EPA releases proposed rulemaking for RFS2

By Erin Voegele
Posted May 7, 2009, at 9:13 a.m. CST

The U.S. EPA released its proposed rulemaking for the second stage of the renewable fuels standard (RFS2) on May 5. The proposed rulemaking lays out the agency's strategy for increasing the supply of renewable fuels as mandated by the Energy Independence & Security act of 2007, which requires the production of 36 gallons of renewable fuels by 2022.

The agency was originally scheduled to issue its final ruling on RFS2 on January 1. However, in July 2008 the EPA announced that due to the inclusion of new elements that add complexity to the program, a final ruling on the matter would not be issued until mid-2009.

The proposed rulemaking for RFS2 expands the scope of the program to include all transportation fuels, which includes gasoline and diesel fuel intended for use in highway vehicles and engines, and nonroad locomotive and marine engines. Similar to RFS1, the EPA is proposing that these provisions apply to refiners, blenders and importers of transportation fuel, and that the percentage standards apply to the total amount of gasoline and diesel they produce for each use.

Under EISA, the proposed rulemaking establishes four categories of renewable fuels, including:
� Cellulosic biofuels;
� Biomass-based diesel;
� Advanced biofuels; and
� Total renewable fuel

In 2022, the proposed rulemaking would require:
� 16 billion gallons of cellulosic biofuels;
� 15 billion gallons annually of conventional biofuels;
� 4 billion gallons of advanced biofuels; and
� 1 billion gallons of biomass-based diesel

The proposed rulemaking for RFS2 requires that some renewable fuels must achieve greenhouse gas (GHG) emissions reductions compared with the gasoline and diesel fuels they displace. In order to receive credit toward meeting the new standards, refiners must meet these requirements. For each fuel pathway, the proposed rulemaking takes into account GHG emissions produced over the full life cycle of the fuel. This includes production and transport of the feedstock, land-use change, production, distribution, blending of the renewable fuel and use. The resulting life-cycle GHG emission level is then compared with the life-cycle GHG emissions of 2005 petroleum baseline fuels that are displaced by the renewable fuel. In order for renewable fuels to quality for RFS2, they must meet or exceed the minimum GHG reduction thresholds.

The thresholds for the four categories of renewable fuels are as follows:
� 20 percent less GHG emissions for renewable fuels produced from new facilities;
� 50 percent less for biomass-based diesel;
� 50 percent less for advanced biofuels; and
� 60 percent less for cellulosic biofuels

According to EPA, the process to determine life-cycle GHG emissions combines a suite of peer-reviewed process models and peer-reviewed economic models of the domestic and international agricultural sectors to determine direct and significant indirect emissions. The analysis uses economic models to determine the area and location of cropland conversions that occur in each country as a result of the RFS, as well as satellite data that is used to predict the type of land that could be converted into cropland. While the EPA's results suggest land-use changes produce significant near-term results, the agency's draft also suggests that the displacement of petroleum-based fuels with biofuels in later years can pay back earlier land-use impacts. The EPA highlights two options for taking this factor into account. One option is to assume a 30-year time period for assessing future GHG emissions impacts, which values all emissions impacts equally (0 percent discount rate); the other is to assess emissions impacts over a 100-year time period and discount future emissions at 2 percent annually.

The 60-day comment period on this proposal will begin upon publication in the Federal Register. EPA will hold a public workshop on life-cycle analysis during the comment period in order to assure full understanding of the analyses conducted, the issues addressed and the options that are discussed.