WASHINGTON, DC, August 7, 2013 (ENS) – At least 16.55 billion gallons of renewable fuels must be blended into the U.S. fuel supply – a 9.74 percent blend – under the final 2013 overall volumes and standards newly set by the U.S. Environmental Protection Agency.

On Tuesday, the EPA established the volume requirements and associated percentage standards that apply in calendar year 2013 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. Because cellulosic ethanol production cannot meet the amount required by law, the EPA has reduced that requirement.

This projection reflects EPA’s estimate of what will actually happen in 2013 based on consultation with the Energy Information Administration, information from industry, public comments and the agency’s own assessment.

The annual renewable fuel volume targets are part of the Renewable Fuel Standard program established by Congress in 2005 and updated in 2007 with the Energy Independence and Security Act.

These targets are set to steadily increase to an overall level of 36 billion gallons in 2022.

To achieve these volumes, EPA calculates a percentage-based standard for each year. Based on that standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

The 2013 standard specifically requires:

•           Biomass-based diesel (1.28 billion gallons; 1.13 percent)
•           Advanced biofuels (2.75 billion gallons; 1.62 percent)
•           Cellulosic biofuels (6.00 million gallons; 0.004 percent)

All volumes are ethanol-equivalent, except for biomass-based diesel, which is actual volume.

E85

Sheriff in Huron County, Michigan fuels his patrol car with E85, a blend that is 85 percent ethanol. (Photo courtesy Propel Fuels)

These standards apply to all gasoline and diesel produced or imported in 2013. They reflect EPA’s updated production projections, which are informed by engagement with industry and an assessment of the biofuels market.

The feedstocks for these biofuels are produced by American farmers and growers and help reduce the carbon emissions that contribute to climate change.

“As producers of the feedstock that accounts for more than half of all domestic biodiesel production, we are very pleased with today’s announcement,” said ASA President Danny Murphy, a soybean farmer from Canton, Mississippi. “The updated volumes for 2013 will allow the promising growth of the biodiesel industry to continue unhindered, and we appreciate Administrator [Gina] McCarthy and the EPA’s work to see that through.”

There are two problems with the volume requirements, according to the EPA.

In one case, too much corn ethanol is being produced for the market to absorb, and in the other, too little cellulosic ethanol is being produced to meet the legally required volune.

EPA recognizes that “[corn-based] ethanol will likely continue to predominate the renewable fuel pool in the near future, and that for 2014 the ability of the market to consume ethanol in higher blends such as E85 is highly constrained as a result of infrastructure- and market-related factors,” the agency states in the rule.

EPA does not believe the market could consume enough ethanol sold in blends greater than E10, which is 10 percent ethanol, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by law for 2014.

During the 2013 rulemaking, EPA received comments from a number of stakeholders concerning the “E10 blend wall.”

Projected to occur in 2014, the “E10 blend wall” refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10. Most gasoline sold in the U.S. today is E10.

EPA said that it will propose using flexibilities in the Renewable Fuel Standard law to reduce both the advanced biofuel and total renewable volumes in the 2014 RFS volume requirement proposal.

In the case of cellulosic ethanol, technical challenges have slowed development of the industry. When Congress introduced the cellulosic biofuel requirement in 2007, there was no commercial-scale production.

Still, Congress mandated cellulosic biofuel sales in the United States of 100 million gallons in 2010, 250 million in 2011, and half a billion in 2012 – all in ethanol-equivalent gallons.

A January 2013 ruling by the U.S. Court of Appeals vacated the cellulosic standard, and required the EPA to re-evaluate projections for cellulosic biofuel to reflect market conditions.

The final 2013 standard for cellulosic biofuel announced today “was developed in a manner consistent with the approach outlined in that ruling,” the EPA said in a statement.

The appellate court ruled that EPA must set the cellulosic ethanol standard at a volume that is “reasonably achievable” based on the information available at the time.

The agency said, “We expect that in preparing the 2014 proposed rule, EPA will estimate the available supply of cellulosic biofuel and advanced biofuel volumes, assess the ethanol blendwall and current infrastructure and market-based limitations to the consumption of ethanol in gasoline-ethanol blends above E10, and then propose to establish volume requirements that are reasonably attainable in light of these considerations and others as appropriate.”

Compliance with the Renewable Fuel Standard is implemented through the use of tradable credits called Renewable Identification Numbers, or RINs, each of which corresponds to a gallon of renewable fuel produced in or imported into the United States in a given year. The EPA estimates sufficient RINs exist in the market to make it work in 2013.

EPA also announced it has denied two petitions for reconsideration of the 2013 biomass-based diesel standard of 1.28 billion gallons. These appeals were submitted by petroleum groups in late November 2012, raising a number of issues, including the impact of the 2012 drought and concerns about fraudulent RINs. The EPA determined that the petitions failed to meet the requirements for reconsideration under the Clean Air Act.

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