Closer look at EPA's Latest Renewable Fuel Standard

New RFS2 rules will impact what kinds of crops you grow in future.

EPA's Administrator on February 3, 2010, signed another of the unending rules coming out of EPA which will impact all our lives. The 418 page preamble to the rule (http://www.epa.gov/otaq/renewablefuels/rfs2-preamble.pdf) will regulate fuel, fuel additives and make changes to the Renewable Fuel Standard (RFS2). This rule has been controversial in the popular press because greenhouse gas (GHG) emission assessments must be made on the full life cycle of fuels. Corn growers have been particularly critical of this aspect of the rule.

 

The new EPA rule will impact every purchaser of transportation fuel in the country. It may even be beneficial to those of us in production agriculture. The rule "…will specify the volumes of cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that must be used in transportation fuel." This rule will impact the growers of corn, soybeans, wheat, sorghum, and possibly a host of new crops that EPA seeks to encourage being grown.

 

Because of the massiveness of this new rule, you will see a number of articles written about it. I plan to write several upcoming columns to look at the specifics of the preamble and EPA's arguments.

 

To put fuel usage in the United States in perspective, we burn in our transportation vehicles something in the range of 140-144 billion gallons of gasoline a year. We also burn approximately 42-44 billion gallons of diesel fuel annually.

 

Follow the mandates EPA, responding to the requirements of the Energy Independence and Security Act of 2007 (EISA), has issued RFS2 which "…mandates the use of 36 billion gallons of renewable fuel by 2022 – a nearly a five-fold increase over the highest volume…" that had been previously specified by the Energy Policy Act of 2005. EISA requires four separate categories of renewable fuels.  Each renewable fuel has a separate gallon mandate and each fuel must meet a specific life cycle GHG emission requirement. (EPA is going to reduce CO2 emissions whether Congress requires it or not.)

 

The fuel categories you will be reading about and should understand as producers are defined as renewable fuels, advanced biofuel, biomass-based diesel, and cellulosic biofuel. The RSF2 rule will become effective on July 1, 2010.

 

In July, obligated parties - and this means petroleum refineries, ethyl alcohol manufacturers, petroleum bulk stations and terminals, and petroleum and petroleum products merchant wholesalers - will be required to include certain amounts of renewable fuels in the fuels you and I purchase.  An enormous reporting program with severe penalties will be instituted where the obligated parties must demonstrate compliance with renewable volume obligations.

 

EPA will require that our nation's gasoline and diesel in 2010 include 12,950,000,000 gallons of total renewable fuel, 950,000,000 gallons of advanced biofuel, 650,000,000 biomass-based diesel, and 100,000,000 gallons of cellulosic biofuel.

 

Regarding the 100,000,000 gallons for cellulosic biofuels, EPA did have the common sense to check on whether this number of gallons could be produced and found that only about 5,000,000 gallons could be produced. Therefore the 100,000,000 gallon number will not be met. 

 

What constitutes the renewable fuels just described? Renewable fuels include feedstock from planted crops, crop residue, planted trees, tree residue, timber slash, and biomass from wildfire areas. EPA goes on to further define planted crops and crop residue as including "…all annual or perennial agricultural crops that may be used as feedstock for renewable fuel, such as grains, oilseeds, and sugar cane, as well as energy crops, such as switchgrass, prairie grass, and other species..." Renewable fuel, which is basically our ethanol of today, must reduce its GHG emissions by 20% from a 2005 gasoline or diesel baseline. This 20% threshold only applies to renewable fuel from new facilities that commenced construction after December 19, 2007. Facilities not subject to the 20% get an indefinite exemption if they were constructed prior to December 19, 2007.

 

Advanced biofuel is defined as a fuel that is not derived from corn starch, is not ethanol and which has a life cycle GHG emission at least 50% less than the gasoline or diesel fuel it displaces. This biofuel may include ethanol derived from renewable biomass so long as it would meet the 50% GHG emission reduction.

 

Biomass-based diesel includes any diesel fuel made from biomass feedstocks. This fuel must have a reduction of 50% of its GHG emissions from the 2005 diesel baseline.

Cellulosic biofuel must be derived from any cellulose, hemicelluloses or lignon which must originate from renewable biomass and it must have a life cycle reduction of GHGs of at least 60% compared to the gas or diesel fuel it displaces.

 

RFS2, when fully implemented in 2022, will reduce our GHG emissions approximately 138 million metric tons of CO2 per year. To put this in perspective, as a nation, we generate approximately 7 billion tons of CO2 and CO2 equivalents annually.

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