Grainnet

Mead, NE--Enivronmental Protection Agency Administrator Stephen Johnson announced Thursday, Sept. 7, the proposed rule for the implementation of the Renewable Fuels Standard (RFS) at the E3 Biofuels complex in Mead, NE.

The RFS provision in last year’s Energy Policy Act requiring increasing amounts of ethanol and biodiesel to be used through 2012.

"For years, our nation's rolling farm fields have filled America's breadbaskets. Now, by helping meet President Bush's renewable energy goals, these same fields are filling America's gas tanks," Johnson said.

"Under President Bush's leadership, EPA is working with our partners in agriculture and industry to produce solutions that are good for our energy security, good for our environment, and good for the American people."

For a copy of the proposal, see the EPA link below.

A national RFS will expand the use of biodiesel and ethanol, creating new markets for farm products and greater energy security.

Advanced technologies under development could make it possible to produce renewable ethanol from agricultural and industrial waste at a cost competitive with today's gas prices.

"The Renewable Fuels Standard recognizes the value of home-grown energy, and it supports our rural roots by investing in bio-fuels," said Gov. Dave Heineman of Nebraska.

"It also increases ethanol and biodiesel use and is the first step toward America's energy future."

The new regulation proposes that 3.71 percent of all the gasoline sold or dispensed to U.S. motorists in 2007 be renewable fuel.

Last December, EPA issued a rule implementing the Energy Policy Act's default standard of 2.78 percent for 2006, which will continue to apply through this calendar year.

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.

In addition to preliminary analyses of the economic and environmental impacts, the proposed regulation explains how industry is likely to comply with the RFS for 2007 and beyond.

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.

Various renewable fuels can be used to meet the requirements of RFS program, including ethanol and biodiesel.

While the RFS program provides the certainty that a minimum amount of renewable fuel will be used in the United States; more can be used if fuel producers and blenders choose to do so.

In 2006, there will be about 4.5 billion gallons of renewable fuel consumed as motor vehicle fuel in the United States.

The RFS program requires that this volume increase to at least 7.5 billion gallons by 2012.

Industry Comments

Brian Jennings, American Coalition for Ethanol (ACE) Executive Vice President, made the following statement:

“The enactment of the Renewable Fuels Standard is the single most significant step forward that Congress has taken in decades to secure our nation’s energy independence," he said.

"The RFS is crucial to the future growth and success of the U.S. ethanol industry, and it is imperative that the proposed rule be simple yet enforceable."

Congress intended for the RFS to be an annual program requiring blenders and others to meet annual obligations for biofuels use.

An issue of key importance to ACE members is whether the proposed rule is consistent with the letter and spirit of the law with respect to credit trading.

If not designed correctly, the RFS credit trading mechanism may permit an excessive number of credits or gallons to roll over from one year to another, thereby reducing biofuels demand and undermining the effectiveness and intent of the RFS program.

It is critically important to prevent a proliferation of an unlimited number of credits.

ACE looks forward to reviewing the proposed rule and offering substantive comments in the future.

"We very much appreciate the willingness of the EPA to consider our views on this extremely important rule, and we look forward to working with them on the implementation of the RFS," said Jennings.

The ultimate test of the program’s effectiveness will be whether it ensures the minimum renewable fuels demand levels set forth by Congress are indeed met, he said.

“The RFS was a watershed moment for the U.S. ethanol industry. It has created the fastest growing energy sector anywhere on the planet,” said Renewable Fuels Association President Bob Dinneen.

“The success of the RFS is critical to the continued growth of the U.S. ethanol industry. I want to commend the commitment and dedication of Administrator Johnson, EPA staff and the Bush Administration to getting this program fully implemented as quickly as possible.”

Oil refiners will be allowed to accrue credits for blending more ethanol than required that can then be traded or sold to other refiners who have chosen not to blend the required amounts for whatever reason.

This provision was critical to securing the final compromise that led to the passage of the RFS.

“EPA has worked diligently with all stakeholders, including the RFA, to create a credit trading mechanism that provides oil refiners the flexibility they need while honoring congressional intent to expand the use of renewable fuels,” said Dinneen.

“We look forward to reviewing this rule in detail and offering comments in the coming weeks.

"The success of this program is paramount to the future of America’s renewable fuels industry and setting our nation on a path toward greater energy independence.”

See Related Websites/Articles:

• American Coalition for Ethanol
• RFS Regulations - Complete Report

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