The U.S. Environmental Protection Agency recently released a proposed rule to fully implement the Renewable Fuels Standard created as part of the Energy Policy Act of 2005 (EPAct) signed in August 2005. The RFS requires minimum volumes of renewable fuels be used in America’s motor fuels market annually. The RFS will also allow oil refiners the flexibility to use renewable fuels where it makes the most sense for their company.
“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.”
The RFS requires oil refiners to use 4 billion gallons of renewable fuels in motor fuel in 2006. The required annual usage increases incrementally until 2012, when oil refiners will be required to use 7.5 billion gallons of renewable fuel. While ethanol will constitute the vast majority of renewable fuel used, other fuels like biodiesel will also qualify under the program.
Additionally, 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.”
While this proposed rule would create the credit-trading program and fully implement the RFS, the default program has been in place since Jan. 1, 2006. Under the default rule, oil refiners are required to use at least 4 billion gallons of renewable fuel. According to industry projections, the United States will consume some 5 billion gallons of ethanol in 2006, well above RFS requirements.
Since EPAct was signed last August, more than 30 ethanol biorefineries have begun construction is states such Oregon, Arizona and Texas. This new construction represents more than 2 billion gallons of new production capacity, some 30,000 new jobs and hundreds of millions of dollars in new economic activity in rural communities across the country.
Currently, 101 ethanol biorefineries nationwide have a capacity to produce more than 4.8 billion gallons annually. Additionally, 44 biorefineries are under construction and 7 are expanding that will add more than 3 billion gallons of capacity when complete.
For more information, visit the Renewable Fuels Association Web site at: www.ethanolRFA.org