Renewable Fuel Standard (United States)

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The Renewable Fuel Standard(RFS) is an American federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. It originated with the Energy Policy Act of 2005 and was expanded and extended by the Energy Independence and Security Act of 2007. Research published by the Government Accountability Office in November 2016 found the program unlikely to meet its goal of reducing greenhouse gas emissions due to limited current and expected future production of advanced biofuels. [1]

Contents

History

The RFS requires renewable fuel to be blended into transportation fuel in increasing amounts each year, escalating to 36 billion gallons by 2022. Each renewable fuel category in the RFS must emit lower levels of greenhouse gases relative to the petroleum fuel it replaces. [2]

The first RFS, usually referred to as RFS1, required that 4 billion gallons of biofuel be used in 2006. This requirement was scheduled to rise to 7.5 billion gallons in 2012. These requirements were passed as part of the Energy Policy Act of 2005. The Energy Independence and Security Act of 2007 changed and broadened these rules. EISA was signed into law by President George W. Bush and the bill was overwhelmingly supported by members of congress from both parties. [3]

The changes required by the 2007 legislation are usually referred to as RFS2. RFS2 required the use of 9 billion gallons in 2008 and scheduled a requirement for 36 billion gallons in 2022. The quota for 2022 was to allow no more than a maximum of 15 billion gallons from corn starch ethanol and a minimum of 16 billion gallons from cellulosic biofuels. [3]

In reaction to the implementation of the RFS, passage of EISA, and other measures to support ethanol, the Organization of Petroleum Exporting Countries (OPEC) expressed alarm. In 2007, OPEC's secretary general, Abdalla El-Badri, said that increased use of biofuels by the United States could cause OPEC to decrease production. Other OPEC leaders openly worried about "security of demand." [4]

Enforcement and administration

The United States Environmental Protection Agency (EPA) administers the RFS with volume requirements for several categories of renewable fuels. [5] The EPA issued detailed regulations for implementing RFS1 in April 2007. These regulations established rules for fuel suppliers, created the Renewable Identification Numbers (RIN) system for compliance and trading credits, and rules for waivers. The EPA calculates a blending standard for each year based on estimates of gasoline usage created by the Department of Energy's Energy Information Administration. Separate quotas and blending requirements are determined for cellulosic biofuels, biomass-based diesel, advanced biofuels, and total renewable fuel. Exemptions for small producers are considered when calculating blending ratios. [3] [6] Advanced biofuels are required to meet stricter air pollution requirements than regular corn-based ethanol. [7]

The individual obligations for producers are called Renewable Volume Obligations (RVO). An RVO is determined by multiplying the output of the producer by the EPA's announced blending ratios for each of the four standards described above. The producer has to show compliance through the RIN system. It can purchase RINs to makeup for any shortfall in production. Surplus RINs can be sold. This is done through the EPA's Moderated Transaction System. [3] The EPA established an RVO of 18.11 billion gallons total for 2016. [6]

On May 29, 2015, the EPA set an RVO lower than the benchmarks established by Congress. This generated criticism from all sides of the issue. The EPA was also blamed for missing legal deadlines to revise the RVO targets. Some say this introduced market uncertainty, harming both consumers and producers. The EPA made this announcement in May to meet a June 1, 2015 deadline established by the settlement to a lawsuit brought by fossil fuel and chemical trade associations. The EPA defended the targets calling them "ambitious but responsible" and arguing that "Biofuels remain an important part of the overall strategy to enhance energy security and address climate change." The EPA announcement called for a 27-percent increase in the use of advanced biofuels from 2014 to 2016. Most gasoline used in the United States is blended to E10, which contains only 10% ethanol. The May 2015 rule changes thus created modest incentives to make greater use of E85 and E15, which contain more ethanol. [8]

Many in the biofuel industry argue that the EPA abused its waiver authority by setting RVOs lower than the statutory minimums. They say Congress clearly intended for the law to apply according to supply that could be available rather than demand. They contend that the EPA has conflated the two. Under EISA, the statutory standard for 2017 is 24 billion gallons. On May 19, 2016, the EPA proposed an RVO of 18.8 billion gallons of biofuel for 2017. This was up from 18.4 billion gallons in 2016. Ethanol supporters and oil companies alike criticized this target. [9] On July 28, 2017, the District of Columbia Court of Appeals rejected the EPA's 2015 waivers. [10]

On June 22, 2016, the EPA announced that it was considering changes to the enforcement of blending standards. The agency has received petitions calling for compliance to be shifted away from refiners to blenders or "the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system … to a wholesaler, retailer or ultimate consumer." [11]

After 2022, the EPA has wide discretion to set RVOs in accordance with the goals outlined under EISA. [12] According to the EISA, "the applicable volumes of each fuel specified in the tables in clause (i) for calendar years after the calendar years specified in the tables shall be determined by the Administrator, in coordination with the Secretary of Energy and the Secretary of Agriculture, based on a review of the implementation of the program during calendar years specified in the tables..." [13]

Feedstock

EISA defined "renewable fuel" as being made from biomass but also restricted the type of land on which permissible feedstock could be grown. Land put into cultivation after December 13, 2007 was excluded. [3]

Pollution standards

EISA defined air pollution standards that require various levels of greenhouse gas reductions according to the type of biofuel used and the fuel being displaced. Cellulosic biofuels must have emissions that are at least a 60 percent reduction relative to gasoline or diesel fuel that would be used in its place. Biomass and sugarcane ethanol must have 50 percent reductions. Research at Argonne National Laboratory sponsored by the Department of Energy demonstrated that, on average, corn ethanol reduces carbon dioxide emissions by 34 percent over gasoline. [7]

"Blend wall"

The amount of ethanol used in the United States is capped by a limit of 10% ethanol content for most gasoline and diesel sales. This limit is often referred to as the "blend wall." Raising the blend wall to 15% could help meet the statutory minimums set out in EISA. [4] Increasing ethanol content in gasoline beyond 15% would require modifications to the fuel systems of a conventional engine. The amount of ethanol used in the United States is also limited by the number of Flex Fuel vehicles available which are capable of operating on ethanol blends as high as 85% (E85) and the relative pricing of E85 as compared to regular gasoline (E10).

Other alternative fuels may have higher functional "blend walls". Biobutanol may be legally blended up to 16%, operating as an E10 equivalent, [14] though it is possible to operate at as high as 20% butanol without engine modification.

Effects

Food prices

According to research sponsored by the United States government, the World Bank, and other organizations, there is no clear link between the RFS and higher food prices. Ethanol critics contend that RFS requirements crowd out production that would go to feed livestock. [4] [15]

The 2008 financial crisis illustrated corn ethanol's limited impact on corn prices, which fell 50% from their July 2008 high by October 2008, in tandem with other commodities, including oil, while corn ethanol production continued unabated. "Analysts, including some in the ethanol sector, say ethanol demand adds about 75 cents to $1.00 per bushel to the price of corn, as a rule of thumb. Other analysts say it adds around 20 percent, or just under 80 cents per bushel at current prices. Those estimates hint that $4 per bushel corn might be priced at only $3 without demand for ethanol fuel." [16]

University of Wisconsin researchers determined the RFS caused corn prices to be 30% higher and other crops 20% higher. [17]

Land use and emissions

A 2021 study from the University of Wisconsin found that the RFS increased corn cultivation by 8.7% and total cropland by 2.4% through 2016. This resulted in 3 to 8% more fertilizer use and 3 to 5% more release of water degradents. This land-use change resulted in corn ethanol's carbon intensity being no lower than gasoline's and up to 24% higher. [17]

Litigation

A question of statutory interpretation of the Standard was raised at the Supreme Court in a 2021 case, HollyFrontier Cheyenne Refining, LLC v. Renewable Fuels Assn. Under the Standards, smaller refineries, those with under 75,000 barrels per year, had been exempt from blending until 2010 due to potential economic hardship related to blending, and then could apply to the EPA for extending that exemption on an annual basis if they could demonstrate continued hardship. Three small refineries had let their exemption period lapse but later applied to renew their exemption, which the EPA granted. Several renewable fuels association sued on the EPA's actions, arguing that they could only extend a continuous exemption period. While the Tenth Circuit overturned the EPA's decision, the Supreme Court in their 6–3 decision reversed the Tenth Circuit and ruled in favor of the refineries, stating that under the ordinary meaning of "extension", there was no need for a refinery to have maintained a continuous exemption period to apply for such an extension. [18]

Related Research Articles

<span class="mw-page-title-main">Ethanol fuel</span> Type of biofuel

Ethanol fuel is fuel containing ethyl alcohol, the same type of alcohol as found in alcoholic beverages. It is most often used as a motor fuel, mainly as a biofuel additive for gasoline.

<span class="mw-page-title-main">E85</span> Fuel blend of 85% ethanol and 15% another hydrocarbon

E85 is an abbreviation typically referring to an ethanol fuel blend of 85% ethanol fuel and 15% gasoline or other hydrocarbon by volume.

<span class="mw-page-title-main">Flexible-fuel vehicle</span> Vehicle that runs on multiple fuels

A flexible-fuel vehicle (FFV) or dual-fuel vehicle is an alternative fuel vehicle with an internal combustion engine designed to run on more than one fuel, usually gasoline blended with either ethanol or methanol fuel, and both fuels are stored in the same common tank. Modern flex-fuel engines are capable of burning any proportion of the resulting blend in the combustion chamber as fuel injection and spark timing are adjusted automatically according to the actual blend detected by a fuel composition sensor. Flex-fuel vehicles are distinguished from bi-fuel vehicles, where two fuels are stored in separate tanks and the engine runs on one fuel at a time, for example, compressed natural gas (CNG), liquefied petroleum gas (LPG), or hydrogen.

<span class="mw-page-title-main">Common ethanol fuel mixtures</span> Mixtures of common ethanol fuel types

Several common ethanol fuel mixtures are in use around the world. The use of pure hydrous or anhydrous ethanol in internal combustion engines (ICEs) is only possible if the engines are designed or modified for that purpose, and used only in automobiles, light-duty trucks and motorcycles. Anhydrous ethanol can be blended with gasoline (petrol) for use in gasoline engines, but with high ethanol content only after engine modifications to meter increased fuel volume since pure ethanol contains only 2/3 of the BTUs of an equivalent volume of pure gasoline. High percentage ethanol mixtures are used in some racing engine applications as the very high octane rating of ethanol is compatible with very high compression ratios.

<span class="mw-page-title-main">Alcohol fuel</span>

Various alcohols are used as fuel for internal combustion engines. The first four aliphatic alcohols are of interest as fuels because they can be synthesized chemically or biologically, and they have characteristics which allow them to be used in internal combustion engines. The general chemical formula for alcohol fuel is CnH2n+1OH.

<span class="mw-page-title-main">Renewable Fuels Association</span> Body representing the U.S. ethanol industry

The Renewable Fuels Association (RFA) represents the ethanol industry promoting policies, regulations, and research and development initiatives that will lead to the increased production and use of ethanol fuel. First organized in 1981, RFA serves as a voice of advocacy for the ethanol industry, providing research data and industry analysis to its members, to the public via the media, to the United States Congress, as well as to related federal and state agencies.

<span class="mw-page-title-main">Ethanol fuel in the United States</span>

The United States became the world's largest producer of ethanol fuel in 2005. The U.S. produced 15.8 billion U.S. liquid gallons of ethanol fuel in 2019, and 13.9 billion U.S. liquid gallons in 2011, an increase from 13.2 billion U.S. liquid gallons in 2010, and up from 1.63 billion gallons in 2000. Brazil and U.S. production accounted for 87.1% of global production in 2011. In the U.S, ethanol fuel is mainly used as an oxygenate in gasoline in the form of low-level blends up to 10 percent, and, increasingly, as E85 fuel for flex-fuel vehicles. The U.S. government subsidizes ethanol production.

The United States produces mainly biodiesel and ethanol fuel, which uses corn as the main feedstock. The US is the world's largest producer of ethanol, having produced nearly 16 billion gallons in 2017 alone. The United States, together with Brazil accounted for 85 percent of all ethanol production, with total world production of 27.05 billion gallons. Biodiesel is commercially available in most oilseed-producing states. As of 2005, it was somewhat more expensive than fossil diesel, though it is still commonly produced in relatively small quantities.

Renewable Fuels are fuels produced from renewable resources. Examples include: biofuels, Hydrogen fuel, and fully synthetic fuel produced from ambient carbon dioxide and water. This is in contrast to non-renewable fuels such as natural gas, LPG (propane), petroleum and other fossil fuels and nuclear energy. Renewable fuels can include fuels that are synthesized from renewable energy sources, such as wind and solar. Renewable fuels have gained in popularity due to their sustainability, low contributions to the carbon cycle, and in some cases lower amounts of greenhouse gases. The geo-political ramifications of these fuels are also of interest, particularly to industrialized economies which desire independence from Middle Eastern oil.

Biofuel is fuel that is produced from organic matter (biomass), including plant materials and animal waste. It is considered a renewable source of energy that can assist in reducing carbon emissions. The two main types of biofuel currently being produced in Australia are biodiesel and bioethanol, used as replacements for diesel and petrol (gasoline) respectively. As of 2017 Australia is a relatively small producer of biofuels, accounting for 0.2% of world bioethanol production and 0.1% of world biodiesel production.

<span class="mw-page-title-main">Energy Independence and Security Act of 2007</span> United States law

The Energy Independence and Security Act of 2007, originally named the Clean Energy Act of 2007, is an Act of Congress concerning the energy policy of the United States. As part of the Democratic Party's 100-Hour Plan during the 110th Congress, it was introduced in the United States House of Representatives by Representative Nick Rahall of West Virginia, along with 198 cosponsors. Even though Rahall was 1 of only 4 Democrats to oppose the final bill, it passed in the House without amendment in January 2007. When the Act was introduced in the Senate in June 2007, it was combined with Senate Bill S. 1419: Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007. This amended version passed the Senate on June 21, 2007. After further amendments and negotiation between the House and Senate, a revised bill passed both houses on December 18, 2007 and President Bush, a Republican, signed it into law on December 19, 2007, in response to his "Twenty in Ten" challenge to reduce gasoline consumption by 20% in 10 years.

<span class="mw-page-title-main">Corn ethanol</span> Ethanol produced from corn biomass

Corn ethanol is ethanol produced from corn biomass and is the main source of ethanol fuel in the United States, mandated to be blended with gasoline in the Renewable Fuel Standard. Corn ethanol is produced by ethanol fermentation and distillation. It is debatable whether the production and use of corn ethanol results in lower greenhouse gas emissions than gasoline. Approximately 45% of U.S. corn croplands are used for ethanol production.

There are various social, economic, environmental and technical issues with biofuel production and use, which have been discussed in the popular media and scientific journals. These include: the effect of moderating oil prices, the "food vs fuel" debate, poverty reduction potential, carbon emissions levels, sustainable biofuel production, deforestation and soil erosion, loss of biodiversity, effect on water resources, the possible modifications necessary to run the engine on biofuel, as well as energy balance and efficiency. The International Resource Panel, which provides independent scientific assessments and expert advice on a variety of resource-related themes, assessed the issues relating to biofuel use in its first report Towards sustainable production and use of resources: Assessing Biofuels. In it, it outlined the wider and interrelated factors that need to be considered when deciding on the relative merits of pursuing one biofuel over another. It concluded that not all biofuels perform equally in terms of their effect on climate, energy security and ecosystems, and suggested that environmental and social effects need to be assessed throughout the entire life-cycle.

<span class="mw-page-title-main">Biofuels by region</span> Use of biofuel as energy source across the world

The use of biofuels varies by region. The world leaders in biofuel development and use are Brazil, United States, France, Sweden and Germany.

<span class="mw-page-title-main">Low-carbon fuel standard</span> Rule to reduce carbon intensity of transportation fuels

A low-carbon fuel standard (LCFS) is an emissions trading rule designed to reduce the average carbon intensity of transportation fuels in a given jurisdiction, as compared to conventional petroleum fuels, such as gasoline and diesel. The most common methods for reducing transportation carbon emissions are supplying electricity to electric vehicles, supplying hydrogen fuel to fuel cell vehicles and blending biofuels, such as ethanol, biodiesel, renewable diesel, and renewable natural gas into fossil fuels. The main purpose of a low-carbon fuel standard is to decrease carbon dioxide emissions associated with vehicles powered by various types of internal combustion engines while also considering the entire life cycle, in order to reduce the carbon footprint of transportation.

<span class="mw-page-title-main">Indirect land use change impacts of biofuels</span> Negative spillover effect of production of biofuels

The indirect land use change impacts of biofuels, also known as ILUC or iLUC, relates to the unintended consequence of releasing more carbon emissions due to land-use changes around the world induced by the expansion of croplands for ethanol or biodiesel production in response to the increased global demand for biofuels.

The fleet of flexible-fuel vehicles in the United States is the second largest in the world after Brazil, and there were more than 21 million 85 flex-fuel vehicles registered in the country by the end of 2017. Despite the growing fleet of E85 flex-fuel vehicles, actual use of ethanol fuel is limited due to the lack of E85 refueling infrastructure and also because many North American flex-fuel car owners were not aware they owned an E85 flex-fuel vehicle. Flex-fuel vehicles are common in the Midwest, where corn is a major crop and is the primary feedstock for ethanol fuel production. Also the U.S. government has been using flex-fuel vehicles for many years.

United States policy in regard to biofuels, such as ethanol fuel and biodiesel, began in the early 1990s as the government began looking more intensely at biofuels as a way to reduce dependence on foreign oil and increase the nation's overall sustainability. Since then, biofuel policies have been refined, focused on getting the most efficient fuels commercially available, creating fuels that can compete with petroleum-based fuels, and ensuring that the agricultural industry can support and sustain the use of biofuels.

A Renewable Identification Number is a serial number assigned to a batch of biofuel for the purpose of tracking its production, use, and trading as required by the United States Environmental Protection Agency's Renewable Fuel Standard (RFS) implemented according to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.

<span class="mw-page-title-main">Ethanol fuel by country</span>

The world's top ethanol fuel producers in 2011 were the United States with 13.9 billion U.S. liquid gallons (bg) and Brazil with 5.6 bg, accounting together for 87.1% of world production of 22.36 billion US gallons. Strong incentives, coupled with other industry development initiatives, are giving rise to fledgling ethanol industries in countries such as Germany, Spain, France, Sweden, India, China, Thailand, Canada, Colombia, Australia, and some Central American countries.

References

  1. ↑ Renewable Fuel Standard: Program Unlikely to Meet Its Targets for Reducing Greenhouse Gas Emissions (PDF) (Report). GAO. 29 November 2016. Retrieved 25 April 2019.
  2. ↑ "Renewable Fuel Standard". US Department of Energy Alternative Fuels Data Center. Retrieved 15 January 2013.
  3. 1 2 3 4 5 Schnepf, Randy; Yacobucci, Brent (14 October 2010). Renewable Fuel Standard: Overview and Issues. United States: Congressional Research Service. ISBN   9781437942521.
  4. 1 2 3 Brown, Robert C.; Brown, Tristan R. (2012). Why Are We Producing Biofuels. Ames, Iowa: Brownia. ISBN   978-0984090631.
  5. ↑ "Renewable Fuel Standard". US Environmental Protection Agency. Retrieved 15 January 2013.
  6. 1 2 Swift, Wes (19 April 2016). "RIN generation is up, but more biofuels mandates are on the way". The Barrel: The essential perspective on global commodities. PLATTS McGraw-Hill Financial. Retrieved 20 April 2016.
  7. 1 2 "The Renewable Fuel Standard: Issues for 2014 and Beyond" (PDF). www.cbo.gov. Congressional Budget Office. June 2014. Retrieved 16 June 2016.
  8. ↑ Neuhauser, Alan (29 May 2015). "EPA Raises Fuel Requirements, Lowers Standards, Upsets Everybody". U.S. News. United States. Retrieved 20 April 2016.
  9. ↑ Dinneen, Bob (22 May 2016). "It's Time for the RFS to get 'Back on Track'". Ethanol Producer Magazine. United States. Retrieved 16 June 2016.
  10. ↑ Henry, Devin (July 28, 2017). "Court rejects 2015 EPA biofuels waivers". The Hill. Retrieved July 28, 2017.
  11. ↑ "EPA Considering Petitions to Change Renewable Fuel Standard Obligation - Morning Consult". morningconsult.com. Archived from the original on 2016-09-19.
  12. ↑ "House Energy and Power Subcommittee to Examine Renewable Fuel Standard". 16 June 2016.
  13. ↑ "2022: A Cliff for Clean Fuels and the RFS? | Biomass Magazine".
  14. ↑ "Alternative Fuels Data Center: Biobutanol".
  15. ↑ Prentice, Chris (14 June 2016). "Ethanol, bioenergy no threat to food security - report". Reuters. United States. Retrieved 16 June 2016.
  16. ↑ Sam Nelson (2008-10-23). "Ethanol no longer seen as big driver of food price". Reuters UK. Retrieved 2008-11-26.
  17. 1 2 Lark, Tyler J.; Hendricks, Nathan P.; Smith, Aaron; Pates, Nicholas; Spawn-Lee, Seth A.; Bougie, Matthew; Booth, Eric G.; Kucharik, Christopher J.; Gibbs, Holly K. (2022-03-01). "Environmental outcomes of the US Renewable Fuel Standard". Proceedings of the National Academy of Sciences. 119 (9). Bibcode:2022PNAS..11901084L. doi:10.1073/pnas.2101084119. ISSN   0027-8424. PMC   8892349 . PMID   35165202.
  18. ↑ Dhouly, Jennifer (June 25, 2021). "Oil Refiners Win Easier Biofuel Waivers at Supreme Court". Bloomberg News . Retrieved June 26, 2021.
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