Vol. 78 Thursday, 

No. 26 February 7, 2013 

Part V 

Environmental Protection Agency 

40 CFR Part 80 

Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; 

Proposed Rule 

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9282 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2012–0546; FRL–9678–8] 

RIN 2060–AR43 

Regulation of Fuels and Fuel 

Additives: 2013 Renewable Fuel 

Standards 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: Under section 211(o) of the 

Clean Air Act, the Environmental 

Protection Agency is required to set the 

renewable fuel standards each 

November for the following year. In 

general the standards are designed to 

ensure that the applicable volumes of 

renewable fuel specified in the statute 

are used. However, the statute specifies 

that EPA is to project the volume of 

cellulosic biofuel production for the 

upcoming year and must base the 

cellulosic biofuel standard on that 

projected volume if it is less than the 

applicable volume set forth in the Act. 

EPA is today proposing a projected 

cellulosic biofuel volume for 2013 that 

is below the applicable volume 

specified in the Act. EPA is proposing 

that the applicable volumes of advanced 

biofuel and total renewable fuel would 

remain at the statutory levels for 2013. 

Finally, today’s action also proposes 

annual percentage standards for 

cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and renewable fuels 

that would apply to all gasoline and 

diesel produced or imported in year 

2013. 

DATES: Comments must be received on 

or before March 25, 2013. A request for 

a public hearing must be received by 

February 14, 2013. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2012–0546, by one of the 

following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• Email: a-and-r-docket@epa.gov. 

• Mail: Air and Radiation Docket and 

Information Center, Environmental 

Protection Agency, Mailcode: 2822T, 

1200 Pennsylvania Ave. NW., 

Washington, DC 20460. 

• Hand Delivery: EPA Docket Center, 

EPA West Building, Room 3334, 1301 

Constitution Ave. NW., Washington, DC 

20460. Such deliveries are only 

accepted during the Docket’s normal 

hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2012– 

0546. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or email. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means EPA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an email 

comment directly to EPA without going 

through www.regulations.gov your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public docket and 

made available on the Internet. If you 

submit an electronic comment, EPA 

recommends that you include your 

name and other contact information in 

the body of your comment and with any 

disk or CD–ROM you submit. If EPA 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EPA may not be 

able to consider your comment. 

Electronic files should avoid the use of 

special characters, any form of 

encryption, and be free of any defects or 

viruses. For additional information 

about EPA’s public docket visit the EPA 

Docket Center homepage at http:// 

www.epa.gov/epahome/dockets.htm. 

For additional instructions on 

submitting comments, go to Section I.B 

of the SUPPLEMENTARY INFORMATION

section of this document. 

Docket: All documents in the docket 

are listed in the www.regulations.gov 

index. Although listed in the index, 

some information is not publicly 

available, e.g., CBI or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, will be publicly 

available only in hard copy. Publicly 

available docket materials are available 

either electronically in 

www.regulations.gov or in hard copy at 

the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Ave. 

NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566– 

1742. 

FOR FURTHER INFORMATION CONTACT: Julia 

MacAllister, Office of Transportation 

and Air Quality, Assessment and 

Standards Division, Environmental 

Protection Agency, 2000 Traverwood 

Drive, Ann Arbor, MI 48105; Telephone 

number: 734–214–4131; Fax number: 

734–214–4816; Email address: 

macallister.julia@epa.gov, or the public 

information line for the Office of 

Transportation and Air Quality; 

telephone number (734) 214–4333; 

Email address OTAQ@epa.gov. 

SUPPLEMENTARY INFORMATION: 

I. General Information 

A. Does this action apply to me? 

Entities potentially affected by this 

proposed rule are those involved with 

the production, distribution, and sale of 

transportation fuels, including gasoline 

and diesel fuel or renewable fuels such 

as ethanol and biodiesel. Potentially 

regulated categories include: 

Category NAICS1 codes SIC 2 codes Examples of potentially regulated entities 

Industry ............................................ 324110 2911 Petroleum Refineries. 

Industry ............................................ 325193 2869 Ethyl alcohol manufacturing. 

Industry ............................................ 325199 2869 Other basic organic chemical manufacturing. 

Industry ............................................ 424690 5169 Chemical and allied products merchant wholesalers. 

Industry ............................................ 424710 5171 Petroleum bulk stations and terminals. 

Industry ............................................ 424720 5172 Petroleum and petroleum products merchant wholesalers. 

Industry ............................................ 454319 5989 Other fuel dealers. 

1 North American Industry Classification System (NAICS). 

2Standard Industrial Classification (SIC) system code. 

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Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 9283 

1 75 FR 14670. 

This table is not intended to be 

exhaustive, but rather provides a guide 

for readers regarding entities likely to be 

regulated by this proposed action. This 

table lists the types of entities that EPA 

is now aware could potentially be 

regulated by this proposed action. Other 

types of entities not listed in the table 

could also be regulated. To determine 

whether your activities would be 

regulated by this proposed action, you 

should carefully examine the 

applicability criteria in 40 CFR part 80. 

If you have any questions regarding the 

applicability of this proposed action to 

a particular entity, consult the person 

listed in the preceding section. 

B. What should I consider as I prepare 

my comments for EPA? 

1. Submitting CBI 

Do not submit confidential business 

information (CBI) to EPA through 

www.regulations.gov or email. Clearly 

mark the part or all of the information 

that you claim to be CBI. For CBI 

information in a disk or CD ROM that 

you mail to EPA, mark the outside of the 

disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

claimed as CBI. In addition to one 

complete version of the comment that 

includes information claimed as CBI, a 

copy of the comment that does not 

contain the information claimed as CBI 

must be submitted for inclusion in the 

public docket. Information so marked 

will not be disclosed except in 

accordance with procedures set forth in 

40 CFR part 2. 

2. Tips for Preparing Your Comments 

When submitting comments, 

remember to: 

• Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

• Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

• Explain why you agree or disagree, 

suggest alternatives, and substitute 

language for your requested changes. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

• Make sure to submit your 

comments by the comment period 

deadline identified. 

Outline of This Preamble 

I. Executive Summary 

A. Purpose of This Proposed Action 

B. Summary of Major Provisions in This 

Notice 

1. Cellulosic Biofuel Volume for 2013 

2. Advanced Biofuel and Total Renewable 

Fuel in 2013 

3. Proposed Standards for 2013 

4. Biomass-Based Diesel for 2014 

5. Administrative Actions 

C. Impacts of Proposed Actions 

II. Projection of Cellulosic Volume for 2013 

A. Statutory Requirements 

B. Status of the Cellulosic Biofuel Industry 

C. Cellulosic Biofuel Volume Assessment 

for 2013 

1. Cellulosic Biofuel Facilities Considered 

in the 2012 Projections 

2. Facilities Not Included in 2012 

Projections 

3. Other Potential Sources of Domestic 

Cellulosic Biofuel 

4. Imports of Cellulosic Biofuel 

5. Projections From the Energy Information 

Administration 

6. Summary of Volume Projections 

D. Proposed Cellulosic Biofuel Volume for 

2013 

III. Assessment of Advanced Biofuel and 

Total Renewable Fuel for 2013 

A. Statutory Requirements 

B. Assessment of Available Volumes of 

Advanced Biofuel 

1. Biodiesel 

2. Domestic Production of Other Advanced 

Biofuel 

3. Imported Sugarcane Ethanol 

C. Proposed Volume Requirements for 

Advanced Biofuel and Total Renewable 

Fuel in 2013 

D. Consideration of the Ethanol Blendwall 

IV. Proposed Percentage Standards for 2013 

A. Background 

B. Calculation of Standards 

1. How are the standards calculated? 

2. Small Refineries and Small Refiners 

3. Proposed Standards 

V. Public Participation 

A. How do I submit comments? 

B. How should I submit CBI to the agency? 

VI. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer and 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

VII. Statutory Authority 

I. Executive Summary 

The Renewable Fuel Standard (RFS) 

program began in 2006 pursuant to the 

requirements in Clean Air Act (CAA) 

section 211(o) which were added 

through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for 

the RFS program were subsequently 

modified through the Energy 

Independence and Security Act of 2007 

(EISA), resulting in the promulgation of 

major revisions to the regulatory 

requirements on March 26, 2010.1

The volumes of renewable fuel to be 

used under the RFS program each year 

(absent an adjustment or waiver by EPA) 

are specified in CAA 211(o)(2). The 

volumes for 2013 are shown in Table I– 

1. 

TABLE I–1—REQUIRED APPLICABLE

VOLUMES IN THE CLEAN AIR ACT

FOR 2013 

[Bill gal] 

Cellulosic biofuel ................... a 1.0 

Biomass-based diesel .......... b ≥1.0 

Advanced biofuel .................. a 2.75 

Renewable fuel ..................... a 16.55 

aEthanol-equivalent volume. 

bActual volume. The ethanol-equivalent volume would be 1.5 if biodiesel is used to meet 

this requirement. 

Under the RFS program, EPA is 

required to determine and publish 

annual percentage standards for each 

compliance year by November 30 of the 

previous year. The percentage standards 

are used by obligated parties to calculate 

their individual compliance obligations. 

The percentage standards are applied to 

the volume of gasoline and/or diesel 

fuel that each obligated party produces 

or imports during the specified calendar 

year to determine the volumes of 

renewable fuel that they must cause to 

be used as transportation fuel, heating 

oil, or jet fuel. The percentage standards 

are calculated so as to ensure use in 

transportation fuel of the ‘‘applicable 

volumes’’ of four types of biofuel 

(cellulosic biofuel, biomass-based 

diesel, advanced biofuel, and total 

renewable fuel) that are either set forth 

in the Clean Air Act or established by 

EPA in accordance with the Act’s 

requirements. 

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2Solecki M, Rickey D, Epstein B. Advanced 

Biofuel Market Report 2011: Meeting the California 

LCFS. Environmental Entrepreneurs. August 22, 

2011. http://www.e2.org/ext/doc/E2%20Advanced

%20Biofuel%20Mkt%20Report%202011.pdf. 

The cellulosic biofuel industry is 

transitioning from research and 

development (R&D) and pilot-scale to 

commercial scale facilities, leading to 

increases in production capacity. 

Construction has begun on several 

facilities with multiple facilities having 

progressed to the start-up phase. Based 

on detailed information from 

production companies and a 

consideration of various potential 

uncertainties, we are projecting that 14 

million ethanol-equivalent gallons of 

cellulosic biofuel will be available in 

2013. 

We have evaluated the types of 

advanced biofuels that can be produced 

or imported in 2013. Our preliminary 

determination is that there should be 

sufficient volumes to meet the statutory 

applicable volume of 2.75 billion 

gallons. As a result, we are proposing to 

use that volume to calculate the 

advanced biofuel standard for 2013. 

Combined with the availability of 

conventional biofuels such as corn 

ethanol, we have preliminarily 

determined that there should be 

sufficient total renewable fuels available 

in 2013 to meet the statutory applicable 

volume of 16.55 billion gallons. 

Therefore, we are not proposing to 

reduce the advanced biofuel and total 

renewable fuel applicable volumes 

below the levels specified in the statute. 

However, as described in Section III.C, 

there is some uncertainty in the 

projected availability of advanced 

biofuel in 2013. Therefore, we are 

requesting comment on the possibility 

of reducing the required volume of 

advanced biofuel and total renewable 

fuel in 2013 to reflect this uncertainty. 

A. Purpose of This Proposed Action 

EPA is today proposing volume 

requirements for cellulosic biofuel, 

advanced biofuel, and total renewable 

fuel for 2013. Table I.A–1 lists the 

statutory provisions and associated 

criteria relevant to determining the 

applicable volumes in today’s proposal. 

We are also proposing percentage 

standards for all four categories of 

renewable fuel for 2013. 

TABLE I.A–1—STATUTORY PROVISIONS FOR DETERMINATION OF PROPOSED APPLICABLE VOLUMES

Applicable volumes Clean Air Act reference Criteria provided in statute for determination of applicable volume 

Cellulosic biofuel in 2013 ................ 211(o)(7)(D)(i) ................................ Required volume must be lesser of volume specified in CAA 

211(o)(2)(B)(i)(III) or EPA’s projected volume. 

Advanced biofuel in 2013 ............... 211(o)(7)(D)(i) ................................ If applicable volume of cellulosic biofuel is reduced to the projected 

volume, EPA may reduce advanced biofuel by the same or lesser 

volume. No other criteria specified. 

Total renewable fuel in 2013 .......... 211(o)(7)(D)(i) ................................ If applicable volume of cellulosic biofuel is reduced to the projected 

volume, EPA may reduce total renewable fuel by the same or lesser volume. No other criteria specified. 

EPA must annually determine the 

projected volume of cellulosic biofuel 

production for the following year. If the 

projected volume of cellulosic biofuel 

production is less than the applicable 

volume specified in section 

211(o)(2)(B)(i)(III) of the statute, EPA 

must lower the applicable volume used 

to set the annual cellulosic biofuel 

percentage standard to the projected 

volume of production. In today’s 

proposal, we present our analysis of 

cellulosic biofuel production and 

proposed projected volume for 2013. 

The analyses that led to the proposed 

2013 applicable volume requirement 

were based on our evaluation of EIA’s 

projection for 2013 as well as individual 

producers’ production plans and 

progress to date. For the final rule, we 

will also consider comments received in 

response to this notice of proposed 

rulemaking and other information that 

becomes available. 

When we lower the applicable 

volume of cellulosic biofuel below the 

volume specified in CAA 

211(o)(2)(B)(i)(III), we also have the 

authority to reduce the applicable 

volumes of advanced biofuel and total 

renewable fuel by the same or a lesser 

amount. Today’s proposal includes our 

consideration of the 2013 volume 

requirements for these biofuels. 

Based on the applicable volumes for 

cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and total renewable 

fuel presented in today’s proposal, we 

have calculated proposed percentage 

standards (shown in Section I.B.3 

below) that would apply to all 

producers and importers of gasoline and 

diesel in 2013. The proposed percentage 

standards are based on a projection of 

volumes of gasoline and diesel 

consumption in 2013 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This 

Notice 

1. Cellulosic Biofuel Volume for 2013 

The cellulosic biofuel industry in the 

United States continues to make 

significant advances in its progress 

towards large scale commercial 

production. Ongoing research and 

development work has resulted in 

increasing product yields, while at the 

same time lowering enzyme and catalyst 

costs. New supply chains have been 

developed, and several companies have 

reached contract agreements to provide 

the necessary feedstock for large scale 

cellulosic biofuel production facilities. 

Companies are continuing to invest 

significant sums of money to further 

refine cellulosic biofuel production 

technology and to construct the first 

commercial-scale facilities. From 2007 

through the second quarter of 2011 over 

$2.4 billion was invested in advanced 

biofuel production companies by 

venture capitalists alone.2 For more 

information on the current status of the 

cellulosic biofuel industry in the United 

States and the advances being made, see 

Section II.B. 

2013 is also expected to be a year of 

transition for the cellulosic biofuel 

industry, as many companies are 

shifting their focus from technology 

development to commercialization. This 

transition began in 2012 with 

commercial production facilities from 

INEOS Bio and KiOR completing 

construction and scheduled to begin 

producing fuel in the first quarter of 

2013. Abengoa, one of the largest 

producers of ethanol in the United 

States, is planning to begin producing 

cellulosic ethanol at commercial scale 

by the end of 2013. Several others 

companies, including DuPont and Poet, 

expect to be constructing their first 

commercial scale facilities in 2013, with 

the intention of beginning production in 

2014. If these facilities are able to 

operate as anticipated, the uncertainty 

associated with commercial-scale 

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cellulosic biofuel production will 

decrease, and the expansion of the 

industry could be rapid. 

As part of our effort to estimate the 

volume of cellulosic biofuel that can be 

made available in the U.S. in 2013, we 

researched all potential production 

sources by company and facility. This 

included sources that were still in the 

planning stages, those that were under 

construction, and those that are already 

producing some volume of cellulosic 

ethanol, cellulosic diesel, or some other 

type of cellulosic biofuel. Facilities 

primarily focused on research and 

development were not the focus of our 

assessment as production from these 

facilities represents very small volumes 

of cellulosic biofuel, and these facilities 

typically have not generated RINs for 

the fuel they have already produced. 

From this universe of potential 

cellulosic biofuel sources we identified 

the subset that could be producing 

commercial volumes of qualifying 

cellulosic biofuel for use as 

transportation fuel in 2013. To arrive at 

a proposed projected volume for each 

facility, we took into consideration 

EIA’s company specific projections and 

factors such as the current and expected 

state of funding, the status of the 

technology utilized, progress towards 

construction and production goals, and 

other significant factors that could 

potentially impact fuel production or 

the ability of the produced fuel to 

generate cellulosic Renewable 

Identification Numbers (RINs) in 2013. 

Further discussion of these factors can 

be found in Section II.B. 

In our assessment we focused on 

domestic sources of cellulosic biofuel. 

At the time of this proposal no 

internationally-based cellulosic biofuel 

production facilities have registered 

under the RFS program and therefore no 

volume from international producers 

has been included in our projections for 

2013. Of the domestic sources, we 

estimated that up to four facilities may 

produce commercial-scale volumes of 

cellulosic biofuel available for 

transportation use in the U.S. in 2013. 

Two of these four facilities have made 

sufficient progress to project that 

commercial scale production from these 

two facilities will occur, and we have 

therefore included production from 

them in our projected available volume 

for 2013. All four facilities are listed in 

Table I.B.1–1 along with our estimate of 

the projected 2013 volume for each. 

TABLE I.B.1–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL PLANT VOLUMES FOR 2013 

Company Location Fuel type 

Capacity 

(million 

gallons per 

year) 

First 

production 

(projected) 

Projected 

available 

volume a

Abengoa ................................ Hugoton, KS ......................... Ethanol .................................. 24 4Q 2013 0 

Fiberight ................................. Blairstown, IA ........................ Ethanol .................................. 6 4Q 2013 0 

INEOS Bio ............................. Vero Beach, FL .................... Ethanol .................................. 8 1Q 2013 6 

KiOR ...................................... Columbus, MS ...................... Gasoline and Diesel ............. 11 1Q 2013 8 

Total ............................... ............................................... ............................................... 49 ........................ 14 

aVolumes listed in million ethanol-equivalent gallons. 

The EIA projections, variation in 

expected start-up times, along with the 

facility production capacities, company 

production plans, and a variety of other 

factors have all been taken into account 

in predicting the actual volume of 

cellulosic biofuel that will be produced 

in 2013. For more detailed information 

on our projections of cellulosic biofuel 

in 2013 and the companies we expect to 

produce this volume see Section II. 

2. Advanced Biofuel and Total 

Renewable Fuel in 2013 

The statute indicates that we may 

reduce the applicable volume of 

advanced biofuel and total renewable 

fuel specified in the statute for 2013 if 

we determine that the projected volume 

of cellulosic biofuel production for 2013 

falls short of the statutory volume of 1.0 

billion gallons. As shown in Table 

I.B.1–1, we have proposed a finding that 

this is the case. Therefore, we have also 

evaluated whether to propose lowering 

the applicable volumes for advanced 

biofuel and total renewable fuel. The 

statute provides no explicit criteria or 

direction for making this determination. 

We have focused our evaluation on the 

availability of renewable fuels that 

would qualify as advanced biofuel. The 

CAA specifies an applicable volume of 

2.75 billion gallons of advanced biofuel 

for 2013. To determine whether to lower 

this volume, we considered the sources 

that are expected to satisfy any 

advanced biofuel mandate including: 

Cellulosic biofuel, biomass-based diesel, 

other domestically-produced advanced 

biofuels, and imported sugarcane 

ethanol. 

As described in Section II, we project 

that 14 mill gallons of cellulosic biofuel 

will be available in 2013. This volume 

would fulfill 0.014 bill gal of the 2.75 

bill gal advanced biofuel requirement. 

We have finalized a volume of 1.28 

bill gal for 2013 biomass-based diesel in 

a separate action, and we expect that the 

vast majority of this requirement will be 

fulfilled with biodiesel. Since biodiesel 

has an Equivalence Value of 1.5, 1.28 

billion physical gallons of biodiesel 

would provide 1.92 billion ethanolequivalent gallons that could be counted 

towards the advanced biofuel standard 

of 2.75 billion gallons. 

As described in more detail in Section 

III, we have projected that domestic 

advanced biofuels are expected to grow 

steadily through 2013, and would 

include renewable diesel that does not 

qualify to be biomass-based diesel, 

heating oil, biogas used as CNG, and 

ethanol. We are projecting that about 

150 mill gal of domestic advanced 

biofuels is likely to be available in 2013, 

which would fulfill 0.15 bill gal of the 

2.75 bill gal advanced biofuel 

requirement. 

After taking into account cellulosic 

biofuel, biomass-based diesel, and 

domestic advanced biofuels, 666 mill 

gal of imported sugarcane ethanol 

would be needed to fulfill the advanced 

biofuel requirement of 2.75 bill gal. As 

described in Section III, there is reason 

to believe that this volume can be 

exported from Brazil to the U.S. in 2013 

given Brazilian production and 

consumption projections. However, we 

note that there is some uncertainty in 

the volumes of Brazilian sugarcane 

ethanol that could be imported into the 

U.S. in 2013. This uncertainty arises 

from the possibility of poor sugarcane 

crop yields in the next harvest as 

occurred during the previous harvest, 

and the interplay between these yields 

and Brazilian demand for ethanol, 

world sugar prices, and international 

demand for biofuels. While most 

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9286 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

3 ‘‘2012 Ethanol Industry Outlook,’’ Renewable 

Fuels Association, http://ethanolrfa.3cdn.net/ 

d4ad995ffb7ae8fbfe_1vm62ypzd.pdf. 

4Letter, Adam Sieminski, Administrator, U.S. 

Energy Information Administration, to Lisa P. 

Jackson, Administrator, U.S. EPA, October 18, 2012. 5 77 FR 59458. 

projections indicate that Brazilian 

sugarcane crop yields will be 

significantly better in the coming 

harvest in comparison to the previous 

harvest, and that as a result sufficient 

sugarcane ethanol could be produced 

and exported to the U.S. to help meet 

the need for 2.75 bill gal advanced 

biofuel, we nevertheless request 

comment on whether the advanced 

biofuel requirement should be reduced 

to account for this uncertainty. 

We also note that in both 2011 and 

2012 there was significant two-way 

trade in ethanol between the United 

States and Brazil. According to current 

EIA data, in 2011 the U.S. imported 101 

million gallons of sugarcane ethanol 

from Brazil and exported 396 million 

gallons of corn-based ethanol to Brazil. 

Total fuel ethanol exports in 2011 were 

1.2 billion gallons, and total exports 

through October 2012 were 646 million 

gallons. 

Finally, we believe there will be 

sufficient volumes of conventional 

renewable fuel including corn-ethanol, 

combined with advanced biofuel, to 

satisfy the 16.55 billion gallon 

applicable volume of total renewable 

fuel specified in the Act. For instance, 

corn-ethanol production capacity in 

2012 was 14.9 bill gal, compared to the 

13.8 bill gal needed to meet the RFS 

requirements in 2013.3 We are not 

proposing to reduce the advanced 

biofuel volume requirement of 2.75 bill 

gal, nor the total renewable fuel volume 

requirement of 16.55 bill gal. However, 

we are taking comment on lowering the 

advanced biofuel and total renewable 

volumes due to various uncertainties. 

For example, we currently project that 

666 mill gal of sugarcane ethanol would 

need to be imported in order to meet the 

advanced biofuel volume. However, the 

recent reinstatement of the biodiesel tax 

credit introduced uncertainty around 

those projections, since it affects the 

amount of biodiesel that may be 

produced above the required 1.28 bill 

gal. In addition, the potential for 

increased domestic demand in Brazil if 

the 25% biofuel blending requirement is 

reinstated also introduces uncertainty 

around the projections. We seek input 

on these and other such factors that are 

relevant to how the advanced biofuel 

volume requirement would be met. 

3. Proposed Standards for 2013 

The renewable fuel standards are 

expressed as a volume percentage and 

are used by each refiner, blender or 

importer to determine their renewable 

fuel volume obligations. The applicable 

percentages are set so that if each 

regulated party meets the percentages, 

and if EIA projections of gasoline and 

diesel use for the coming year are 

accurate, then the amount of renewable 

fuel, cellulosic biofuel, biomass-based 

diesel, and advanced biofuel actually 

used will meet the volumes required on 

a nationwide basis. 

To calculate the percentage standards 

for 2013, we have used the proposed 

projected volume of 14 million ethanolequivalent gallons of cellulosic biofuel 

and the volume of biomass-based diesel 

of 1.28 bill gal that we have finalized in 

a separate action. The applicable 

volumes used in this proposal for 

advanced biofuel and total renewable 

fuel for 2013 are those specified in the 

statute. These volumes are shown in 

Table I.B.3–1. 

TABLE I.B.3–1—PROPOSED VOLUMES

USED TO DETERMINE THE PROPOSED 2013 PERCENTAGE STANDARDS a

Cellulosic biofuel ........... 14 mill gal. 

Biomass-based diesel ... 1.28 bill gal. 

Advanced biofuel .......... 2.75 bill gal. 

Renewable fuel ............. 16.55 bill gal. 

aAll volumes are ethanol-equivalent, except 

for biomass-based diesel which is actual. 

Four separate standards are required 

under the RFS program, corresponding 

to the four separate volume 

requirements shown in Table I.B.3–1. 

The specific formulas we use to 

calculate the renewable fuel percentage 

standards are contained in the 

regulations at § 80.1405 and repeated in 

Section IV.B.1. The percentage 

standards represent the ratio of 

renewable fuel volume to projected nonrenewable gasoline and diesel volume. 

The projected volume of transportation 

gasoline and diesel used to calculate the 

standards in today’s proposed rule was 

derived from EIA projections.4 At this 

time EPA has not approved any small 

refinery or small refiner exemptions for 

2013, and thus no adjustment has been 

made to the proposed standards to 

account for such exemptions. The 

proposed standards for 2013 are shown 

in Table I.B.3–2. Detailed calculations 

can be found in Section IV, including 

the projected 2013 gasoline and diesel 

volumes used. 

TABLE I.B.3–2—PROPOSED

PERCENTAGE STANDARDS FOR 2013 

Cellulosic biofuel ................. 0 .008% 

Biomass-based diesel ........ 1 .12% 

Advanced biofuel ................ 1 .60% 

Renewable fuel ................... 9 .63% 

4. Biomass-Based Diesel for 2014 

While Clean Air Act section 

211(o)(2)(B) specifies the volumes of 

biomass-based diesel through year 2012, 

it directs the EPA to establish the 

applicable volume of biomass-based 

diesel for years after 2012 no later than 

14 months before the first year for 

which the applicable volume will apply. 

EPA proposed an applicable volume of 

biomass-based diesel for 2013 on July 1, 

2011, and issued a final rule 

establishing that applicable volume on 

September 27, 2012.5

Under 211(o)(2)(B)(ii) EPA, in 

coordination with the Secretary of 

Energy and the Secretary of Agriculture, 

is to establish the applicable volume for 

biomass based diesel in 2014 based on 

a review of implementation of the 

program in prior years and analysis of 

a number of factors, including biodiesel 

production capacity, consumption, and 

infrastructure capabilities, as well as 

impacts on emissions, costs, energy 

security, and other factors. While the 

industry produced around 1.15 bill 

physical gallons in 2012, we are still 

evaluating the potential market impacts 

of this production level. In order to 

provide sufficient time for this 

evaluation, as well as the other analyses 

we are required to conduct, we are not 

proposing an applicable volume of 

biomass-based diesel for 2014 in today’s 

NPRM. Instead, we will issue a separate 

proposal at a later date. 

5. Administrative Actions 

By November 30 of each year we are 

required to make several administrative 

announcements which facilitate 

program implementation in the 

following calendar year. These 

announcements include the cellulosic 

biofuel waiver credit price and the 

status of the aggregate compliance 

approach to land-use restrictions under 

the definition of renewable biomass for 

both the U.S. and Canada. Since we did 

not make these announcements for 2013 

by November 30 of 2012, we are here 

presenting our assessments of these 

administrative actions. We will provide 

the final announcements for these 

administrative actions when we finalize 

the standards being proposed in today’s 

action. 

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6 In the first half of 2010 when the RFS1 program 

was still effective, some cellulosic biomass ethanol 

was produced and the RINs generated were valid 

for demonstrating compliance with the 2010 and 

2011 RFS2 cellulosic biofuel standards. However, 

the RFS1 cellulosic biomass ethanol that was 

produced was not made from cellulosic feedstocks, 

but rather was categorized as cellulosic because it 

was produced in plants using waste materials to 

displace 90% or more of fossil fuel use under the 

then-effective definition of cellulosic biomass 

ethanol in CAA Section 211(o)(1)(A). See also 40 

CFR 80.1101(a)(2). 

7 4,248,338 cellulosic waiver credits were 

purchased for 2011 compliance according to the 

EMTS Web site (information retrieved from the Web 

site on December 11, 2012) at a cost of $1.13 per 

Continued 

In the event that we reduce the 

required volume of cellulosic biofuel for 

2013 below the applicable volume 

specified in the statute, EPA is required 

to offer biofuel waiver credits to 

obligated parties that can be purchased 

in lieu of acquiring cellulosic biofuel 

RINs. These waiver credits are not 

allowed to be traded or banked for 

future use, are only allowed to be used 

to meet the 2013 cellulosic biofuel 

standard, and cannot be applied to 

deficits carried over from 2012. 

Moreover, unlike cellulosic biofuel 

RINs, waiver credits may not be used to 

meet either the advanced biofuel 

standard or the total renewable fuel 

standard. For the 2013 compliance 

period, we estimate that cellulosic 

biofuel waiver credits could be made 

available to obligated parties for end-ofyear compliance should they need them 

at a price of $0.42 per credit. 

As part of the RFS2 regulations, EPA 

established an aggregate compliance 

approach for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land. This 

compliance approach relieved such 

producers (and importers of such fuel) 

of the individual recordkeeping and 

reporting requirements otherwise 

required of producers and importers to 

verify that feedstocks used in the 

production of RIN-qualifying renewable 

fuel meet the definition of renewable 

biomass. EPA determined that 402 

million acres of U.S. agricultural land 

was available in 2007 (the year of EISA 

enactment) for production of crops and 

crop residue that would meet the 

definition of renewable biomass, and 

determined that as long as this total 

number of acres is not exceeded, it is 

unlikely that new land has been devoted 

to crop production based on historical 

trends and economic considerations. We 

indicated that we would conduct an 

annual evaluation of total U.S. acreage 

that is cropland, pastureland, or 

conservation reserve program land, and 

that if the value exceed 402 million 

acres, producers using domestically 

grown crops or crop residue to produce 

renewable fuel would be subject to 

individual recordkeeping and reporting 

to verify that their feedstocks meet the 

definition of renewable biomass. Based 

on data provided by the USDA, we have 

estimated that U.S. agricultural land 

reached 384 million acres in 2012, and 

thus did not exceed the 2007 baseline 

acreage. 

On September 29, 2011, EPA 

approved the use of an aggregate 

compliance approach to renewable 

biomass verification for planted crops 

and crop residue grown in Canada. The 

Government of Canada utilized several 

types of land use data to demonstrate 

that the land included in their 124 

million acre baseline is cropland, 

pastureland or land equivalent to U.S. 

Conservation Reserve Program land that 

was cleared or cultivated prior to 

December 19, 2007, and was actively 

managed or fallow and nonforested on 

that date (and is therefore RFS2 

qualifying land). The total agricultural 

land in Canada in 2012 is estimated at 

121 million acres. The total acreage 

estimate of 121 million acres does not 

exceed the trigger point for further 

investigation. 

C. Impacts of Proposed Actions 

Analyses for the March 26, 2010 RFS2 

final rule indicated the GHG benefits 

from cellulosic biofuels compared to the 

petroleum-based fuels they displace 

could likely range well above the 60 

percent threshold. Therefore, EPA 

expects that the increase in cellulosic 

biofuel use that EPA has projected for 

2013 over prior year production levels 

would have directionally beneficial 

GHG emissions impacts. 

For advanced biofuel and total 

renewable fuel, we are not proposing to 

reduce the applicable volumes below 

the volumes required in the statute. All 

of the impacts of the biofuel volumes 

specified in the statute were addressed 

in the RFS2 final rule published on 

March 26, 2010. Today’s rulemaking 

simply proposes the standards for 2013 

advanced biofuel and total renewable 

fuel whose impacts were previously 

analyzed. Nevertheless, we recognize 

that the combination of imports of 

sugarcane ethanol from Brazil into the 

U.S. and exports of corn-ethanol from 

the U.S. to Brazil that may occur as a 

result of the advanced biofuel volume 

requirement engenders additional 

transport related emissions. 

II. Projection of Cellulosic Volume for 

2013 

In order to project the production 

volume of cellulosic biofuel in 2013 for 

use in setting the percentage standard, 

we considered the EIA projections and 

collected information on individual 

facilities that have the potential to 

produce qualifying volumes for 

consumption as transportation fuel, 

heating oil, or jet fuel in the U.S. in 

2013. This section describes the 

volumes that we project will be 

produced or imported in 2013 as well as 

some of the uncertainties associated 

with those volumes. 

In the past several years the cellulosic 

biofuel industry has made many 

significant advances. The production 

cost of cellulosic biofuels continues to 

fall as a result of ongoing technology 

development and operating experience 

gained from many research and 

development and demonstration-scale 

facilities across the country. These 

important advances include higher 

biofuel yields per ton of feedstock as 

well as lower enzyme and catalyst costs. 

As a result of these yield increases, the 

projected capital costs and energy costs 

to produce a gallon of cellulosic biofuel 

have decreased. New feedstock supply 

chains, which will be necessary to 

provide the raw materials for 

anticipated commercial facilities, have 

been established, and in several cases 

companies have signed contracts to 

obtain significant quantities of 

feedstocks for their first commercial 

facilities. These developments, along 

with the increased availability of project 

financing, have resulted in the 

construction of new commercial-scale 

cellulosic biofuel production facilities. 

Two commercial-scale facilities are both 

structurally complete and currently in 

the start-up phase of operations. Several 

additional facilities are planning 

construction in 2013 and start-up in 

2014. If these first facilities are 

successful and operate as designed it 

will significantly decrease the perceived 

risk associated with similar future 

facilities and could potentially lead to 

the rapid deployment of cellulosic 

biofuel production facilities around the 

United States. 

Despite significant advances in 

cellulosic biofuel production technology 

in recent years, RIN-generating 

cellulosic biofuel production in 2010 

and 2011 was zero despite our 

projections that the industry was 

positioned to produce about 6 million 

gallons in each of those years.6 In 2010 

the majority of the cellulosic biofuel 

shortfall was met through the use of 

RINs generated under the RFS1 

regulations, and since there were excess 

RFS1 cellulosic RINs many carried over 

into the following year. The remaining 

cellulosic biofuel requirements in 2011 

were met through the purchase of 

cellulosic biofuel waiver credits.7 A 

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9288 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

credit. The ethanol-equivalent volume of cellulosic 

biofuel projected for 2011 and used to calculate the 

percentage standard for that year was 6.0 million 

gallons. 

8On December 31, 2012 EPA also received a 

request for a waiver of the 2012 cellulosic biofuel 

volume requirement from the American Fuel and 

Petrochemical Manufacturers. 

9Solecki M, Rickey D, Epstein B. Advanced 

Biofuel Market Report 2011: Meeting the California 

LCFS. Environmental Entrepreneurs. August 22, 

2011. Available Online <http://www.e2.org/ext/doc/ 

E2%20Advanced%20Biofuel%20Mkt%20Report

%202011.pdf>. 

10Nielsen, Peder Holk. ‘‘The Path to 

Commercialization of Cellulosic Ethanol—A 

Brighter Future.’’ PowerPoint Presentation. 

Conference Call. February 22, 2012. Available 

Online <http://www.novozymes.com/en/investor/

events-presentations/Documents/Cellic3_conf_call_

220212.pdf>. 

11 IBID. 

12 Department of Energy. Biomass Multi-Year 

Program Plan. April 2012. DOE/EE–0702. Available 

Online <http://www1.eere.energy.gov/biomass/

pdfs/mypp_april_2012.pdf>. 

13Hettinga WG, Junginger HM, Dekker SC, 

Hoogwijk M, McAloon AJ, Hicks KB. 

Understanding the reductions in US corn ethanol 

production costs: An experience curve approach. 

Energy Policy 37 (2009): 190–203. Available Online 

<http://ddr.nal.usda.gov/bitstream/10113/22550/1/

IND44146988.pdf>. 

14 IBID. 

discussion of the reasons for this 

disparity between our projections and 

subsequent production is provided in 

Section II.B below. 

In 2012 the first cellulosic RINs were 

generated under the RFS2 regulations. 

However, cellulosic biofuel production 

once again fell far short of our 

projections in 2012.8

A. Statutory Requirements 

The volumes of renewable fuel to be 

used under the RFS program each year 

(absent an adjustment or waiver by EPA) 

are specified in CAA 211(o)(2). For 

2013, the statute specifies a cellulosic 

biofuel applicable volume requirement 

of 1.0 bill gal. The statute requires that 

if EPA determines, based on EIA’s 

estimate, that the projected volume of 

cellulosic biofuel production for the 

following year is less than the 

applicable volume shown in Table II.A– 

1, then EPA is to reduce the applicable 

volume of cellulosic biofuel to the 

projected volume available during that 

calendar year. 

In addition, if EPA reduces the 

required volume of cellulosic biofuel 

below the level specified in the statute, 

the Act also indicates that we may 

reduce the applicable volumes of 

advanced biofuels and total renewable 

fuel by the same or a lesser volume. Our 

consideration of the 2013 volume 

requirements for advanced biofuels and 

total renewable fuel is presented in 

Section III. 

B. Status of the Cellulosic Biofuel 

Industry 

As in previous years, cellulosic 

biofuel production in the United States 

in 2011 was limited to small-scale 

research and development, pilot, and 

demonstration-scale facilities. 

Companies such as Abengoa, BP, 

Coskata, DuPont Danisco, KL Energy, 

KiOR, Poet, and others successfully 

operated small-scale facilities in 2011. 

Several of these facilities, including all 

that were part of our 2012 volume 

projections, are discussed in more detail 

in Section II.C below. While there were 

numerous small-scale facilities 

producing cellulosic biofuel in 2011, the 

total volume of fuel produced was very 

small. Because of the R&D nature of 

these small facilities they are neither 

designed to produce fuel for commercial 

sale nor required to report the small 

volumes of fuel they produced. No RINs 

were generated for volumes that were 

produced in 2011, despite all of the 

companies included in the 2011 

projections expressing interest and/or 

intent in doing so. Although EPA has 

not attempted to accurately assess 

production volumes, based on generally 

available information we believe that 

total production in the United States in 

2011 was likely less than one million 

gallons of cellulosic biofuel across the 

industry. 

Each of the companies included in 

our 2011 projections for cellulosic 

biofuel production had different reasons 

for not generating cellulosic RINs in 

2011. DuPont had concerns about their 

ability to retain the R&D status of their 

Vonore, TN facility if they generated 

RINs and sold the cellulosic ethanol 

they produced from this facility. 

Fiberight was unable to secure the 

funding required to complete the 

modifications to their facility to allow 

for cellulosic ethanol production. KL 

Energy finalized an agreement with 

Petrobras in the second half of 2010 and 

changed the direction of their facility to 

focus on using bagasse as a primary 

feedstock. Finally, after completing 

initial production of cellulosic ethanol 

Range Fuels shut down operations in 

January 2011 and eventually declared 

bankruptcy. 

While cellulosic biofuel production in 

the United States remains limited, the 

industry continues to make significant 

progress towards producing cellulosic 

biofuel at prices competitive with 

petroleum fuels. From 2007 through the 

second quarter of 2011 venture 

capitalists invested over $2.4 billion in 

advanced biofuel companies in North 

America.9 Recent advancements in 

enzyme and catalyst technologies are 

allowing cellulosic biofuel producers to 

achieve greater yields of biofuel per ton 

of feedstock. These advancements have 

led to lower operational costs as they 

have driven down the cost for feedstock, 

energy, and other important inputs on a 

per gallon basis. For example, the 

estimated cost of producing cellulosic 

ethanol using an enzymatic hydrolysis 

process in 2007 was $4–$8 per gallon.10

By 2012 the estimated cost of cellulosic 

ethanol production using the same 

process had fallen to $2–$3.50 per 

gallon.11 The U.S. Department of Energy 

similarly reports that advancements in 

cellulosic ethanol technology have 

resulted in a decrease in modeled costs 

from approximately $4 per gallon 

(minimum ethanol selling price) in 2007 

to approximately $2.50 per gallon in 

2011.12 The same technological 

advances have also lowered the capital 

costs of cellulosic biofuel production 

facilities per gallon of annual fuel 

production, as more gallons of biofuel 

can be produced at a facility without 

additional equipment or increased 

feedstock requirements. 

As cellulosic biofuel producers gain 

experience and continue to progress 

towards commercial-scale biofuel 

production, it is reasonable to expect 

that the production costs and capital 

costs will continue to decline. This is a 

pattern shown by many new 

technologies, including renewable and 

emerging energy technologies. One 

example which has several similarities 

to the cellulosic biofuel industry is the 

experience with the dry mill corn 

ethanol industry. From 1983, the year in 

which the first commercial volumes of 

dry mill ethanol were produced, to 2005 

the processing cost of corn ethanol 

decreased by 45%, while the capital 

costs of a dry mill ethanol facility 

decreased by 88%.13 Many of the 

drivers for this cost reduction, such as 

higher ethanol yields, reduced enzyme 

costs, and better fermentation 

technologies 14 are also expected to be 

factors in the lower cellulosic biofuel 

costs expected in the future. While the 

cost reduction percentages observed in 

the dry mill corn ethanol industry are 

not directly applicable to the cellulosic 

biofuel industry, the trend of decreasing 

production and capital costs over time 

is expected to hold true. 

Another area where significant 

progress has been made is that of 

feedstock supply for commercial-scale 

cellulosic biofuel production facilities. 

This issue has often been raised as a 

factor that could hinder the 

development of the cellulosic biofuel 

industry as many of the proposed 

facilities rely on feedstocks, such as 

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agricultural residues or energy crops, for 

which supply chains have not 

previously existed. Over the past several 

years both Abengoa and Poet have been 

reaching out to farmers in the regions 

surrounding their first commercial-scale 

facilities to ensure the availability of the 

necessary feedstock. Because corn cobs 

and stover are only seasonally available, 

using them as a feedstock for a 

cellulosic biofuel production facility 

would require significant feedstock 

storage facilities. In the last two years 

Abengoa and Poet completed 

construction of large-scale feedstock 

storage facilities to ensure adequate 

supply to their cellulosic biofuel 

production facilities throughout the 

year. Both companies successfully 

completed fall biomass harvests in 2011 

and have contracted with local farmers 

to provide feedstock for their cellulosic 

ethanol facilities. This supply chain will 

not only provide feedstock for their first 

commercial-scale facilities, but also a 

model that can be re-created at future 

production facilities. 

Several cellulosic biofuel producers 

are planning to use slash, forest 

thinnings, and forest product residue or 

the cellulosic portions of yard waste as 

feedstock. This material has many 

qualities that make it desirable as a 

cellulosic biofuel feedstock. It is 

generally inexpensive and is readily 

available in some regions of the United 

States. It is also available year round 

rather than seasonally, significantly 

reducing the need for large-scale 

feedstock storage facilities. Securing a 

sufficient quantity of this feedstock for 

a commercial-scale facility, however, 

can be challenging. In the summer of 

2011 KiOR announced it had signed a 

feedstock agreement with Catchlight 

Energy to provide all the necessary 

slash, forest thinning, and forest product 

residue for their first commercial-scale 

facility. While KiOR plans to transition 

to planted trees for future facilities, 

KiOR now has secured sufficient 

feedstock such that they can produce 

cellulosic biofuel and cellulosic RINs 

using an existing pathway at their first 

commercial-scale facility. INEOS Bio 

also has a long term agreement with 

Indian River County to provide 

vegetative waste which will serve as the 

feedstock for their first facility. 

Another appealing feedstock for 

cellulosic biofuel production is 

separated municipal solid waste (MSW). 

MSW is already being collected and 

transported to a centralized facility, is 

consistently available throughout the 

year, and can be obtained for a very low, 

or even negative cost. MSW often 

contains contaminants, however, that 

may make it challenging to process for 

some cellulosic biofuel technologies. 

EPA also requires that waste separation 

plans be submitted and approved prior 

to any company generating RINs using 

separated MSW as a feedstock. In June 

2012 EPA approved the first waste 

separation plan under the RFS program 

for Fiberight’s facility in Blairstown, 

Iowa. 

Significant progress has also been 

made by some companies towards 

funding the construction of their first 

commercial-scale facilities. In the early 

years of the cellulosic biofuel industry 

several small start-up companies 

announced plans to build large 

commercial-scale facilities that were 

scheduled to begin production in the 

past few years. The construction of 

many of these facilities was dependent 

on the companies raising additional 

funding, either from venture capitalists, 

government grants, or loans backed by 

government guarantees. So far few of the 

companies that made these early 

announcements have been able to 

successfully raise the necessary funds 

and begin construction. Securing this 

funding proved difficult, and when it 

did not materialize the projects were 

delayed or cancelled. 

The funding profiles of the companies 

included in our proposed volume for 

2013, as well as for many of the 

companies targeting production in 2014, 

are markedly different. Many of these 

projects have already received, and in 

several cases have closed on loan 

guarantees and grants offered by DOE or 

USDA. Other companies have filed for 

and successfully executed IPOs. Several 

cellulosic ethanol projects are being 

self-financed by large companies such 

as Abengoa and Poet with significant 

experience in the biofuel, 

petrochemical, and specialty chemical 

markets. This solid financial backing 

has allowed these companies to proceed 

with construction. Both of the facilities 

included in our proposed volume for 

2013 have already completed the 

construction of their first commercial 

production facilities. There is therefore 

far less uncertainty as to likely 

production from these two facilities 

than has been present for most of EPA’s 

earlier projections. The next section 

provides additional details on the 

funding and construction status of the 

projects included in our projected 

cellulosic biofuel production volumes 

for 2013. 

If these first commercial-scale 

cellulosic biofuel production facilities 

are successful, the potential exists for a 

rapid expansion of the industry in 

subsequent years. Having successful 

commercial-scale facilities would not 

only provide useful information to help 

maximize the efficiency of future 

facilities, but would also significantly 

decrease the technology and scale-up 

risks associated with cellulosic biofuel 

production facilities and could lead to 

increased access to project funding. 

Fiberight and ZeaChem both plan to 

build larger-scale facilities (∼25 mill gal 

per year) as soon as they are able to raise 

the necessary funds. INEOS Bio plans to 

expand production by building 

additional units near sources of 

inexpensive feedstock ranging in size 

from 8 to 50 million gallons of ethanol 

per year. They are currently exploring 

expansion possibilities in the United 

States and internationally. KiOR has 

plans for a second commercial-scale 

facility to be built in Natchez, MS, that 

will be approximately three times larger 

(∼30 mill gal per year) than their 

Columbus, MS, plant and plans to break 

ground at their second facility after their 

first is fully operational. Abengoa 

currently anticipates construction of 

additional cellulosic ethanol facilities at 

multiple locations, likely including colocating with some of their existing 

starch facilities in the US. Poet has a 

similar expansion strategy to build 

cellulosic ethanol plants at their grain 

ethanol facilities, license their 

technology for use at other grain ethanol 

facilities, and build cellulosic ethanol 

facilities that use feedstocks such as rice 

straw, rice hulls, woody biomass, or 

energy crops as a feedstock. Poet’s goal 

is to be involved in the production of 

3.5 billion gallons of cellulosic ethanol 

per year by 2022. Several other 

companies, such as DuPont and 

Enerkem are also targeting 2014 for the 

start-up of cellulosic biofuel production 

facilities and would likely look to build 

additional facilities relatively quickly if 

successful. While many of these 

expansion plans are still in the early 

stages and are subject to change, they do 

point to the potential for cellulosic 

biofuel production to increase rapidly in 

future years. 

C. Cellulosic Biofuel Volume 

Assessment for 2013 

In 2011 no cellulosic biofuel RINs 

were generated, though some small 

volumes were produced. 

Announcements of new projects and 

project funding, changes in project 

plans, project delays, and cancellations 

occurred. Biofuel producers faced not 

only the challenge of the scale-up of 

innovative, first-of-a-kind technology, 

but also the challenge of securing 

funding in a difficult economy. While 

the cellulosic biofuel producer tax 

credit has been extended through 2013, 

the short-term nature of this incentive 

and legal challenges to the RFS volumes 

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have caused some technology 

developers and investors to question the 

long term RIN value of cellulosic 

biofuels. The resulting uncertainty may 

have had an impact on cellulosic biofuel 

production in 2011 and 2012. 

Despite these challenges, there are 

several factors indicating that significant 

volumes of cellulosic biofuel are 

projected to be produced in 2013. 

Commercial-scale cellulosic biofuel 

projects from INEOS Bio and KiOR are 

structurally complete and expected to 

begin fuel production in the first quarter 

of 2013 and achieve production rates at 

or near their nameplate capacities by the 

end of 2013. Another commercial-scale 

facility backed by Abengoa, a large 

company with significant experience in 

biofuel production, is also scheduled to 

begin producing cellulosic biofuel in 

2013. These facilities are indicative of a 

shift across the cellulosic biofuel 

industry from small-scale R&D and 

demonstration facilities operated by 

small start-up companies to large 

commercial-scale facilities backed by 

large companies, many of which have 

substantial experience in related 

industries. 

In order to project cellulosic biofuel 

production for 2013, we have tracked 

the progress of more than 100 biofuel 

production facilities. From this list of 

facilities we used publically available 

information, as well as information 

provided by DOE and USDA, to make a 

preliminary determination of which 

facilities are the most likely candidates 

to produce cellulosic biofuel and 

generate cellulosic biofuel RINs in 2013. 

Each of these companies was 

investigated further in order to 

determine the current status of their 

facilities and their likely cellulosic 

biofuel production and RIN generation 

volumes for the coming years. 

Information such as the funding status 

of these facilities, current status of the 

production technologies, announced 

construction and production rampup 

periods, and annual fuel production 

targets were all considered when we 

met with senior level representatives of 

each company to discuss cellulosic 

biofuel target production levels for 

2013. Our projection of the cellulosic 

biofuel production in 2013 is based on 

the estimate we received from EIA as 

well as the individual production 

projections that emerged from these 

discussions. A brief description can be 

found below for each of the companies 

we believe will produce cellulosic 

biofuel and make it commercially 

available in 2013. We will continue to 

gather more information to help inform 

our decision regarding the final 

cellulosic biofuel volume to be required 

for 2013. 

In the sections that follow, we first 

discuss the cellulosic production 

facilities that were part of our volume 

projections for the 2012 compliance 

year and the progress that they have 

made. Then we present our 

consideration of additional facilities 

that we believe will also produce 

cellulosic biofuel in 2013. 

1. Cellulosic Biofuel Facilities 

Considered in the 2012 Projections 

In the January 9, 2012, final rule that 

established the required 2012 cellulosic 

biofuel volume, we identified six 

production facilities that we projected 

would produce cellulosic biofuel and 

make that fuel commercially available 

in 2012. Five of these production 

facilities are currently structurally 

complete and one is planning to retrofit 

an existing corn ethanol plant with 

construction beginning in the first half 

of 2013. Six active facilities have 

completed the registration process for 

the RFS program, and are currently able 

to generate cellulosic RINs. The current 

status of each of these facilities, 

including target production levels for 

each facility in 2013, is discussed 

below. 

API 

American Process Inc. (API) is 

developing a project in Alpena, 

Michigan capable of producing up to 

900,000 gallons of cellulosic ethanol per 

year from woody biomass. This facility 

will use a technology developed by API 

called GreenPower+TM. This technology 

extracts the hemicellulose portion of 

woody biomass using hot water and 

hydrolyzes it into sugars. These sugars 

are then converted to ethanol or other 

alcohols, while the remaining portion of 

the woody biomass, containing mostly 

cellulose and lignin, is processed into 

wood paneling at a co-located facility. 

At future, larger-scale facilities API 

anticipates burning the residual biomass 

in a boiler to produce renewable steam 

and electricity as well as cellulosic 

biofuel. 

In January 2010 API received a grant 

from DOE for up to $18 million for the 

construction of their demonstration 

facility. Construction of the Alpena, 

Michigan facility began in March 2011 

and API began commissioning 

operations at their facility in the 

summer of 2012. Production start-up is 

expected to begin in 2013. 

Fiberight 

Fiberight uses an enzymatic 

hydrolysis process to convert the 

biogenic portion of separated MSW and 

other waste feedstocks into ethanol. 

They have successfully completed five 

years of development work on their 

technology at their small pilot plant in 

Lawrenceville, Virginia. In 2009 

Fiberight purchased an idled corn 

ethanol plant in Blairstown, Iowa with 

the intention of making modifications to 

this facility to allow for the production 

of 6 million gallons of cellulosic ethanol 

per year from separated MSW and 

industrial waste streams. These 

modifications were scheduled to be 

completed in 2011, but difficulties in 

securing funding have resulted in 

construction at this facility being 

delayed. In January 2012 Fiberight was 

offered a $25 million loan guarantee 

from USDA. Closing on this loan would 

provide substantially all of the 

remaining funds required for Fiberight 

to complete the required modifications 

at their Blairstown facility. Construction 

is expected to begin in early spring 2013 

and the company expects that it will 

take approximately 6 months to 

complete. Additionally, Fiberight’s 

waste separation plan for this facility 

was approved in June 2012 allowing 

Fiberight to generate RINs for the 

cellulosic ethanol they produce using 

separated MSW as a feedstock. Fiberight 

is also currently developing a second 

commercial-scale project based on their 

MSW ‘‘hub and spoke’’ concept. They 

anticipate that this facility will begin 

fuel production in 2014 and will 

produce approximately 25 million 

gallons of cellulosic ethanol per year 

when fully built out. 

INEOS Bio 

INEOS Bio has developed a process 

for producing cellulosic ethanol by first 

gasifying cellulosic feedstocks into a 

syngas and then using naturally 

occurring bacteria to ferment the syngas 

into ethanol. In January 2011 USDA 

announced a $75 million loan guarantee 

for the construction of INEOS Bio’s first 

commercial facility to be built in Vero 

Beach, Florida. This loan was closed in 

August 2011. This was in addition to 

the grant of up to $50 million INEOS 

Bio received from DOE in December 

2009. At full capacity, this facility will 

be capable of producing 8 million 

gallons of cellulosic biofuel as well as 

6 megawatts (gross) of renewable 

electricity from a variety of feedstocks 

including yard, agricultural, and wood 

waste. The facility also plans to use a 

limited quantity of separated MSW as a 

feedstock after initial start-up. 

On February 9, 2011, INEOS Bio 

broke ground on this facility. INEOS Bio 

completed construction on this facility 

in June 2012 and began full 

commissioning of the facility. In August 

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15 In conversations with KiOR they refer to this 

as a ‘‘line-out’’ period. 16EPA is not assuming that this facility will 

produce at a 30% rate throughout the entire startup period, but rather projects that cellulosic biofuel 

production, when averaged over the entire start-up 

period, will be 30% of the production capacity 

during that period. Production will likely be very 

small in the first few months and will ramp up to 

near full production capacity by the end of the startup period. 

2012 INEOS Bio received approval from 

EPA for their yard waste separation plan 

and successfully registered their Vero 

Beach, FL facility under the RFS 

program. In October 2012 the facility 

began producing renewable electricity. 

INEOS Bio entered the start-up phase of 

cellulosic ethanol production in 

November 2012. During this phase the 

facility was not run continually as 

facility modifications continued to be 

made, however a small volume of 

cellulosic ethanol was successfully 

produced. INEOS Bio has reported that 

they plan to be producing cellulosic 

ethanol at levels near the facility’s 

capacity of 8 million gallons per year 

throughout 2013. This reported 

schedule represents a very aggressive 

ramp-up period. Due to the many 

challenges of starting up a first-of-a-kind 

facility and the history of production 

delays in the cellulosic biofuel industry, 

EPA believes a more conservative 

projection is appropriate. For this 

proposal we project 6 million gallons of 

cellulosic ethanol from INEOS Bio in 

2013. This volume is consistent with 

what would be expected from this 

facility assuming a six month straightline ramp-up period beginning in 

January 2013. EPA requests comment on 

the projected available volume from 

INEOS Bio’s facility in 2013, as well as 

these assumptions for the appropriate 

ramp-up period for cellulosic biofuel 

facilities and expectations for 

production during this ramp-up phase. 

EPA will monitor INEOS Bio’s 

production output in the time between 

this proposal and the final rule and will 

consider that information, together with 

public comments received in making a 

final projection. INEOS Bio is also 

exploring several opportunities for 

additional cellulosic biofuel production 

facilities, both in the United States and 

internationally. INEOS Bio is targeting 

sources of inexpensive feedstock, 

primarily waste materials, and sees a 

market for plants with production 

capacities ranging from 8 to 50 million 

gallons per year. 

KiOR 

KiOR is working to commercialize a 

technology capable of converting 

biomass to a biocrude using a process 

they call Biomass Fluid Catalytic 

Cracking (BFCC). BFCC uses a catalyst 

developed by KiOR in a process similar 

to Fluid Catalytic Cracking currently 

used in the petroleum industry. The 

first stage of this process produces a 

renewable crude oil which is then 

upgraded to produce primarily gasoline, 

diesel, and jet fuel as well as a small 

quantity of fuel oil, all of which are 

nearly identical to those produced from 

petroleum. 

KiOR’s first commercial-scale facility 

is located in Columbus, Mississippi and 

is capable of producing approximately 

11 million gallons of gasoline, diesel, 

and jet fuel per year. Construction on 

this facility began in May 2011 and was 

completed in September 2012. KiOR’s 

Columbus facility is currently in the 

start-up phase. They have produced 

biocrude from cellulosic feedstocks that 

is in line with their specifications for 

upgrading to finished transportation 

fuels. Cellulosic biofuel RINs from this 

facility are expected in the first quarter 

of 2013. This facility is funded, in large 

part, with funds acquired through 

private equity raises and supplemented 

by KiOR’s $150 million IPO in June 

2011. KiOR’s current expectations at 

their Columbus facility are for a startup 15 period lasting 9–12 months during 

which they estimate fuel production 

will be at 30%–50% of the facility 

capacity after which they plan to 

approach full production rates at the 

facility. KiOR has feedstock supply 

agreements in place to supply all of the 

required feedstock for their Columbus 

facility with slash and pre-commercial 

thinning. They also have off-take 

agreements with several companies for 

all of the fuel that will be produced. 

KiOR has also announced plans to begin 

work on their second commercial-scale 

biofuel production facility in Natchez, 

Mississippi upon the successful start-up 

of their first facility. It is unlikely this 

second facility will begin production of 

biofuel in 2013. For 2013 our proposed 

production projection is for 5 million 

gallons (8 million ethanol-equivalent 

gallons) of cellulosic biofuel from 

KiOR’s Columbus facility. This volume 

is calculated assuming KiOR will 

produce at 30% of the facility capacity 

for the first nine months of 2013 

(consistent with a 12 month line-out 

period beginning in October 2012) 

followed by three months of production 

at the nameplate capacity of the 

facility.16 These numbers are relatively 

conservative estimates based on the low 

end of KiOR’s production guidance. 

EPA believes this is an appropriate 

approach for this proposal. We will 

continue to monitor KiOR’s production 

volume in the period between this 

proposal and the final rule and will use 

this information, together with the 

public comments we receive in 

preparing an updated projection for the 

final rule. 

Blue Sugars 

Blue Sugars, formerly KL Energy, has 

developed a process to convert cellulose 

and hemicellulose into sugars and 

ethanol using a combined chemical/ 

thermal-mechanical pretreatment 

process followed by enzymatic 

hydrolysis, co-fermentation of C5 and 

C6 sugars, and distillation to fuel-grade 

ethanol. This production process is 

versatile enough to allow for a wide 

variety of cellulosic feedstocks to be 

used, including woody biomass and 

herbaceous biomass such as sugarcane 

bagasse. In August 2010 Blue Sugars 

announced a joint development 

agreement with Petrobras America Inc. 

As part of the agreement Petrobras has 

invested $11 million to modify Blue 

Sugars’ 1.5 million gallons per year 

demonstration facility in Upton, 

Wyoming to allow it to process bagasse 

and other biomass feedstocks. The 

modifications to Blue Sugars’ facility 

were completed in the spring of 2011. 

In April 2012 Blue Sugars generated 

approximately 20,000 cellulosic biofuel 

RINs, the first such RINs generated 

under the RFS program. Blue Sugars has 

indicated, however, that the cellulosic 

ethanol they produced was exported to 

Brazil for promotional efforts at the Rio 

+20 conference in Brazil. These RINs 

would therefore have to be retired and 

will not be available to obligated parties 

to meet their cellulosic biofuel 

requirements in 2012. The main 

purpose of the Upton, Wyoming facility 

is to further refine Blue Sugars’ 

technology in preparation for their first 

commercial facilities which may be 

located in the Brazil or the United 

States. 

ZeaChem 

ZeaChem successfully completed 

construction of their demonstrationscale facility in Boardman, Oregon, in 

October 2012, allowing for the 

production of ethanol from sugars 

derived from cellulose and hemicellulose. When fully operational, 

ZeaChem expects this facility will be 

capable of producing 250,000 gallons of 

cellulosic ethanol per year. ZeaChem’s 

production process uses a combination 

of biochemical and thermochemical 

technologies to produce ethanol and 

other renewable chemicals from 

cellulosic materials. The feedstock is 

first fractionated into two separate 

streams, one containing sugars derived 

from cellulose and hemicellulose and 

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the other containing lignin. The sugars 

are fermented into an intermediate 

chemical, acetic acid, using a naturally 

occurring acetogen. The acetic acid is 

then converted into ethyl acetate, which 

can then be hydrogenated into ethanol. 

The hydrogen necessary for this process 

is produced by gasifying the lignin 

stream from the cellulosic biomass. 

Work is currently underway to add 

additional process modules that will 

enable ZeaChem to convert the 

cellulosic ethanol to jet and diesel fuel 

beginning in 2013. 

ZeaChem’s process is flexible and is 

capable of producing a wide range of 

renewable chemicals and fuels from 

many different feedstocks. They plan to 

use both agricultural residues and wood 

waste at their demonstration facility and 

have contracts in place for these 

feedstocks, as well as purpose-grown 

wood, at their first commercial-scale 

facility. In January 2012 ZeaChem 

announced that they had received a 

$232.5 million conditional loan 

guarantee offer from USDA for the 

construction of their first commercialscale facility, which will have a capacity 

of at least 25 million gallons per year. 

ZeaChem currently has agreements in 

place to provide all of the necessary 

feedstock for this facility. This facility, 

however, is not expected to begin 

producing cellulosic biofuel until late 

2014 at the earliest. 

2. Facilities Not Included in 2012 

Projections 

In addition to the facilities that were 

included in our cellulosic biofuel 

volume projections for the 2012 

compliance year, there is one additional 

facility that we believe will produce 

volumes in 2013. Several other large 

production facilities are planning to 

begin production of cellulosic biofuel in 

2014. 

Abengoa 

Abengoa, a large international 

biofuels company, is one of two new 

cellulosic biofuels producers expected 

to begin the production of cellulosic 

biofuels and RINs from a commercialscale facility in 2013. Abengoa plans to 

use an enzymatic hydrolysis technology 

to convert corn stover and other 

agricultural waste feedstocks into 

ethanol. After successfully testing and 

refining their technology at a pilot-scale 

facility in York, Nebraska as well as in 

a demonstration-scale facility in 

Salamanca, Spain, Abengoa is now 

working towards the completion of their 

first commercial-scale cellulosic ethanol 

facility in Hugoton, Kansas. Abengoa 

has contracts in place to provide the 

majority of feedstocks necessary for this 

facility for the next 10 years and 

successfully completed their first 

biomass harvest in the fall of 2011. 

Construction at this facility, which 

began in September 2011, is expected to 

take 24 months and be completed in the 

fourth quarter of 2013. All of the major 

process equipment for this project has 

been purchased and all of the required 

permits for construction have been 

approved. Abengoa’s Hugoton facility is 

being partially funded by a $132 million 

Department of Energy (DOE) loan 

guarantee. 

When completed, the Hugoton plant 

will be capable of processing 700 dry 

tons of corn stover per day, with an 

expected annual ethanol production 

capacity of approximately 24 million 

gallons. Abengoa plans to begin ramping 

up production at the facility shortly 

after completing construction in late 

2013 and to be producing fuel at rates 

near the nameplate capacity in the 

second quarter of 2014. After 

successfully proving their technology at 

commercial-scale in Hugoton, Abengoa 

currently plans to construct additional 

similar cellulosic ethanol production 

facilities, either on greenfield sites or 

co-locating these new facilities with 

their currently existing starch ethanol 

facilities around the United States. 

While this facility could produce up to 

1 million gallons of cellulosic ethanol in 

2013 even a slight delay would result in 

no fuel being produced in 2013. Given 

the history of delays in the cellulosic 

biofuels industry we are not including 

any volume from Abengoa’s Hugoton, 

KS facility in our proposed projected 

available volume for 2013. 

Poet 

Poet has also developed an enzymatic 

hydrolysis process to convert cellulosic 

biomass into ethanol. Poet has been 

investing in the development of 

cellulosic ethanol technology for more 

than a decade and began producing 

small volumes of cellulosic ethanol at 

pilot-scale at their plant in Scotland, SD 

in late 2008. In January 2012, Poet 

formed a joint venture with Royal DSM 

of the Netherlands called Poet-DSM 

Advanced Biofuels to commercialize 

and license their cellulosic ethanol 

technology. 

The joint venture’s first commercialscale facility, called Project LIBERTY, 

will be located in Emmetsburg, Iowa. 

This facility is designed to process 770 

dry tons of corn cobs, leaves, husks, and 

some stalk per day into cellulosic 

ethanol. The facility is projected to have 

an annual production capacity 

beginning at approximately 20 million 

gallons per year, increasing over time to 

25 million gallons per year. In 

anticipation of the start-up of this 

facility, Poet constructed a 22-acre 

biomass storage facility and had its first 

commercial harvest in 2010, collecting 

56,000 tons of biomass. 

Site prep work for Project LIBERTY 

began in the summer of 2011, and 

vertical construction of the facility 

began in the spring of 2012. Poet was 

awarded a $105 million loan guarantee 

offer for this project from DOE in July 

2011, but with the joint venture decided 

to proceed without the loan guarantee. 

This project is expected to be completed 

by the end of 2013, however at this time 

EPA is not expecting any commercial 

cellulosic ethanol production from this 

facility until 2014. After the completion 

of Project LIBERTY, Poet plans to build 

cellulosic ethanol facilities at all of their 

existing corn ethanol plants. They are 

also planning to license their technology 

for use at other grain ethanol plants, as 

well as build additional plants that will 

process wheat straw, rice hulls, woody 

biomass or herbaceous energy crops. By 

2022 Poet has a goal of producing 3.5 

billion gallons of cellulosic ethanol per 

year. 

Other Companies 

There are several more companies 

planning to begin producing cellulosic 

biofuel from commercial-scale facilities 

in 2014. Companies such as DuPont, 

Enerkem, and several others are all 

currently targeting 2014 for the start-up 

of their first commercial facilities. These 

facilities represent approximately 100 

million gallons of additional cellulosic 

biofuel production capacity. As with the 

companies discussed above, most of 

these companies have already begun to 

develop plans for their successive 

facilities after the successful completion 

of their initial projects. While they will 

not contribute any volume in 2013, and 

have therefore not been included in our 

proposed volume, they are a further 

indication of the potential for the 

significant growth of the cellulosic 

biofuel industry in the United States in 

the near future. 

3. Other Potential Sources of Domestic 

Cellulosic Biofuel 

Each of the companies listed in the 

previous two sections is planning to 

generate cellulosic biofuel RINs using 

one of the valid RIN-generating 

pathways listed in Table 1 to § 80.1426. 

We are also aware of several companies 

who may be in a position to produce 

cellulosic biofuel in 2013 but intend to 

use a production pathway that is not 

currently approved for RIN generation. 

Pathways that are currently under 

evaluation by EPA include 

transportation fuels derived from 

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17Letter from Adam Sieminski, EIA 

Administrator to Lisa Jackson, EPA Administrator 

October 18, 2012. 

landfill biogas such as CNG and 

cellulosic ethanol produced from corn 

kernel fiber. If these or other cellulosic 

biofuel pathways are approved by EPA, 

they may be used to generate cellulosic 

biofuel RINs in 2013. Because the date 

of any final determination on these 

pathways is uncertain, however, no 

volume of cellulosic fuel from these 

pathways has been included in our 

proposed 2013 cellulosic biofuel 

projection. 

4. Imports of Cellulosic Biofuel 

While domestically produced 

cellulosic biofuels are the most likely 

source of cellulosic biofuel available in 

the United States in 2013, imports of 

cellulosic biofuel produced in other 

countries may also generate RINs and 

participate in the RFS program. While 

the RFS program does provide a 

financial incentive for companies to 

import cellulosic biofuels into the 

United States, the combination of local 

demand, financial incentives from other 

governments, and transportation costs 

for the cellulosic biofuel has resulted in 

no cellulosic biofuel being imported to 

the United States thus far. We believe 

this situation is likely to continue in the 

near future and have not included any 

cellulosic biofuel imports in our 

projections of available volume in 2013. 

As in the United States, the 

production of cellulosic biofuels 

internationally is currently limited to 

small-scale research and development, 

pilot, and demonstration facilities. This 

is likely to continue to be the case 

throughout 2013. Two notable 

exceptions are facilities built and 

operated by Beta Renewables and 

Enerkem. Beta Renewables completed 

construction of their first commercialscale facility located in Crescentino, 

Italy in the summer of 2012. This 

facility is designed to produce 

approximately 20 million gallons of 

cellulosic ethanol per year. Beta 

Renewables uses an enzymatic 

hydrolysis process to produce ethanol 

from local agricultural residues and 

herbaceous energy crops. 

Enerkem is also in the process of 

building their first commercial-scale 

facility in Edmonton, Alberta and plans 

to begin operations in early 2013. 

Enerkem’s facility will use a 

thermochemical process to produce 

syngas from MSW and then catalytically 

convert the syngas to methanol. The 

methanol can then be sold directly or 

upgraded to ethanol or other chemical 

products. At full capacity this facility 

will be capable of producing 10 million 

gallons of cellulosic ethanol per year. At 

this point, neither Beta Renewables nor 

Enerkem have registered their facilities 

under the RFS program, a necessary step 

that must be completed before these 

companies can generate RINs for any 

fuel they import into the United States. 

Both are planning to locate additional 

plants in the United States in the future 

and are likely to generate RINs for 

production from domestic facilities in 

future years. 

5. Projections From the Energy 

Information Administration 

Section 211(o)(3)(A) of the Clean Air 

Act requires EIA to ‘‘ * * * provide to 

the Administrator of the Environmental 

Protection Agency an estimate, with 

respect to the following calendar year, 

of the volumes of transportation fuel, 

biomass-based diesel, and cellulosic 

biofuel projected to be sold or 

introduced into commerce in the United 

States.’’ EIA provided these estimates to 

us on October 18, 2012.17 With regard 

to cellulosic biofuel, the EIA estimated 

that the available volume in 2013 would 

be 9.6 million gallons (13.1 million 

ethanol-equivalent gallons). A summary 

of the commercial scale plants they 

considered and associated production 

volumes is shown below in Table II.C.5. 

TABLE II.C.5—CELLULOSIC BIOFUEL PLANTS EXPECTED TO GENERATE BIOFUEL RINS FOR 2013 

Mechanical 

completion Company Location Product Design capacity 

EIA forecast 

Utilization 

(percent) 

Production 

(million 

gallons) 

Ethanolequivalent 

production 

(million 

gallons) 

2012 ....................... INEOS Bio ............ Vero Beach, FL ..... Ethanol .................. 8 50 4.0 4.0 

2012 ....................... KiOR ..................... Columbus, MS ...... Liquids ................... 11 50 5.5 9.0 

Various ................... Various Pilot Plants Various .................. Ethanol .................. 1 10 0.1 0.1 

Total Capacity and Production for 2013 .................................................................. 20 48 9.6 13.1 

EIA’s projections of cellulosic biofuel 

production in 2013 are very similar to 

EPA’s projections discussed above and 

summarized in Section II.C.6 below. 

The lists of companies that EIA and EPA 

expect to generate cellulosic biofuel 

RINS in 2013 are the same. There are, 

however, differences in the volumes of 

cellulosic biofuel expected to be 

produced at the production facilities 

listed. EPA has higher projections of 

cellulosic biofuel production for INEOS 

Bio (6 million gallons vs. 4 million 

gallons) and lower projections for KiOR 

(8 million ethanol-equivalent gallons vs. 

9 million ethanol equivalent gallons). 

These variations are a result of different 

methodologies used by EIA and EPA to 

project biofuel production in future 

years. Both INEOS Bio and KiOR are 

structurally complete commercial scale 

facilities that plan to operate throughout 

2013. In their projections EIA has used 

a utilization rate of 50% for both of 

these facilities. Rather than use 

utilization rates to project production, 

EPA has estimated ramp-up schedules 

for the both INEOS Bio and KiOR. The 

ramp-up schedules estimated for these 

facilities differ from each other and 

were developed based on information 

received from the companies and EPA’s 

knowledge of the production processes 

used by each company. We believe 

these different ramp-up schedules, 

which correspond to different effective 

utilization rates, are appropriate due to 

the significant differences in the 

technologies used by INEOS Bio and 

KiOR to produce cellulosic biofuel. EPA 

and EIA both considered the timing of 

the anticipated start up of these 

facilities along with anticipated rampup schedules/utilization rates in 

projecting volume production for 2013. 

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18See API v. EPA, No. 12–1139, slip op. at 10 

(D.C. Cir. January 25, 2013). 

As both facilities plan to start 

production at approximately the same 

time, the difference in the effective 

utilization rates represented by EPA’s 

projected volumes for these companies 

is the result of anticipated ramp-up 

schedules. More information on the 

ramp-up schedules used by EPA in our 

projected production volumes for 

INEOS Bio and KiOR can be found in 

Section II.C.1 above. 

While the cellulosic biofuel volume 

projections for 2013 provided by EIA are 

not identical to those being finalized in 

this rule EPA believes that they are 

similar enough to support the volumes 

we are finalizing. Where differences 

exist they are due to differences in the 

ramp-up schedules estimated by EPA 

and the utilization factors used by EIA 

for the two companies expected to 

produce cellulosic biofuel in 2013. As 

discussed above, EPA believes the 

approach we have taken is appropriate. 

EPA has interpreted section CAA 

211(o)(7)(D) as vesting the authority for 

making the projection with EPA, and is 

not re-opening that interpretation for 

comment in today’s proposal. As 

described in past rulemakings, the 

statute provides that the projection is 

‘‘determined by the Administrator based 

on the estimate provided [by EIA].’’ 

Congress did not intend that EPA 

simply adopt EIA’s projection without 

an independent evaluation. EPA’s 

consideration of EIA’s estimate in 

developing this proposal is consistent 

with EPA’s consideration of EIA’s 

estimate in the past rulemakings 

involving a reduction of the volume 

standard for cellulosic biofuel. EPA’s 

interpretation and implementation of 

the obligation to base its projection on 

the EIA estimate recently was upheld in 

API v. EPA, No. 12–1139, slip op. at 5– 

9 (D.C. Cir. January 25, 2013). 

6. Summary of Volume Projections 

The information we have gathered on 

cellulosic biofuel producers, described 

above, allows us to project production 

volumes for each facility in 2013. For 

the purposes of this proposed 

rulemaking we have focused on 

commercial-scale cellulosic biofuel 

production facilities. We believe our 

focus on commercial-scale facilities is 

appropriate as the industry transitions 

from small-scale R&D and pilot facilities 

to large-scale commercial production. It 

is likely that several small-scale 

facilities such as API, KL Energy, 

ZeaChem, and others will also produce 

some cellulosic biofuel in 2013. Indeed, 

EIA’s projection from such facilities was 

only 0.1 million gallons in 2013. This 

volume is quite small in relation to that 

expected from the two commercial-scale 

facilities for which we have projected 

volumes in 2013 (see Table II.C.6–1 

below). Additionally, while RINs may 

be generated for any cellulosic biofuel 

produced from these small R&D and 

pilot facilities, historically many have 

chosen not to do so for a variety of 

reasons. We are therefore not proposing 

to include a volume projection from 

these facilities. We invite comment on 

this issue. 

In 2013 as many as four domestic 

cellulosic biofuel production facilities 

have the potential to produce fuel at 

commercial scale. Each of these 

facilities is discussed above, and the 

facility production targets for each are 

summarized in Table II.C.6–1 below. 

Two of the companies that have the 

potential to produce cellulosic biofuel 

in 2013, Abengoa and Fiberight, are not 

planning on beginning fuel production 

until late in the year. Even a small delay 

in their expected production timeline 

could result in their failure to produce 

any cellulosic biofuel in 2013. For the 

purpose of this proposal, therefore, we 

are not projecting production from these 

facilities in 2013 consistent with EIA. 

When added together, the total 

projected production volume from 

commercial-scale production facilities 

in the United States in 2013 is 11 

million gallons (14 million ethanolequivalent gallons). This number 

represents the expected fuel production 

from each facility, taking into account 

the EIA estimates and the many factors 

described in detail above. 

TABLE II.C.6–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL FOR 2013 

Company name Location Feedstock Fuel 

Design 

capacity 

(MGY) 

First production 

(projected) 

2013 

projected 

available 

volume (MG) 

Abengoa ................. Hugoton, KS .......... Corn Stover ........... Ethanol ................... 24 4th Quarter 2013 ... 0 

Fiberight .................. Blairstown, IA ......... MSW ...................... Ethanol ................... 6 4th Quarter 2013 ... 0 

INEOS Bio .............. Vero Beach, FL ...... Vegetative Waste .. Ethanol ................... 8 1st Quarter 2013 ... 6 

KiOR ....................... Columbus, MS ....... Wood Waste .......... Gasoline and Diesel 11 1st Quarter 2013 .... 8 

Various Pilot/Demo 

Plants.

N/A ......................... N/A ......................... N/A ......................... N/A N/A ......................... 0 

Total ............................................................................................................................. 49 ................................ 14 

D. Proposed Cellulosic Biofuel Volume 

for 2013 

In today’s NPRM we are proposing a 

volume for the 2013 cellulosic biofuel 

standard that is based on EIA’s estimate, 

production volumes developed in 

consultation with the companies 

expected to produce cellulosic biofuel 

from commercial-scale facilities in 2013, 

and EPA’s judgment. Many factors have 

been taken into consideration in 

developing these projections, such as 

the EIA estimate, the current status of 

project funding, the status of the 

production facility, anticipated 

construction timelines, the anticipated 

start-up date and ramp-up schedule, 

feedstock supply, intent to generate 

RINs, and many others. Moreover, all of 

the companies included in our 2013 

volume projections have invested a 

significant amount of time and 

resources developing their technologies 

at R&D and demonstration-scale 

facilities prior to the design and 

construction of their first commercialscale facilities. The projects have solid 

financial backing; for example the 

INOES Bio project is backed by federal 

loan guarantees. By the time of our final 

rule the facilities owned by KiOR and 

INEOS Bio are scheduled to have 

already begun fuel production, making 

our 2013 projections more reliable than 

prior year projections. We believe the 

sum of these individual projected 

available volumes (14 million ethanolequivalent gallons) is a reasonable 

representation of expected production. 

This projection reflects EPA’s best 

estimate of what will actually happen in 

2013.18

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19The energy security analysis took into account 

both domestic and foreign sources of advanced 

biofuel. 

It is important to note that the final 

cellulosic biofuel standard for 2013 may 

be set at a volume that differs from the 

proposed volume. This could happen 

for a variety of reasons, including 

unexpected project modifications or 

cancellations or the inclusion of 

volumes of cellulosic biofuel from 

sources other than those listed above. 

For example, the proposed projected 

available volume of cellulosic biofuel in 

2013 discussed above (14 million 

ethanol-equivalent gallons) does not 

include potential contributions from 

cellulosic ethanol produced from corn 

fiber or transportation fuels derived 

from landfill biogas such as CNG. 

Together, these pathways could generate 

several tens of millions of gallons of 

ethanol-equivalent renewable fuel. 

However, since it is uncertain when our 

evaluation of these pathways will be 

completed we have not included their 

volumes in our 2013 projection in this 

NPRM. If any of these pathways are 

approved prior to the final rule, 

additional volume from these sources 

may be added to the target production 

volumes listed in Table II.C.5–1 for the 

final rule. 

We will continue to monitor the 

progress of the cellulosic biofuel 

industry, in particular the progress of 

the companies which form the basis of 

our proposed 2013 volume projection. 

As time progresses and we are able to 

track whether or not the cellulosic 

biofuels producers are able to meet the 

construction and ramp-up schedules 

they have presented, and after 

considering public comments we 

receive on this proposal, we will have 

a clearer idea of the appropriate volume 

of fuel that we can reasonably expect to 

be produced and made commercially 

available in 2013. 

III. Assessment of Advanced Biofuel 

and Total Renewable Fuel for 2013 

As described in Section I, the volumes 

of renewable fuel to be used under the 

RFS2 program each year (absent an 

adjustment or waiver by EPA) are 

specified in CAA 211(o)(2). For 2013, 

the applicable volume of advanced 

biofuel is 2.75 bill gal and the 

applicable volume of total renewable 

fuel is 16.55 bill gal. However, the 

statute gives EPA the discretion to 

reduce these volume requirements in 

the event that the cellulosic biofuel 

volume requirement is reduced. While 

we are not proposing to reduce the 

required volumes of advanced biofuel 

and total renewable fuel for 2013, we 

request comment on whether and to 

what extent a reduction is warranted. 

We have the discretion to reduce the 

advanced biofuel volume and the total 

renewable requirements for 2013 by up 

to the amount that the cellulosic biofuel 

volume requirement is reduced (986 

mill gal in today’s proposal). This 

section discusses our evaluation of these 

two volume requirements. 

A. Statutory Requirements 

According to CAA 211(o)(7)(D)(i), if 

EPA determines that the projected 

volume of cellulosic biofuel production 

for the following year is less than the 

applicable volume provided in the 

statute, then EPA must reduce the 

applicable volume of cellulosic biofuel 

to the projected volume available during 

that calendar year. Under such 

circumstances, EPA also has the 

discretion to reduce the applicable 

volumes of advanced biofuel and total 

renewable fuel by an amount not to 

exceed the reduction in cellulosic 

biofuel. 

Section 211(o)(7)(D)(i) provides that 

‘‘For any calendar year in which the 

Administrator makes such a reduction, 

the Administrator may also reduce the 

applicable volume of renewable fuel 

and advanced biofuels requirement 

established under paragraph (2)(B) by 

the same or a lesser volume.’’ Thus 

Congress authorized EPA to reduce the 

volume of total renewable fuel ‘‘and’’ 

advanced biofuels. This indicates a clear 

Congressional intention that EPA may 

reduce both the total renewable and 

advanced biofuel volume together, not 

one or the other. 

This is consistent with the structure 

of the national volume standards, where 

the volume standards are nested and are 

not separate, unrelated standards. 

Congress established the advanced 

biofuel standard and its subsets as 

integral parts of the total renewable fuel 

standard. The volume requirements are 

interrelated and work together to 

achieve the goals of increasing the 

displacement of fossil fuel and 

increasing the use of fuels that reduce 

greenhouse gases. As described in the 

NPRM for the RFS2 program, we do not 

believe it would be appropriate to lower 

the advanced biofuel standard but not 

the total renewable standard, as doing 

so would allow conventional biofuels to 

effectively be used to meet the standards 

that Congress specifically set for 

advanced biofuels. See 74 FR 24915, 

May 26, 2009. EPA interprets this 

provision as authorizing EPA to reduce 

both total renewable fuel and advanced 

biofuel, by the same amounts, if EPA 

reduces the volume of cellulosic biofuel. 

The reductions in total renewable fuel 

and advanced biofuel can be up to but 

no more than the amount of reduction 

in the cellulosic biofuel volume. 

Since cellulosic biofuel is also used to 

satisfy the advanced biofuel standard 

and the total renewable fuel standard, 

any reductions in the applicable volume 

of cellulosic biofuel will also affect the 

means through which obligated parties 

comply with these two other standards. 

Congress established the volume 

requirements for advanced biofuel and 

total renewable fuel in conjunction with 

the specified cellulosic biofuel volumes, 

as interrelated standards. Therefore it is 

appropriate to consider a possible 

reduction in the advanced biofuel and 

total renewable fuel applicable volumes 

when EPA reduces the cellulosic biofuel 

volume below the applicable volume for 

cellulosic biofuel set forth in the statute. 

In 2013 the applicable volume of 

cellulosic biofuel specified in the statute 

represents more than a third of the 

advanced biofuel volume (1.0 bill gal 

out of 2.75 bill gal), a higher fraction 

than in any previous year. A substantial 

reduction in the applicable volume of 

cellulosic biofuel could potentially also 

have a substantial impact on the 

sufficiency of volumes to meet the 

advanced biofuel and total renewable 

fuel standards. As described in Section 

II.D above, we are indeed proposing a 

projected available volume of cellulosic 

biofuel for 2013 at significantly below 

the statutory applicable volume of 1.0 

billion gallons. If we were to finalize a 

cellulosic biofuel applicable volume of 

14 mill gallons for 2013, we would have 

the discretion to reduce the advanced 

biofuel and total renewable fuel 

applicable volumes by up to 986 mill 

gallons (ethanol-equivalent). Therefore, 

we believe that an investigation into the 

availability of advanced biofuel and 

total renewable fuel is warranted. 

The statute does not provide any 

explicit criteria that must be met or 

factors that must be considered when 

making a determination as to whether 

and to what degree to reduce the 

advanced biofuel and total renewable 

fuel applicable volumes when we have 

the discretion under CAA 211(o)(7)(D)(i) 

to do so. However, in general we believe 

that it would not be consistent with the 

energy security 19 and greenhouse gas 

reduction goals of the statute to reduce 

the applicable volume of advanced 

biofuel set forth in the statute if there 

are sufficient volumes of advanced 

biofuels available, even if those volumes 

do not include the amount of cellulosic 

biofuel that Congress may have desired. 

Due to its relevance to RFS volume 

requirements, we note here that in the 

summer of 2012 and in light of drought 

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20 77 FR 70752, November 27, 2012. 

21 2011 data from the EPA-Moderated Transaction 

System (EMTS) 

22 77 FR 1320, published on January 9, 2012. 

23Figures taken from Table 4, ‘‘Monthly Biodiesel 

Production Report,’’ EIA, December 2012. 

24Based on construction times for new plants 

listed in Biodiesel Magazine from July 2006 through 

May 2009. 

conditions affecting much of the 

country, Governors from several States 

and a number of organizations requested 

a waiver of the national volume 

requirements for the RFS pursuant to 

Section 211(o)(7)(A) of the Clean Air 

Act. The general waiver authority 

granted in this part of the statute is 

different from the authority granted in 

Section 211(o)(7)(D) that allows the 

advanced biofuel and total renewable 

fuels volume requirements to be 

reduced in the event that the cellulosic 

biofuel volume is reduced. After 

extensive analysis, review of thousands 

of comments, and consultation with the 

Department of Agriculture and the 

Department of Energy, the EPA on 

November 27, 2012 published a Federal 

Register decision denying the requests 

for a waiver.20 The Federal Register 

notice contains a detailed description of 

the analysis EPA conducted in 

conjunction with DOE and USDA, along 

with a discussion of relevant comments 

we received through our public 

comment process. 

B. Assessment of Available Volumes of 

Advanced Biofuel 

Renewable fuels that can be used to 

meet the standard for advanced biofuel 

include those with Renewable 

Identification Number (RIN) codes of 3, 

4, 5, or 7. Table III.B–1 shows the 

number of each of these types of RIN 

that was generated in 2011. For the final 

rule, we will update our analysis with 

estimates from 2012. 

TABLE III.B–1—2011 RINS THAT QUALIFIED TO MEET THE ADVANCED BIOFUEL STANDARD 21

[Million ethanol-equivalent gallons] 

D 

code Category Ethanol Biodiesel Renewable diesel 

Biogas and 

heating oil 

3 ...... Cellulosic biofuel ................................................................................. 0 0 0 0 

4 ...... Biomass-based diesel ........................................................................ 0 1,600 76 0 

5 ...... Advanced biofuel ................................................................................ 186 0 27 8 

7 ...... Cellulosic diesel .................................................................................. 0 0 0 0 

Total .................................................................................................... 1,895 

The total of 1,895 mill ethanolequivalent gallons is significantly higher 

than the 1,350 mill gal required in 2011 

and nearly as high as the 2012 advanced 

biofuel requirement of 2,000 mill gal. 

This result supports our projection in 

the rulemaking setting the 2012 

standards 22 that there was no need to 

reduce the 2012 advanced biofuel 

requirement despite the significant 

reduction in the applicable volume of 

cellulosic biofuel. 

The statutory volume requirement for 

advanced biofuel in 2013 is 2,750 mill 

gal, an increase of 750 mill gal over the 

2012 requirement of 2,000 mill gal. In 

order to determine the sufficiency of 

advanced biofuel volumes to meet a 

requirement for 2,750 mill gal in 2013, 

we first accounted for biomass-based 

diesel and cellulosic biofuels that would 

be required under the standards we are 

proposing today. As shown in Table 

III.B–2, the result is that there would 

need to be 816 mill ethanol-equivalent 

gallons of other advanced biofuels in 

order to meet the total advanced biofuel 

requirement of 2,750 mill gal. 

TABLE III.B–2—NECESSARY VOLUME

OF ADVANCED BIOFUEL (MILL GAL

ETHANOL-EQUIVALENT) 

2013 Advanced biofuel applicable volume ..................... 2,750 

TABLE III.B–2—NECESSARY VOLUME

OF ADVANCED BIOFUEL (MILL GAL

ETHANOL-EQUIVALENT)—Continued 

Cellulosic biofuel requirement .................................. 14 

Biomass-based diesel requirement .......................... a 1,920 

Necessary volume of excess 

biodiesel, other domestic 

advanced biofuels, and/or 

imported sugarcane ethanol ................................... 816 

a In 2011, a substantial majority of biomassbased diesel was biodiesel. Moreover, we expect further increases in biomass-based diesel 

to be met primarily with expanded biodiesel. 

Therefore, for this analysis we have assumed 

that the 1.28 bill gal requirement is composed 

entirely of biodiesel with an equivalence value 

of 1.5. 

We have identified a variety of 

sources of advanced biofuel that could 

meet the need for 816 mill gal of 

additional advanced biofuel, including 

the following: 

• Biodiesel in excess of that required to 

meet the volume requirement of 1.28 

bill gal 

• Domestically produced advanced 

biofuels such as renewable diesel that 

does not qualify as biomass-based 

diesel, heating oil and qualifying fuel 

oil, and ethanol and other qualifying 

renewable fuels from separated food 

wastes 

• Imported sugarcane ethanol 

We have investigated each of these 

sources as discussed below. 

1. Biodiesel 

In a separate action, we have finalized 

a biomass-based diesel volume of 1.28 

bill gal for 2013. However, biomassbased diesel volumes above 1.28 bill gal 

are possible. As of October 2012, the 

aggregate production capacity of 

biodiesel plants in the U.S. is estimated 

to be 2.1 billion gallons per year across 

107 facilities.23 This includes idled 

plants, those producing at less than full 

capacity, and those that are producing 

products other than biodiesel. We 

expect the time and reinvestment 

required to ramp up biodiesel 

production at existing facilities to be 

likely on the order of 1–2 months, 

significantly less than the time required 

to build and begin production at new 

plants, which takes about a year on 

average.24 Thus, restarting idled plants 

is likely to be a cost-effective way of 

exceeding the applicable volumes of 

1.28 bill gal in 2013 if a demand for 

such production exists. 

Moreover, the biodiesel industry has 

demonstrated that it can increase 

production quickly under appropriate 

circumstances. Total production of 

biomass-based diesel in 2011 exceeded 

1.0 bill gal, compared to a 2010 

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25All values from EMTS. 2010 estimate consists 

of approximately 209 mill gallons as recorded 

through EMTS for volume produced under the 

RFS2 regulations in July through December of 2010, 

and approximately 171 mill gallons as recorded 

through RIN generation reports submitted by 

producers for volume produced under the RFS1 

regulations in January through June of 2010. 

26See comments in docket EPA–HQ–OAR–2010– 

0133 from the American Petroleum Institute, 

Marathon Petroleum Company, and the National 

Petrochemical Refiners Association. 

27 ‘‘Congress Votes to Reinstate Biodiesel Tax 

Incentive,’’ January 2, 2013. http://biodiesel.org/ 

news/biodiesel-news/news-display/2013/01/02/ 

congress-votes-to-reinstate-biodiesel-tax-incentive. 

28Our final action on the 2013 biomass-based 

diesel renewable fuel volume provides further 

details with regards to which feedstocks we believe 

will be used to meet that volume. See 77 FR 59458, 

September 27, 2012. 

29Biogas from landfills could be generated from 

separated food waste or yard waste. 

30While the individual reports have not been 

published since they include company-specific 

information that could impact the competitive 

nature of the industry, we are providing aggregate 

results in this NPRM. 

production of about 380 mill gallons.25

In response to the NPRM published on 

July 1, 2011, some stakeholders 

expressed doubts that such increases 

could occur by 2012.26 Nevertheless, 

based on the single-year increase of 

more than 600 mill gal in 2011 and the 

total capacity of existing plants 

described above, it is possible that the 

industry could achieve increases in 

production of both the 280 mill gallon 

increment that is reflected in the 

biomass-based diesel requirement for 

2013 as well as some ‘‘excess’’ 

production. 

Recently, the tax credit for biodiesel 

was reinstated after having expired at 

the end of 2011.27 This tax credit, 

applicable retroactively to 2012 and 

through the end of 2013, may provide 

additional incentives to produce and 

consume biodiesel volumes in excess of 

the 1.28 bill gal requirement. EPA is 

requesting comment on what effect the 

tax credit will have on the advanced 

biofuel production volumes and the 

whether this would affect the incentives 

to import sugarcane ethanol and to what 

extent. 

Nevertheless, there are a variety of 

factors that make the potential for 2013 

biodiesel volumes in excess of 1.28 bill 

gal uncertain. For instance, despite the 

significant excess production capacity, 

the industry may not make the 

necessary preparations for excess 

production above 1.28 bill gal, such as 

restarting idled plants or establishing 

contracts for feedstocks supply, until 

such time as it becomes clear what the 

demand for excess biodiesel might be. 

This might not occur until later in 2013. 

Moreover, biodiesel production rates are 

currently and will continue to be at a 

historic high. The industry that supplies 

feedstocks for biodiesel production will 

be adjusting supplies and distribution 

routes to ensure that the 1.28 bill gal 

volume requirement is met, and 

biodiesel distribution and blending 

infrastructure is being upgraded to 

ensure that those volumes can be 

consumed. However, it is unclear if 

those adjustments and upgrades will be 

designed to accommodate biodiesel 

production in 2013 of volumes above 

1.28 bill gal. We request comment on 

the degree to which biodiesel volumes 

in excess of the 1.28 bill gal requirement 

might be expected. 

2. Domestic Production of Other 

Advanced Biofuel 

Pathways that have been approved for 

the generation of RINs are provided in 

the regulations in Table 1 to § 80.1426. 

Apart from ethanol made from 

sugarcane which is permitted to 

generate advanced biofuel RINs, there 

are currently three pathways through 

which advanced biofuel RINs can be 

generated. These three are shown in 

Table III.B.2–1. 

TABLE III.B.2–1—PATHWAYS FOR ADVANCED BIOFUEL

Fuel type Feedstock Production process requirements 

Ethanol ................................. Grain Sorghum ................................................................ Dry mill process, using only biogas from landfills, waste 

treatment plants, and/or waste digesters for process 

energy and for on-site production of all electricity 

used at the site other than up to 0.15 kWh of electricity from the grid per gallon of ethanol produced, 

calculated on a per batch basis. 

Biodiesel, renewable diesel 28.Soy bean oil; Oil from annual covercrops; Algal oil; Biogenic waste oils/fats/greases; Non-food grade corn 

oil. 

One of the following: 

Trans-Esterification. 

Hydrotreating. 

Includes only processes that co-process renewable biomass and petroleum. 

Ethanol, renewable diesel, 

jet fuel, heating oil, and 

naphtha.

The non-cellulosic portions of separated food waste ..... Any. 

Biogas .................................. Landfills 29, sewage waste treatment plants, manure digesters.Any. 

In addition to producers of biomassbased diesel and cellulosic biofuel, 

there are many companies either 

producing or developing technologies to 

produce ‘‘other advanced biofuels.’’ In 

order to estimate the volumes of other 

advanced biofuels that could be 

produced by these companies in 2013, 

we investigated three sources of data: 

Production Outlook Reports. Required 

under § 80.1449 for all registered producers, 

these reports contain projections of 

renewable fuel production for each of the 

next five years.30

2011 producers. Data from the EPAModerated Transaction System (EMTS) was 

reviewed to identify parties that produced 

some RIN-generating advanced biofuel in 

2011. Insofar as such parties did not provide 

a projected 2013 volume in a Production 

Outlook Report, they were contacted to 

update their 2013 projected production 

volume. We will update this analysis with 

information from 2012 for the final rule. 

Additional registered producers. We 

identified parties that were registered as 

producers of advanced biofuel under the RFS 

program, but neither produced RINgenerating volume in 2011 nor provided a 

projection of 2013 production volume in a 

Production Outlook Report. We contacted 

such parties to determine what, if any, 

volume could be expected in 2013. 

Based on these investigations, we 

identified twenty domestic companies 

that are expected to produce some other 

advanced biofuel in 2013. The total 

projected production volume for these 

companies in 2013 is about 115 mill 

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31Solecki, Mary et al, ‘‘Advanced Biofuel Market 

Report 2011, Meeting the California LCFS’’ August 

22, 2011. E2/Environmental Entrepreneurs. 

32See 77 FR 74592 published on December 17, 

2012. 

33 Gain Report BR110016, October 3, 2011, USDA 

Agricultural Service. See http://gain.fas.usda.gov/ 

Recent%20GAIN%20Publications/Sugar%20Semiannual_Sao%20Paulo%20ATO_Brazil_10-3- 

2011.pdf 

34On the margin, the high sugar prices may have 

also encouraged some growers to divert their crop 

from ethanol production to sugar production. But 

most cane growers do not have this flexibility with 

sugarcane mills designed for fixed amounts of 

refined sugar or ethanol so high sugar prices was 

likely a contributing factor but not a major cause 

of reduced sugarcane ethanol production in Brazil. 

35UNICA, ‘‘Harvest update: Biweekly Bulletin’’, 

December 1, 2012, http://www.unicadata.com.br/ 

listagem.php?idMn=63. 

36UNICA, ‘‘Estimate for 2012/2013 Sugarcane 

Harvest of Brazilian South-Central Region’’, 

September 20, 2012, http://www.unicadata.com.br/ 

listagem.php?idMn=39. 

37See http://www.platts.com/ 

RSSFeedDetailedNews/RSSFeed/Oil/8987702. 

38See http://www.bloomberg.com/news/2012-03- 

08/santa-terezinha-invests-283-million-in-brazilethanol-projects.html. 

actual gallons, or 150 million ethanol- equivalent gallons, as shown in Table 

III.B.2–2. 

TABLE III.B.2–2—PROJECTED DOMESTIC PRODUCTION OF OTHER ADVANCED BIOFUEL IN 2013 

[Million ethanol-equivalent gallons] 

Ethanol Renewable 

diesel Heating oil CNG Total 

Production Outlook Reports ................................................. 31 35 4 0 70 

2011 producers .................................................................... 18 18 0 5 41 

Other registered producers .................................................. 0 15 15 9 39 

Total .............................................................................. 49 68 19 14 150 

A projected volume of 150 mill 

ethanol-equivalent gallons of other 

advanced biofuel in 2013 is also 

consistent with a 2011 report released 

by E2/Environmental Entrepreneurs 31

which estimated that the production 

capacity of domestic advanced biofuels 

in 2012 would be about 180 mill gal. 

EPA has recently approved an 

advanced ethanol pathway that is 

produced from grain sorghum at dry 

mill facilities using specified forms of 

biogas for both process energy and most 

electricity production.32 Although 

advanced sorghum ethanol is not 

reflected in Table III.B.2–2, sorghum 

ethanol is likely to help meet the 2013 

advanced biofuel volume requirements 

as a number of companies have been 

making preparations to use this 

feedstock. We are also currently 

investigating a variety of other potential 

RIN-generating pathways for advanced 

biofuel that could result in additional 

volumes in 2013. In addition to 

potential new pathways for cellulosic 

biofuel that would also count as 

advanced biofuel as discussed in 

Section II.D, new pathways for 

advanced biofuel could include certain 

butanol processes from corn and certain 

ethanol processes from barley. We have 

not yet determined, either through 

rulemaking or approval of an industry 

petition, whether these pathways are 

valid for the generation for advanced 

biofuel RINs. However, approval of such 

advanced biofuel pathways could 

potentially result in 200 million 

additional ethanol-equivalent gallons of 

advanced biofuel being qualified to 

participate in the RFS program. Insofar 

as any of these pathways are approved 

in time to be used in 2013, it would 

increase the volume of domesticallyproduced advanced biofuels available 

for 2013 compliance. 

3. Imported Sugarcane Ethanol 

EPA estimates that if biodiesel 

production in 2013 does not exceed 1.28 

bill gallons, and domestic production of 

other advanced biofuels is about 150 

mill gallons, imports of sugarcane 

ethanol from Brazil would need to reach 

666 mill gal in order for the 2.75 bill gal 

advanced biofuel requirement to be met. 

We believe that such volumes can be 

reasonably expected from Brazil despite 

some uncertainty in production and 

export potential. 

From the supply perspective, recent 

production of sugarcane in Brazil has 

been lower than normally expected due 

to two factors. First, adverse weather 

conditions have reduced production.33

Since the adverse weather conditions 

are estimated to have reduced cane 

production by about 4%, a return to 

normal weather conditions should alone 

restore approximately 4% of 

production. Second, the general 

economic downturn made credit harder 

to get, delaying the replanting of 

existing fields. Normally sugarcane 

fields are replanted every five or six 

years to maximize yield. However, the 

lack of available credit caused some 

growers to delay the expense of this 

replanting, with the older fields losing 

production.34

Early 2012/13 sugarcane crop year 

data suggests that, at the very least, 

production in the 2012/2013 year will 

not be lower than in 2011/2012. 

According to UNICA’s December 1, 

2012 biweekly report of sugar and 

ethanol production, total ethanol 

production from the 2012/13 crop in the 

South Central region was approximately 

5.38 billion gallons, up slightly from 

5.36 billion gallons this time last year.35

In September, UNICA projected that the 

South Central region, the dominant 

region for ethanol production in Brazil, 

will produce a total of 5.56 billion 

gallons for the 2012/13 year.36 Other 

regions contributed roughly another 565 

million gallons in 2011/12. Based on 

this, 6.1 billion gallons is a reasonable 

conservative estimate for total 2012/13 

production, assuming no growth at all 

in production outside the South Central 

region. By comparison, total ethanol 

production from the 2011/12 crop was 

just less than 6 billion gallons. 

Some parties expect a more typical 

trend in sugarcane ethanol production 

for 2013 and future years, with 

replanted fields beginning to boost 

sugarcane production in existing 

plantations and, in response to 

increased worldwide demand, a growth 

in the acres planted with sugarcane. 

Increased production is supported by 

the Brazilian government which 

announced in February 2012 support for 

a plan to invest over $8 billion annually 

to boost cane and ethanol production.37

Private investment in Brazil is also 

increasing. For example, Usina de 

Acucar Santa Terezinha, a Brazilian 

ethanol producer, recently announced 

plans to invest almost $300 million in 

a new mill and sugarcane plantation.38

All of this suggests that sugarcane and 

ethanol production in the 2013/14 

harvest year (which will begin in April 

of 2013) will be significantly higher 

than production over the last two years. 

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39USDA Foreign Agricultural Service, ‘‘Brazil 

Biofuels Annual, Annual Report 2012,’’ August 21, 

2012. GAIN Report Number BR12013. 

40Bloomberg, ‘‘Brazil Said to Plan Higher Ethanol 

Blend as Early as May,’’ December 18, 2012. http:// 

www.bloomberg.com/news/2012-12-18/brazil-saidto-plan-higher-ethanol-blend-as-early-as-may.html 

Nevertheless, there remains some 

uncertainty in the volumes of sugarcane 

ethanol that could be produced in Brazil 

in 2013. If weather conditions are 

unfavorable for another year, ethanol 

production may not recover from the 

comparatively low levels in 2011 and 

early 2012. A study from USDA projects 

that this may be the case, and concludes 

that total ethanol exports from Brazil to 

all countries in 2013 may only reach 

about 500 mill gallons,39 well short of 

the 666 mill gal that would be needed 

as described above. As a result, it is 

possible that there could be a shortfall 

of the total advanced biofuel 

requirement in 2013 under these 

circumstances. 

Brazil’s sugarcane ethanol production 

serves both its domestic market as well 

as the export market. The government of 

Brazil sets a minimum ethanol 

concentration for its gasoline. In 2011, 

the Brazilian government lowered this 

concentration to 20%, reflecting the 

decrease in domestic production. There 

have been indications that Brazil may 

raise the minimum ethanol 

concentration back up by 25% by May 

of 2013,40 but no formal announcement 

has been made. Projecting this Brazilian 

domestic demand into the future can be 

uncertain since the government can 

reset the minimum ethanol content at 

any time; in the past this adjustment has 

largely been influenced by the price of 

ethanol (high prices leading to a 

reduction in the minimum percent). 

While these historical changes have 

typically varied by a few percent and 

have only occurred periodically, they do 

add another element of uncertainty to 

any projection of the volumes of ethanol 

that may be available for export to the 

U.S. in 2013. 

Total exports of ethanol from Brazil 

depend on ethanol production and 

demand within Brazil, and have varied 

significantly over the last decade. The 

historical maximum occurred in 2008 

when 1.35 bill gal was exported, and 

ongoing efforts to upgrade distribution 

infrastructure mean that Brazil is 

capable of exporting around 2 bill gal 

today. However, actual export volumes 

in 2010–2012 have been significantly 

below those from previous years. 

Moreover, imports of ethanol into Brazil 

also impact the volumes it exports. In 

both 2011 and 2012 there was 

significant two-way trade in ethanol 

between the United States and Brazil. 

According to current EIA data, in 2011 

the U.S. imported 101 million gallons of 

sugarcane ethanol from Brazil and 

exported 396 million gallons of cornbased ethanol to Brazil. Total fuel 

ethanol exports in 2011 were 1.2 billion 

gallons, and total exports through 

October 2012 were 646 million gallons. 

This two-way trade of ethanol 

engenders additional transport related 

emissions. 

Aside from production capability and 

domestic demand within Brazil, market 

conditions generally determine the 

availability of sugarcane ethanol 

imported into the U.S. from Brazil. 

Approved as an advanced biofuel 

pathway, ethanol produced from 

sugarcane benefits from the RIN value 

associated with advanced biofuel but 

also has to compete with other sources 

of ethanol used for blending with 

gasoline in the U.S., most notably 

ethanol made from corn starch (which 

does not qualify as an advanced 

biofuel). The expiration of the tariff 


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9300 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

applicable to imported ethanol has 

helped make imported sugarcane 

ethanol more cost competitive in the 

U.S., and any volumes of Brazilian 

sugarcane ethanol imported into 

California to meet the requirements of 

their Low Carbon Fuel Standard (LCFS) 

would also count towards meeting the 

requirements of the RFS program. 

However, international demand for 

Brazilian sugarcane ethanol is expected 

to continue to create some limitations in 

what volumes may be available to the 

U.S. Indeed in 2010 essentially all 

ethanol exported from Brazil went to 

other countries, and in 2011 about 70% 

of ethanol exported from Brazil went to 

other countries. As a result, imports of 

Brazilian sugarcane ethanol into the 

U.S. in 2010 and 2011 were 

comparatively low. Brazil is on track to 

meet the need for about 500 mill gal of 

imported sugarcane ethanol in the U.S. 

in 2012, but this is below the 666 mill 

gal that may be needed in 2013 to meet 

the 2.75 bill gal advanced biofuel 

requirement. However, since the rate of 

ethanol imports from Brazil was 

significantly higher in recent months 

than at the beginning of 2012, there may 

be good reason to expect that import 

volumes in 2013 will be higher than in 

2012. 

Considering that reinvestment in 

sugarcane stock is already underway, a 

considerable resurgence in Brazilian 

ethanol export potential in the 2013 

calendar year seems likely. Any 

limitations on ethanol exports created 

by delayed reinvestment in sugarcane 

stock appear to be waning. While 

uncertainties exist, on balance there is 

good reason to believe that Brazil can 

export at least 666 mill gal of ethanol to 

the U.S. in 2013. 

C. Proposed Volume Requirements for 

Advanced Biofuel and Total Renewable 

Fuel in 2013 

As shown in Table III.B–2, in order 

for an advanced biofuel requirement of 

2.75 bill gal to be met, there would need 

to be 816 mill gal of advanced biofuels 

in addition to the volumes that would 

need to be produced to meet the 

biomass-based diesel and proposed 

cellulosic biofuel requirements. After 

reviewing the projected availability of 

advanced biofuel volumes from various 

sources, we have preliminarily 

determined that it is likely that there 

will be sufficient volumes available to 

produce or import this 816 mill gal. 

Given our estimate of about 150 mill gal 

of domestic ‘‘other’’ advanced biofuel, 

the remaining volume of 666 mill gal 

would likely need to come from 

imported sugarcane ethanol and/or 

biodiesel in excess of 1.28 bill gal. As 

discussed above, we believe that this 

volume is achievable through a 

combination of these sources. Therefore, 

we believe that there is no reason to 

reduce the required volume of 2.75 bill 

gal advanced biofuel on the basis of 

available volumes. As noted above, 

maintaining the 2.75 bill gal advanced 

biofuel volume set forth in the statute 

will result in reduced GHG emissions 

from the transportation sector and could 

also contribute to energy security 

objectives. We do not believe it is 

appropriate to forgo such benefits when 

they are physically achievable but we 

invite comment on this issue, 

particularly in the context of increasing 

international trade in biofuels and the 

blendwall implications for ethanol 

consumption (see discussion in Section 

D below). 

Nevertheless, we recognize that some 

uncertainty exists in the projected 

availability of other advanced biofuels. 

The single largest source, Brazilian 

sugarcane ethanol, was exported at 

lower total volumes in 2010–2012 than 

the U.S. would need in 2013 to meet the 

2.75 bill gal advanced biofuel 

requirement. Moreover, the need for 666 

mill gal of Brazilian sugar ethanol in 


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41 77 FR 70759, November 27, 2012. 

2013 exceeds all historical volumes of 

ethanol imported into the U.S. from 

Brazil by a substantial margin. In 

addition, some stakeholders have stated 

that given a limited supply, sugarcane 

ethanol imported into the U.S. may be 

replaced in the exporting country’s 

domestic market by either nonadvanced biofuels, or by petroleum, 

which these stakeholders believe could 

lead to adverse GHG impacts. There 

may be enough uncertainty to warrant a 

more cautious approach to advanced 

biofuel and total renewable fuel in 2013, 

for example a reduction of 200 mill gal 

to approximate the uncertainty 

discussed above. Therefore, while we 

are not proposing to reduce the required 

volumes of advanced biofuel and total 

renewable fuel for 2013, we request 

comment on whether and to what extent 

a reduction is warranted; we have the 

discretion to reduce the advanced 

biofuel volume requirement for 2013 by 

up to the amount that the cellulosic 

biofuel volume requirement is reduced 

(986 mill gal in today’s proposal). Were 

we to do so, as discussed in Section 

III.A, we would also simultaneously 

reduce the total renewable fuel 

requirement by the same amount. 

The overall cost impact of reducing 

the advanced biofuel and total 

renewable fuel volume mandates would 

depend on a number of factors, such as 

the future cost of petroleum, 2012/2013 

crop production, the number of 

additional advanced biofuel pathways 

that are approved over the next year, 

and the time it would take for facilities 

using new advanced pathways to begin 

generating RINs. 

In 2014, the advanced biofuel 

requirement rises substantially to 3.75 

bill gal. Thus regardless of whether we 

reduce the advanced biofuel and total 

renewable fuel volume requirements for 

2013, we also seek comment on whether 

such a reduction should be considered 

for 2014, the basis for such a reduction, 

and the amount of that reduction. 

D. Consideration of the Ethanol 

Blendwall 

As the volume requirements of the 

RFS program increase, it becomes more 

likely that the volume of ethanol that 

must be consumed to meet those 

requirements will exceed the volume 

that can be consumed as E10. 

Additional volumes of ethanol must 

then be consumed as higher blend levels 

such as E15 or E85. While other nonethanol biofuels can also be used to 

meet the RFS requirements, ethanol has 

predominated and will likely continue 

to predominate in the near future. As a 

result, some stakeholders have indicated 

that the volume of ethanol that can be 

legally and practically consumed in 

2013 is a limiting factor in how much 

renewable biofuel can be consumed. 

In the context of the analyses 

conducted to support the decision 

regarding requests for a waiver of the 

renewable fuel standard, we estimated 

that the number of excess RINs 

generated in 2012 that could be carried 

over to 2013 will be on the order of 2.6 

billion.41 Since this number of carryover 

RINs falls below the rollover cap 

imposed by § 80.1427(a)(5), all of them 

can be used for compliance purposes in 

2013. As a result, we expect that the 

RFS demand for physical gallons of 

ethanol will be significantly less than 

the E10 saturation point (the blendwall), 

and thus there would be no dependence 

on significant volumes of E15–E85 in 

2013. This remains the case regardless 

of whether EPA were to reduce the 

advanced biofuel and total renewable 

fuel volume requirements as described 

in Section III.C above. Nevertheless, we 

request comment on whether the 

blendwall presents any difficulty in 

terms of compliance with the RFS 

volume requirements in 2013. 

In 2014, the situation could be 

different. There are a number of factors 

that will play a role in determining how 

regulated parties will demonstrate 

compliance with the applicable RFS 

volumes. First, the advanced biofuel 

and total renewable fuel requirements 

rise substantially to 3.75 bill gal and 

18.15 bill gal respectively. This increase 

in volume, combined with the cornethanol volume expected to meet the 

total renewable fuel standard, could 

cause the total ethanol volume used to 

comply with the RFS program to be 

higher than 16 bill gal. While nonethanol biofuels are also anticipated to 

continue to grow to help supply the 

advanced biofuel standard, this value 

gives some estimate of the amount of 

ethanol that might need to be used to 

comply with the RFS program in 2014. 

Second, the number of carryover RINs 

will also be a critical factor in 

determining whether obligated parties 

can acquire sufficient RINs to show 

compliance with the RFS volume 

requirements. However, the number of 

carryover RINs into 2014 will almost 

certainly be lower than for 2013. EPA 

will continue to engage with 

stakeholders on this issue as we project 

the RFS volume requirements for 2014. 

IV. Proposed Percentage Standards for 

2013 

A. Background 

The renewable fuel standards are 

expressed as volume percentages and 

are used by each refiner, blender, or 

importer to determine their renewable 

volume obligations (RVO). Since there 

are four separate standards under the 

RFS2 program, there are likewise four 

separate RVOs applicable to each 

obligated party. Each standard applies 

to the sum of all gasoline and diesel 

produced or imported. The applicable 

percentage standards are set so that if 

every obligated party meets the 

percentages, then the amount of 

renewable fuel, cellulosic biofuel, 

biomass-based diesel, and advanced 

biofuel used will meet the volumes 

required on a nationwide basis. 

As discussed in Section II.D, we are 

proposing a required volume of 

cellulosic biofuel for 2013 of 11 million 

gallons (14 million ethanol-equivalent 

gallons). The volume we select for the 

final rule will be used as the basis for 

setting the percentage standard for 

cellulosic biofuel for 2013. We are also 

proposing that the advanced biofuel and 

total renewable fuel volumes would not 

be reduced below the applicable 

volumes specified in the statute. The 

biomass-based diesel volume for 2013 

has been established at 1.28 billion 

gallons through a separate rulemaking. 

The volumes used to determine the four 

proposed percentage standards are 

shown in Table IV.A–1. 

TABLE IV.A–1—PROPOSED VOLUMES

FOR USE IN SETTING THE APPLICABLE PERCENTAGE STANDARDS FOR

2013 a

Cellulosic biofuel ................. 14 mill gal. 

Biomass-based diesel ......... 1.28 bill gal. 

Advanced biofuel ................. 2.75 bill gal. 

Renewable fuel .................... 16.55 bill gal. 

a Due to the manner in which the percentage standards are calculated, all volumes are 

given in terms of ethanol-equivalent except for 

biomass-based diesel which is given in terms 

of physical volume. 

As with previous years’ renewable 

fuels standards determination, the 

formulas used in deriving the annual 

standards are based in part on estimates 

of the volumes of gasoline and diesel 

fuel, for both highway and nonroad 

uses, that are projected to be used in the 

year in which the standards will apply. 

Producers of other transportation fuels, 

such as natural gas, propane, and 

electricity from fossil fuels, are not 

subject to the standards, and volumes of 

such fuels are not used in calculating 

the annual standards. Since the 

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9302 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

42Letter, Adam Sieminski, Administrator, U.S. 

Energy Information Administration, to Lisa P. 

Jackson, Administrator, U.S. EPA, October 18, 2012. 

43 72 FR 23900, May 1, 2007. 

standards apply to producers and 

importers of gasoline and diesel, these 

are the transportation fuels used to set 

the standards, and then again to 

determine the annual volume 

obligations of an individual gasoline or 

diesel producer or importer. 

B. Calculation of Standards 

1. How are the standards calculated? 

The following formulas are used to 

calculate the four percentage standards 

applicable to producers and importers 

of gasoline and diesel (see § 80.1405): 

Where: 

StdCB,i = The cellulosic biofuel standard for 

year i, in percent. 

StdBBD,i = The biomass-based diesel standard 

(ethanol-equivalent basis) for year i, in 

percent. 

StdAB,i = The advanced biofuel standard for 

year i, in percent. 

StdRF,i = The renewable fuel standard for year 

i, in percent. 

RFVCB,i = Annual volume of cellulosic 

biofuel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVBBD,i = Annual volume of biomass-based 

diesel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVAB,i = Annual volume of advanced 

biofuel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVRF,i = Annual volume of renewable fuel 

required by section 211(o) of the Clean 

Air Act for year i, in gallons. 

Gi = Amount of gasoline projected to be used 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

Di = Amount of diesel projected to be used 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

RGi = Amount of renewable fuel blended into 

gasoline that is projected to be consumed 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

RDi = Amount of renewable fuel blended into 

diesel that is projected to be consumed 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

GSi = Amount of gasoline projected to be 

used in Alaska or a U.S. territory in year 

i if the state or territory opts-in, in 

gallons. 

RGSi = Amount of renewable fuel blended 

into gasoline that is projected to be 

consumed in Alaska or a U.S. territory in 

year i if the state or territory opts-in, in 

gallons. 

DSi = Amount of diesel projected to be used 

in Alaska or a U.S. territory in year i if 

the state or territory opts-in, in gallons. 

RDSi = Amount of renewable fuel blended 

into diesel that is projected to be 

consumed in Alaska 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, in any 

year they are exempt per §§ 80.1441 and 

80.1442, respectively. For 2013, this 

value is zero. See further discussion in 

Section IV.B.2 below. 

DEi = Amount of diesel projected to be 

produced by exempt small refineries and 

small refiners in year i, in gallons, in any 

year they are exempt per §§ 80.1441 and 

80.1442, respectively. For 2013, this 

value is zero. See further discussion in 

Section IV.B.2 below. 

The Act requires EPA to base the 

standards on an EIA estimate of the 

amount of gasoline and diesel that will 

be sold or introduced into commerce for 

that year. The four separate renewable 

fuel standards for 2013 are based on the 

gasoline, ethanol, diesel, and biodiesel 

consumption volumes projected by 

EIA.42 We adjusted these nationwide 

values to represent the 49 states that 

participate in the RFS program (neither 

Alaska nor any U.S. territory 

participates). 

2. Small Refineries and Small Refiners 

In CAA section 211(o)(9), enacted as 

part of the Energy Policy Act of 2005, 

Congress provided a temporary 

exemption to small refineries (those 

refineries with a crude throughput of no 

more than 75,000 barrels of crude per 

day) through December 31, 2010. In our 

initial rulemaking to implement the new 

RFS program 43, we exercised our 

discretion under section 211(o)(3)(B) 

and extended this temporary exemption 

to the few remaining small refiners that 

met the Small Business 

Administration’s (SBA) definition of a 

small business (1,500 employees or less 

company-wide) but did not meet the 

statutory small refinery definition as 


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44 DOE report ‘‘EPACT 2005 Section 1501 Small 

Refineries Exemption Study’’, (January, 2009). 

45 ‘‘Small Refinery Exemption Study: An 

Investigation into Disproportionate Economic 

Hardship,’’ U.S. Department of Energy, March 2011. 

46Since the standards are applied on an annual 

basis, the exemptions are likewise on an annual 

basis even though the determination of which 

refineries would receive an extension to their 

exemption did not occur until after January 1, 2011. 47 75 FR 14670, March 26, 2010. 

48To determine the 49-state values for gasoline 

and diesel, the amounts of these fuels used in 

Alaska is subtracted from the totals provided by 

DOE. The Alaska fractions are determined from the 

most recent (2010) EIA State Energy Data, 

Transportation Sector Energy Consumption 

Estimates. The gasoline and transportation distillate 

fuel oil fractions are approximately 0.2% and 0.7%, 

respectively. Ethanol use in Alaska is estimated at 

11.2% of its gasoline consumption (based on the 

same State data), and biodiesel use is assumed to 

be zero. 

noted above. 40 CFR 80.1141, 80.1142. 

Because EISA did not alter the small 

refinery exemption in any way, the 

RFS2 program regulations maintained 

the exemptions for gasoline and diesel 

produced by small refineries and small 

refiners through 2010 (unless the 

exemption was waived). See 40 CFR 

80.1441, 80.1442. 

Congress provided two ways that 

small refineries can receive a temporary 

extension of the exemption beyond 

2010. One is based on the results of a 

study conducted by the Department of 

Energy (DOE) to determine whether 

small refineries would face a 

disproportionate economic hardship 

under the RFS program. The other is 

based on EPA determination of 

disproportionate economic hardship on 

a case-by-case basis in response to 

refiner petitions. 

In January 2009, DOE issued a study 

which did not find that small refineries 

would face a disproportionate economic 

hardship under the RFS program.44 The 

conclusions were based in part on the 

expected robust availability of RINs and 

EPA’s ability to grant relief on a case-bycase basis. As a result, beginning in 

2011 small refiners and small refineries 

were required to participate in the RFS 

program as obligated parties, and there 

was no small refiner/refinery volume 

adjustment to the 2011 standards as 

there was for the 2010 standards. 

Following the release of DOE’s 2009 

small refinery study, Congress directed 

DOE to complete a reassessment and 

issue a revised report. In March of 2011 

DOE re-evaluated the impacts of the 

RFS program on small entities and 

concluded that some small refineries 

would suffer a disproportionate 

hardship.45 As a result, EPA exempted 

these refineries from being obligated 

parties for two additional years, 2011 

and 2012.46 The 2012 standards 

established in the January 9, 2012, final 

rulemaking reflected the exemption of 

these refineries. We are seeking 

comment on whether it would be 

appropriate to extend the two year 

exemption for small refineries as 

discussed in section 211(o)(9)(A)(ii)(II). 

EPA may also extend the exemption 

for individual small refineries or small 

refiners on a case-by-case basis if they 

demonstrate disproportionate economic 

hardship. 40 CFR §§ 80.1441(e)(2), 

80.1442(h). EPA has granted some 

exemptions pursuant to this process that 

apply in 2011 and 2012. However, at 

this time, no exemptions have been 

approved for 2013. Therefore, for this 

proposal we have calculated the 

proposed 2013 standards without a 

small refinery/small refiner adjustment. 

Note that if exemptions under Section 

211(o)(9)(A)(ii)(II) were granted before 

finalizing the standards, or if an 

individual small refinery or small 

refiner requests an exemption and is 

approved following the release of this 

NPRM and prior to issuance of the final 

rule, the final standards will be adjusted 

upward to account for the exempted 

volumes of gasoline and diesel. Any 

requests for exemptions that are 

approved after the release of the final 

2013 RFS standards will not affect the 

2013 standards. As stated in the final 

rule establishing the 2011 standards, 

‘‘EPA believes the Act is best 

interpreted to require issuance of a 

single annual standard in November 

that is applicable in the following 

calendar year, thereby providing 

advance notice and certainty to 

obligated parties regarding their 

regulatory requirements. Periodic 

revisions to the standards to reflect 

waivers issued to small refineries or 

refiners would be inconsistent with the 

statutory text, and would introduce an 

undesirable level of uncertainty for 

obligated parties.’’ Thus, after the 2013 

standards are finalized, any additional 

exemptions for small refineries or small 

refiners that are issued will not affect 

those 2013 standards. EPA requests 

comment on whether it is appropriate 

for the agency to make changes to the 

2013 volumes if small refiner 

exemptions are granted after the final 

rule is issued. 

We encourage any producers of 

gasoline and/or diesel who believe that 

they may be eligible under the small 

refinery or small refiner exemption 

provision to send a petition to the EPA 

under the provisions of § 80.1441 or 

§ 80.1442. We believe that the approach 

EPA is currently using to assess 

disproportionate economic hardships 

for small refineries and small refiners 

appropriately addresses the intent of the 

statutory provision and the needs of the 

affected parties. 

3. Proposed Standards 

As specified in the March 26, 2010 

RFS2 final rule 47, the percentage 

standards are based on energyequivalent gallons of renewable fuel, 

with the cellulosic biofuel, advanced 

biofuel, and total renewable fuel 

standards based on ethanol equivalence 

and the biomass-based diesel standard 

based on biodiesel equivalence. 

However, all RIN generation is based on 

ethanol-equivalence. More specifically, 

the RFS2 regulations provide that 

production or import of a gallon of 

qualifying biodiesel will lead to the 

generation of 1.5 RINs. In order to 

ensure that demand for 1.28 billion 

physical gallons of biomass-based diesel 

will be created in 2013, the calculation 

of the biomass-based diesel standard 

provides that the required volume be 

multiplied by 1.5. The net result is a 

biomass-based diesel gallon being worth 

1.0 gallon toward the biomass-based 

diesel standard, but worth 1.5 gallons 

toward the other standards. 

The levels of the percentage standards 

would be reduced if Alaska or a U.S. 

territory chooses to participate in the 

RFS2 program, as gasoline and diesel 

produced in or imported into that state 

or territory would then be subject to the 

standard. Neither Alaska nor any U.S. 

territory has chosen to participate in the 

RFS2 program at this time, and thus the 

value of the related terms in the 

calculation of the standards is zero. 

Note that because the gasoline and 

diesel volumes estimated by EIA 

include renewable fuel use, we must 

subtract the total renewable fuel 

volumes from the total gasoline and 

diesel volumes to get total nonrenewable gasoline and diesel volumes. 

The values of the variables described 

above are shown in Table IV.B.3–1.48

Terms not included in this table have a 

value of zero. 

TABLE IV.B.3–1—VALUES FOR TERMS

IN CALCULATION OF THE STANDARDS

[Bill gal] 

Term Value 

RFVCB,2013 ............................. 0 .014 

RFVBBD,2013 .......................... 1 .28 

RFVAB,2013 ............................ 2 .75 

RFVRF,2013 ............................. 16 .55 

G2013 ..................................... 133 .70 

D2013 ...................................... 52 .26 

RG2013 ................................... 12 .85 

RD2013 ................................... 1 .23 

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49Estimates from RFS2 final rule, 75 FR 14867. 

Using the volumes shown in Table 

IV.B.3–1, we have calculated the 

proposed percentage standards for 2013 

as shown in Table IV.B.3–2. 

TABLE IV.B.3–2—PROPOSED

PERCENTAGE STANDARDS FOR 2013 

Cellulosic biofuel ................... 0 .008% 

Biomass-based diesel .......... 1 .12% 

Advanced biofuel .................. 1 .60% 

Renewable fuel ..................... 9 .63% 

V. Public Participation 

We request comment on all aspects of 

this proposal. This section describes 

how you can participate in this process. 

A. How do I submit comments? 

We are opening a formal comment 

period by publishing this document. We 

will accept comments during the period 

indicated under the DATES section 

above. If you have an interest in the 

proposed standards, we encourage you 

to comment on any aspect of this 

rulemaking. We also request comment 

on specific topics identified throughout 

this proposal. 

Your comments will be most useful if 

you include appropriate and detailed 

supporting rationale, data, and analysis. 

Commenters are especially encouraged 

to provide specific suggestions for any 

changes that they believe need to be 

made. You should send all comments, 

except those containing proprietary 

information, to our Air Docket (see 

ADDRESSES section above) by the end of 

the comment period. 

You may submit comments 

electronically, by mail, or through hand 

delivery/courier. To ensure proper 

receipt by EPA, identify the appropriate 

docket identification number in the 

subject line on the first page of your 

comment. Please ensure that your 

comments are submitted within the 

specified comment period. Comments 

received after the close of the comment 

period will be marked ‘‘late.’’ EPA is not 

required to consider these late 

comments. If you wish to submit 

Confidential Business Information (CBI) 

or information that is otherwise 

protected by statute, please follow the 

instructions in Section VI.B below. 

B. How should I submit CBI to the 

agency? 

Do not submit information that you 

consider to be CBI electronically 

through the electronic public docket, 

www.regulations.gov, or by email. Send 

or deliver information identified as CBI 

only to the following address: U.S. 

Environmental Protection Agency, 

Assessment and Standards Division, 

2000 Traverwood Drive, Ann Arbor, MI 

48105, Attention Docket ID EPA–HQ– 

OAR–2012–0546. You may claim 

information that you submit to EPA as 

CBI by marking any part or all of that 

information as CBI (if you submit CBI 

on disk or CD ROM, mark the outside 

of the disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

CBI). Information so marked will not be 

disclosed except in accordance with 

procedures set forth in 40 CFR part 2. 

In addition to one complete version of 

the comments that include any 

information claimed as CBI, a copy of 

the comments that does not contain the 

information claimed as CBI must be 

submitted for inclusion in the public 

docket. If you submit the copy that does 

not contain CBI on disk or CD ROM, 

mark the outside of the disk or CD ROM 

clearly that it does not contain CBI. 

Information not marked as CBI will be 

included in the public docket without 

prior notice. If you have any questions 

about CBI or the procedures for claiming 

CBI, please consult the person identified 

in the FOR FURTHER INFORMATION

CONTACT section. 

VI. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), this action is a 

‘‘significant regulatory action’’ because 

it raises novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

Accordingly, EPA submitted this action 

to the Office of Management and Budget 

(OMB) for review under Executive 

Orders 12866 and 13563 (76 FR 3821, 

January 21, 2011) and any changes made 

in response to OMB recommendations 

have been documented in the docket for 

this action. 

The economic impacts of the RFS2 

program on regulated parties, including 

the impacts of the required volumes of 

renewable fuel, were already addressed 

in the RFS2 final rule promulgated on 

March 26, 2010 (75 FR 14670). With the 

exception of cellulosic biofuel, this 

action proposes the percentage 

standards applicable in 2013 based on 

the volumes that were analyzed in the 

RFS2 final rule. 

B. Paperwork Reduction Act 

This action does not impose an 

information collection burden under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. Burden is 

defined at 5 CFR 1320.3(b). This 

proposed rule does not impose any 

additional reporting requirements on 

regulated parties beyond those already 

required under the RFS program; 

therefore, there will not be any 

additional reporting burdens on entities 

impacted by this regulation. This action 

merely proposes, as required by section 

211(o) of the Clean Air Act, the RFS 

annual standards for 2013. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

After considering the economic 

impacts of today’s proposed rule on 

small entities, we certify that this 

proposed action will not have a 

significant economic impact on a 

substantial number of small entities. 

This rule proposes the annual standard 

for cellulosic biofuel for 2013 at 14 mill 

gal. Since small refiners and small 

refineries collectively comprise about 

11.9% of gasoline and 15.2% of diesel 

production49, for an average of 12.9% 

for the entire gasoline + diesel pool, 

small refiners and small refineries 

would only be required to collectively 

meet a cellulosic biofuel requirement of 

about 1.8 mill gal (14 x 12.9%). At a 

projected cellulosic biofuel waiver 

credit price of $0.42, the cost of 

complying with this requirement would 

total about $0.76 million for the 

approximately 60 obligated parties that 

would be affected, or about $12,600 per 

facility on average. 

The impacts of the RFS2 program on 

small entities were already addressed in 

the RFS2 final rule promulgated on 

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Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 9305 

March 26, 2010 (75 FR 14670), and this 

proposed rule will not impose any 

additional requirements on small 

entities. However, we continue to be 

interested in the potential impacts of the 

proposed rule on small entities and 

welcome comments on issues related to 

such impacts. 

D. Unfunded Mandates Reform Act 

This proposed action contains no 

Federal mandates under the provisions 

of Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), 2 U.S.C. 

1531–1538 for State, local, or tribal 

governments or the private sector. This 

action implements mandate(s) 

specifically and explicitly set forth by 

the Congress in Clean Air Act section 

211(o) without the exercise of any 

policy discretion by EPA. Therefore, 

this action is not subject to the 

requirements of sections 202 or 205 of 

the UMRA. 

This action is also not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. This 

proposed rule only applies to gasoline, 

diesel, and renewable fuel producers, 

importers, distributors and marketers 

and merely proposes the 2013 annual 

standards for the RFS program. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This action 

proposes the 2013 annual standards for 

the RFS program and only applies to 

gasoline, diesel, and renewable fuel 

producers, importers, distributors and 

marketers. Thus, Executive Order 13132 

does not apply to this rule. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between EPA 

and State and local governments, EPA 

specifically solicits comment on this 

proposed rule from State and local 

officials. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 

2000). This proposed rule will be 

implemented at the Federal level and 

affects transportation fuel refiners, 

blenders, marketers, distributors, 

importers, exporters, and renewable fuel 

producers and importers. Tribal 

governments would be affected only to 

the extent they purchase and use 

regulated fuels. Thus, Executive Order 

13175 does not apply to this action. 

EPA specifically solicits additional 

comment on this proposed action from 

tribal officials. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

EPA interprets EO 13045 (62 FR 

19885, April 23, 1997) as applying only 

to those regulatory actions that concern 

health or safety risks, such that the 

analysis required under section 5–501 of 

the EO has the potential to influence the 

regulation. This action is not subject to 

EO 13045 because it does not establish 

an environmental standard intended to 

mitigate health or safety risks and 

because it implements specific 

standards established by Congress in 

statutes (section 211(o) of the Clean Air 

Act). 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not a ‘‘significant 

energy action’’ as defined in Executive 

Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355 (May 22, 2001)) because it is 

not likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy. This action simply proposes 

the annual standards for renewable fuel 

under the RFS program for 2013. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations 

when the Agency decides not to use 

available and applicable voluntary 

consensus standards. 

This proposed rulemaking does not 

involve technical standards. Therefore, 

EPA is not considering the use of any 

voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order (EO) 12898 (59 FR 

7629 (Feb. 16, 1994)) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has determined that this 

proposed rule will not have 

disproportionately high and adverse 

human health or environmental effects 

on minority or low-income populations 

because it does not affect the level of 

protection provided to human health or 

the environment. This action does not 

relax the control measures on sources 

regulated by the RFS regulations and 

therefore will not cause emissions 

increases from these sources. 

VII. Statutory Authority 

Statutory authority for this action 

comes from section 211 of the Clean Air 

Act, 42 U.S.C. 7545. Additional support 

for the procedural and compliance 

related aspects of today’s proposal, 

come from Sections 114, 208, and 301(a) 

of the Clean Air Act, 42 U.S.C. 7414, 

7542, and 7601(a). 

List of Subjects in 40 CFR Part 80 

Administrative practice and 

procedure, Air pollution control, Diesel 

fuel, Environmental protection, Fuel 

additives, Gasoline, Imports, Oil 

imports, Petroleum. 

Dated: January 31, 2013. 

Lisa P. Jackson, 

Administrator. 

For the reasons set forth in the 

preamble, Environmental Protection 

Agency proposes to amend 40 CFR part 

80 as follows: 

PART 80—REGULATION OF FUELS 

AND FUEL ADDITIVES 

■ 1. The authority citation for part 80 

continues to read as follows: 

Authority: 42 U.S.C. 7414, 7521(1), 7545 

and 7601(a). 

■ 2. Section 80.1405 is amended by 

adding paragraph (a)(4) to read as 

follows: 

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9306 Federal Register / Vol. 78, No. 26 / Thursday, February 7, 2013 / Proposed Rules 

§ 80.1405 What are the Renewable Fuel 

Standards? 

(a) * * * 

(4) Renewable Fuel Standards for 

2013. 

(i) The value of the cellulosic biofuel 

standard for 2013 shall be 0.008 percent. 

(ii) The value of the biomass-based 

diesel standard for 2013 shall be 1.12 

percent. 

(iii) The value of the advanced biofuel 

standard for 2013 shall be 1.60 percent. 

(iv) The value of the renewable fuel 

standard for 2013 shall be 9.63 percent. 

* * * * * 

[FR Doc. 2013–02794 Filed 2–6–13; 8:45 am] 

BILLING CODE 6560–50–P 

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