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US Energy Independence and Security Act of 2007 - Renewable Fuel Provisions -. Paul Machiele Fuel Programs Center Director Office of Transportation and Air Quality U.S. Environmental Protection Agency October 2, 2008. Presentation Overview.

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Us energy independence and security act of 2007 renewable fuel provisions

US Energy Independence and Security Act of 2007- Renewable Fuel Provisions -

Paul Machiele

Fuel Programs Center Director

Office of Transportation and Air Quality

U.S. Environmental Protection Agency

October 2, 2008


Presentation overview
Presentation Overview

  • Refresher on Energy Policy Act 2005Renewable Fuel Standard (RFS)

  • Overview of new RFS provisions in Energy Independence and Security Act (EISA)

  • Other Key EISA requirements


Overview: EPAct 2005 RFS Program

  • Final Renewable Fuel Standard (RFS)

    • Required by August 2005 Energy Policy Act

    • Final Rule Signed April 9th, 2007

    • Published May 1st2007

    • Official Program Start - Sept 1, 2007

  • EPA converts RFS into percent of gasoline production

    • Based on annual EIA predictions of gasoline consumption each Oct

    • Obligation Applies to refiners, importers, gasoline blenders

    • 4.0 billion gallons/yr in 2006 -- growing to 7.5 bgy in 2012

    • 2013+: Minimum of same % of renewables for 2012 (0.25 bg must be cellulosic)

  • Major Compliance Element - Trading and Banking Provisions

    • Flexible Program - Based on a RIN – Renewable Identification Number (i.e. credits)

    • Allows for compliance when, where, and how it makes the most sense

  • Renewable values based on volumetric energy content compared to corn ethanol

    • Corn-ethanol: 1.0

    • Biodiesel (alkyl esters): 1.5

    • Cellulosic biomass ethanol: 2.5

      (As specified in EPAct)


Current rfs program up and running
Current RFS Program: Up and Running

  • Extensive educational outreach effort

  • Registration, Recordkeeping, Reporting

  • Program began September 1, 2007

  • Growing pains of implementing a new program are beginning to lessen

  • RINs (Credits) – Market values

    • 0.25 c/gal to 5 +/- c/gal since December signing of EISA


New Challenges and Direction: Energy Independence & Security Act of 2007

  • EISA signed by the President December 19, 2007

  • Major modifications to the current RFS program beginning in 2009

    • Greater volume for 2008

  • RFS 2 – Building off of the foundation of RFS1

  • Rule development process similar to RFS 1

    • Engage early and often with stakeholders throughout the process

  • Final RFS 2 Rule required by December 19, 2008, effective 1/1/09

    • Proposal expected this Fall, FRM next Summer

    • Currently evaluating implementation options


Rfs2 4 nested standards bill gal
RFS2: 4 Nested Standards (bill gal)

* Can be adjusted downward by 10%



Rfs2 obligations and coverage
RFS2 Obligations and Coverage

  • Standard applies to Gasoline and Diesel Fuel production – highway and nonroad

    • Does not apply to jet fuel, marine residuals, heating oil; though renewables used here count

  • Obligation is placed on refiners, importers, blenders of gasoline and diesel

  • Definitions significantly changed from RFS1 and/or now include new elements

    • Lifecycle GHG thresholds

    • Grandfathering provisions

    • New Renewable Biomass definition

  • Each November EPA will set the cellulosic, advanced biofuel, and total renewable standards for the following year based on projections of supply of renewable fuels


Fuel lifecycle ghg assessment
Fuel Lifecycle GHG Assessment

  • Also called fuel cycle or well-to-wheel analysis, compilation of the GHG impacts of a fuel throughout its lifecycle “including direct emissions and significant indirect emissions such as significant emissions from land use changes”

    • Production / extraction of feedstock

    • Feedstock transportation

    • Fuel production

    • Fuel distribution

    • Tailpipe emissions

  • Can be used to compare one or more fuels performing the same function (e.g., miles driven)

  • Using a number of Models / Tools for Assessments of GHG, Ag sector impacts (domestic/international), energy sector impacts, etc.


Further work on life cycle modeling
Further Work on Life Cycle Modeling

  • Conducting LCA for a range of renewable fuels

    • Corn ethanol

    • Biodiesel/Renewable diesel

    • Imported ethanol

    • Cellulosic ethanol

    • Others as data allows

  • Modeling enhancements underway

    • Domestic and international agricultural sector land-use and agricultural practice changes

    • Agricultural N2O emissions

    • Updating petroleum baseline for 2005

    • Updating renewable fuel production process data

  • We continue to have discussions with:

    • Industry groups

    • Academics and other experts

    • CA and EU regulators


Commence construction allowance
“Commence Construction” Allowance

  • Post Enactment facilities must meet minimum 20% GHG reduction

  • Pre-enactment facilities are grandfathered – estimated at >14 bg

    • Including those that start production in calendar years 2008 and 2009, and are fired with natural gas, biomass, or any combination

  • Will seek comment on a range of options based on input from stakeholders

    • Protective of pre-EISA investments

    • Level playing field for future investments

    • Practical implementation


New renewable biomass defn
New Renewable Biomass Defn

  • Renewable fuels must now be produced from renewable biomass:

    • Harvested from land “cleared or cultivated” prior to enactment of EISA

    • For trees, not from Federal lands

  • Implementation of this provision presents some unique challenges

    • Tracking feedstocks nationally and internationally

    • Practical system for implementation

    • Potential for shell game regardless

  • Development of this provision has required extensive stakeholder interaction and coordination with USDA


What Ifs: EISA Waiver Authorities

  • General: Anyone subject to requirements can petition waiver or relaxation of the four standards

    • Severe harm to the economy; Inadequate supply

    • EPA must approve or disapprove within 90 days but requires opportunity for notice and comment

    • Limited to one year, but can be renewed

  • Biomass Based Diesel: EPA can lower the standard in the Act

    • If significant supply or other market circumstances lead to high prices

    • Up to 15% or 30% if renewed

    • Can reduce advanced biofuel and total renewable fuel standards accordingly

  • Cellulosic Biofuel Standard: Irrespective of the volumes required in the Act

    • Administrator must set the cellulosic standard each November for the following year based on projected available volume

    • If cellulosic standard is set less than volume required in Act EPA must make EPA-RINs available for sale at the greater of

      • 25 cent/gallon

      • $3.00 per gallon less the wholesale price of gasoline

    • EPA may reduce the standards for advanced biofuel and total renewable fuel accordingly


Analyses for rulemaking expect this and much more
Analyses for Rulemaking – Expect This and Much More

  • Renewable fuel production and use projections, technology and cost assessments

  • GHG Lifecycle Modeling, Inventory, and Benefits

  • Other Pollutant Inventory, Air Quality and Benefits

  • Agricultural Sector Impacts

  • Water and Soil Impacts

  • Macroeconomic Impacts

  • Energy Security


Next steps on the rule
Next Steps on the Rule

  • Rulemaking process

    • Actively drafting

    • Ongoing discussions with Stakeholders

  • Proposal – Fall of 2008

  • Final – ~Summer 2009



Questions
Questions

Thank youPaul MachieleFuel Program Center DirectorOffice of Transportation and Air Quality [email protected]


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