EPA Proposes Rules for Renewable Fuel Requirements
September 13, 2006
The U.S. Environmental Protection Agency (EPA) proposed rules on September 7th for a national program requiring increasing levels of renewable fuels production over the next six years. The Renewable Fuels Standard (RFS) Program, authorized by the Energy Policy Act of 2005, requires 4.7 billion gallons of biofuels production in 2007, increasing gradually to 7.5 billion gallons in 2012. To meet that requirement, the new regulation proposes that 3.71 percent of all the gasoline sold or dispensed to U.S. motorists in 2007 be renewable fuel. The rule contains compliance tools and a credit and trading system that is integral to the overall program. The system allows renewable fuels to be used where they are most economical, while providing a flexible means for industry to comply with the standard. See the links to the EPA press release, proposed rules, and a related fact sheet on the RFS Program Web site.
The RFS Program is designed to cut petroleum use by approximately 3.9 billion gallons a year in 2012 and reduce greenhouse gas emissions by up to 14 million tons annually. But as noted in the August 30th edition of this newsletter, the ethanol fuel industry is already on track to far exceed the requirements of the RFS, with an existing capacity to produce 4.8 billion gallons of ethanol per year and facilities under construction that will boost that capacity to 7.6 billion gallons of ethanol. Unless the industry experiences a downturn and some production capacity goes uncompleted or unused, the ethanol fuel industry should easily exceed the RFS requirements.
Editor's postscript: The EPA proposed rules for the RFS were published in the September 22nd edition of the Federal Register. A public hearing will be held in Chicago on October 13th. Public comments are due by November 12th. See the official publication of the proposed rules.