Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

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4. Expected Growth in Ethanol Consumption As mentioned above, ethanol demand is expected to increase well beyond the levels contained in the renewable fuels standard (RFS) under the Act. With the removal of the oxygenate mandate for reformulated gasoline (RFG) 49 , all U.S. refiners are expected to eliminate the use of MTBE in gasoline as soon as possible. In order to accomplish this transition quickly (by 2006 or 2007 at the latest) while maintaining gasoline volume, octane, and mobile source air toxics emission performance standards, refiners are electing to blend ethanol into virtually all of their RFG. 50 This has caused a dramatic increase in demand for ethanol which, in 2006 is being met by temporarily shifting large volumes of ethanol out of conventional gasoline and into RFG areas. By 2012, however, ethanol production will have grown to accommodate the removal of MTBE without the need for such a shift from conventional gasoline. More important than the removal of MTBE over the long term, however, is the impact that the dramatic rise in the price of crude oil is having on demand for renewable fuels, both ethanol and biodiesel. This has dramatically improved the economics for renewable fuel use, leading to a surge in demand that is expected to continue. In the Annual Energy Outlook (AEO) 2006, EIA forecasted that by 2012, total ethanol use (corn, cellulosic, and imports) would be about 9.6 billion gallons 51 and biodiesel use would be about 0.3 billion gallons at a crude oil price forecast of $47 per barrel. This ethanol projection was not based on what amount the market would demand (which could be higher), but rather on the amount that could be produced by 2012. Others are making similar predictions, and as discussed above in VI.A.2, production capacity would be sufficient. Therefore, in assessing the impacts of expanded use of renewable fuels, we have chosen to evaluate two different future ethanol consumption levels, one reflecting the statutory required minimum, and one reflecting the higher levels projected by EIA. For the statutory consumption scenario we assumed 7.2 billion gallons of ethanol (0.25 of which was assumed to be cellulosic) and 0.3 billion gallons of biodiesel. For the higher projected renewable fuel consumption scenario, we assumed 9.6 billion gallons of ethanol (0.25 of which is once again assumed to be cellulosic) and 0.3 billion gallons of biodiesel. Although the actual renewable fuel volumes consumed in 2012 may differ from both the required and projected volumes, we believe that these two scenarios provide a reasonable range for analysis purposes. 52 In addition to modeling two different future 2012 ethanol consumption levels, two scenarios were considered based on how refineries could potentially respond to the recent removal of the RFG oxygenate mandate. In both cases, the impacted RFG areas did not 49 Energy Act Section 1504, promulgated on May 8, 2006 at 71 FR 26691 50 Based on discussions with the refining industry. 51 AEO 2006 Table 17 Renewable Energy Consumption by Sector and Source shows 0.80 quadrillion BTUs of energy coming from ethanol in 2012. A parallel spreadsheet provided to EPA shows 2012 total ethanol use as 628.7 thousand bbls/day (which works out to be 9.64 billion gallons/yr). 52 As a comparison point for cost and emissions analyses, a 2012 reference case of 3.9 billion gallons of ethanol was also considered. The reference case is described in Section II.A.1 (above) and a complete derivation is contained in DRIA Section 2.1.3. - 126 -
change from the 2004 base case. 53 In the maximum scenario (“max-RFG”), refineries would continue to add oxygenate (ethanol) into all batches of reformulated gasoline. In this case, refineries currently blending MTBE (at 11 volume percent) would be expected to replace it with ethanol (at 10 volume percent). In the minimum scenario (“min-RFG”), we predict some refineries would respond by using less (or even zero) ethanol in RFG based on the minimum amount needed to meet volume, octane, and/or total toxics performance requirements. Applying the max-RFG and min-RFG criteria resulted in a total of four different 2012 ethanol consumption control cases: 1. 7.2 billion gallons of ethanol, maximum amount used in RFG areas; 2. 7.2 billion gallons of ethanol, minimum amount used in RFG areas; 3. 9.6 billion gallons of ethanol, maximum amount used in RFG areas; and 4. 9.6 billion gallons of ethanol, minimum amount used in RFG areas. The seasonal RFG assumptions applied in 2012 (in terms of percent ethanol marketshare) are summarized below in Table VI.A.4-1. The rationale behind these selected values are explained in DRIA Section 2.1.4.2. Table VI.A.4-1 2012 RFG Area Assumptions ETOH-Blended Gasoline (% Market Share) a RFG Areas Summer Winter Summer Winter PADD 1 0% 100% 100% 100% PADD 2 50% 100% 100% 100% PADD 3 0% 25% 100% 100% California b 25% 100% 100% 100% Arizona c Min-RFG Scenario Max-RFG Scenario 0% 100% 100% 100% a Percent marketshare of E10, with the exception of California (E5.7 year-round) and Arizona (E5.7 summer only). b Pertains to both Federal RFG and California Phase 3 RFG c Pertains to Arizona Clean Burning Gasoline (CBG) Once we determined how much ethanol was likely to be used in RFG areas (by PADD), we systematically allocated the remaining ethanol into conventional gasoline. First it was apportioned to winter oxy-fuel areas. In the 2004 base case, there were 14 state-implemented winter oxy-fuel programs in 11 states. Of these programs, 9 were required in response to non-attainment with the CO National Ambient Air Quality Standards (NAAQS) and 4 were implemented to maintain CO attainment status. 54 By 2012, 4 areas are expected to be redesignated to CO attainment status and discontinue oxy-fuel use and 2 areas are predicted to discontinue using oxy-fuel as a maintenance 53 For a list of the Federal RFG areas, refer to DRIA Table 2.2-1. 54 Refer to DRIA Table 2.1-2. - 127 -
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The Administrator signed the follow
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Ave., NW, Washington DC. This Docke
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Table of contents: I. Background A.
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C. Requirements for Producers and I
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G. Executive Order 13045: Protectio
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The increased use of renewable fuel
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establish the applicable national v
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Today's proposal outlines the full
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enewable fuel feedstock market pric
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Unlike VOC and NOx, emissions of CO
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These renewable feedstocks are then
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5. Potential Water Quality Impacts
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enewable fuel volume which each par
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certain volume of renewable fuel. E
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est practices would have the option
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As stated, the renewable fuel stand
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enewable fuel volumes in the calcul
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For illustrative purposes, we have
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These credit provisions have meanin
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Stdi = The RFS program standard for
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gasoline. The Act is unclear on whe
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. Ethanol Made From Any Feedstock I
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generate thermal energy used to pro
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animal wastes, including poultry fa
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limit this program solely to a stra
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presence of the denaturant. For ins
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First, doing so could create an inc
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For purposes of this preamble, the
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capability for all of the small ref
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trading program, without any per ga
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obligated parties. However, there i
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particular importance for 2013 and
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have to significantly change their
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The D code would identify cellulosi
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Another case in which a RIN may not
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Section IV. In the context of demon
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equired volumes shown in Table I.B-
Page 75 and 76: We request comment on the valid lif
Page 77 and 78: e used for current year compliance.
Page 79 and 80: equirements by roughly 10 to 30 per
Page 81 and 82: 4. Provisions For Exporters Of Rene
Page 83 and 84: Previous-year RINs: RINs that came
Page 85 and 86: a. Responsibilities Of Renewable Fu
Page 87 and 88: another, in electronic or paper for
Page 89 and 90: e a one-to-one correspondence betwe
Page 91 and 92: Parent batch Actual volume (gal) Ba
Page 93 and 94: should also have the right to separ
Page 95 and 96: 3. Distribution Of Separated RINs O
Page 97 and 98: obligated parties to exercise marke
Page 99 and 100: Our proposed program is designed to
Page 101 and 102: As discussed in Section III.D, it i
Page 103 and 104: additional enforcement burdens plac
Page 105 and 106: B. Requirements for Obligated Parti
Page 107 and 108: fuel and containing identifying inf
Page 109 and 110: We request comment on our proposed
Page 111 and 112: We also request comment on our prop
Page 113 and 114: The refiner or importer would be li
Page 115 and 116: Plant Feedstock Corn a Table VI.A.1
Page 117 and 118: Leading the Midwest in ethanol prod
Page 119 and 120: EPA forecasts ethanol production to
Page 121 and 122: As shown in Table VI.A.2-1 and Figu
Page 123 and 124: 3. Current Ethanol and MTBE Consump
Page 125: Oxygenate Use (Bgal) 4.5 4.0 3.5 3.
Page 129 and 130: per gallon to biodiesel produced fr
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Page 133 and 134: Modifications to the rail, barge, t
Page 135 and 136: other waste materials as discussed
Page 137 and 138: elatively small fraction of the tot
Page 139 and 140: production costs using prices for s
Page 141 and 142: the capital cost of making the nece
Page 143 and 144: information on biodiesel freight co
Page 145 and 146: For further details on RVP reductio
Page 147 and 148: assuming only that blending of etha
Page 149 and 150: costs). At a $70 per barrel crude o
Page 151 and 152: gasoline use scenarios will cost th
Page 153 and 154: the incentive to blend in ethanol b
Page 155 and 156: supporting this rulemaking. We hope
Page 157 and 158: We base our estimates of fuel quali
Page 159 and 160: Table VIII.A.1.b-2 Effect of MTBE a
Page 161 and 162: pre-1998 model year onroad diesel e
Page 163 and 164: 1. Primary Analysis The national em
Page 165 and 166: Table VIII.B.1-4 Annual Emissions N
Page 167 and 168: RFG due to the absence of an RVP wa
Page 169 and 170: increase in ambient ozone levels is
Page 171 and 172: developing a model of secondary org
Page 173 and 174: IX. Impacts On Fossil Fuel Consumpt
Page 175 and 176: intended to help fuel producers est
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efficiency and to reduce air emissi
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combined those displacement indexes
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3. Displacement Indexes (DI) The di
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Table IX.C.1-1 Fossil fuel impacts
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as on the exports of agricultural p
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which may change in response to an
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X. Agricultural Sector Economic Imp
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XI. Public Participation We request
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ways to comply with any previously
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small refiner under this proposal.
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meet these criteria to be considere
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“economically significant” as d
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40 CFR Part 80 is proposed to be am
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(b) Renewable Fuel Standard for 200
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(2) The term “Renewable fuel” i
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RFStdi = Renewable Fuel Standard in
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a party’s renewable volume obliga
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(a) YYYY is the calendar year in wh
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(ii) The value for EEEEEE in an ext
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(2) A deficit is calculated accordi
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(a) (1) Any party that exports any
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(e) If a refiner is complying on an
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calendar year; however, disqualific
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§80.76, if such information has no
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(1) A summary report of the annual
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(4) Reports shall be submitted on f
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(1) Fail to acquire sufficient RINs
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(b) The following attest procedures
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(B) That the RFS-FRGAS remained seg
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EPA employees or EPA contractors, f
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(iv) Determine the date and time th
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(ii) Be licensed as a Certified Pub
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