there continue to be, steps taken to facilitate the blending of El5
into summertime conventional gasoline. EPA granted El 5 a 1 psi waiver that took effect in the
summer of 2019; however, this waiver was struck down by a federal court in 2021. For summer
2022, EPA granted numerous emergency waivers to allow El5 to continue to be sold with a 1 psi
RVP waiver. More recently, a number of states petitioned EPA to allow them to remove the 1 psi
waiver for blending E10 gasoline, and if the 1 psi waiver for E10 were to be removed, the same

1008 Both RFG and CG must meet many of the same gasoline property specifications, including sulfur and benzene,
as well as ASTM standards (ASTM D4814).

462


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lower RVP, higher cost gasoline blendstock would be required for both ethanol blends in
summertime conventional gasoline in those states.

El5 could potentially realize a blending cost benefit based on the increased octane for the
additional ethanol if refiners could create and distribute a low RVP, low octane El 5 blendstock
for oxygenate blending (BOB). However, this would require a widespread shift by refineries,
pipelines, and terminals in an entire geographical region to produce and distribute another even
lower octane BOB specially designed for producing El5 instead of ElO.1009 This would most
likely only occur if El 5 becomes the predominant gasoline used in that region because of the
limitations of the distribution system and experience with the historic conversion to ElO. Since
this could not feasibly happen during the time period of this rulemaking, we have not included
any octane blending benefit for the additional ethanol blended into El 5 in excess of the ethanol
blended in ElO (the additional 5%).1010 Thus, the gasoline BOB used to produce E15 in the
winter months is the same as that used for producing ElO, resulting in a higher octane fuel than
what it can be priced at. In the summer months, El 5 would also incur the additional RVP control
costs.

There also is not a blending cost benefit for ethanol blended as E85 resulting from its
high octane beyond that which is already being realized when blending ElO. When producing
E85, ethanol's high octane results in significant overcompliance with the minimum octane
standard. Refiners do not produce a low octane BOB for producing E85 to realize a cost savings.
Conversely, ethanol plants produce E85 by adding a denaturant to ethanol, which typically is a
low cost, low octane, high RVP, hydrocarbon commonly called natural gas liquids (NGL). Thus,
E85 produced from NGLs does realize a cost savings. But NGLs are also lower in energy
density, offsetting the potential cost savings to consumers. Regardless, there is no RVP blending
cost for E85 because the high portion of ethanol results in lower RVP instead of higher RVP;
therefore, a lower RVP blendstock is not needed for producing E85. In fact, to adjust for the
lower RVP of E85 blends, E85 is actually blended at roughly 74% ethanol on average over both
the summer and winter, instead of 85%, to have sufficiently high RVP to avoid RVP minimum
limits.1011

The societal cost of using ethanol must include ethanol's lower energy density (fuel
economy effect). Ethanol has about 33% lower energy density than gasoline blendstock (CBOB

1009	Some refiners may have extra tankage available to allow producing and storing a lower octane, El5 blendstock
to enable selling El5 over its own terminal rack to local retail stations. Refinery rack gasoline sales, however, are
usually a small portion of the refinery's gasoline sales.

1010	The reformulated gasoline pool always took advantage of ethanol's high octane as it was needed to cause a
reduction in aromatics to reduce the emissions of air toxics under the Complex Model - the compliance tool of the
RFG program. So when ethanol replaced methyl tertiary butyl ether (MTBE) as the oxygenate in 2005 when the
RFG oxygen requirement was rescinded, refiners took advantage of ethanol's high octane content. The CG pool,
however, could not take advantage of ethanol's high octane until an entire U.S. gasoline market (i.e., Midwest) was
blended with ethanol, and then that gasoline market shifted over all at once to a suboctane blendstock for oxygenate
blending (CBOB). Reviewing CG aromatics levels (high octane aromatics decrease when refiners produce
suboctane CBOB), refiners switched the CG pool over to low octane CBOB over the years from 2008 to 2013 which
is around the time when the U.S. reached the ElO blendwall.

1011	E85 can have RVP levels which are too low which makes starting a parked car difficult. When blended at about
70% ethanol, the RVP of the ethanol-gasoline blend is a little higher than E85 blends improving cold starts.

463


-------
and RBOB).1012 Accounting for ethanol's lower energy density adds about 80C per gallon of
ethanol for all the ethanol blends to account for the additional cost to consumers for having to
purchase a greater volume of less energy dense fuel to travel the same distance.

10.1.3.2 Biodiesel and Renewable Diesel

Biodiesel and renewable diesel fuel have properties that could cause a cost savings or
incur a cost. Both fuels have higher cetane value relative to petroleum diesel.1013,1014 Although
ICF/Mathpro considered the possibility of the petroleum refining industry taking advantage of
that property, they concluded that most markets are not cetane limited and that as a result refiners
likely would not take advantage of this property of biodiesel and renewable diesel.1015 At this
time, we do not have any evidence that refiners are capitalizing on biodiesel and renewable
diesel's higher cetane value.

Conversely, a blending cost could be incurred for biodiesel due to the addition of
additives to prevent oxidation and lower pour or cloud point. The need to add pour point
additives is primarily a cold weather issue and likely contributes to the lower observed blending
rates of biodiesel into diesel fuel in the winter compared to the summer, particularly in northern
areas. However, for our analysis, no additive costs were included for biodiesel because we do not
have a good estimate for them.

As with ethanol, the societal cost of using biodiesel and renewable diesel must include
their lower energy density in comparison to petroleum-based diesel fuel, which impacts fuel
economy. Accounting for this fuel economy effect adds about 18 and 11 cents per gallon to the
societal cost of biodiesel and renewable diesel, respectively.

10.1.4 Distribution and Retail Costs

In this part of the chapter, we evaluate the costs of distributing biofuels from the places
where they are produced to retail stations as well as the costs of dispensing these fuels at those
retail stations.

10.1.4.1 Ethanol
10.1.4.1.1 Distribution Costs

Distribution costs are the freight costs to distribute the ethanol, although the total
distribution costs could also include the amortized capital costs of newly or recently installed
distribution infrastructure. A significant amount of capital has already been invested to enable
ethanol to be blended nationwide as E10, and a small amount of ethanol as E85 and El 5.

1012 Frequently Asked Questions: How much ethanol is in gasoline, and how does it affect fuel economy?; Energy
Information Administration; hi:tps://www.eia.gov/tools/faqs/faq.php?id=27&.!:= 10
i°i3 Ammai Fats for Biodiesel Production; Farm Energy; January 31, 2014.

1014	McCormick, Robert; Renewable Diesel Fuel; NREL; July 18, 2016.

1015	Modeling a No-RFS Case; ICF Incorporated; Work Assignment 0,1-11, EPA contract EP-C-16-020; July 17,
2018.

464


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Virtually all terminals, including those co-located with refineries, standalone product distribution
terminals, and port terminals, have made investments over the last 15-plus years to enable the
distribution and blending of ethanol. Thus, these capital costs are considered sunk and no
additional capital cost is explicitly included in our analysis. However, in the part of the analysis
where we estimate ethanol's distribution costs using spot ethanol prices, as described below, we
may inherently be including some distribution capital costs which are still being recovered.

As part of the effort by ICF/Mathpro to estimate use of renewable fuels in the absence of
the RFS program, ICF estimated distribution costs for ethanol and biodiesel. We used these cost
estimates for this rulemaking.1016 ICF estimated ethanol's distribution costs based on ethanol
spot prices that are available from the marketplace. The spot prices likely represent the operating
and maintenance costs, and any capital costs which are being recovered. Certain publications,
including OPIS and ARGUS, publish ethanol spot prices for certain cities and these spot prices
were consulted for estimating ethanol's distribution costs. These spot prices are tracked because
they represent unit train origination and receiving locations where the custody of the ethanol
changes hands in the distribution system. Since nearly all the ethanol is being produced in the
Midwest, the ICF distribution cost analysis assumed that the ethanol is collected together in
Chicago by truck or manifest rail at an average cost of 7 cents per gallon and then moved out of
the Midwest to other areas mostly using unit trains. For the ethanol consumed in the Midwest,
the ethanol is likely to be moved by trucks directly to the terminals in the Midwest. For the areas
adjacent to the Midwest, the ethanol is assumed to be moved by truck for the areas nearest to the
Midwest (i.e., Colorado and Wyoming), and by manifest train for the adjacent areas further out
(i.e., Utah and Idaho). These various means for distributing ethanol, and their associated costs,
were accounted for when estimating the ethanol's distribution cost to and within each region.

Once the ethanol is moved to a unit train or manifest train receiving terminal, there are
many other terminals in these areas which must also receive the ethanol. Ethanol must then be
moved either by truck or, if further away, by manifest train from the unit train receiving
terminals to the other terminals. Since many of these other terminals do not have sidings for rail
car offloading, the manifest train ethanol must be offloaded to trucks at tank car-truck transfer
locations before it can be received by these other terminals. A simple analysis revealed that each
unit train receiving terminal must then service, on average, an area of 31 thousand square miles
(equivalent to a 180 x 180 miles) to make the ethanol available to the various terminals in the
area. ICF estimated that, on average, the further distribution of ethanol from these unit train
receiving terminals to the rest of the terminals would cost an additional 9 or 11 cents per gallon,
depending on the PADD. Since ICF completed its analysis, we discovered that most corn ethanol
plants are capable of sourcing unit trains from their plants. Thus, the 7 cent per gallon
transportation cost from corn ethanol plants to Chicago is not necessary and this cost was
removed from the estimated cost to each destination.1017 Table 10.1.4.1.1-1 provides the estimate
of ethanol distribution costs for the various parts of the country estimated by ICF, and as revised
to remove the 7 per gallon transportation cost.

1016	Modeling a No-RFS Case; ICF Incorporated; Work Assignment 0,1-11, EPA contract EP-C-16-020; July 17,
2018.

1017	Rail congestion, cold weather raise ethanol spot prices; US Energy Information Administration; April 3, 2014.

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Table 10.1.4.1.1-1: Ethanol Distribution Costs for Certain Cities or Areas





Distribution Cost (^/gal) to:







Location

Hub/Terminal



Total (t/gal)

PADD

Area

To
Chicago

From
Chicago

Blending
Terminal

ICF Estimate

Revised
Estimate



Florida/Tampa



17.8

11.0

35.8

28.8



Southeast/Atlanta



11.7

11.0

29.7

22.7

PADD 1

VA/DC/MD



9.7

11.0

27.7

20.7



Pittsburgh



6.2

11.0

24.2

17.2



New York



7.7

11.0

25.7

18.7

PADD 2

Chicago



0.0

11.0

18.0

11.0

Tennessee

7.0

9.7

11.0

27.7

20.7

PADD 3

Dallas



4.5

11.0

22.5

15.5

PADD 4





6.2

11.0

24.2

17.2



Los Angeles



16.4

9.0

32.4

25.4

PADD 5

Arizona



16.4

9.0

32.4

25.4

Nevada



12.4

9.0

28.4

21.4



Northwest



12.4

9.0

28.4

21.4

We volume-weighted the various revised regional distribution cost estimates for PADDs

1	through 5 to derive a PADD-average ethanol distribution cost for all PADDs. Table 10.1.4.1.1-

2	summarizes the estimated average ethanol distribution cost by PADD, and the average for the
U.S adjusted to 2021 dollars.

Table 10.1.4.1.1-2: Average Ethanol Distribution Cost by PADD and the U.S



Gasoline

Average Ethanol



Volume

Distribution Cost

Region

(kgals/day)

(C/gal)

PADD 1

123,700

22.0

PADD 2

102,400

11.0

PADD 3

68,500

15.5

PADD 4

15,100

17.2

PADD 5

63,400

24.4

U.S. Average

373,100

18.1

U.S. Average 2021$



19.7

10.1.4.1.2 Retail Costs

The infrastructure at retail needed to make E10 available has been in place for many
years. As a result, no additional retail costs are assumed for E10. However, this is not the case
for El5 and E85. Additional investments are needed to make them available at retail. The El5
and E85 volumes that we are using in this costs analysis are summarized in Chapter 6.5.2.

466


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The retail costs for El 5 and E85 are estimated based on the investments that are needed
to be made to offer such ethanol blends. To this end, we reviewed literature and conferred with
EPA's Office of Underground Storage Tanks on what might be considered "typical" for El 5 and
E85 equipment installations for a typical sized retail station selling these blends.1018'1019,1020,1021
For the typical retail station revamp to sell El5 the station is assumed to have an underground
storage tank already compatible with El5 that it would convert over to store El5, but would still
require 4 new dispensers to dispense the El5 - each dispenser is estimated to cost $20,000 for a
total cost of $80,000 (assuming only 4 dispensers for a retail outlet), and this cost per dispenser
increases to $24,500 when adjusted to 2021 dollars.1022 In addition, these retail stations are
assumed to invest in additional equipment changes to make their hardware compatible with El5
(e.g., pipes, pipe connectors, sealants including pipe dope and elastomers, pumps, and hardware
associated with underground storage tanks) at a cost of $15,000. Thus, the total investment for a
typical retail station revamp is $108,000.

The E85 stations are also assumed to have an existing underground storage it could use
for storing E85, but would require some equipment modification costing $15,000 to allow the
very high ethanol concentration to be stored in that tank and other equipment. The E85 station
would also be required install a new E85-compatible dispenser, costing $24,500, for a total cost
of $39,500 (assuming only one dispenser at a retail outlet is provided for E85).1023

Retail stations can incur costs which are higher or lower than the retail revamp costs we
estimate for offering El 5 and E85. If the retail station already has dispensers, tanks and other
equipment that can offer El 5 or E85 fuel, then perhaps only a few thousand dollars would need
to be spent to make some dispenser parts compatible with the higher concentration ethanol. On
the other hand, if the retail station needs the new dispensers and also needs to install a separate
storage tank and other equipment to store and dispense El 5 or E85, then the installation costs
would be much higher. The retail revamp costs to offer higher ethanol blends estimated here
attempts to find representative costs for this large cost range.

To estimate the per-gallon cost, it is necessary to estimate the volume of E85 and El5
sold at each station which offers these blends. These per-station volume estimates were based on
data collected by USDA through their BIP program and made available to EPA.1024 The total
volumes of El 5 and E85 sold were divided by the estimated number of El 5 and E85 retail
stations to estimate the volume per retail station. As a result, retail stations offering El 5 are
estimated to sell 147 thousand gallons of El 5 per year while retail stations offering E85 are
estimated to sell 78 thousand gallons of E85 per year. Using the amortization factor shown in
Table 10.1.2.1.1-1, and amortizing these retail costs over the volume of ethanol in El 5 and E85

1018	Moriarity, K.; E15 and Infrastructure; National Renewable Energy Laboratory; May 2015

1019	E15's Compatibility with UST Systems; Office of Underground Storage Tanks, Environmental Protection
Agency; January 2020.

1020	UST System Compatibility with Biofuels; Environmental Protection Agency; July 2020.

1021	Conversations with Ryan Haerer, Office of Underground Storage Tanks; Spring 2022

1022	Renkes, Robert; Scenarios to Determine Approximate Cost for E15 Readiness; Prepared by the Petroleum
Equipment Institute for the United States Department of Agriculture; September 6, 2013.

1023	Because only a small percentage of the motor vehicle fleet is comprised of fuel flexible vehicles (FFVs) which
can refuel on E85, typically a retail station only offers E85 from a single dispenser at the retail station.

1024	"Communication with USDA on the BIP program 1-19-22," available in the docket.

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(15% for El 5 and 74% for E85), covering the cost of capital for the retail equipment adds 54 and
7 cents per gallon to the ethanol portion of El 5 and E85, respectively. When solely amortizing
this retail cost solely over the 5% and 64% of ethanol that is incremental to E10, the cost
increases by 1.61 and 8.5 cents per gallon of ethanol in El 5 and E85 in excess of E10,
respectively.

10.1.4.2 Biodiesel and Renewable Diesel Distribution Costs

Biodiesel distribution costs were determined by ICF under contract to EPA based on an
estimate of biodiesel being moved by rail and by truck, within each PADD, and between
PADDs.1025 While biodiesel production is more spread out across the country than ethanol, a
significant amount must still be moved long distances to match the production to the demand.
The internal PADD rail costs were estimated to be 15 cents per gallon and truck movements for
shorter fuel movements were estimated based on distance moved. Movement of these fuels
between PADDs was assumed to be made by rail for most areas and also by ship from the Gulf
Coast to the West Coast. ICF relied on EIA reports for biofuel movements between PADDs.
Based on these analyses, the inter-PADD movements are estimated to cost 15 to 32 cents per
gallon, depending on the distance that the biodiesel must travel.

Renewable diesel fuel distribution costs are assumed to be the same as biodiesel. Because
renewable diesel is very similar in quality as diesel fuel, it can more readily be blended in more
places in the diesel fuel distribution system, including at refineries, where the renewable diesel
fuel would be moved by the same distribution system as diesel fuel. Thus, if renewable diesel is
used locally its distribution costs would likely be lower than biodiesel. However, much of the
renewable diesel is expected to be distributed to the West Coast to help meet the Low Carbon
Fuel Standard programs there.

Table 10.1.4.2-1 summarizes the biodiesel and renewable diesel distribution costs for
each PADD taking into account the amount of fuel that is distributed within PADDs and between
PADDs, and shows the national average distribution cost and that average cost adjusted to 2021
prices.

1025 Modeling a No-RFS Case; ICF Incorporated; Work Assignment 0,1-11, EPA contract EP-C-16-020; July 17,
2018.

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Table 10.1.4.2-1: Estimated Biodiesel and Renewable Diesel Fuel Distribution Cost by
PADD

Destination
Location

PADD Total
Transportation Cost (
-------
otherwise be necessary to debottleneck the upstream natural gas pipeline system to meet
commercial and industrial sector demand increases. If we assume that RNG would be injected
into a natural gas pipeline at least large enough to serve commercial consumers, the RNG
distribution cost can be based on commercial natural gas distribution costs which are represented
by the natural gas prices to commercial consumers. As summarized in Table 10.2.2-2,
distribution of natural gas to commercial consumers is estimated to cost $5.47 per million cubic
feet. We could not find detailed cost information for the distribution of commercial natural gas
through different parts of the distribution system that would allow us to scale the commercial
natural gas distribution costs to the portion of the natural gas pipeline used by RNG. For this
reason, half of the commercial natural gas distribution cost, or about $2.7 per million cubic feet,
is assumed to apply to biogas for distribution to the natural gas pipeline.1029

While this cost analysis assumes the biogas is being produced entirely at landfills, it is
worthwhile to consider the situation other RNG producers are likely to face to distribute their
biogas. Like landfills, RNG production at wastewater treatment plants and municipal waste
digesters are located near cities and thus would likely have distribution costs similar to landfills.
Conversely, agricultural waste digesters are much more likely to be located in rural areas further
away from both natural gas pipelines and urban areas. The distribution costs for RNG producers
using agricultural waste digesters would likely be higher. Some of these rural locations may be
so remote that the RNG could be considered stranded and not readily available for use as
transportation fuel, although such stranded locations could perhaps still provide RNG to local
truck fleets which distribute agricultural products.1030

10.1.4.3.2 Retail Costs

Retail facilities to dispense RNG are more expensive compared to other transportation
fuel retail costs. One information source provided an estimate that a larger sized CNG retail
facility would cost about $4.78 per million BTU, so this was used for the RNG retail cost.1031

10.1.4.4 Renewable Electricity

Once the biogas is consumed by generator sets to produce electricity, it is necessary to
distribute the electricity from where it is produced to where it can be consumed. AEO 2022
projects two values for distributing electricity in 2024, the first year that eRINs could be
generated under this proposal: 1.46C per kilowatt-hour for electricity transmission, and 3.15C per
kilowatt-hour for electricity distribution. The transmission cost of the electricity is for moving it
from where it is produced to where it can be transformed (to a lower voltage) for the eventual
consumption by consumers. The distribution cost of the electricity is the cost for distributing the
electricity to the consumer after it has been transformed to a lower voltage. Since landfills and

1029	Biogas producers tell us that they are being charged an equivalent distribution price that natural gas producers
are being charged which essentially assumes that they are using the entire natural gas pipeline. This pricing scheme,
though, does not represent the true social cost for distributing biogas, and a separate distribution cost is estimated for
biogas.

1030	The term "stranded" means the cost to recover and use the biogas is too high to justify installing the equipment
collect upgrade and distribute it for commercial use.

i°3i permitting CNG and LNG Stations, Best Practices Guide for Host Sites and Local Permitting Authorities;
prepared for The California Statewide Alternative Fuel and Fleets Project by Clean Fuel Connection, Inc.

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digesters at waste water treatment plants are small electricity producers near urban areas, we
presume that the electricity generated would be for local distribution downstream of the
electricity transmission system. Therefore, we assumed that the transmission cost which exists
for conventional electricity, would not apply for RNG-derived electricity and that only the 3.15C
per kilowatt-hour distribution cost would apply.

10.2 Gasoline, Diesel Fuel, Natural Gas and Electricity Costs
10.2.1 Production Costs

As renewable fuel use increases or decreases, the volume of petroleum-based products,
such as gasoline and diesel fuel, would decrease or increase, respectively. This change in
finished refinery petroleum products results in a change in refinery industry costs. The change in
costs would essentially be the volume of fuel displaced multiplied by the cost for producing the
fuel.

In addition, there could be a situation where we may need to account for capital
investments made by the refining industry. For example, increasing renewable fuel standards
could reduce capital investments refiners would otherwise make to increase refined product
production above previous levels. In this case increased renewable fuel capital investments
would offset decreased refining industry investments. However, we have not assumed for this
analysis that there would be any reduction in refining industry investments considering the
current situation. After the economic impact of the COVID-19 pandemic, Energy Information
Administration (EIA) data shows that gasoline and diesel fuel demand are lower now and as of
early 2022, only diesel fuel is expected to increase above previous levels.1032 Furthermore, light-
duty and heavy-duty greenhouse gas standards will continue to phase-in, continuing to reduce
transportation fuel demand.1033,1034,1035,1036 Thus, we would not anticipate there to be refined
product investment regardless of the proposed renewable fuel volumes and thus no savings that
would offset renewable fuel investments.

10.2.1.1 Gasoline and Diesel Fuel Production Costs

The production cost of gasoline and diesel fuel are based on the projected wholesale price
for gasoline and diesel fuel provided in AEO 20 2 2.1037 Current gasoline prices are much higher,

1032 2 0 2 2 Annual Energy Outlook; Table 12 Petroleum and Other Liquid Prices, and Table 57 Component of
Selected Petroleum Product Prices; March 3, 2022.

i°33 Environmental Protection Agency, Department of Transportation; Final rule for Model Year 2012-2016 Light-
Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; May 7, 2010.

1034	Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards; Environmental
Protection Agency, December 30, 2021.

1035	Environmental Protection Agency, Department of Transportation; Final Rule for Phase 1 Greenhouse Gas
Emissions Standards and Fuel Efficiency Standards for Medium-Duty and Heavy-Duty Engines and Vehicles;
September 15, 2011.

1036	Environmental Protection Agency, Department of Transportation; Final Rule for Phase 2 Greenhouse Gas
Emissions Standards and Fuel Efficiency Standards for Medium-Duty and Heavy-Duty Engines and Vehicles;
October 25, 2016.

1037	2 0 2 2 Annual Energy Outlook; Table 4a. U.S. Petroleum and Other Liquids Supply, Consumption and
Inventories; March 3, 2022.

471


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so a sensitivity cost analysis is conducted at higher petroleum prices and presented in Chapter
10.4.2.3 which assumes crude oil prices are priced much higher than those in AEO 2022. The
projected Brent crude oil prices and gasoline and diesel fuel wholesale prices in 2023 through
2025 are summarized in Table 10.2.1.1-1.

Table 10.2.1.1-1 Estimated Gasoline Production Costs



Gasoline

Diesel Fuel



2023

2024

2025

2023

2024

2025

Brent Crude Oil Prices ($/bbl)

61

66

67

61

66

67

Wholesale Prices - assumed to
be Production Costs ($/gal)

1.82

1.81

1.79

1.97

2.08

2.08

10.2.1.2 Natural Gas Production Cost

For estimating the cost of biogas relative to natural gas, it is necessary to estimate the
production cost of fossil natural gas. The natural gas production cost can be estimated using
natural gas spot prices. In its AEO 2022, EIA projects the natural gas spot price for Henry Hub to
average $3.49 per thousand cubic feet in 2023 and decrease to $3.00 per thousand cubic feet in
20 2 5.1038 The Henry Hub spot price most closely represents the natural gas field price, and thus
is a proxy for its production cost.

10.2.1.3 Electricity Generation Cost

It is necessary to provide an estimate of the cost of producing electricity generated by
conventional means to be able to assess the relative cost of the electricity generated by
converting biogas to electricity for eRINs. AEO 2022 estimates the cost for generating electricity
to be 5.91 ct per kilowatt-hour in 2024, and we used this as the reference cost for comparing
biogas-produced electricity for eRINs.

10.2.2 Gasoline, Diesel Fuel, Natural Gas, and Electricity Distribution and
Blending Cost

10.2.2.1 Gasoline and Diesel Fuel

Gasoline and diesel fuel distribution costs from refineries to terminals are estimated as
the difference between wholesale prices and terminal prices (which we estimated based on
historical sales for resale prices). This results in estimated gasoline and diesel fuel distribution
costs to the terminal of 5 and 8 cents per gallon, respectively.

We also estimated the distribution costs from terminals to retail stations. To do so, we
first calculated the retail costs of gasoline, less taxes. We calculated this by subtracting average
federal and state taxes, which are 55C per gallon for gasoline and 64C gallon for diesel fuel, from
historical gasoline and diesel fuel retail prices. Then, we calculated the difference between
historical retail prices (less taxes) and historical terminal prices (estimated as sales for resales

1038 2 0 2 2 Annual Energy Outlook; Table 13 Natural Gas Supply, Disposition, and Prices; March 3, 2022.

472


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prices) to estimate the costs for terminal and retail distribution. The resulting terminal and retail
distribution costs for gasoline and diesel fuel are estimated to be 20 and 40 cents per gallon for
gasoline and diesel fuel, respectively. These various prices and estimated costs are summarized
in Table 10.2.2-1.

Table 10.2.2.1-1: Estimated Gasoline and Diesel Fuel Distribution and Retail Costs ($/gal)



Gasoline

Diesel Fuel



2017

2018

2019

Average

2017

2018

2019

Average

Bulk Price

1.64

1.94

1.74

1.77

1.62

2.05

1.86

1.85

Sales for Resale

1.69

1.98

1.81

1.83

1.69

2.13

1.96

1.93

Retail Price

2.42

2.72

2.60

2.58

2.65

3.18

3.06

2.96

Taxes

0.55

0.55

0.55

0.55

0.64

0.64

0.64

0.64

Distribution Costs

0.05

0.04

0.07

0.05

0.07

0.08

0.08

0.08

Retail Costs

0.18

0.19

0.24

0.20

0.32

0.41

0.46

0.40

We then apply the estimated gasoline and diesel fuel distribution costs to the projected
wholesale gasoline and diesel fuel prices in Table 10.2.1.1-1 for each year to estimate the
gasoline and diesel fuel prices from refinery to retail. These gasoline and diesel fuel prices are
summarized in Table 10.2.2.1-2.

Table 10.2.2.1-2:

5rojected Gasoline and Diesel Production Costs ($/

Kal)





2023

2024

2025



Brent Crude Oil Prices

61.0

66.0

67.0

Gasoline

Retail Cost minus taxes

2.08

2.07

2.05

Terminal and Retail Costs

0.20

0.20

0.20

Terminal Costs







Distribution Cost

0.05

0.05

0.05

Production Cost
(from Table 10.2.1.1-1)

1.82

1.81

1.79

Diesel Fuel

Retail Cost minus taxes

2.44

2.55

2.55

Terminal and Retail Costs

0.40

0.40

0.40

Terminal Costs

2.05

2.16

2.16

Distribution Cost

0.08

0.08

0.08

Production Cost
(from Table 10.2.1.1-1)

1.97

2.08

2.08

We acknowledge that, currently, gasoline and diesel fuel prices are much higher than
these price projections and could remain higher during the years of this proposed rulemaking. In
Chapter 10.4.2.3 we provide the results of a cost sensitivity analysis which assumes a higher
crude oil price.

473


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10.2.2.2 Natural Gas

EIA projects natural gas prices downstream of natural gas production fields which can be
used to estimate natural gas distribution costs.1039 The three principal natural gas consumers are
industrial, commercial, and residential. Industrial consumers consume the largest natural gas
volumes per facility, and due to the very large consumption, the distribution costs are lowest.
Commercial entities are medium sized consumers, and their distribution costs are higher than
industrial consumers. Residential consumers, because of their very low consumption, must pay a
much larger distribution cost to maintain the distribution system for much lower consumption to
each home. EIA also provides a price for natural gas sold into the transportation sector, although
this price includes road taxes which would need to be omitted for the purposes of this cost
analysis, so we did not use EIA's natural gas to transportation sector cost.1040

The varying costs for these different natural gas categories permit estimating natural gas
distribution costs for natural gas consumed by motor vehicles. Natural gas produced and
distributed to retail outlets to refuel natural gas trucks and cars most likely falls in the category of
midsized consumers, or commercial users. The distribution costs of natural gas can therefore be
estimated by subtracting the projected Henry Hub prices from the projected commercial prices.
Thus, Henry Hub prices projected in AEO 2022 were subtracted from the commercial prices for
2023 through 2025. Table 10.2.2.2-1 summarizes the calculation of natural gas distribution costs.
To put the natural gas costs on the same footing as the biogas, we also add $4.61 per million
BTU for retail costs.1041

Table 10.2.2.2-1: Natural Gas Distribution Cost ($/t



2023

2024

2025

Commercial Prices

8.84

8.52

8.38

Henry Hub Prices

3.49

3.17

3.00

Pipeline Distribution Costs

5.47

5.46

5.48

Retail Station Costs

4.78

4.78

4.78

Total Distribution & Retail
Station Costs

10.25

10.24

10.26

lousand cubic feet)

10.2.2.3 Conventional Electricity

It is also necessary to project the distribution cost for electricity produced by
conventional means to enable a downstream electricity comparison cost to the renewable
electricity produced from biogas. Since most electricity is produced at large generation facilities,
it must first be transmitted from those facilities to the population centers before being
transformed to a lower voltage and distributed to the various homes and businesses. AEO 2022
estimates 1.46C per kilowatt-hour for transmission of the electricity from the generation facilities
to population areas, and 3.15C per kilowatt-hour for electricity distribution. Both of these costs

1039	Table 13 Natural Gas Supply, Disposition and Prices; Annual Energy Outlook 2022.

1040	Taxes are not included in social cost estimates because they are not true costs, only transfer payments.

1041	Permitting CNG and LNG Stations, Best Practices Guide for Host Sites and Local Permitting Authorities;
prepared for The California Statewide Alternative Fuel and Fleets Project by Clean Fuel Connection, Inc.

474


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are added to the conventional electricity generation costs to estimate a national average cost for
electricity to consumers.

10.3 Fuel Energy Density and Fuel Economy Cost

To estimate the change in fossil fuel volume that would occur with these changes in
renewable fuel volumes and to estimate the fuel economy cost summarized in Chapter 10.4.1, it
was necessary to estimate the energy density of each fuel. Table 10.3-1 contains the estimated
energy densities for the various renewable fuels and petroleum fuels analyzed for this cost
analysis.

Table 10.3-1: Lower Heating Value (LHV) Energy Densities

LHV Energy Density (GREET 2017)



BTU/gal

Gasoline (E0)a

114,200

Diesel Fuel

128,450

Pure Ethanol

76,330

Natural Gas Liquids

83,686

Denatured Ethanol

76,477

E10 Gasoline

110,428

El5 Gasoline

108,542

E85b

86,285

Biodiesel

119,550

Renewable Diesel

122,887

Crude Oil

129,670

a From Chevron Paper.1042
b Assumed to contain 74% ethanol.

To account for the fuel economy effect for the cost analysis, the change in fossil fuel
volume displaced by a change in renewable fuel volume is estimated by the relative energy
content of the renewable and fossil fuels. However, if the energy density is not the same between
the fossil fuel and renewable fuel displacing it, the energy equivalent replacement is not one-for-
one on a volume basis. For example, ethanol contains about 33% lower energy per volume than
the gasoline it is displacing, such that 100 gallons of ethanol would displace 67 gallons of
gasoline. The fuel economy effect is therefore inherent in the cost analysis and is not reported
out separately.

For the individual fuels cost summary in Chapter 10.4.1, it is desirable to report out a
specific fuel economy effect. To do so, the difference in energy density between the renewable
fuel and fossil fuel is divided by the fossil fuel energy density and then multiplied times the
fossil fuel cost at retail, before taxes, to estimate the fuel economy effect.

1042 Diesel Fuels Technical Review; Chevron Global Marketing; 2007.

475


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10.4 Costs

10.4.1 Individual Fuels Cost Summary

Table 10.4.1-1 summarizes the estimated overall societal costs (including production,
distribution, blending, and fuel economy) for the renewable fuels analyzed for this rulemaking
for the years 2023-2025. These costs do not account for the per-gallon federal cellulosic biofuel
and biodiesel tax subsidies, nor do they consider taxes or tax subsidies more generally, as these
are transfer payments which are not relevant in the estimation of societal costs. Nor do these
costs consider state or local infrastructure support funding or the funding from USDA's Blends
Infrastructure Incentive Program (HBIIP) which offsets half of the investment costs for
revamping retail stations to be compatible with E85 and El 5.1043 A separate line item is added
for El 5 and E85 which only adds in xk of the retail cost to help illustrate the impact that the
HBIIP program would have on the costs for these fuels. The costs of renewable fuels other than
biogas are primarily influenced by the feedstock costs, which can vary significantly depending
on a wide range of factors domestically and internationally, especially since many of them are
also agricultural commodities.

To put the different fuels on an equivalent basis for the miles driven, the societal cost
analysis also needs to account for each fuel's impact on fuel economy, which is first discussed in
Chapter 10.3. While these costs may not always be reflected in the sales prices among the market
participants (e.g., if refiners sell, and consumers buy, gasoline based on volume, not energy
content), the varying impacts on fuel economy among the fuels nevertheless still result in
different costs to consumers in operating their vehicles and therefore must be accounted for in a
social cost analysis. The cost associated with the impact of renewable fuels on fuel economy
costs are determined relative to the fuels they are assumed to displace; ethanol displaces
gasoline, biodiesel and renewable diesel displace diesel fuel, and RNG displaces natural gas.1044
To the extent that RINs representing RNG incentivize some incremental growth in sales of
CNG/LNG trucks at the expense of diesel fueled trucks, then some RNG could also displace
diesel fuel. However, this is expected to be a relatively minor occurrence for the volumes and
timeframe of this proposal, and so is not included in this cost analysis.

The cost is shown for two different pathways for RNG. The first is RNG which is cleaned
up, distributed through a natural gas pipeline, and used as CNG. This cost is expressed in both
dollars per million BTU and dollars per ethanol-equivalent gallon. The second RNG pathway is
RNG which, for the most part, is raw RNG from a landfill being converted onsite to electricity.
Both of these RNG pathways represent the production cost for a midsize landfill as summarized
in Table 10.1.2.5.2-4. Estimated costs for larger or smaller RNG producers, such as other sized
landfills or agricultural digesters, could be substituted for the mid-size landfall cost used in the

1043	Higher Blends Infrastructure Incentive Program; United States Department of Agriculture (USDA);
https://www.rd.usda.gov/hbiip

1044	Fuel economy costs are calculated by multiplying the total of petroleum fuel production, distribution and retail
costs by the difference in energy density (BTU per gallon) between the petroleum fuel being displaced and the
renewable fuel, and the result of that operation is divided by the energy density of the petroleum fuel. For ethanol
blended as E10 as an example: (denatured ethanol production + distribution + blending cost) * (E10 gasoline energy
density - denatured ethanol energy density)/denatured ethanol energy density.

476


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cost comparison to gain an understanding of the relative cost for these other RNG producer
scenarios. Table 10.4.1-1 is divided into two subparts, "a" and "b."

Table 10.4.1-la: Renewable Fuels Costs estimated for 2023-2025 ($/gallon unless otherwise
noted; 2021$)	

















Fuel





Proc

uction Cost

Blending
Cost

Distribution
Cost

Retail
Cost

Economy
Cost





2023

2024

2025











E10

1.94

1.89

1.85

-0.65

0.43



0.69



E15 w xk
Retail Costs

1.94

1.89

1.85



0.43

0.81

0.69



E15















Corn

w/Retail

1.94

1.89

1.85



0.43

1.61

0.69

Starch

Costs















Ethanol

E85 w/1/2
Retail Costs

1.94

1.89

1.85



0.43

0.04

0.69



E85

















w/Retail

1.94

1.89

1.85



0.43

0.09

0.69



Costs

















Soy Oil

5.74

5.41

5.09



0.57



0.17

Biodiesel

Corn Oil

4.03

3.88

3.76



0.57



0.17

Waste Oil

4.80

5.20

5.67



0.57



0.17



Palm Oil

3.85

3.68

3.53



0.57



0.17



Soy Oil

6.23

5.88

5.52



0.57



0.11

Renewable

Corn Oil

4.41

4.24

4.10



0.57



0.11

Diesel

Waste Oil

5.23

5.65

6.14



0.57



0.11



Palm Oil

4.22

4.03

3.86



0.57



0.11



Pyrolysis
Diesel

3.35

3.35

3.35



0.57



0.11



Pyrolysis
Naphtha

3.35

3.35

3.35

0.20

0.38



0.05

Cellulosic

RNG ($/gal
Ethaool)

0.57

0.57

0.57



0.42

0.39





RNG

($/mmBTU)

7.49

7.49

7.49



5.47

5.12





RNG

















electricity
(c/kWh)

8.54

8.54

8.54



3.15





a Fuel economy cost is per fuel being displaced—ethanol and pyrolysis naphtha displace gasoline, renewable diesel
and pyrolysis diesel displace diesel fuel, and biogas displaces natural gas.

b It is important to note that in estimating the social cost for this rulemaking the fuel economy cost for ethanol
blended into E10 is included since this is a cost that consumers will bear. However, when refiners are considering
whether to blend ethanol, such as for estimating volumes for the No RFS baseline, they do not consider the fuel

477


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economy effect and this distinction is important for understanding ethanol's relative economic viability in the
marketplace.

c For modeling the societal costs of E15 and E85 shown in Chapters 10.4.2 and 10.4.3, the cost analysis is conducted
for the entire volume of E15 and E85, and includes the blending cost savings for the E10 BOB used to blend with
E15 and E85. For the cost analysis shown here, the cost for E15 and E85 is solely for the ethanol volume above that
blended at 10 volume percent and therefore does not include any blending value for El0 BOBs to represent the
marginal cost for the ethanol volume above E10.

Table 10.4.1-lb: Renewable Fuels Costs estimated for 2023 - 2025 ($/gallon unless
otherwise noted; 2021$)	





Total Cost





2023

2024

2025

Corn

Starch

Ethanol

E10

2.41

2.36

2.32

El5 w Vi Retail Costs

3.87

3.82

3.78

El5 w/Retail Costs

4.67

4.62

4.58

E85 w/1/2 Retail Costs

3.10

3.06

3.02

E85 w/Retail Costs

3.15

3.10

3.06

Biodiesel

Soy Oil

6.48

6.16

5.83

Corn Oil

4.77

4.63

4.50

Waste Oil

5.54

5.94

6.41

Palm Oil

4.59

4.42

4.26

Renewable
Diesel

Soy Oil

6.91

6.56

6.20

Corn Oil

5.09

4.92

4.78

Waste Oil

5.91

6.33

6.82

Palm Oil

4.90

4.71

4.54

Cellulosic

Pyrolysis Diesel

4.03

4.03

4.03

Pyrolysis Naphtha

3.78

3.78

3.78

RNG ($/gal Ethaool)

1.38

1.38

1.38

RNG ($/mmBTU)

18.08

18.08

18.08

RNG electricity (c/kWh)

11.69

11.69

11.69

The distribution costs for the biofuels are nationwide averages, which does not capture
the substantial difference depending on the destination. For example, ethanol distribution costs
from the ethanol plants to terminals can vary from under 10 cents per gallon for local distribution
in the Midwest, to over 30 cents per gallon for moving the ethanol to the coasts. Thus, total
ethanol cost blended as E10 can vary from around 2.38 to 2.58 per gallon. Biogas distribution
includes both the amortized capital cost of transporting the biogas to a nearby pipeline as well as
the amortized retail distribution capital costs, since the retail facilities for natural gas trucks are
relatively expensive.

Table 10.4.1-2 summarizes production and distribution costs for each category of fossil
transportation fuel—gasoline, diesel fuel, natural gas, and conventional (fossil-based) electricity.
For gasoline and diesel, production costs are based on prices in AEO 2022.1045 Natural gas and
conventional electricity projected spot prices from the AEO 2022 are used to represent both
feedstock and production costs.

1045 EIA, Annual Energy Outlook 2022, Energy Information Administration, March, 2022.

478


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The distribution costs for gasoline and diesel fuel are typical for these fuels. While they
can vary depending on the transportation distance, the differences between high and low
distribution costs for gasoline and diesel fuel are likely lower than that for renewable fuels due to
the well-established pipeline distribution system for petroleum fuels. The natural gas distribution
costs are based on the difference between the projected price for natural gas sold to commercial
entities and the projected natural gas spot price, which reflects the price at the point of
production.

Table 10.4.1-2: Gaso

ine, Diesel Fuel, and Natural Gas Costs for 2023-2025 (2021$)



Production Cost

Distribution
Cost

Retail
Cost

Total Cost



2023

2024

2025

2023

2024

2025

Gasoline ($/gal)

1.82

1.81

1.79

0.26



2.08

2.07

2.05

Diesel Fuel ($/gal)

1.97

2.08

2.08

0.47



2.44

2.55

2.55

Natural Gas
($/million BTU)

3.49

3.17

3.00

4.89

5.12

13.51

13.19

13.02

Electricity (C/kWh)

6.23

5.91

5.73

4.61



10.84

10.52

10.34

Table 10.4.1-3 compares the data from Tables 10.4.1-1 and 2 to show the relative cost of
the renewable fuels with the fossil fuels or conventional electricity they are assumed to displace.

Table 10.4.1-3
2021$)

Relative Renewable Fuel Costs for 2023-2025 ($/gal unless otherwise noted,

Biofuel Category

Biofuel

N

et Cost by Year

2023

2024

2025

Corn Starch Ethanol

E10

0.33

0.30

0.27

El5 w/1/2 Retail Costs

1.79

1.75

1.73

El5 w/Retail Costs

2.60

2.56

2.54

E85 w/1/2 Retail Costs

1.03

0.99

0.97

E85 w/Retail Costs

1.07

1.03

1.01

Biodiesel

Soy Oil

4.04

3.60

3.28

Corn Oil

2.33

2.07

1.95

Waste Oil

3.10

3.39

3.86

Palm Oil

2.15

1.87

1.72

Renewable Diesel

Soy Oil

4.47

4.00

3.65

Corn Oil

2.65

2.37

2.23

Waste Oil

3.47

3.77

4.27

Palm Oil

2.46

2.15

1.98

Cellulosic Biofuels

Pyrolysis Diesel

1.59

1.48

1.48

Pyrolysis Naphtha

1.71

1.72

1.74

Biogas ($/mmBTU)

4.58

4.90

5.07

Biogas (c/kWh)

0.85

1.17

1.35

479


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10.4.2 Costs Relative to the No RFS Baseline

In this section, we summarize the estimated costs for the changes in renewable fuel
volumes described in Chapter 3.2 (changes relative to the No RFS baseline volumes described in
Chapter 2). For this analysis we considered all societal costs, including production, blending, and
distribution costs, and differences in energy density.

10.4.2.1 Volumes

An important first step for the cost analysis is understanding the change in both
renewable fuel volumes and the associated change in the fossil fuel volume, which is calculated
based on its energy content relative to the renewable fuel that it is displaced by. Table 10.4.2.1-1
summarizes the renewable and fossil fuel changes relative to the No RFS baseline, and Table
10.4.2.1-2 summarizes the volumes associated with the supplemental standard for 2023.

480


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Table 10.4.2.1-1: Renewable Fuel and Fossil Fuel Volume Changes Relative to the No RFS
Baseline (million gallons, except where noted)	

Change in Renewable Fuel Volume

Chan

ge in Fossil Fuel Volume

Fuel Type

2023

2024

2025

Fuel Type

2023

2024

2025

Cellulosic biofuel - Total















CNG - landfill biogas (MMft3)

26,771

31,638

37,169

Natural Gas

-26,771

-31,638

-37,169

Electricity - Biogas

0

0

0



0

0

0

Naphtha - Wood biomass

0

1

3

Gasoline

0

1

3

Diesel/Jet - Wood biomass

0

2

4

Diesel Fuel

0

2

3

Non-cellulosic adv. - Total















Biodiesel - Soy

728

695

661

Diesel Fuel

-678

-646

-615

Biodiesel -FOG

200

200

200

Diesel Fuel

-186

-186

-186

Biodiesel - Corn Oil

120

120

120

Diesel Fuel

-112

-112

-112

Biodiesel - Canola

240

240

240

Diesel Fuel

-223

-223

-223

Renewable Diesel - Soy

879

1,026

1,032

Diesel Fuel

-841

-981

-988

Renewable Diesel - FOG

272

325

383

Diesel Fuel

-260

-311

-367

Renewable Diesel - Corn

78

84

90

Diesel Fuel

-74

-80

-86

Conventional - Total















Ethanol - E10

-84

-96

-106

Gasoline

56

64

71

Ethanol - El5

84

101

113

Gasoline

-56

-67

-76

Ethanol - E85

262

272

282

Gasoline

-175

-182

-189

Change in Biogas Volume

26,771

31,638

37,169

-

-

-

-

Change in Ethanol Volume

262

276

290

-

-

-

-

Change in Biodiesel Volume

1,288

1,255

1,221

-

-

-

-

Change in Renewable Diesel















Volume

1,229

1,437

1,512

-

-

-

-

Change in Gasoline Volume

-

-

-

-

-175

-184

-192

Change in Diesel Fuel Volume

-

-

-

-

-2,374

-2,538

-2,574

Change in Natural Gas Volume

-

-

-

-

-26,771

-31,638

-37,169

Change in Imported Gasoline









5

5

6

Change in Imported Diesel Fuel









70

75

76

Total Change in Crude Oil









-2,580

-2,755

-2,799

Change in Domestic Crude Oil









-12

-13

-13

Change in Imported Crude Oil









-2,568

-2,742

-2,785

Table 10.4.2.1-2 Supplemental Standard Renewable Fuel and Petroleum Fuel Volume

Changes

Change in Renewable Fuel Volume

Change in Petroleum Fuel Volume



2023

2024

2025



2023

2024

2025

Supplemental Std. RD Soy Oil

147

0

0

Diesel Fuel

-141

0

0

The change in gasoline and diesel volume for each case is used to estimate the change in
crude oil based on its relative energy content. The change in petroleum demanded and its effect
on both imported crude oil, domestic crude oil, and imported petroleum products, is projected
based on these effects by a comparison of two separate economic cases: the Low Economic

481


-------
Growth Case and the Reference Case, modeled by EIA in its AEO 2022.1046 The AEO Low
Economic Growth Case estimates lower refined product demand than that of the Reference case,
and due to the reduced refined product demand the AEO estimates changes in reduced imports of
crude oil refined products. The two AEO cases project that for a volume of reduced gasoline or
diesel fuel, 102 percent of that gasoline or diesel reduction would be attributed to reduced crude
oil imports and imports of refined product would increase by 3 percent. Based on these
correlations, Table 10.4.2.1-3 summarizes the projected change in petroleum imports expected
from the increased consumption of renewable biofuels over the years 2023 to 2025 relative to the
No RFS baseline, and Table 10.4.2.1-4 shows the same information, but also accounts for the
Supplemental Standard. In both tables, we consider the projected change in imported petroleum
products only as well as the projected change in all imported fuels, including imported renewable
diesel and imported sugar cane ethanol. The change in crude oil volume and imported petroleum
products is used for the energy security analysis contained in Chapter 5.

Table 10.4.2.1-3: Projected Change in Petroleum Imports Due to Increased Renewable Fuel

Consumption Relative to the No RFS Base



2023

2024

2025

Change in Imported Gasoline

5

5

6

Change in Imported Diesel Fuel

70

75

76

Total Change in Crude Oil

-2,580

-2,755

-2,799

Change in Domestic Crude Oil

-12

-13

-13

Change in Imported Crude Oil

-2,568

-2,742

-2,785

ine (million gallons)

Table 10.4.2.1-4: Projected Change in Petroleum Imports Due to Increased Renewable Fuel
Consumption Relative to the No RFS Baseline; accounts for the Supplemental Standard



2023

2024

2025

Change in Imported Gasoline

5

5

6

Change in Imported Diesel Fuel

74

75

76

Total Change in Crude Oil

-2,724

-2,755

-2,799

Change in Domestic Crude Oil

-13

-13

-13

Change in Imported Crude Oil

-2,711

-2,742

-2,785

10.4.2.2 Cost Impacts Relative to the No RFS Baseline

Table 10.4.2.2-1 summarizes the component cost (production, distribution, blending
retail) of each biofuel fuel type for 2023 through 2025 compared to the fossil fuel it is displacing,
and Table 10.4.2.2-2 provides this information for the supplemental standard.

1046 "Change in product demand on imports", spreadsheet available in the docket.

482


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Table 10.4.2.2-1 Renewable and Petroleum Fuel Costs for 2023 to 2025 (million dollars;

year 2(

21 dollars)





Renewable Fuel

Petroleum Fuel







Production

Distribution

Blending

Production

Distribution

Total



Cellulosic biofuel















CNG - landfill biogas

208

282

0

-94

-305

92



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

0.0

0.0

0.0

0.0

0.0

0.0



Diesel/Jet - Wood biomass

0.0

0.0

0.0

0.0

0.0

0.0



Non-cellulosic adv.















Biodiesel - Soy

4,175

418

0

-1,335

-321

2,938



Biodiesel -FOG

958

115

0

-366

-88

618

2023

Biodiesel - Corn Oil

484

69

0

-221

-53

280



Biodiesel - Canola

1,377

138

0

-440

-106

968



Renewable Diesel - Soy

5,479

504

0

-1,657

-398

4,933



Renewable Diesel - FOG

1,421

156

0

-512

-123

941



Renewable Diesel - Corn

314

45

0

-147

-35

176



Conventional















Ethanol - E10

-163

-36

55

102

14

-28



Ethanol- El 5

163

37

-37

-103

-14

46



Ethanol - E85

507

114

-23

-319

-45

234



Cellulosic biofuel















CNG - landfill biogas

246

334

0

-100

-360

119



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

4.5

0.3

0.3

-2.4

-0.3

2.4



Diesel/Jet - Wood biomass

5.9

1.0

0.0

-3.3

-0.8

2.8



Non-cellulosic adv.















Biodiesel - Soy

3,761

123

0

-1,274

-306

2,304



Biodiesel -FOG

1,039

35

0

-366

-88

620

2024

Biodiesel - Corn Oil

467

21

0

-221

-53

215



Biodiesel - Canola

1,299

42

0

-440

-106

796



Renewable Diesel - Soy

6,027

183

0

-2,041

-464

3,704



Renewable Diesel - FOG

1,834

57

0

-612

-147

1,132



Renewable Diesel - Corn

325

15

0

-158

-38

144



Conventional















Ethanol - E10

-181

-42

63

116

16

-28



Ethanol- El 5

190

44

-44

-122

-17

51



Ethanol - E85

514

118

-24

-329

-47

232



Cellulosic biofuel















CNG - landfill biogas

289

392

0

-112

-423

146



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

18.2

1.2

1.1

-4.7

-0.7

4.8



Diesel/Jet - Wood biomass

23.7

4.0

0.0

-6.7

-1.6

5.6



Non-cellulosic adv.















Biodiesel - Soy

3,367

117

0

-1,212

-291

1,980



Biodiesel -FOG

1,133

35

0

-366

-88

714

2025

Biodiesel - Corn Oil

452

21

0

-221

-53

200



Biodiesel - Canola

1,222

42

0

-440

-106

719



Renewable Diesel - Soy

5,702

183

0

-2,055

-468

3,363



Renewable Diesel - FOG

2,355

68

0

-723

-174

1,527



Renewable Diesel - Corn

337

16

0

-169

-41

143



Conventional















Ethanol - E10

-195

-46

69

126

18

-28



Ethanol- El 5

210

49

-49

-136

-19

54



Ethanol - E85

521

123

-25

-338

-10

271

483


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Table 10.4.2.2-2 Renewable Fuel and Petroleum Fuel Costs for the 2023 Supplemental
Standard (million dollars; 2021$)	



Renewable Fuel

Fossil Fuel



Production

Distribution

Blending

Production

Distribution

Total

Supplemental Std.
RD Soy Oil

916

84

0

-277.0

-66.0

657.1

To estimate the per-gallon cost on the total gasoline, diesel, and natural gas pools, the
projected total volumes for each of these fuels was obtained from AEO 2022 and summarized in
Table 10.4.2.2-3.1047

Table 10.4.2.2-3: Total Gasoline, Diesel Fuel and Natural Gas Volumes



2023

2024

2025

Units

Gasoline Volume

139.8

139.7

139.2

Billion gallons

Diesel Volume

55.5

55.3

55.3

Billion gallons

Natural Gas Volume

30.5

30.7

30.5

Trillion cubic feet

The costs are aggregated for each fossil fuel type and expressed as per-gallon and per
thousand cubic feet costs in Table 10.4.2.2-4 for 2023 through 2025.

Table 10.4.2.2-4: Total Annual Rule Cost Relative to the No RFS baseline (2021$)





Total Cost
(million $)

Per-Unit
Cost

Units

2023

Gasoline

252

0.18

cents/gallon gasoline

Diesel Fuel

10,855

19.56

cents/gallon diesel

Natural Gas

92

0.3015

$/K FT3 natural gas

Total

11,199

5.73

cents/gallon gasoline and diesel

2023 with
Suppl. Std.

Gasoline

252

0.18

cents/gallon gasoline

Diesel Fuel

11,512

20.74

cents/gallon diesel

Natural Gas

92

0.3015

$/K FT3 natural gas

Total

11,856

6.07

cents/gallon gasoline and diesel

2024

Gasoline

258

0.18

cents/gallon gasoline

Diesel Fuel

8,919

16.12

cents/gallon diesel

Natural Gas

119

0.3873

$/K FT3 natural gas

Total

9,295

4.77

cents/gallon gasoline and diesel

2025

Gasoline

303

0.22

cents/gallon gasoline

Diesel Fuel

8,651

15.63

cents/gallon diesel

Natural Gas

146

0.4795

$/K FT3 natural gas

Total

9,100

4.68

cents/gallon gasoline and diesel

1047 EIA, Annual Outlook 2022, Energy Information Administration, March 3, 2022.

484


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10.4.2.3 Petroleum Cost Sensitivity Analysis

A sensitivity cost analysis is conducted to provide a sense of the impact of higher crude
oil prices on societal costs. For this sensitivity case, the prices for renewable fuels feedstocks, the
renewable fuel byproducts, and utilities are assumed to be the same. The only difference is that
crude oil is assumed to be priced at $110 per barrel, and this is modeled by increasing both
gasoline and diesel fuel prices by 97 cents per gallon, which approximates the impact of this
higher crude oil price on gasoline and diesel fuel wholesale prices. No change in natural gas
prices is assumed for this analysis. Table 10.4.2.3-1 summarizes the societal costs based on these
assumptions. As one would expect, increasing the crude oil price from about $65 per barrel to
$110 per barrel and holding other prices constant reduces the relative cost of renewable fuels, in
this case by an estimated 22 percent. In reality other prices are typically also impacted by crude
oil prices to varying degrees, but this sensitivity analysis nevertheless provides some sense of the
impact of crude oil price changes.

Table 10.4.2.3-1 Total Sensitivity Cost at $110/bbl Crude Oil Price with and without the
Supplemental Standard (year 2021 dollars)		





Total Cost
(million $)

Per-Unit
Cost

Units

2023

Gasoline

83

0.06

cents/gallon gasoline

Diesel Fuel

8,559

15.42

cents/gallon diesel

Natural Gas

92

0.3015

$/K FT3 natural gas

Total

8,734

4.47

cents/gallon gasoline and diesel

2023 with
Suppl. Std.

Gasoline

83

0.06

cents/gallon gasoline

Diesel Fuel

9,080

16.36

cents/gallon diesel

Natural Gas

92

0.3015

$/K FT3 natural gas

Total

9,255

4.74

cents/gallon gasoline and diesel

2024

Gasoline

77

0.06

cents/gallon gasoline

Diesel Fuel

6,461

11.68

cents/gallon diesel

Natural Gas

119

0.3873

$/K FT3 natural gas

Total

6,658

3.41

cents/gallon gasoline and diesel

2025

Gasoline

112

0.08

cents/gallon gasoline

Diesel Fuel

6,156

11.12

cents/gallon diesel

Natural Gas

146

0.4795

$/K FT3 natural gas

Total

6,414

3.30

cents/gallon gasoline and diesel

10.4.3 Costs Relative to the Year 2022 Volumes
10.4.3.1 Volumes

In this section, we summarize the results of our analysis estimating the costs for changes
in the use of renewable fuels relative to the year 2022 renewable fuels volumes estimated to
occur under the 2022 RFS renewable fuel obligation (RVO). This analysis is conducted the same
way as that conducted for the No RFS baseline analysis, with the only difference being the

485


-------
baseline volumes. Table 10.4.3.1-1 summarizes the cost and cost savings of each biofuel fuel
type compared to the fossil fuel it is displacing for the years 2023 to 2025.

Table 10.4.3.1-1: Renewable Fuel and Fossil Fuel Volume Changes Relative to Year 2022

Volumes (million gallons, except where noted)

Change in Renewable Fuel Volume



Change in Fossil Fuel Volume

Fuel Type

2023

2024

2025

Fuel Type

2023

2024

2025

Cellulosic biofuel















CNG - landfill biogas (MMFT3)

6,564

13,570

21,461

Natural Gas

-6,564

-13,570

-21,461

Electricity - Biogas















Naphtha - Wood biomass

0

1

3

Gasoline

0.0

1.3

2.6

Diesel/Jet - Wood biomass

0

2

4

Diesel Fuel

0.0

1.7

3.4

Non-cellulosic adv.















Biodiesel - Soy

-32

-65

-99

Diesel Fuel

-30

-61

-92

Biodiesel -FOG

-11

-11

-11

Diesel Fuel

-11

-11

-11

Biodiesel - Corn Oil

1

1

1

Diesel Fuel

1

1

1

Biodiesel - Canola

-5

-5

-5

Diesel Fuel

-4

-4

-4

Renewable Diesel - Soy

-129

17

24

Diesel Fuel

124

-17

-23

Renewable Diesel - FOG

62

115

174

Diesel Fuel

-60

-110

-167

Renewable Diesel - Corn

11

16

22

Diesel Fuel

-10

-16

-21

Conventional















Ethanol - E10

76

44

-2

Gasoline

-51

-29

1

Ethanol - El5

18

35

47

Gasoline

-12

-23

-32

Ethanol - E85

11

21

31

Gasoline

-7

-14

-21

Renewable Diesel - Palm

-155

-155

-155

Diesel Fuel

144

144

144

Change in Biogas Volume

6,564

13,570

21,461

-

-

-

-

Change in Ethanol Volume

29

100

77

-

-

-

-

Change in Biodiesel Volume

-47

-80

-113

-

-

-

-

Change in Renewable Diesel Volume

-211

-3

72

-

-

-

-

Change in Gasoline Volume

-

-

-

-

-19

-65

-49

Change in Diesel Fuel Volume

-

-

-

-

155

-71

-169

Change in Natural Gas Volume

-

-

-

-

-6,564

-13,570

-21,461

Change in Imported Gasoline









1

2

1

Change in Imported Diesel Fuel









-5

2

5

Total Change in Crude Oil









140

-132

-217

Change in Domestic Crude Oil









1

-1

-1

Change in Imported Crude Oil









140

-131

-216

These volumes would need to be adjusted to account for the supplemental standard which
applies in 2022 and 2023. Since the supplemental volumes applies in 2022, the baseline year for
conducting this cost analysis, 2023 volumes would not change relative to the 2022 baseline
volumes, but the renewable diesel volumes decrease in 2024 and 2025 as summarized the
volumes in Table 10.4.3.1-2.

486


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Table 10.4.3.1-2: Soy Renewable Diesel and Diesel Fuel Volume Changes Relative to Year
2022 Volumes due to the Supplemental Standard (million gallons)	

Change in Renewable Fuel Volume

Change in Petroleum Fuel Volume



2023

2024

2025



2023

2024

2025

Supplemental Std. RD Soy Oil

0

-147

-147

Diesel Fuel

0

-141

-141

10.4.3.2 Costs

Table 10.4.3.2-1 summarizes the component cost (production, distribution, blending,
retail costs, which are costs to enable sale of the renewable fuel) for each biofuel fuel type for
2023 through 2025 compared to the fossil fuel it is assumed to displace.

487


-------
Table 10.4.3.2-1: Renewable Fuel and Petroleum Fuel Costs Relative to Year 2022 Volumes

(million dollars; 2021$)





Renewable Fuel

Petroleum Fuel







Production

Distribution

Blending

Production

Distribution

Total



Cellulosic biofuel















CNG - landfill biogas

51

69

0

-23

-75

23



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

0.0

0.0

0.0

0.0

0.0

0.0



Diesel/Jet - Wood biomass

0.0

0.0

0.0

0.0

0.0

0.0



Non-cellulosic adv.















Biodiesel - Soy

-54

-7

0

21

6

-34



Biodiesel -FOG

5

1

0

-2

-1

3

2023

Biodiesel - Corn Oil

-27

-3

0

9

2

-18

Biodiesel - Canola

0

0

0

0

0

0



Renewable Diesel - Soy

326

36

0

-118

-34

210



Renewable Diesel - FOG

43

6

0

-20

-6

23



Renewable Diesel - Corn

0

0

0

0

0

0



Conventional















Ethanol - E10

148

20

-50

-93

-13

11



Ethanol - E15

35

5

-8

-22

-3

7



Ethanol - E85

21

3

-1

-13

-2

8



Renewable Diesel - Palm

-654

-89

0

284

11

-448



Cellulosic biofuel















CNG - landfill biogas

105

143

0

-43

-154

51



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

9.1

0.6

0.5

4.5

0.3





Diesel/Jet - Wood biomass

11.8

2.0

0.0

5.9

1.0





Non-cellulosic adv.















Biodiesel - Soy

-59

-7

0

22

6

-37



Biodiesel -FOG

5

1

0

-3

-1

3

2024

Biodiesel - Corn Oil

-25

-3

0

9

2

-16

Biodiesel - Canola

0

0

0

0

0

0



Renewable Diesel - Soy

651

66

0

-229

-63

425



Renewable Diesel - FOG

64

9

0

-33

-9

32



Renewable Diesel - Corn

0

0

0

0

0

0



Conventional















Ethanol - E10

83

11

-29

-53

-8

5



Ethanol - E15

65

9

-15

-42

-6

11



Ethanol - E85

40

5

-2

-25

-4

14



Renewable Diesel - Palm

-624

-89

0

300

11

-402



Cellulosic biofuel















CNG - landfill biogas

167

226

0

-64

-244

84



Electricity - Biogas

0

0

0

0

0

0



Naphtha - Wood biomass

9.1

0.6

0.5

-4.7

-0.7

4.8



Diesel/Jet - Wood biomass

11.8

2.0

0.0

-7.0

-1.6

5.2



Non-cellulosic adv.















Biodiesel - Soy

-64

-7

0

22

6

-43



Biodiesel -FOG

5

1

0

-3

-1

2

2025

Biodiesel - Corn Oil

-24

-3

0

9

2

-15

Biodiesel - Canola

0

0

0

0

0

0



Renewable Diesel - Soy

1,070

100

0

-346

-96

727



Renewable Diesel - FOG

84

13

0

-44

-12

40



Renewable Diesel - Corn

0

0

0

0

0

0



Conventional















Ethanol - E10

-3

0

1

2

0

0



Ethanol - E15

88

12

-21

-57

-8

14



Ethanol - E85

58

8

-3

-37

-5

20



Renewable Diesel - Palm

-598

-89

0

300

11

-376

488


-------
The costs are aggregated for each fossil fuel type and costs expressed as per-gallon
gasoline and diesel fuel, and per thousand cubic feet of natural gas, in Table 10.4.3.2-2.

Table 10.4.3.2-2: Total Costs Relative to Year 2022 Volumes (2021$)





Total Cost
(million $)

Per-Unit
Cost

Units

2023

Gasoline

26

0.02

cents/gallon gasoline

Diesel Fuel

-968

-1.74

cents/gallon diesel

Natural Gas

23

0.07

$/K FT3 natural gas

Total

-920

-0.47

cents/gallon gasoline and diesel

2024

Gasoline

33

0.02

cents/gallon gasoline

Diesel Fuel

-150

-0.27

cents/gallon diesel

Natural Gas

51

0.17

$/K FT3 natural gas

Total

-66

-0.03

cents/gallon gasoline and diesel

2025

Gasoline

39

0.03

cents/gallon gasoline

Diesel Fuel

115

0.21

cents/gallon diesel

Natural Gas

84

0.28

$/K FT3 natural gas

Total

238

0.12

cents/gallon gasoline and diesel

The total costs associated with the proposed volumes relative to the 2022 baseline does
not include the supplemental standard which applies in 2022 and 2023. If we include these
supplemental volumes and their associated costs, the total costs after 2023 are adjusted lower
based on the cost figures in Table 10.4.3.2-3 (e.g., 317 million lower cost in 2024).

Table 10.4.3.2-3: Adjustments to the Estimated Total Costs to Account for the
Supplemental Standard (million dollars)		



Renewable Fuel

Fossil Fuel





Production

Distribution

Blending

Production

Distribution

Total

2023

0

0

0

0.1

0.0

-0.1

2024

-592

-84

0

293

67

-317

2025

-567

-84

0

293

67

-293

10.5 Estimated Fuel Price Impacts

In this section we estimate the impact of the use of renewable fuels on the cost to
consumers of transportation fuel and the cost to transport goods. We have estimated cost to
consumers of transportation fuel by assessing the fuel price impacts associated with this
rulemaking. We do so based on the cost of renewable fuels (less available federal tax credits) and
accounting for the cross-subsidy implemented through the RIN system. We have also used
estimates of the fuel price impacts of this rule to estimate the cost to transport goods discussed in
Chapter 10.5.5.

489


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10.5.1 RIN Cost and RIN Value

Before estimating fuel price impacts, we first estimated the RIN cost (i.e., the cost added
to each gallon of petroleum fuel to account for the RIN obligation on the fuel) and RIN value
(i.e., the value of the RINs associated with the renewable fuel in the fuel blend) associated with
producing petroleum and renewable fuels, respectively. Because RIN prices can be impacted by
a wide variety of different factors (including the prices of renewable fuels and petroleum-based
fuels, oil prices, commodity prices, etc.), we are not able to project what RIN prices will be in
the future. We can, however, use the average RIN prices over the last 12 months (through June
2022) as an estimate of future RIN prices, as shown in Table 10.5.1-1.

Table 10.5.1-1: Average RIN Prices (July 2021 - June 2022)





Average
RIN Price



2023

2024

2025

RFS Standard

RIN
Type

(July 2021
-June
2022)

2022
Percentage
Standards

Proposed
Percentage
Standard

Proposed
Percentage
Standard

Proposed
Percentage
Standard

Cellulosic
Biofuel (D3)

D3

$3.06

0.35%

0.41%

0.82%

1.23%

Biomass-Based
Diesel (D4)

D4

$1.52

2.33%

2.54%

2.60%

2.67%

Other













Advanced

D5

$1.54

0.48%

0.38%

0.38%

0.38%

Biofuel3 (D5)













Conventional













Renewable

D6

$1.28

8.57%c

8.73%d

8.75%

8.77%

Fuelb (D6)













a Other advanced biofuel is not a fuel category for which a percentage standard is established, but is calculated by
subtracting the cellulosic biofuel and biomass-based diesel standards from the advanced biofuel standard.
b Conventional renewable fuel is not a fuel category for which a percentage standard is established, but is calculated
by subtracting the advanced biofuel standard from the total renewable fuel standard.
c Includes the 2022 total renewable fuel supplemental standard.
d Includes the 2023 total renewable fuel supplemental standard.

We then calculated the RIN cost for petroleum fuel by weighting the RIN price for each
D code by their respective RFS standard and summing the total. The results are shown in Table
10.5.1-2.

Table 1C

.5.1-2: Estimated R



RIN Cost

Year

($/Gallon)

2022

$0.16

2023

$0.17

2024

$0.18

2025

$0.20

N Costs for Petroleum Fuel for 2023-2025

490


-------
Finally, we calculated RIN values for fuels. For gasoline-ethanol blends, we multiplied
the average D6 RIN price by the ethanol content of each blend (i.e., 10% for E10, 15% for El 5,
and an average ethanol content of 74% for E85). For biodiesel and renewable diesel, we
multiplied the average D4 RIN price by the equivalence value of each fuel (i.e., 1.5 for biodiesel
and 1.7 for renewable diesel). The results are shown in Table 10.5.1-3.

Table 10.5.1-3: Estimated RIN Values for Fuels



RIN Value

Fuel

($/Gallon)

E10

$0.13

E15

$0.19

E85

$0.95

Biodiesel

$2.29

Renewable Diesel

$2.59

10.5.2 Estimated Fuel Price Impacts (Gasoline)

In this section we have estimated the fuel price impacts of the 2023-2025 candidate
volumes on gasoline relative to the No RFS and 2022 baselines. First we estimated the total cost
of gasoline-ethanol blends for the candidate volumes. We began with the production cost for
each fuel,1048 added the RIN cost associated with the gasoline portion of the fuel, and then
subtracted the RIN value associated with the ethanol portion of each fuel, which gave us each
fuel's net cost per gallon. We then multiplied each fuel's net cost by its volume from Table
6.5.2-3. As shown in Tables 10.5.2-1 through 3, we estimate that total gasoline costs would
range from $288-290 billion per year.

Table 10.5.2-1: Gasoliner

"otal Cost - 2023 (Candidate Volumes)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.14

$2.29

RIN Cost ($/gal)

$0.17

$0.15

$0.14

$0.04

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.24

$2.06

$2.09

$1.38

Volume (mil gal)

2,128

136,643

561

353

Total Blend Cost ($bil)

$4.8

$282.0

$1.2

$0.5

Total Cost ($bil)

$288.5

1048 Note that for purposes of this fuel price impacts assessment, we only looked at the cost to produce and distribute
fuel to retail stations for sale to consumers (i.e., we subtracted out of the fuel economy cost for each fuel).

491


-------
Table 10.5.2-2: Gasoline Total Cost - 2024 (Candidate Volumes)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.13

$2.25

RIN Cost ($/gal)

$0.18

$0.16

$0.16

$0.05

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.26

$2.07

$2.09

$1.35

Volume (mil gal)

2,128

136,323

671

367

Total Blend Cost ($bil)

$4.8

$282.4

$1.4

$0.5

Total Cost ($bil)

$289.1

Table 10.5.2-3: Gasoliner

'otal Cost - 2025 (Candidate Volumes)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.03

$2.12

$2.22

RIN Cost ($/gal)

$0.20

$0.18

$0.17

$0.05

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.27

$2.08

$2.10

$1.32

Volume (mil gal)

2,128

135,871

756

381

Total Blend Cost ($bil)

$4.8

$282.6

$1.6

$0.5

Total Cost ($bil)

$289.5

Next we estimated the total cost of gasoline-ethanol blends under the No RFS and 2022
baselines. We began with the production cost for each gasoline-ethanol blend and multiplied by
the volume of each blend under the respective baseline.1049 As shown in Tables 10.5.2-4 through
6, we estimate that total gasoline costs under the No RFS baseline range from $285-288 billion
per year. As shown in Tables 10.5.2-7 through 9, we estimate that total gasoline costs under the
2022 baseline range from $285-286 billion per year.

Table 10.5.2-4: Gasoliner

"otal Cost - 2023 (No RFS Base

ine)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.14

$2.29

Volume (mil gal)

2,128

138,850

0

0

Total Blend Cost ($bil)

$4.4

$283.3

$0.0

$0.0

Total Cost ($bil)

$287.7

1049 For purposes of the No RFS baseline analysis, we assumed that E0 volumes were held constant relative to the
candidate volumes scenario and that there would not be any volumes of El5 or E85. E10 volumes were calculated
by totaling ethanol production for each year from Table 2.1-1 and dividing by 0.1.

492


-------
Table 10.5.2-5: Gasoliner

"otal Cost - 2024 (No RFS Base

ine)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.13

$2.25

Volume (mil gal)

2,128

138,650

0

0

Total Blend Cost ($bil)

$4.4

$282.2

$0.0

$0.0

Total Cost ($bil)

$286.6

Table 10.5.2-6: Gasoliner

"otal Cost - 2025 (No RFS Base

ine)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.03

$2.12

$2.22

Volume (mil gal)

2,128

138,280

0

0

Total Blend Cost ($bil)

$4.4

$280.9

$0.0

$0.0

Total Cost ($bil)

$285.3

Table 10.5.2-7: Gasoliner

otal Cost - 2023 (2022 Baseline)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.14

$2.29

RIN Cost ($/gal)

$0.16

$0.15

$0.15

$0.15

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.24

$2.06

$2.08

$1.38

Volume (mil gal)

2,128

135,972

440

339

Total Blend Cost ($bil)

$4.8

$280.0

$0.9

$0.5

Total Cost ($bil)

$286.1

Table 10.5.2-8: Gasoliner

"otal Cost - 2024 (2022 Baseline)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.13

$2.25

RIN Cost ($/gal)

$0.16

$0.15

$0.14

$0.04

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.24

$2.05

$2.08

$1.35

Volume (mil gal)

2,128

135,972

440

339

Total Blend Cost ($bil)

$4.8

$279.3

$0.9

$0.5

Total Cost ($bil)

$285.5

493


-------
Table 10.5.2-9: Gasoliner

otal Cost - 2025 (2022 Baseline)



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.03

$2.12

$2.22

RIN Cost ($/gal)

$0.16

$0.15

$0.14

$0.04

RIN Value ($/gal)

$0.00

-$0.13

-$0.19

-$0.95

Net Cost ($/gal)

$2.24

$2.05

$2.07

$1.32

Volume (mil gal)

2,128

135,972

440

339

Total Blend Cost ($bil)

$4.8

$278.8

$0.9

$0.4

Total Cost ($bil)

$284.9

Finally, we calculated the fuel price impacts on gasoline by dividing the net cost of
gasoline each year (i.e., the difference between the total cost of gasoline for the candidate
volumes and the total cost of gasoline under the No RFS baseline) by the total volume of
gasoline projected for each year. As shown in Table 10.5.2-10, we estimate that the fuel price
impacts on gasoline under the No RFS baseline range from 0.6—3.1 ct per gallon. As shown in
Table 10.5.2-11, we estimate that the fuel price impacts on gasoline under the 2022 baseline
range from 1.7-3.3C per gallon.

Table 10.5.2-10: Gasoline Fuel Price Impacts (No

?FS Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$288.5

$289.1

$289.5

Total Cost (No RFS) ($bil)

$287.7

$286.6

$285.3

Net Cost ($bil)

$0.8

$2.5

$4.2

Total Volume (bil gal)

139.7

139.5

139.1

Fuel Price Impact (C/gal)

0.6C

1.8C

3.1C

Table 10.5.2-11: Gasoline Fuel Price Impacts (2022 Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$288.5

$289.1

$289.5

Total Cost (2022) ($bil)

$286.1

$285.5

$284.9

Net Cost ($bil)

$2.4

$3.7

$4.6

Total Volume (bil gal)

139.7

139.5

139.1

Fuel Price Impact (C/gal)

1.7C

2.6C

3.3C

10.5.3 Estimated Fuel Price Impacts (Diesel)

In this section we have estimated the fuel price impacts of the 2023-2025 candidate
volumes on diesel relative to the No RFS and 2022 baselines. First we estimated the total cost of
diesel, biodiesel, and renewable diesel for the candidate volumes. We began with the production
cost for each fuel,1050 and then either added the RIN cost (for diesel) or subtracted the RIN value
and tax credit (for biodiesel and renewable diesel) associated with each fuel, which gave us each
fuel's net cost per gallon. We then multiplied each fuel's net cost by its volume from Preamble

1050 Note that for purposes of this fuel price impacts assessment, we only looked at the cost to produce and distribute
fuel to retail stations for sale to consumers (i.e., we subtracted out of the fuel economy cost for each fuel).

494


-------
Table VII.C-l (diesel) or Table 3.1-1 (biodiesel and renewable diesel). As shown in Tables
10.5.3-1 through 3, we estimate that total diesel costs would range from $138-139 billion per
year.

Table 10.5.3-1: Diesel

otal Cost - 2023 (Candidate Volumes)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.60

$5.37

$6.31

$4.98

$5.80

$6.81

RIN Cost ($/gal)

$0.17

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.61

$1.31

$2.08

$3.02

$1.39

$2.21

$3.21

Volume (mil gal)

49,400

207

347

1,167

112

707

1,026

Total Blend Cost ($bil)

$129.0

$0.3

$0.7

$3.5

$0.2

$1.6

$3.3

Total Cost ($bil)

$138.6

Table 10.5.3-2: Diesel

otal Cost - 2024 (Candidate Volumes)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.46

$5.77

$5.99

$4.82

$6.22

$6.45

RIN Cost ($/gal)

$0.18

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.63

$1.17

$2.49

$2.70

$1.22

$2.63

$2.86

Volume (mil gal)

49,250

207

347

1,133

118

760

1,026

Total Blend Cost ($bil)

$129.3

$0.2

$0.9

$3.1

$0.1

$2.0

$2.9

Total Cost ($bil)

$138.6

Table 10.5.3-3: Dieselr

"otal Cost - 2025 (Candidate Volumes)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.33

$6.24

$5.66

$4.67

$6.72

$6.10

RIN Cost ($/gal)

$0.20

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.64

$1.05

$2.96

$2.38

$1.08

$3.12

$2.50

Volume (mil gal)

49,250

207

347

1,100

124

819

1,032

Total Blend Cost ($bil)

$130.0

$0.2

$1.0

$2.6

$0.1

$2.6

$2.6

Total Cost ($bil)

$139.1

Next we estimated the total cost of diesel under the No RFS and 2022 baselines. We
began with the production cost for each fuel and subtracted the tax credit (for biodiesel and
renewable diesel) associated with each fuel, which gave us each fuel's net cost per gallon. We

495


-------
then multiplied each fuel's net cost by its volume under the respective baseline.1051 As shown in
Tables 10.5.3-4 through 6, we estimate that total diesel costs under the No RFS baseline to be
$131 billion per year. As shown in Tables 10.5.3-7 through 9, we estimate that total diesel costs
under the 2022 baseline range from $137-138 billion per year.

Table 10.5.3-4: Diesel

otal Cost - 2023 (No RFS Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.60

$5.37

$6.31

$4.98

$5.80

$6.81

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.44

$3.60

$4.37

$5.31

$3.98

$4.80

$5.81

Volume (mil gal)

51,919

86

147

199

34

438

0

Total Blend Cost ($bil)

$126.9

$0.3

$0.6

$1.1

$0.1

$2.1

$0.0

Total Cost ($bil)

$131.1

Table 10.5.3-5: Diesel

otal Cost - 2024 (No RFS Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.46

$5.77

$5.99

$4.82

$6.22

$6.45

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.44

$3.46

$4.77

$4.99

$3.82

$5.22

$5.45

Volume (mil gal)

51,794

86

147

199

34

438

0

Total Blend Cost ($bil)

$126.5

$0.3

$0.7

$1.0

$0.1

$2.3

$0.0

Total Cost ($bil)

$131.0

Table 10.5.3-6: Diesel

otal Cost - 2025 (No RFS Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.33

$6.24

$5.66

$4.67

$6.72

$6.10

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.44

$3.33

$5.24

$4.66

$3.67

$5.72

$5.10

Volume (mil gal)

51,831

86

147

199

34

438

0

Total Blend Cost ($bil)

$126.6

$0.3

$0.8

$0.9

$0.1

$2.5

$0.0

Total Cost ($bil)

$131.3

i°5i por pUrposes of the No RFS baseline analysis, we assumed that total diesel energy demand was held constant
relative to the candidate volumes scenario in order to calculate petroleum diesel fuel volumes.

496


-------
Table 10.5.3-7: Diesel

otal Cost - 2023 (2022 Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Palm

Cost to Produce ($/gal)

$2.44

$4.60

$5.37

$6.31

$4.98

$5.80

$6.81

$4.79

RIN Cost ($/gal)

$0.16

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.61

$1.31

$2.08

$3.02

$1.39

$2.21

$3.21

$1.20

Volume (mil gal)

49,312

205

358

1,204

101

644

1,008

155

Total Blend Cost ($bil)

$128.5

$0.3

$0.7

$3.6

$0.1

$1.4

$3.2

$0.2

Total Cost ($bil)

$138.2

Table 10.5.3-8: Diesel

otal Cost - 2024 (2022 Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Palm

Cost to Produce ($/gal)

$2.44

$4.46

$5.77

$5.99

$4.82

$6.22

$6.45

$4.60

RIN Cost ($/gal)

$0.16

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.61

$1.17

$2.49

$2.70

$1.22

$2.63

$2.86

$1.01

Volume (mil gal)

49,312

205

358

1,204

101

644

1,008

155

Total Blend Cost ($bil)

$128.5

$0.2

$0.9

$3.3

$0.1

$1.7

$2.9

$0.2

Total Cost ($bil)

$137.8

Table 10.5.3-9: Diesel

otal Cost - 2025 (2022 Baseline)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Palm

Cost to Produce ($/gal)

$2.44

$4.33

$6.24

$5.66

$4.67

$6.72

$6.10

$4.43

RIN Cost ($/gal)

$0.16

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.61

$1.05

$2.96

$2.38

$1.08

$3.12

$2.50

$0.84

Volume (mil gal)

49,312

205

358

1,204

101

644

1,008

155

Total Blend Cost ($bil)

$128.5

$0.2

$1.1

$2.9

$0.1

$2.0

$2.5

$0.1

Total Cost ($bil)

$137.4

Finally, we calculated the fuel price impacts on diesel by dividing the net cost of diesel
each year (i.e., the difference between the total cost of diesel for the candidate volumes and the
total cost of diesel under the No RFS baseline) by the total volume of diesel, biodiesel, and
renewable diesel projected for each year. As shown in Table 10.5.3-10, we estimate that the fuel
price impacts on diesel under the No RFS baseline range from 14.1-14.9C per gallon. As shown
in Table 10.5.3-11, we estimate that the fuel price impacts on diesel under the 2022 baseline
range from 0.8-3.2C per gallon.

497


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Table 10.5.3-10: Diesel Fuel Price Impacts (No R

TS Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$138.6

$138.6

$139.1

Total Cost (No RFS) ($bil)

$131.1

$131.0

$131.3

Net Cost ($bil)

$7.5

$7.6

$7.9

Total Volume (bil gal)

53.0

52.8

52.9

Fuel Price Impact (C/gal)

14.1 (t

14.4C

14.9C

Table 10.5.3-11: Diesel Fuel Price Impacts (2022

Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$138.6

$138.6

$139.1

Total Cost (No RFS) ($bil)

$138.2

$137.8

$137.4

Net Cost ($bil)

$0.4

$0.8

$1.7

Total Volume (bil gal)

53.0

52.8

52.9

Fuel Price Impact (C/gal)

0.8C

1.5C

3.2C

10.5.4 Overall Net Fuel Price Impacts

In this section we have estimated the overall fuel price impacts of the candidate volumes
relative to the No RFS and 2022 baselines by totaling the gasoline and diesel net costs and
dividing by the total volume of gasoline, diesel, biodiesel, and renewable diesel projected for
each year. As shown in Table 10.5.4-1, we estimate the overall fuel price impacts under the No
RFS baseline range from 4.3-6.3C per gallon. As shown in Table 10.5.4-2, we estimate the
overall fuel price impacts under the 2022 baseline range from 1.4-3.3C per gallon.

Table 10.5.4-1: Overall Fuel Price Impacts (No RFS Baseline)



2023

2024

2025

Total Net Cost ($bil)

$8.3

$10.1

$12.1

Total Volume (bil gal)

192.7

192.3

192.0

Fuel Price Impact (C/gal)

4.3C

5.3C

6.3C

Table 10.5.4-2: Overall Fuel

5rice Impacts (2022 Baseline)



2023

2024

2025

Total Net Cost ($bil)

$2.7

$4.4

$6.3

Total Volume (bil gal)

192.7

192.3

192.0

Fuel Price Impact (C/gal)

1.4C

2.3C

3.3C

10.5.5 Fuel Price Impacts of Alternative Scenarios

In previous years a number of stakeholders have raised concerns about the impact of high
RIN prices—particularly D6 RINs—on the price of gasoline and diesel. Because the RFS
program functions as a cross-subsidy—placing an obligation to acquire RINs on producers and
importers of gasoline and diesel while at the same time providing for the generation of tradable
credits (RINs) by producers and importers of renewable fuels—we would not expect that higher
RIN prices would impact the overall cost of transportation fuel. EPA has regularly reviewed the

498


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available market data and has concluded that the RIN and fuels markets are operating as
expected, and that higher RIN prices are not expected to result in higher costs for transportation
fuel.1052

While we do not expect that higher RIN prices would result in an overall increase in the
price of transportation fuel, they can have differing impacts on the price of fuel blends with
different quantities of renewable fuel. In general, higher RIN prices reduce the price of fuel
blends with higher proportions of renewable fuel and increase the price of fuel blends with lower
proportions of renewable fuel.1053 Further, because gasoline is generally blended with renewable
fuel that generates D6 RINs (corn ethanol) and diesel is generally blended with renewable fuel
that generates D4 RINs (biodiesel and renewable diesel), the impact of the RFS program on
gasoline and diesel prices can vary depending on the relative prices of D6 and D4 RINs. Finally,
as discussed in Chapter 1.9.2, because RIN obligations are placed on refiners and importers of
gasoline and diesel, RINs generated for non-liquid transportation fuels can result in transferring
money from the liquid fuels market to other markets. While these transfers do not increase the
price of transportation fuel on the whole, they are expected to increase the price of liquid
transportation fuels such as gasoline and diesel.

In this chapter we provide additional estimates of the impacts of the RFS program on fuel
prices. The first scenario we consider is one in which the advanced biofuel volume requirement
is increased without correspondingly increasing the total renewable fuel volume requirement
such that the implied volume of conventional renewable fuel falls below the E10 blendwall. We
refer to this alternative as the "Below the Blendwall" scenario. In this scenario the price of D6
RINs is expected to be significantly lower than the prices observed in recent years. We then
consider the impact of increasing the cellulosic biofuel volume requirements to account for the
generation of eRINs in 2024 and 2025 on the price of gasoline and diesel. Each of these
scenarios, and the expected impact on RIN prices, is described in more detail below.

10.5.5.1 Below the Blendwall Alternative Scenario

The Below the Blendwall scenario is one in which EPA increases the advanced biofuel
volume requirement without correspondingly increasing the total renewable fuel volume
requirement such that the implied volume of conventional renewable fuel falls below the E10
blendwall. This scenario results in a higher advanced biofuel percentage standard for each year
from 2023-2025, but the percent standards for the other categories of renewable fuel remain the
same. To account for the impact of reducing the implied conventional biofuel volume below the
E10 blendwall, we reduced the D6 RIN price in this scenario to $0.01. The prices for the other
RIN types (D3, D4, and D5) are assumed to be the same in this scenario as in the assessment of
the fuel price impacts of the candidate volumes. As a simplifying assumption, we have assumed
that the same mix of renewable fuels would be used to meet the volume requirements in this
alternative scenario as would be used to meet the candidate volumes. The required percent
standards and RIN prices used for this scenario are shown in Table 10.5.5.1-1. The RIN cost and

1052	EPA recently considered the available market data on the impact of RIN prices on the price of transportation
fuel in the context of the June 2022 Denial of Petitions for RFS Small Refinery Exemptions.

1053	See "A Preliminary Assessment of RIN Market Dynamics, RIN Prices, and Their Effects," memorandum by
Dallas Burkholder, US EPA.

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RIN value for petroleum fuels and fuel blends are shown in Tables 10.5.5.1-2 and 3. The
calculations used to determine the values in these tables are identical to those used in Chapters
10.5.1 for the candidate volumes.

Table 10.5.5.1-1: Average RIN Prices and Percent Standards (Below the Blendwall
Scenario)	









2023

2024

2025

RFS Standard

RIN
Type

RIN Price

2022
Percentage
Standards

Proposed
Percentage
Standard

Proposed
Percentage
Standard

Proposed
Percentage
Standard

Cellulosic
Biofuel (D3)

D3

$3.06

0.35%

0.41%

0.82%

1.23%

Biomass-Based
Diesel (D4)

D4

$1.52

2.33%

2.54%

2.60%

2.67%

Other













Advanced

D5

$1.54

0.48%

1.23%

1.24%

1.26%

Biofuel3 (D5)













Conventional













Renewable

D6

$0.01c

8.57%d

7.88%e

7.89%

7.89%

Fuelb (D6)













a Other advanced biofuel is not a fuel category for which a percentage standard is established, but is calculated by
subtracting the cellulosic biofuel and biomass-based diesel standards from the advanced biofuel standard.
b Conventional renewable fuel is not a fuel category for which a percentage standard is established, but is calculated
by subtracting the advanced biofuel standard from the total renewable fuel standard.

cFor this scenario we assumed that the 2022 D6 RIN price (used for the 2022 baseline) remained at $1.28 (the
average observed D6 RIN price from July 2021 - June 2022).
d Includes the 2022 total renewable fuel supplemental standard.
e Includes the 2023 total renewable fuel supplemental standard.

Table 10.5.5.1-2: Estimated RIN Costs for Petroleum Fuel for 2023-2025 (Below the
Blendwall Scenario)	



RIN Cost

Year

($/Gallon)

2022

$0.16

2023

$0.07

2024

$0.08

2025

$0.10

Table 10.5.5.1-3: Estimated RIN Values for Fuels (Below the Blendwall Scenario)



2022 RIN Value

2023-2025 RIN

Fuel

($/Gallon)

Value ($/Gallon)

E10

$0.13

$0.00

E15

$0.19

$0.00

E85

$0.95

$0.01

Biodiesel

$2.29

$2.29

Renewable Diesel

$2.59

$2.59

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We then estimated the fuel price impacts of the Below the Blendwall scenario on gasoline
relative to the No RFS and 2022 baselines. First we estimated the total cost of gasoline-ethanol
blends under the Below the Blendwall scenario. We began with the production cost for each
fuel,1054 added the RIN cost associated with the gasoline portion of the fuel, and then subtracted
the RIN value associated with the ethanol portion of each fuel, which gave us each fuel's net cost
per gallon. We then multiplied each fuel's net cost by its volume from Table 6.5.2-3. As shown
in Tables 10.5.5.1-4 through 6, we estimate that total gasoline costs would range from $294-295
billion per year.

Table 10.5.5.1-4: Gasoline Total Cost - 2023 (E

lelow the I

tlendwall S



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.14

$2.29

RIN Cost ($/gal)

$0.07

$0.06

$0.06

$0.02

RIN Value ($/gal)

$0.00

$0.00

$0.00

-$0.01

Net Cost ($/gal)

$2.15

$2.10

$2.19

$2.30

Volume (mil gal)

2,128

136,643

561

353

Total Blend Cost ($bil)

$4.6

$287.4

$1.2

$0.8

Total Cost ($bil)

$294.0

Table 10.5.5.1-5: Gasoline Total Cost - 2024 (E

lelow the E

tlendwall S



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.04

$2.13

$2.25

RIN Cost ($/gal)

$0.08

$0.08

$0.07

$0.02

RIN Value ($/gal)

$0.00

$0.00

$0.00

-$0.01

Net Cost ($/gal)

$2.16

$2.11

$2.20

$2.27

Volume (mil gal)

2,128

136,323

671

367

Total Blend Cost ($bil)

$4.6

$287.7

$1.5

$0.8

Total Cost ($bil)

$294.6

Table 10.5.5.1-6: Gasoline Total Cost - 2025 (E

lelow the E

tlendwall S



E0

E10

E15

E85

Cost to Produce ($/gal)

$2.08

$2.03

$2.12

$2.22

RIN Cost ($/gal)

$0.10

$0.09

$0.08

$0.03

RIN Value ($/gal)

$0.00

$0.00

$0.00

-$0.01

Net Cost ($/gal)

$2.17

$2.12

$2.20

$2.24

Volume (mil gal)

2,128

135,871

756

381

Total Blend Cost ($bil)

$4.6

$287.9

$1.7

$0.9

Total Cost ($bil)

$295.0

We then compared the estimated total cost of gasoline in each year to the No RFS and
2022 baselines. The total cost of gasoline for each baseline and year can be found in Tables

1054 Note that for purposes of this fuel price impacts assessment, we only looked at the cost to produce and distribute
fuel to retail stations for sale to consumers (i.e., we subtracted out of the fuel economy cost for each fuel).

501


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10.5.2-4 through 9. Finally, we calculated the fuel price impacts on gasoline by dividing the net
cost of gasoline each year (i.e., the difference between the total cost of gasoline for the Below the
Blendwall scenario and the total cost of gasoline under the No RFS and 2022 baselines) by the
total volume of gasoline projected for each year. As shown in Table 10.5.5.1-7, we estimate that
the fuel price impacts on gasoline under the No RFS baseline range from 4.5-7.0C per gallon. As
shown in Table 10.5.5.1-8, we estimate that the fuel price impacts on gasoline under the 2022
baseline range from 5.6-7.3C per gallon.

Table 10.5.5.1-7: Gasoline Fuel Price Impacts (No RFS Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$294.0

$294.6

$295.0

Total Cost (No RFS) ($bil)

$287.7

$286.6

$285.3

Net Cost ($bil)

$6.3

$8.0

$9.7

Total Volume (bil gal)

139.7

139.5

139.1

Fuel Price Impact (C/gal)

4.5C

5.7C

7.0C

Table 10.5.5.1-8: Gasoline Fuel Price Impacts (2022 Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$294.0

$294.6

$295.0

Total Cost (2022) ($bil)

$286.1

$285.5

$284.9

Net Cost ($bil)

$7.8

$9.1

$10.1

Total Volume (bil gal)

139.7

139.5

139.1

Fuel Price Impact (C/gal)

5.6C

6.6C

7.3C

We next estimated the fuel price impacts of the Below the Blendwall scenario on diesel
relative to the No RFS and 2022 baselines. Similar to our calculations for gasoline, we first
estimated the total cost of diesel, biodiesel, and renewable diesel under the Below the Blendwall
scenario. We began with the production cost for each fuel,1055 and then either added the RIN cost
(for diesel) or subtracted the RIN value and tax credit (for biodiesel and renewable diesel)
associated with each fuel, which gave us each fuel's net cost per gallon. We then multiplied each
fuel's net cost by its volume from Preamble Table VII.C-l (diesel) or Table 3.1-1 (biodiesel and
renewable diesel). As shown in Tables 10.5.5.1-9 through 11, we estimate that total diesel costs
would be $134 billion per year.

i°55 N0je for purposes of this fuel price impacts assessment, we only looked at the cost to produce and distribute
fuel to retail stations for sale to consumers (i.e., we subtracted out of the fuel economy cost for each fuel).

502


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Table 10.5.5.1-9: Diese

Total Cost - 2023 (Below the Blendwall Scenario)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.60

$5.37

$6.31

$4.98

$5.80

$6.81

RIN Cost ($/gal)

$0.07

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.51

$1.31

$2.08

$3.02

$1.39

$2.21

$3.21

Volume (mil gal)

49,400

207

347

1,167

112

707

1,026

Total Blend Cost ($bil)

$124.2

$0.3

$0.7

$3.5

$0.2

$1.6

$3.3

Total Cost ($bil)

$133.7

Table 10.5.5.1-10: Diesel Total Cost - 2024 (Below the Blendwall Scenario)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.46

$5.77

$5.99

$4.82

$6.22

$6.45

RIN Cost ($/gal)

$0.08

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.53

$1.17

$2.49

$2.70

$1.22

$2.63

$2.86

Volume (mil gal)

49,250

207

347

1,133

118

760

1,026

Total Blend Cost ($bil)

$124.5

$0.2

$0.9

$3.1

$0.1

$2.0

$2.9

Total Cost ($bil)

$133.7

Table 10.5.5.1-11: Diesel Total Cost - 2025 (Below the Blendwall Scenario)



Diesel

Biodiesel

Renewable Diesel

Corn

FOG

Soybean

Corn

FOG

Soybean

Cost to Produce ($/gal)

$2.44

$4.33

$6.24

$5.66

$4.67

$6.72

$6.10

RIN Cost ($/gal)

$0.10

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

RIN Value ($/gal)

$0.00

-$2.29

-$2.29

-$2.29

-$2.59

-$2.59

-$2.59

Tax Credit ($/gal)

$0.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

-$1.00

Net Cost ($/gal)

$2.54

$1.05

$2.96

$2.38

$1.08

$3.12

$2.50

Volume (mil gal)

49,250

207

347

1,100

124

819

1,032

Total Blend Cost ($bil)

$125.2

$0.2

$1.0

$2.6

$0.1

$2.6

$2.6

Total Cost ($bil)

$134.3

We then compared the estimated total cost of diesel in each year to the No RFS and 2022
baselines. The total cost of diesel for each baseline and year can be found in Tables 10.5.3-4
through 9. Finally, we calculated the fuel price impacts on diesel by dividing the net cost of
diesel each year (i.e., the difference between the total cost of diesel for the Below the Blendwall
scenario and the total cost of diesel under the No RFS and 2022 baselines) by the total volume of
diesel, biodiesel, and renewable diesel projected for each year. As shown in Table 10.5.5.1-12,
we estimate that the fuel price impacts on diesel under the No RFS baseline range from 5.0-5.8C

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per gallon. As shown in Table 10.5.5.1-13, we estimate that the fuel price impacts on diesel
under the 2022 baseline range from (9.6)—(7.2)(t per gallon.

Table 10.5.5.1-12: Diesel Fuel Price Impacts (No

?FS Base

ine)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$133.7

$133.7

$134.3

Total Cost (No RFS) ($bil)

$131.1

$131.0

$131.3

Net Cost ($bil)

$2.6

$2.8

$3.1

Total Volume (bil gal)

53.0

52.8

52.9

Fuel Price Impact (C/gal)

5.0C

5.3C

5.8C

Table 10.5.5.1-13: Diesel Fuel Price Impacts (2022 Baseline)



2023

2024

2025

Total Cost (candidate volumes) ($/bil)

$133.7

$133.7

$134.3

Total Cost (No RFS) ($bil)

$138.2

$137.8

$137.4

Net Cost ($bil)

-$5.1

-$4.7

-$3.8

Total Volume (bil gal)

53.0

52.8

52.9

Fuel Price Impact (C/gal)

-9.6C

-8.9C

-7.2C

We estimated the overall fuel price impacts of the Below the Blendwall scenario relative
to the No RFS and 2022 baselines by totaling the gasoline and diesel net costs and dividing by
the total volume of gasoline, diesel, biodiesel, and renewable diesel projected for each year. As
shown in Table 10.5.5.1-14, we estimate the overall fuel price impacts under the No RFS
baseline range from 4.6—6.7ct per gallon. As shown in Table 10.5.5.1-15, we estimate the overall
fuel price impacts under the 2022 baseline range from 1.4-3.3C per gallon. We note that the
overall fuel price impacts of the Below the Blendwall scenario are similar to those of the
candidate volumes relative to the No RFS baseline and that the cost impacts of these two
scenarios are identical relative to the 2022 baseline. The relative impacts on gasoline and diesel,
however, are significantly different, with higher price impacts for gasoline and lower price
impacts for diesel under the Below the Blendwall scenario.

Table 10.5.5.1-14: Overall

niel Price Impacts



2023

2024

2025

Total Net Cost ($bil)

$8.9

$10.8

$12.8

Total Volume (bil gal)

192.7

192.3

192.0

Fuel Price Impact (C/gal)

4.6C

5.6C

6.7C

No RFS Baseline)

Table 10.5.5.1-15: Overall Fuel Price Impacts (2

)22 Baseline)



2023

2024

2025

Total Net Cost ($bil)

$2.7

$4.4

$6.3

Total Volume (bil gal)

192.7

192.3

192.0

Fuel Price Impact (C/gal)

1.4C

2.3C

3.3C

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10.5.5.2 Impact of eRINs on Fuel Prices

In this chapter, we consider the impact of the proposed eRIN volumes on the price of
gasoline and diesel, which we believe may be of interest for at least two reasons. First, in this
action we are proposing a regulatory structure to allow for the generation of RINs for electricity
used as transportation fuel for the first time. This would enable the generation of RINs for a new
fuel type that has the potential to generate significant quantities of RINs through 2025 and in
future years. Second, while the value of RINs generated for liquid renewable fuel (e.g., ethanol,
biodiesel, and renewable diesel) represents transfers within the liquid fuel pool and does not
increase the total price of liquid transportation fuel (e.g., gasoline and diesel), the value of eRINs
represents transfers from the liquid fuel pool to other markets, and thus increases the total price
of liquid transportation fuel.

The mechanism through which eRIN volume requirements are expected to impact the
price of gasoline and diesel is through their contribution to the total RIN obligation for each
gallon of gasoline or diesel refined or imported into the U.S. While there is not a separate eRIN
volume obligation, eRINs are expected to represent over half of the available cellulosic RINs by
2025. We can therefore estimate the impact of the eRIN volume requirement (technically the
portion of the cellulosic biofuel volume requirement expected to be met with eRINs) by
considering the volume obligation expected to be met with eRINs and the projected cellulosic
RIN price in each year. The resulting expected fuel price impact on gasoline and diesel is shown
in Table 10.5.5.2-1. Because the same volume obligations apply to both gasoline and diesel, and
the fuel price impact of eRINs is due to its contribution to the volume obligations, the expected
price impact is the same for both gasoline and diesel. Further, because no eRINs would be
generated or required to be used under either the No RFS or 2022 baseline, the expected fuel
price impact of eRINs is the same under either baseline.

Table 10.5.5.2-1: Projected Impact of eRINs on the Price of Gasoline and Diesel



2023

2024

2025

eRIN Volume (mil RINs)

0

600

1,200

Cellulosic (D3) RIN Price (S/RIN)

$3.06

$3.06

$3.06

Total eRIN Price Impact ($bil)

$0.00

$1.84

$3.67

Gasoline and Diesel Volume (bil gal)a

192.7

192.3

192.0

eRIN Price Impact (C/gal)

0.0(t

1.0C

1.9C

a Sum of the projected consumption of all gasoline/ethanol blends (from Table 6.5.2-3), diesel (from Preamble Table
VII.C I), and biodiesel and renewable diesel (from Table 3.1-1).

10.5.6 Cost to Transport Goods

In this chapter we consider the impact of the use of renewable fuels on the cost to
transport goods. Since most goods being transported utilize diesel fuel powered trucks (as
opposed to gasoline or natural gas vehicles), we focus on the impacts on diesel fuel prices.
Reviewing the price estimates in Table 10.5.4-1, the projected price increase for diesel fuel
relative to the No RFS baseline ranged from 14.1C per gallon in 2023 to 14.per gallon in
2025. As a worst case scenario, we will use the projected diesel fuel price increase of 14.per
gallon for estimating the impact on the cost to transport goods.

505


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The impact of fuel price increases on the price of goods is based upon a study conducted
by USDA. USDA analyzed the impact of fuel prices on the wholesale price of produce from
2000 to 2009 when fuel prices ramped up because crude oil prices increased from an average of
$30 per barrel to over $90 per barrel.1056 Their study found that a 100% increase in fuel prices
resulted in a 25% increase in produce prices. Assuming a baseline diesel fuel retail price of
$2.55/gal in 2025 as summarized in Table 10.2.2-1 and adding 60C per gallon state and federal
taxes to it, the projected 14.9
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Chapter 11: Screening Analysis

11.1	Summary

This chapter discusses EPA's screening analysis evaluating the potential impacts of the
RFS standards for 2023, 2024, and 2025 on small entities. The Regulatory Flexibility Act (RFA),
as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA),
generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative Procedure Act or any
other statute, unless the agency certifies that the rule will not have a significant economic impact
on a substantial number of small entities (referred to as a "No SISNOSE finding"). Pursuant to
this requirement, EPA has prepared a screening analysis for this rule.

We conducted the screening analyses by looking at the potential impacts on small entities
and compared the cost-to-sales ratio to a threshold of 1%.1058 Specifically, we compared
obligated parties' cost of compliance (whether they acquire RINs by purchasing renewable fuels
with attached RINs and blending these fuels into transportation fuel or by purchasing separated
RINs) with the ability for the obligated parties to recover these compliance costs through higher
prices for the gasoline and diesel they sell with what would be expected in the absence of the
RFS program. Based on our recent analysis of the data, we have determined that all obligated
parties—including small refiners—fully recover the costs of RFS compliance through higher
sales prices on gasoline and diesel.1059 Given this, the cost-to-sales ratio of this rule is less than
1%. Therefore, EPA finds that these standards would not have a significant economic impact on
a substantial number of small entities.

11.2	Background

11.2.1 Overview of the Regulatory Flexibility Act (RFA)

The RFA was amended by SBREFA to ensure that concerns regarding small entities are
adequately considered during the development of new regulations that affect those entities. The
RFA requires us to carefully consider the economic impacts that our rules may have on small
entities. The elements of the initial regulatory flexibility analysis accompanying a proposed rule
are set forth in 5 U.S.C. § 603, while those of the final regulatory flexibility analysis
accompanying a final rule are set forth in section 604. However, section 605(b) of the statute
provides that EPA need not conduct the section 603 or 604 analyses if we certify that the rule
will not have a significant economic impact on a substantial number of small entities.

1058	A cost-to-sales ratio of 1% represents a typical agency threshold for determining the significance of the
economic impact on small entities. See "Final Guidance for EPA Rulewriters: Regulatory Flexibility Act as
amended by the Small Business Regulatory Enforcement Fairness Act," November 2006.

1059	See "April 2022 Denial of Petitions for RFS Small Refinery Exemptions," EPA-420-R-22-005, April 2022. See
also "June 2022 Denial of Petitions for RFS Small Refinery Exemptions," EPA-420-R-22-011, June 2022.

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11.2.2	Need for the Rulemaking and Rulemaking Objectives

A discussion on the need for and objectives of this action is located in Preamble Section
I. CAA section 211 (o) requires EPA to promulgate regulations implementing the RFS program,
and to annually establish renewable fuel standards that are used by obligated parties to determine
their individual RVOs.

11.2.3	Definition and Description of Small Entities

Small entities include small businesses, small organizations, and small governmental
jurisdictions. For the purposes of assessing the impacts of a rule on small entities, a small entity
is defined as: (1) a small business according to the Small Business Administration's (SBA) size
standards; (2) a small governmental jurisdiction that is a government of a city, county, town,
school district or special district with a population of less than 50,000; or (3) a small organization
that is any not-for-profit enterprise that is independently owned and operated and is not dominant
in its field.

Small businesses (as well as large businesses) would be regulated by this rule, but not
small governmental jurisdictions or small organizations as described above. As set by SBA, the
categories of small entities that would potentially be directly affected by this rulemaking are
described in Table 11.2.3-1.

Table 11.2.3-1: Small Business Definitions

Industry

Defined as small entity by
SBA if less than or equal to:

NAICS3 code

Gasoline and diesel refiners

1,500 employees13

324110

a North American Industrial Classification System.

EPA has included in past fuels rulemakings a provision that, in order to qualify for small refiner flexibilities, a
refiner must also produce no greater than 155,000 barrels per calendar day (bpcd) crude capacity. See 40 CFR
80.1442(a).

EPA used the criteria for small entities developed by SBA under the North American
Industry Classification System (NAICS) as a guide. Information about the characteristics of
refiners comes from sources including EIA, oil industry literature, and previous rules that have
affected the refining industry. In addition, EPA found employment information for companies
meeting the SBA definition of "small entity" using the business information database Hoover's
Inc. (a subsidiary of Dun & Bradstreet). These refiners fall under the Petroleum Refineries
category, 324110, as defined by NAICS.

Small entities that would be subject to this rulemaking include domestic refiners that
produce gasoline and/or diesel. Based on 2022 EIA refinery data,1060 EPA believes that there are
about 35-40 refiners of gasoline and diesel subject to the RFS regulations. Of these, EPA
believes that there are currently 8 refiners (owning 12 refineries) producing gasoline and/or
diesel that meet the small entity definition of having 1,500 employees or fewer.

1060 Data available at https://www.eia.gov/petroleuni/refinerycapacity/archive/2022/refcap2022.php.

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11.2.4 Reporting, Recordkeeping, and Other Compliance Requirements

Registration, reporting, and recordkeeping are necessary to track compliance with the
RFS standards and transactions involving RINs. However, these requirements are already in
place under the existing RFS regulations.1061 While EPA is making revisions to the RFS
requirements in this action, we do not anticipate that there will be any significant cost on directly
regulated small entities.

11.3	Screening Analysis Approach

We believe the most appropriate way to consider the impacts of the 2023-2025 RFS
standards on obligated parties is to compare their cost of compliance with the ability for the
obligated parties to recover these compliance costs through the higher prices for the gasoline and
diesel they sell that result from the market-wide impact of the RFS program. EPA has
determined that while there is a cost to all obligated parties to acquire RINs (including small
refiners), obligated parties recover that cost through the higher sales prices they receive for the
gasoline and diesel they sell due to the market-wide impact of the RFS standards on these
products.1062 EPA has examined available market data and concluded that the costs of
compliance with the RFS program are being passed downstream, as current wholesale gasoline
and diesel prices enable obligated parties to recover the cost of the RINs.1063 When viewed in
light of this data, there is no net cost of compliance with the RFS standards (cost of compliance
with the RFS standards minus the increased revenue due to higher gasoline and diesel prices that
result from implementing the RFS program) to obligated parities, including small refiners. This
is true whether obligated parties acquire RINs by purchasing renewable fuels with attached RINs
or by purchasing separated RINs.

11.4	Cost-to-Sales Ratio Result

The final step in our methodology is to compare the total estimated costs to relevant total
estimated revenue from the sales of gasoline and diesel in the U.S. in 2023-2025. Since the RFS
standards are proportional to the volume of gasoline and diesel produced by each obligated party,
all obligated parties (including small refiners) are expected to experience costs (and recover
those costs) to comply with the RFS standards that are proportional to their sales volumes. As
discussed in Chapter 11.3, all obligated parties—including small refiners—recover their RFS
compliance costs and thus they have no net cost of compliance. Therefore, the cost-to-sales ratio
for all small refiners is 0%.

1061	Prior to issuing our 2009 proposal for the general RFS regulatory program regulations required to implement the
amendments enacted pursuant to EISA, we analyzed the potential impacts on small entities of implementing the full
RFS program through 2022 and convened a Small Business Advocacy Review Panel (SBAR Panel) to assist us in
this evaluation. This information is located in the RFS2 rulemaking docket (Docket ID No. EPA-HQ-OAR-2005-
0161).

1062	For a further discussion of the ability of obligated parties (including small refiners) to recover the cost of RINs,
see "April 2022 Denial of Petitions for RFS Small Refinery Exemption," EPA-420-R-22-005, April 2022 and "June
2022 Denial of Petitions for RFS Small Refinery Exemption," EPA-420-R-22-011, June 2022.

1063

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11.5 Conclusion

Based on our outreach, fact-finding, and analysis of the potential impacts of this rule on
small businesses, we have concluded that there is no net cost to small refiners resulting from the
RFS program. Since obligated parties have been shown to recover their RFS compliance costs
through the resulting higher market prices for their petroleum products, there are no net costs of
the rule on small businesses, resulting in a cost-to-sales ratio of 0.00%.

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