[Federal Register: February 14, 2008 (Volume 73, Number 31)]
[Notices]
[Page 8665-8667]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14fe08-59]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-8528-9]
Revised Renewable Fuel Standard for 2008, Issued Pursuant to
Section 211(o) of the Clean Air Act as Amended by the Energy
Independence and Security Act of 2007
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
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SUMMARY: Section 211(o) of the Clean Air Act (CAA or the Act), as
amended by the Energy Independence and Security Act of 2007 (EISA),
requires the Administrator of the Environmental Protection Agency (EPA)
to annually determine a renewable fuel standard (RFS) which is
applicable to refiners, importers and certain blenders of gasoline, and
publish the standard in the Federal Register. On the basis of this
standard, each obligated party determines the volume of renewable fuel
that it must ensure is consumed as motor vehicle fuel. This standard is
calculated as a percentage, by dividing the amount of renewable fuel
that the Act requires to be blended into gasoline for a given year by
the amount of gasoline expected to be used during that year, including
certain adjustments specified by the Act. In this notice we are
publishing an RFS 7.76% for 2008. This standard is intended to lead to
the use of 9 billion gallons of renewable fuel in 2008, as required by
amended section 211(o). This standard supersedes the 2008 RFS that EPA
published on November 27, 2007, before enactment of the EISA.
FOR FURTHER INFORMATION CONTACT: Chris McKenna, Environmental
Protection Agency, MC 6406J, 1200 Pennsylvania Ave., NW., Washington,
DC 20460; telephone number: 202-343-9037; fax number: 202-343-2801; E-
mail address: mckenna.chris@epa.gov.
SUPPLEMENTARY INFORMATION:
I. Calculation of 2008 RFS
A. Background
On November 27, 2007, EPA published a Notice in the Federal
Register announcing a renewable fuel standard for 2008 of 4.66%. This
standard was designed to result in the use of 5.4 billion gallons of
renewable fuel in 2008, as required by CAA section 211(o) at the time
EPA published the standard. On December 19, 2007, President Bush signed
into law the Energy Independence and Security Act of 2007 (EISA),
which, among other things, amended CAA section 211(o) to
[[Page 8666]]
require the use of 9.0 billion gallons of renewable fuel in 2008.
Today's Notice announces the recalculated standard for 2008, based on
the volume of renewable fuel that amended section 211(o) now requires.
In today's Notice we are using the calculational procedure set
forth in the final rulemaking for the Renewable Fuel Standard Program,
as we did in the November 27, 2007, Notice. The formula includes a
variable representing the volume of renewable fuel required by section
211(o), and EPA is today using that formula with the renewable fuel
volume for 2008 required by the EISA amendments to section 211(o) to
recalculate the RFS for 2008. Since the RFS rule establishes clear
legal criteria for deriving the standard (including specification of
the formula used in today's Notice, and all data sources), EPA is
simply applying facts to pre-established law in issuing the re-
calculated final 2008 RFS. EPA is advising the regulated community of
the revised standard through a Federal Register Notice, without prior
notice and comment, in accordance with the Clean Air Act and EPA
regulations.
The 2008 RFS is calculated by dividing the volume of renewable
fuels required by CAA section 211(o) to be blended into gasoline in
2008, by the volume of gasoline projected by the Energy Information
Administration (EIA) to be consumed in 2008 (including certain
adjustments specified by the Act). The following equation from the
final RFS Program regulations summarizes all of the variables that must
be considered in the calculation.
[GRAPHIC] [TIFF OMITTED] TN14FE08.003
Where
RFStdi= Renewable Fuel Standard in year i, in percent.
RFVi=Annual volume of renewable fuels required by section
211(o)(2)(B) of the Act for year i, in gallons.
Gi=Amount of gasoline projected to be used in the 48
contiguous states, in year i, in gallons.
Ri=Amount of renewable fuel blended into gasoline that is
projected to be consumed in the 48 contiguous states, in year i, in
gallons.
GSi= Amount of gasoline projected to be used in Alaska,
Hawaii, or a U.S. territory in year i if the state or territory
opts-in, in gallons.
RSi= Amount of renewable fuel blended into gasoline that
is projected to be consumed in Alaska, Hawaii, or a U.S. territory
in year i if the state or territory opts-in, in gallons.
GEi= Amount of gasoline projected to be produced by
exempt small refineries and small refiners in year i, in gallons
(through 2010 only unless exemption extended under
Sec. Sec. 211(o)(9)(A)(ii) or (B)).
Celli= Beginning in 2013, amount of renewable fuel that
is required to come from cellulosic sources, in year i, in gallons
(250,000,000 gallons minimum).
EISA section 210(a)(1) also states that, ``For calendar year 2008,
transportation fuel sold or introduced into commerce in the United
States (except in noncontiguous States or territories), that is
produced from facilities that commence construction after the date of
enactment of this Act shall be treated as renewable fuel within the
meaning of section 211(o) of the Clean Air Act only if it achieves at
least a 20 percent reduction in lifecycle greenhouse gas emissions
compared to baseline lifecycle greenhouse gas emissions.'' EISA further
provides that for 2008 and 2009, any ethanol plant that is fired with
natural gas, biomass or any combination thereof is deemed to be in
compliance with the 20 percent lifecycle greenhouse gas reduction
requirement. Based on the text of this section, which is not an
amendment to section 211(o) of the CAA and is not covered by the
rulemaking provision in EISA section 202(a)(1) (amending section
211(o)(2)(A)(i)), EPA believes that these 2008 requirements are self-
implementing, and therefore immediately effective. EPA intends to
address the meaning of the term ``commence construction'', and also
address what transportation fuels other than ethanol from a facility
fired by natural gas, biomass or some combination of the two satisfy
the 20 percent lifecycle greenhouse gas reduction requirement, in the
context of a proposed rule designed to implement the EISA amendments to
the RFS program. EPA further notes, however, that is unlikely that any
facilities for the production of transportation fuel that commence
construction following enactment of EISA will be operational during
2008. Therefore, the 20 percent lifecycle greenhouse gas reduction
requirement is unlikely to have a real-world impact for 2008.
While EISA requires a substantial change in the 2008 RFS, we
believe that the required renewable production capacity will come on
line this year. In addition, at current oil prices, we would expect it
to be economic to use the volume of renewable fuel required by EISA for
2008. We also believe RINS generated in excess of the 2007 RFS can be
applied to the 2008 RFS to provide additional flexibility to the fuel
supply market. However, we recognize that in the short term there may
be some catching-up required for the distribution infrastructure to
deliver the required volume of renewable fuel.
B. Data Sources for 2008 RFS Calculation
The following discussion describes the sources of data for the
variables in the above equation. For ease of calculation, this
discussion regroups the terms (Gi-Ri) +
(GSi-RSi) in the denominator of the above
equation into the terms (Gi + GSi)-(Ri
+ RSi).
Calculation of (RFVi-Celli), Total Amount of
Renewable Fuels From Non-Cellulosic Sources That Must Be Blended Into
Gasoline in 2008
The EISA amended CAA section 211(o) to require 9.0 billion gallons
of renewable fuels to be blended into gasoline in 2008. Since the
amended CAA section 211(o) does not include a cellulosic volume
requirement until 2013, the amount of renewable fuel required to be
produced from cellulosic sources in 2008 (Celli) remains,
zero. Thus the total amount of renewable fuels from non-cellulosic
sources that must be blended into gasoline in 2008 is 9.0 billion
gallons.
Calculation of (Gi + GSi), total amount of
gasoline projected to be used in the 48 contiguous states plus opt-in
states/territories, in year i, in gallons
CAA section 211(o) requires the Administrator of the EIA by October
31 of each year to provide EPA with an estimate of the volumes of
gasoline projected to be sold or introduced into commerce in the United
States for the following year. During the development of the RFS
Program, EIA informed EPA that the projected gasoline consumption in
``Table 4a: U.S. Petroleum Supply, Consumption, and Inventories''
(formerly ``Table 5a. U.S. Petroleum Supply and Demand: Base Case'') of
the October issue of the monthly Short-Term Energy Outlook (STEO)
should be
[[Page 8667]]
used to calculate the RFS for the coming year. The October 2007 STEO
projects that an average of 9.42 million barrels/day of gasoline will
be consumed in all of the United States in 2008. Multiplying this
average consumption rate by 366 days (2008 is a leap year) produces a
total consumption of 144.80 billion gallons of gasoline in 2008.
Only one non-contiguous state or territory has petitioned EPA to
opt into the RFS Program beginning in 2008. Hawaii petitioned EPA on
June 22, 2007 to opt into the RFS program, and EPA approved their
request.\1\ Thus, Alaska is the only one of the 50 states that is not
included in the RFS Program.
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\1\ Letter to the Honorable Linda Lingle, Governor of Hawaii,
from Stephen Johnson of EPA dated July 30, 2007.
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In order to calculate gasoline consumption in the 48 contiguous
states plus Hawaii, we subtracted Alaska's projected gasoline
consumption from the projected nationwide gasoline consumption of
144.80 billion gallons. Alaska's projected gasoline consumption was
calculated by multiplying the projected nationwide gasoline consumption
in 2008 by the ratio of Alaska's gasoline consumption in 2006 to the
total U.S. consumption in 2006, based on Table 48, ``Prime Supplier
Sales Volumes of Motor Gasoline by Grade Formulation, PAD District, and
State'' gasoline data from EIA's Petroleum Marketing Annual 2006 (the
final rulemaking used data from Petroleum Marketing Annual 2005).
According to EIA, Prime Supplier data reflects where gasoline is used,
rather than where it is produced.\2\ Alaska's projected gasoline
consumption in 2008 is 0.30 billion gallons. Subtracting this
consumption from the projected nationwide consumption of 144.80 billion
gallons in 2008 produces a total consumption of 144.50 billion gallons
of gasoline in 2008 in the 48 contiguous states plus Hawaii.
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\2\ Energy Information Administration, Petroleum Marketing
Annual 2006, Explanatory Notes, Relationship of Refiner and Prime
Supplier Sales Volumes'' (p. 382).
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Calculation of (Ri + RSi, total amount of
renewable fuel blended into gasoline that is projected to be consumed
in the 48 contiguous states plus opt-in states/territories, in year i,
in gallons
The projected gasoline consumption in the October 2007 STEO
includes renewable fuel that is blended into gasoline. This volume of
renewable fuel must be subtracted from the total volume of gasoline in
order to calculate the total consumption of non-renewable gasoline. In
Table 8 of the October 2007 STEO, EIA estimates that 0.755 quadrillion
Btu of ethanol will be used as transportation fuel in all of the United
States in 2008. Dividing this energy usage by the high heating value of
ethanol (3.539 million Btu/barrel), and multiplying by 42 gallons/
barrel produces a total ethanol usage of 8.96 billion gallons
nationwide in 2008.
Since Hawaii has opted in, but Alaska has not opted in, to the RFS
program for 2008, Alaska's renewable fuels consumption must be
subtracted from the nationwide renewable fuels consumption to calculate
renewable consumption in the 48 contiguous states plus Hawaii. In
Chapter 2 of the Regulatory Impact analysis for the RFS program
rulemaking, EPA estimated that ethanol consumption in Alaska would be
negligible prior to 2012. Thus, we project renewable fuels consumption
in the 48 contiguous states plus Hawaii to be 8.96 billion gallons in
2008.\3\ For purposes of recalculating the 2008 RFS, we will round this
value to 9.0 billion gallons, which is equivalent to the volume of
renewable fuel required by amended section 211(o) for 2008.
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\3\ Table 2.2-21 ``2012 Forecasted Ethanol Consumption by
State,'' Regulatory Impact Analysis: Renewable Fuel Standard
Program, April 2007.
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Calculation of GEi, amount of gasoline projected to be
produced by exempt small refineries and small refiners in year i, in
gallons \4\
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\4\ Through 2010 only, unless the exemption is extended under
211(o)(9)(A)(ii) or (B) of the Act.
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In the final rulemaking establishing the RFS program regulations,
we stated that we would estimate the combined small refinery and small
refiner gasoline volume using a constant percentage of national
consumption. Using information from gasoline batch reports submitted to
EPA, EIA data and input from the California Air Resources Board
regarding California small refiners, we estimated this percentage to be
13.5%.\5\
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\5\ ``Calculation of the Small Refiner/Small Refinery Fraction
for the Renewable Fuel Program,'' memo to the docket from Christine
Brunner, ASD, OTAQ, EPA, September 2006.
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Multiplying the projected nationwide consumption of gasoline in
2008 (144.80 billion gallons) by 13.5% results in a total projected
production of 19.55 billion gallons of gasoline from small refiners and
small refineries in 2008.
Calculation of RFStdi, renewable fuel standard in year i, in
percent
Substituting all of the terms calculated above into the equation
for RFStdi results in the following RFS for 2008,
[GRAPHIC] [TIFF OMITTED] TN14FE08.004
Therefore, the RFS for 2008 is 7.76%. This is the standard
referenced in 40 CFR 80.1105(b) through (d) and which obligated parties
apply to determine their renewable volume obligation under 40 CFR
80.1107. This recalculated 2008 RFS supersedes, and therefore replaces
for all purposes, the 2008 standard published by EPA on November 27,
2007.
Dated: February 7, 2008.
Stephen L. Johnson,
Administrator.
[FR Doc. 08-679 Filed 2-13-08; 8:45 am]
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