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Diesel Emission Reduction Programs

Diesel Emission Reduction Programs. DERA National RFP Opened April 30, closes June 10 Emphasis on non-attainment and NATA areas Roughly $1.3 million for Region 4, $300k to $1 million SEDC priorities now in regional priorities DERA Tribal RFP Opened May 14, closes July 15 $1 million

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Diesel Emission Reduction Programs

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  1. Diesel Emission Reduction Programs • DERA National RFP • Opened April 30, closes June 10 • Emphasis on non-attainment and NATA areas • Roughly $1.3 million for Region 4, $300k to $1 million • SEDC priorities now in regional priorities • DERA Tribal RFP • Opened May 14, closes July 15 • $1 million • Ports Initiative • High priority topic at the national, regional level • SEDC 10thAnnual Partners meeting • August 17-19

  2. Overview: U.S. Renewable Fuels Program Region 4 Air Directors Meeting Spring, 2015 Dale Aspy

  3. History Goals: Energy Security, Reduce mobile GHG emissions, rural development • Energy Policy Act of 2005 – Established the first RFS Program Standards • Energy Independence and security act of 2007 modified the clean Air act and significantly changed the program • National Standard but with 4 categories of renewable fuels • Significantly increased volumes of • renewable fuel – to 36 billion gallons • 2022 Full Implementation • Expanded to on and off-road gasoline and diesel • Explicit definitions for renewable fuels to qualify • Inclusion of specific types of waivers • Legislation allows renewable fuels used in Home Heating Oil and Jet Fuel to count towards RFS2 program

  4. 2007 EISA RFS2 Program - Key Aspects • Established Specific Volume Standards for Renewable Fuel Use in the Transportation Sector – Gasoline and Diesel; On and Off-Road • Establishes four categories of renewable fuels - each With individual volume standards: • cellulosic biofuel • biomass-based diesel • advanced biofuel • total renewable fuel • Set specific qualification requirements for renewable fuels and feedstocks • Definitions for qualifying fuels & feedstocks Used to comply with the categories • Specifically defines cellulosic, biomass-based diesel, etc. • Set minimum lifecycle GHG reduction thresholds for each category of renewable fuel • Applies restrictions on types of feedstocks that can be used to make renewable fuel, and types of land that can be used to grow and harvest feedstocks • Established grandfathering allowances for renewable volumes from certain Existing facilities • The RFS2 Regulations went into effect July 1, 2010.

  5. Details of EISA Categories and Standards • Four Separate Standards • Biomass-Based Diesel: Minimum of 1 Bgal by 2012 and beyond • E.g., Biodiesel, “renewable diesel” if fats and oils not co-processed with petroleum • Must meet a 50% lifecycle GHG reductionthreshold • Cellulosic Biofuel: Minimum of 16 Bgal by 2022 • Renewable fuel produced from cellulose, hemicellulose, or lignin • E.g., cellulosic ethanol, BTL diesel, green gasoline, etc. • Must meet a 60% lifecycle GHG reduction threshold Total Advanced Biofuel: Minimum of 21 Bgal by 2022 (Minimum of 4 billion additional Total Advanced Biofuel • Essentially anything but corn starch ethanol • Includes cellulosic biofuels and biomass-based diesel • Must meet a 50% lifecycle GHG reduction threshold • Total Renewable Biofuel: 36 Bgal by 2022 (Minimum of 15 Bgal additional) • Ethanol derived from corn starch – or any other qualifying renewable fuel • Must meet 20% lifecycle GHG reduction threshold - Only applies to fuel produced in new facilities • Lifecycle GHG reduction comparisons are based on a 2005 petroleum baseline as mandated by EISA. • NOTE: Existing biofuel facilities (domestic and foreign) are not required to meet GHG threshold for conventional biofuel category – facilities are “Grandfathered.”

  6. Simplified Process Flow Chart Approved Feedstock Provider Biorefinery : Renewable Fuel Production and RIN Generation with D Code and Equivalence Value Supply Transportation Obligated Parties: Refiner, Blender, Importer -- Blending Facility Compliance

  7. Who do the standards apply to and how are the standards determined? • Obligated Parties are Refiners, blenders or importers of gasoline or diesel • How are Obligations Determined? • Obligations are calculated every year, based on EISA volume standards and projections of gasoline and diesel production for the coming year. • A formula is used based on the above information to calculate the Renewable Volume Obligations (RVO) • The standards are converted into a percentage which each obligated party must demonstrate compliance with each year (Renewable Volume Obligation)

  8. Renewable Identification Numbers (RINs). • RINs generated on or after July 1, 2010 shall not be generated as a 38-digit code, but shall be identified by the information specified in paragraphs (a) through (i) of this section and introduced into EMTS as data elements during the generation of RINs pursuant to §80.1452(b). For RINs generated prior to July 1, 2010, each RIN is a 38-digit code of the following form: • KYYYYCCCCFFFFFBBBBBRRD • SSSSSSSSEEEEEEEE

  9. D codes • (1) D has the value of 3 to denote fuel categorized as cellulosic biofuel. • (2) D has the value of 4 to denote fuel categorized as biomass-based diesel. • (3) D has the value of 5 to denote fuel categorized as advanced biofuel. • (4) D has the value of 6 to denote fuel categorized as renewable fuel. • (5) D has the value of 7 to denote fuel categorized as cellulosic diesel.

  10. “D” Production Requirements

  11. Compliance Basics of RFS2 • RINs are the currency of the RFS2 program – used for compliance • RINS are generated by renewable fuel producer • Obligated parties must obtain enough RINS in each category to comply • Trade, buy, produce, bank • Types of Fuels are assigned a D Code – determined by EISA definition, restrictions, GHG evaluation, energy calculation • RINs follow product volume • RIN separation from volume may only be performed by an obligated party • RIN credits have a two year life –year generated, plus one year • Program continues to be supplemented by recordkeeping and attest requirements

  12. Compliance Basics of RFS2 RINs That Can Be Used To Meet Each Standard In RFS2 • A renewable fuel may have different pathways and different equivalency values • Example: • Ethanol from Corn = D Code of 6 (Renewable Fuel) • Ethanol from Sugarcane = D code of 5 (Advanced Renewable)RIN Equivalency Values (Examples) • Ethanol is Baseline Value - all other renewable fuels are compared with ethanol) : • Ethanol: 1.0 • Biodiesel: 1.5; 1.6 • Butanol: 1.3 • Non-ester renewable diesel: 1.7

  13. Blenders Renewable Production / Import RIN Generator Registration EPA Screening Fail Marketers Pass Traders Obligated Parties Other RIN Owners Producers Importers ■ = Attached RIN ■ = Separated RIN Overview: Compliance System • EPA Moderated Transaction System (EMTS): • A closed, EPA-managed system that provides: 1) a mechanism for screening and 2) a means for tracking RIN credits • Screening process checks that the information provided by the RIN generator is consistent with an existing registration • RIN tracking process is similar to a banking system. • Accounts are assigned to registered users. • Transactions are conducted through EMTS which enforces business rules – e.g. a seller must have a sufficient account balance for a buyer to receive their credits.

  14. Setting the EISA RFS2 Standards Each Year • EPA Sets EISA Standards Every Year • Based on projected gasoline / diesel projections • Formula used per regulations to determine the 4 obligations in terms of a percentage of production and EISA volume standards applied for each category • Proposal – Setting Following Year RFS2 Volume Standards • EISA Volumes converted into percent of gasoline and diesel production expected for following year • Standards that apply to refiners, importers, gasoline blenders • Cellulosic standard set based on EIA projections, our market assessment and info through notice and comment • Biomass-Based Diesel Standared EPA must determine the applicable volume of biomass-based diesel at least 14 months prior to the year in which the volume will be required. • Beginning in 2013 • Final Standards --- November 30th by Law

  15. Setting the standards-Key Facts and Goals • 2014 brought a number of new issues that EPA must consider in setting the standards • A key issue is the ethanol “blendwall” – challenges associated with supplying more ethanol to the market than can be provided through blending up to 10% ethanol in gasoline (E10) and can be consumed in other blends or forms • In 2014 – for the first time, EPA is proposed adjustments to the total renewable fuel and advanced biofuel standards to address these market issues • EPA provided a strong indication that this would likely be the case when the Final 2013 RFS Rule was issued last August • EPA’s intention was to put the RFS program on a manageable trajectory that will support continued growth in renewable fuels

  16. Ethanol Blendwall

  17. Proposal for 2014 • The 2014 rulemaking proposed volume requirements for the RFS program outlined a potential path forward for 2014 and beyond • The proposal, issued November 2013, was the starting point in seeking input from the public • EPA held a public hearing December 2013 • Comment period closed at the end of February 2014 • The proposal offered a number of approaches and ranges of volumes in setting the 2014 standards • Stakeholders weighed with well over 300,000 comments • 2014 Standards still haven’t been finalized. • Agency announced last December intention to take action on 2014, 2015 and 2016 this year. • First Action likely in Spring with intention on getting back on schedule for setting current and future annual standards.

  18. Consent Decree • The American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) filed suit over the delays in the Agency issuing the annual standards by the Statutory required dates • April 10: EPA announced a proposed settlement with API and AFPM over deadlines for issuing The standards • EPA must seek public comment on the terms of the settlement for 30 days before deciding whether to proceed with the settlement and seek entry of the consent decree • Under the proposed consent decree EPA would issue final annual volume standards for both 2014 and 2015 • EPA must propose volume requirements for 2015 by June 1, 2015 and; • finalize 2014 and 2015 Standards (and resolve pending waiver petition for 2014) by November 30, 2015. • While not required Under the Proposed Consent decree, EPA also announced the volume standards rule will include the following elements in addition to the requirements of the consent decree: • re-propose volume requirements for 2014 that reflect the volumes of renewable fuel that were actually used in 2014. • finalize standards for 2016 in same action • EPA will also propose and finalize biomass-based diesel volume requirement for 2017

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