Beveridge & Diamond
 
Related Practices
Related Practices

EPA Issues Final Renewable Fuel Standard Regulations

Beveridge & Diamond, P.C., February 5, 2010

The U.S. Environmental Protection Agency (“EPA”) finalized its long-awaited regulations under the federal Renewable Fuel Standard (“RFS”) program on February 3, 2010.  Required by the Energy Independence and Security Act of 2007 (“EISA”) to have the new rules in place by December 19, 2008, EPA’s proposal was delayed in large part due to the complexity of adding new greenhouse gas (“GHG”) emission lifecycle assessments to the eligibility determination for renewable fuels.

Significantly, EPA has now determined that corn-based ethanol produced at facilities using certain “advanced” technologies will meet the minimum GHG reduction threshold requirements for renewable fuels under the RFS.  The Agency’s original proposal had described two possible options for assessing GHG emission impacts over varying time periods, and suggested that corn ethanol might in many circumstances be associated with increased GHG emissions when compared to petroleum gasoline.  (For more information about EPA’s 2008 proposal, see Beveridge & Diamond, “EPA Proposes New Renewable Fuel Standard Regulation Using Lifecycle Greenhouse Gas Analysis,” available here.)  EPA’s final regulations confirm that corn-based ethanol can meet the RFS program’s eligibility requirements for renewable fuels.  

A pre-publication version of EPA’s regulations, along with the Agency’s 418-page regulatory preamble, are available on the Agency’s website at: http://www.epa.gov/OMS/renewablefuels/.  For more information about the new regulations, or fuel or climate change regulation more generally, please contact Stephen Richmond at srichmond@bdlaw.com or Alan Sachs at asachs@bdlaw.com.  For a printable PDF of this article, please click here.

A.        General Requirements of the RFS Program

The RFS program mandates that EPA set annual benchmarks representing the amount of renewable fuel that must be used by each fuel refiner, blender, or importer (“obligated parties”). Initiated in 2007, the RFS also established a trading market in renewable fuel credits, known as Renewable Identification Numbers (“RINs”), and includes registration, recordkeeping and reporting requirements for obligated parties as well as all renewable fuel producers.

Among other changes, EPA’s new regulations set the national RFS volume standard for 2010 at 12.95 billion gallons, which means that 8.25 percent of every obligated party’s gasoline and diesel volume this year must be renewable fuel.  As required by EISA, EPA has also for the first time set volume standards for specific categories of “advanced” renewable fuels --  including cellulosic fuels and biomass-based diesel -- as components of the overall volume requirement. 

B.        New GHG Lifecycle Emission Analysis

In order to qualify as a renewable fuel under the RFS, fuels must now demonstrate that they meet certain minimum GHG reduction standards when compared to the petroleum fuels they displace, based on a lifecycle assessment.  Under the EISA, EPA was required to evaluate the aggregate quantity of GHG emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes) related to a fuel product’s full lifecycle, which includes all stages of fuel and feedstock production, distribution and use by the ultimate consumer.  

In EPA’s final analysis, fuels derived from cellulosic materials – as well as soy-based biodiesel, biodiesel made from waste grease, oils, and fats, and sugarcane-based ethanol – will all meet or exceed the required GHG reduction standards.  In addition, corn-based ethanol produced by facilities using specified technologies to increase efficiency will also meet the minimum 20 percent GHG emissions reduction threshold set for renewable fuels under the RFS.  According to EPA’s modeling, corn-based ethanol achieves a 21 percent GHG reduction compared to gasoline when indirect land use change is included as a factor. 

This finding reflects several significant revisions to the Agency’s proposed modeling, which allowed EPA to reduce its estimated lifecycle GHG emissions for ethanol.  It also marks a notable departure from California’s recently adopted Low Carbon Fuel Standard (“LCFS”), which concluded that most corn-based ethanol will have a “carbon intensity” that is comparable to — or even higher — than the threshold emissions baseline for gasoline.  California’s regulations are now subject to two lawsuits, the first brought by the renewable fuel industry along with state and local farm groups, and a second filed more recently by refiners, petrochemical manufacturers, and the trucking industry.  For more information about California’s LCFS requirements, please click here.

C.        Additional Federal and Regional Renewable Fuel Initiatives in the United States

EPA announced its new regulations on February 3, 2010 in conjunction with a number of other new federal initiatives related to renewable fuels:

  • The U.S. Department of Agriculture (“USDA”) proposed a new Biomass Crop Assistance Program (“BCAP”), which will provide financial incentives to farmers, ranchers and forest landowners who invest in and produce biomass for energy and other purposes;
  • The newly established Biofuels Interagency Working Group – comprised of participants from EPA, USDA, and the U.S. Department of Energy (“DOE”) – released its first report, laying out a strategy to advance the development and commercialization of a sustainable biofuels industry; and
  • President Obama established a new interagency task force on Carbon, Capture and Sequestration (“CCS”), a technology that seeks to collect and sequester GHGs released during the burning of coal and sequester.

Separately, 11 Northeast and Mid-Atlantic states — the ten members of the Regional Greenhouse Gas Initiative (“RGGI”), as well as Pennsylvania — are committing themselves to the development of their own low carbon fuel standard. The RGGI states signed a Memorandum of Understanding on December 30, 2009, agreeing to include indirect land use changes in their evaluation of lifecycle carbon intensities similar to California’s and planning to develop a proposed framework by early 2011. While the agreement doesn’t set forth specific carbon intensity targets, it expresses a commitment to “monitor” low carbon fuel standards in other states and may very well be shaped both by EPA’s new regulations and the California LCFS. A similar regional low carbon fuel standard is also under consideration by Midwestern states. 

Overview

News

Presentations

Media Contact





Attorney Contacts
Attorney Contacts