EPA proposes RFS implementation plan

By | October 13, 2006
The renewable fuels industry has been busy preparing comments for the U.S. EPA since the agency proposed a renewable fuels standard (RFS) implementation plan Sept. 7. Established by last fall's Energy Policy Act of 2005, the RFS creates a floor of 7.5 billion gallons of renewable fuel use in the United States by 2012.

In addition to preliminary analyses of the economic and environmental impacts, the EPA's proposed plan explains how the industry is likely to comply with the RFS for 2007 and beyond. It proposes that the blending standard for 2007 be at 3.71 percent.

"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," said a statement from the EPA. The rule contains compliance tools, and a credit and trading system, which would require a renewable identification number (RIN) to be issued with each shipment of biofuel. Blenders would have the option of using the RIN for their own compliance or trading it to others. Any party that produces gasoline for consumption in the United States would be subject to a renewable volume obligation. Each year, obligated parties-including refiners, importers and blenders-must acquire enough RINs to demonstrate compliance with their RFS obligation.

The credit-trading program permits renewable fuels that are not blended into gasoline, such as biodiesel and biogas, to participate in the RFS program. Biodiesel would be given 1.5 credits for every one credit issued for corn ethanol. "We were happy with that," noted Scott Hughes, director of governmental affairs for the National Biodiesel Board (NBB). "We're still going through and assessing [the proposal], but in our cursory review, the credit-trading program should hopefully be a friendly process."

Hughes said the NBB has a working group to evaluate the proposal and submit comments by the Nov. 12 deadline. NBB members can provide feedback to the board or directly to the EPA, which will then issue a final rule in early 2007.

Before the implementation plan was released, fuels were required to be blended at the default standard of 2.78 percent, or about 4 billion gallons, in 2006. Actual blending equaled about 4.5 billion gallons, according to the EPA. The 2006 standard will remain applicable through the end of the year.
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