On November 16, 2016, the U.S. Environmental Protection Agency (EPA) published the proposed Renewables Enhancement and Support Growth Rule, which proposes changes to EPA’s Renewable Fuel Standard (RFS) program and other renewable fuel regulations designed to encourage market growth of ethanol and renewable fuels in the U.S. and provide additional clarity for key aspects of the RFS program.

The RFS program was originally enacted under the Energy Policy Act of 2005 and was further expanded by the Energy Independence and Security Act of 2007, both of which amended the Clean Air Act to promote the increased use of renewable fuels in the U.S. transportation system. The RFS program requires certain volumes of renewable fuels to be blended into gasoline. For a fuel to qualify as a renewable fuel under the RFS program, the fuel must fall into an approved fuel pathway.

In the proposed rule, EPA is taking steps to remove barriers to production, distribution, and consumption of renewable fuels to better reflect changes in the renewable fuels market. The proposed rule is intended to increase use of higher level ethanol blends and increase production of cellulosic and other advanced biofuels.

Processing of Biofuels at Multiple Facilities Expected to Increase Efficiency

In the proposed rule, EPA is proposing a new regulatory structure that will allow biofuel producers to partially process renewable feedstocks at one facility (“biointermediate”) and further process them into renewable fuels at another facility under existing approved renewable fuel production pathways. EPA is also proposing registration, recordkeeping, and reporting requirements that would apply when renewable fuel is produced through sequential operations at more than one facility.

The proposed rule is intended to increase the efficiency of biofuel production, particularly for advanced and cellulosic fuels that have lower carbon footprints. It is often easier for renewable biomass to be converted into a renewable fuel, like bio-oil, at one facility and then sent to a different facility for additional processing before it can be used as a transportation fuel. Enabling processing at different facilities is anticipated to lower the cost of using cellulosic and other feedstocks for the production of renewable fuels by reducing the storage and transportation costs.

Proposed Ethanol Flex Fuel Regulations Expected to Decrease Costs

EPA is also revising its fuel regulations to expand the availability of high ethanol fuel blends (E16-83) for use in flex fuel vehicles (FFVs). The proposed rule clarifies that higher level ethanol fuel blends are considered to be ethanol flex fuel (EFF) rather than gasoline and proposes specially tailored standards for EFF that are designed to ensure its quality and environmental performance.

FFVs are the only passenger vehicles designed to operate on any gasoline-ethanol mixture between pure gasoline and 85 percent ethanol. FFVs account for nearly 8 percent of all light duty vehicle miles traveled in the U.S. However, the vast majority of fuel used in FFVs is currently gasoline. The proposal is anticipated to expand the availability of EFF by lowering its cost.

In the past, EPA has only approved the practice of blending ethanol with certified gasoline and gasoline blendstocks for oxygenate blending (BOBs) to produce EFF. But today less expensive blendstocks, like natural gasoline, are available in the marketplace. EPA is proposing to permit the use of these alternative blendstocks.

In the Tier 3 Motor Vehicle Emission and Fuel Standards (Tier 3) final rule, EPA deferred finalizing fuel quality standards for EFF because the traditionally approved practice of blending ethanol ensured the blend met the quality standards for traditional gasoline. However, EFF created with less expensive blendstocks does not necessarily meet the gasoline quality standards. Thus, to maintain emission performance, EPA is also proposing clear quality standards for EFF.

Additional Changes

EPA is also proposing a number of other changes to the RFS regulations. First, EPA is exploring the possibility of allowing carbon capture and storage (CCS) as a greenhouse gas (GHG) emissions reduction technology. EPA is proposing registration, recordkeeping, and reporting requirements for the technology if it were to be used in the context of the RFS program.

Second, EPA is proposing new feedstock approvals for cellulosic biofuels produced from short-rotation poplar and willow trees. These new pathways would allow for ethanol produced from these feedstocks to qualify for cellulosic biofuel RINs, and for diesel, jet fuel, and heating oil produced from these feedstocks to qualify for cellulosic biomass-based diesel RINs.

Finally, EPA is also seeking comment on a number of issues that impact renewable fuels, including Renewable Identification Number (RIN) generation for renewable electricity that is produced from biogas and used as transportation fuel.

Overall, these changes are anticipated to provide some much needed clarity and flexibility for the biofuel industry. Comments to the proposed rule are due 60 days after the proposed rule’s publication in the Federal Register.