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The Renewable Fuels Standard: The Renewable Fuels Standard: A Status ReportA Status Report

Dr. Michael ShelbyDr. Michael Shelby

EPA’s Office of Transportation and Air QualityEPA’s Office of Transportation and Air Quality

March 7March 7thth

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The RFS – The RFS – The Program BasicsThe Program Basics

Section 1501 of the Energy Policy Act (EPAct) of 2005 requires EPA Section 1501 of the Energy Policy Act (EPAct) of 2005 requires EPA to establish a program to ensure that the pool of gasoline sold in the to establish a program to ensure that the pool of gasoline sold in the contiguous 48 states of the U.S. contains specific volumes of contiguous 48 states of the U.S. contains specific volumes of renewable fuel renewable fuel

2006: 4.0 billion gallons/yr2006: 4.0 billion gallons/yr 2007: 4.72007: 4.7 2008: 5.42008: 5.4 2009: 6.12009: 6.1 2010: 6.82010: 6.8 2011: 7.42011: 7.4 2012: 7.52012: 7.5 2013+: Same percent of renewables for 2012 (0.25 billion gallon of 2013+: Same percent of renewables for 2012 (0.25 billion gallon of

which must be cellulosic ethanol)which must be cellulosic ethanol)

Each year EPA must convert RFS into percent of gasoline Each year EPA must convert RFS into percent of gasoline production standards that apply to refiners, importers, gasoline production standards that apply to refiners, importers, gasoline blendersblenders

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Relative Value of Relative Value of Different RenewablesDifferent Renewables

Under EPAct, EPA is required to establish an “…appropriate Under EPAct, EPA is required to establish an “…appropriate amount of credit” for biodiesel, and to provide for “…an appropriate amount of credit” for biodiesel, and to provide for “…an appropriate amount of credit” for using more renewable fuels than are required amount of credit” for using more renewable fuels than are required to meet the RFSto meet the RFS

EPAct also specified that 1 gallon of cellulosic ethanol counts as 2.5 EPAct also specified that 1 gallon of cellulosic ethanol counts as 2.5 gallons for RFS compliance purposesgallons for RFS compliance purposes

EPA proposed (September 22, 2006) to base the “Equivalence EPA proposed (September 22, 2006) to base the “Equivalence Value” or credit for other renewables on volumetric energy content Value” or credit for other renewables on volumetric energy content in comparison to ethanol (adjusted for renewable content):in comparison to ethanol (adjusted for renewable content): Corn-ethanol: Corn-ethanol: 1.01.0 Cellulosic biomass ethanol: Cellulosic biomass ethanol: 2.52.5 Biodiesel (alkyl esters): Biodiesel (alkyl esters): 1.51.5 Renewable diesel: Renewable diesel: 1.71.7 Biobutanol: Biobutanol: 1.31.3

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Demand for Ethanol In Marketplace Demand for Ethanol In Marketplace Outpacing RFS RequirementOutpacing RFS Requirement

0

2

4

6

8

10

12

14

16

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

Eth

an

ol

Us

e (

Bg

al)

Per RFS Per AEO 2006 Per AEO 2007 Assum ing 100% E10

76% of all Gasoline @ E10

If 100% of all Gasoline is E10

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Not Pictured

AK: 0% ETOH

HI: 100% ETOH

DC: 100% ETOH

What The Country May Look Like in 2009What The Country May Look Like in 20099.6 Bgal Ethanol

100% E10

<10% E10

10-50% E10

50-100% E10

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Emissions & Air Quality*Emissions & Air Quality*

NationwideNationwide Localized maximumLocalized maximum

COCO 1.3 - 3.6% decrease1.3 - 3.6% decrease N/AN/A

BenzeneBenzene 1.7 - 6.2% decrease1.7 - 6.2% decrease N/AN/A

NOx + VOCNOx + VOC 0.5 - 1.0% increase0.5 - 1.0% increase 3 - 6% increase 3 - 6% increase (Summer)(Summer)

OzoneOzone ~ 0.1 ppb increase~ 0.1 ppb increase 0.1 - 0.2 ppb increase0.1 - 0.2 ppb increase

Impacts will vary by region, since renewable fuel use Impacts will vary by region, since renewable fuel use varies significantlyvaries significantly

* Incremental Impacts in 2012 compared to 2004 Reference Case* Incremental Impacts in 2012 compared to 2004 Reference Case

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Lifecycle GHG Analysis:Lifecycle GHG Analysis: MethodologyMethodology

Using the Using the GGreenhouse gases, reenhouse gases, RRegulated egulated EEmissions, and missions, and EEnergy use in nergy use in TTransportation (GREET) model developed ransportation (GREET) model developed by Argonne National Laboratory to estimate by Argonne National Laboratory to estimate the GHG impacts of replacing a gallon of the GHG impacts of replacing a gallon of conventional fuel with an energy-equivalent conventional fuel with an energy-equivalent gallon of renewable fuelgallon of renewable fuel

We combine GREET results with estimates We combine GREET results with estimates of lifecycle inventories of GHGs and fossil of lifecycle inventories of GHGs and fossil fuel consumption for the transportation fuel consumption for the transportation sector to estimate the GHG impacts of RFS sector to estimate the GHG impacts of RFS

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GHG Percent Reductions*GHG Percent Reductions*

* The use of 1 Btu of corn-ethanol instead of 1 Btu of gasoline reduces the lifecycle GHG emissions by 25.8%

   Corn EthanolCorn Ethanol Cellulosic EthanolCellulosic Ethanol BiodieselBiodiesel

Fossil FuelFossil Fuel 40.1%40.1% 96.0%96.0% 47.9%47.9%

PetroleumPetroleum 92.3%92.3% 92.7%92.7% 84.6%84.6%

COCO22 43.9%43.9% 110.1%110.1% 56.8%56.8%

GHGGHG 25.8%25.8% 98.1%98.1% 53.4%53.4%

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Energy and COEnergy and CO22**

Petroleum consumption in the transportation Petroleum consumption in the transportation sector will be reduced 1.0 - 1.6%sector will be reduced 1.0 - 1.6% Equivalent to 2.3 - 3.9 billion gallon of petroleum in Equivalent to 2.3 - 3.9 billion gallon of petroleum in

2012 2012 ~95% of the reduction is estimated to be from oil ~95% of the reduction is estimated to be from oil

importsimports

Transportation sector greenhouse gases (COTransportation sector greenhouse gases (CO2 2

equivalent) will be reduced by 0.4 - 0.6%equivalent) will be reduced by 0.4 - 0.6% Equivalent to 9 - 14 million tons in 2012Equivalent to 9 - 14 million tons in 2012

* Incremental Impacts in 2012 compared to 2004 Reference Case* Incremental Impacts in 2012 compared to 2004 Reference Case

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Costs of Renewable FuelsCosts of Renewable Fuels

Increase in the use of renewable fuels is Increase in the use of renewable fuels is expected to add 0.3 - 1c/gal to the cost of expected to add 0.3 - 1c/gal to the cost of gasoline for the nation as a whole (at gasoline for the nation as a whole (at $47/bbl crude)*$47/bbl crude)*

EthanolEthanol $1.30 - 1.36 per gallon$1.30 - 1.36 per gallon

BiodieselBiodiesel $2.00 - 2.22 per gallon$2.00 - 2.22 per gallon

Production & Distribution Costs

* Incremental Impacts in 2012 compared to 2004 Reference Case* Incremental Impacts in 2012 compared to 2004 Reference Case

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New Analyses for Final RuleNew Analyses for Final Rule

Rule is being developed on accelerated Rule is being developed on accelerated scheduleschedule

Not enough time before proposal to Not enough time before proposal to undertake a full suite of analyses of the undertake a full suite of analyses of the impacts of the RFSimpacts of the RFS

In RFS Proposal, EPA committed to In RFS Proposal, EPA committed to undertake two additional sets of analyses:undertake two additional sets of analyses: Examine the impacts of the wider use of Examine the impacts of the wider use of

renewable fuels on the U.S. agricultural sectorrenewable fuels on the U.S. agricultural sector Examine the energy security implications of the Examine the energy security implications of the

use of renewable fuels use of renewable fuels

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Ag Sector AnalysisAg Sector Analysis

Using the Forest and Agriculture Sector Using the Forest and Agriculture Sector Optimization (FASOM) model Optimization (FASOM) model developed by Dr. Bruce McCarl of developed by Dr. Bruce McCarl of Texas A&MTexas A&M

Evaluating impacts of the RFS on Evaluating impacts of the RFS on changes in crop commodity prices and changes in crop commodity prices and usage patterns, net U.S. farm income, usage patterns, net U.S. farm income, fertilizer use, and changes in land use fertilizer use, and changes in land use patternspatterns

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Energy Security AnalysisEnergy Security Analysis

EPA is using Oak Ridge National EPA is using Oak Ridge National Laboratory (ORNL) to estimate the energy Laboratory (ORNL) to estimate the energy security implications of the wider use of security implications of the wider use of renewable fuelsrenewable fuels

ORNL energy security methodology used ORNL energy security methodology used in the DOT NHTSA CAFE Standard for in the DOT NHTSA CAFE Standard for Light Trucks Model Year 2007-2011, which Light Trucks Model Year 2007-2011, which was finalized in 2006was finalized in 2006

NHTSA estimates based on ORNL 1997 NHTSA estimates based on ORNL 1997 study; EPA updating same methodology study; EPA updating same methodology using AEO 2006 projected fuel market using AEO 2006 projected fuel market estimatesestimates

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What’s Next?What’s Next?

RFS Rule likely to go final soonRFS Rule likely to go final soon The President has called for an The President has called for an

expansion of the RFS programexpansion of the RFS program 35 billion gallons of renewable and 35 billion gallons of renewable and

alternative fuels by 2017 alternative fuels by 2017 Part of the “20/10” program – a 20% Part of the “20/10” program – a 20%

reduction in U.S. gasoline usage within reduction in U.S. gasoline usage within 10 years from now (in 2017)10 years from now (in 2017)

Stay tuned for moreStay tuned for more