EO12866_RFS 2014 Annual Rule 2060-AR76 NPRM FRN_20130826.docx

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2013-0479; FRL-XXXX-X]

RIN 2060-AR76

2014 Standards For The Renewable Fuel Standard Program

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 percentage standards each November for the following year. 

Today’s action proposes the annual percentage standards for cellulosic biofuel, biomass-based 

diesel, advanced biofuel, and renewable fuels that would apply to all motor vehicle gasoline and 

diesel produced or imported in the year 2014. For cellulosic biofuel, the statute specifies that 

EPA is to project the volume of production and must base the cellulosic biofuel standard on 

projected available volume if it is less than the applicable volume set forth in the Act. Today 

EPA is proposing a cellulosic biofuel volume for 2014 that is below the applicable volume 

specified in the Act. The statute also provides EPA the discretion to reduce the volumes of 

advanced biofuel and total renewable fuel under certain conditions. Relying on its Clean Air Act 

waiver authorities, EPA is proposing to reduce the applicable volumes of advanced biofuel and 

total renewable fuel to address limitations in the ability of the relevant industries to make 

sufficient renewable fuels available for the ultimate consumers of the renewable fuels, including 

the set of factors commonly referred to as the ethanol “blendwall.” Finally, the statute requires 

EPA to determine the applicable volume of biomass-based diesel to be used in setting annual 

percentage standards under the renewable fuel standard program for years after 2012. EPA is 

proposing the applicable volume of biomass-based diesel that would apply in 2014 and 2015. 

DATES: Comments must be received on or before [insert date 45 days after date of 

publication in the Federal Register]. 

Hearing: We intend to hold a hearing on XXdateXX at XXlocationXX.

ADDRESSES: Submit your comments, identified by

Docket ID No. EPA-HQ-OAR-2013-0479, 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.

Style Definition: Heading 4
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Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2013-0479. 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 e-mail. The 

www.regulations.gov website 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 e-mail comment directly to EPA without going through www.regulations.gov your 

e-mail 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; E-mail address: macallister.julia@epa.gov, or the public information line for the 

Office of Transportation and Air Quality; telephone number (734) 214-4333; E-mail 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: 
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Category NAICS1

Codes

SIC2

Codes

Examples of Potentially Regulated Entities

Industry

Industry 

Industry 

Industry 

Industry 

Industry

Industry

324110

325193

325199

424690

424710

424720

454319

2911

2869

2869

5169

5171

5172

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Other fuel dealers

1 North American Industry Classification System (NAICS)

2

Standard Industrial Classification (SIC) system code.

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 e-mail. 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.
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• 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 .................................................................................................... 6

A. Purpose of This Action ........................................................................................................... 7

B. Summary of Major Provisions in This Notice ........................................................................ 9

1. Cellulosic Biofuel Volume for 2014................................................................................... 9

2. Biomass-Based Diesel in 2014 and 2015.......................................................................... 12

3. Advanced Biofuel and Total Renewable Fuel in 2014..................................................... 12

4. Proposed Annual Percentage Standards for 2014............................................................. 13

II. PROJECTION OF CELLULOSIC BIOFUEL VOLUME FOR 2014 ................................. 15

A. Statutory Requirements......................................................................................................... 16

B. Cellulosic Biofuel Volume Assessment for 2014................................................................. 16

1. Potential Domestic Producers with Approved Pathways ................................................. 18

2. Potential Domestic Producers without Existing Pathways............................................... 24

3. Potential Foreign Sources of Cellulosic Biofuel............................................................... 27

4. Summary of Volume Projections for Individual Companies............................................ 29

C. Proposed Cellulosic Biofuel Volume for 2014..................................................................... 32

D. Rescission of the 2011 Cellulosic Biofuel Standards........................................................... 39

III. PROPOSED NATIONAL VOLUME REQUIREMENT FOR BIOMASS-BASED 

DIESEL IN 2014 AND 2015........................................................................................................ 40

A. Statutory Requirements......................................................................................................... 40

B. Compliance with 2013 Volume Requirement of 1.28 Billion Gallons................................. 41

C. Determination of Applicable Volume for 2014 and 2015 .................................................... 43

IV. NATIONAL VOLUME REQUIREMENTS FOR ADVANCED BIOFUEL AND 

TOTAL RENEWABLE FUEL FOR 2014................................................................................... 46

A. Statutory Authorities for Reducing Volumes to Address Insufficient Availability and the 

Ethanol Blendwall......................................................................................................................... 47

1. Cellulosic Waiver Authority............................................................................................. 48

2. General Waiver Authority................................................................................................. 49

3. Combining Authorities for Reductions in Advanced Biofuel and Total Renewable Fuel 53

B. Determination of Reductions in Total Renewable Fuel........................................................ 54

1. Estimating Ethanol Volumes that Could Reasonably Be Consumed ............................... 54

2. Estimating Availability of Non-Ethanol Renewable Fuel Volumes................................. 60

a. Non-Ethanol Cellulosic Biofuel.................................................................................... 60

b. Biomass-Based Diesel .................................................................................................. 61

c. Non-Ethanol Advanced Biofuel.................................................................................... 65

d. Non-Ethanol Non-Advanced Renewable Fuel.............................................................. 67

3. Treatment of Carryover RINs in 2014.............................................................................. 67

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4. Proposed Range for the Volume Requirement for Total Renewable Fuel ....................... 68

C. Determination of Reductions in Advanced Biofuel.............................................................. 73

1. Available Volumes of Advanced Biofuel in 2014............................................................ 73

a. Cellulosic biofuel.......................................................................................................... 74

b. Biomass-Based Diesel .................................................................................................. 74

c. Domestic Production of Other Advanced Biofuel........................................................ 74

d. Imported Sugarcane Ethanol......................................................................................... 75

e. Summary....................................................................................................................... 79

2. Availability, Growth, and the E10 Blendwall.................................................................. 83

D. Summary of Proposed Volume Requirements for 2014....................................................... 86

E. Volume Requirements for 2015............................................................................................ 88

V. PROPOSED PERCENTAGE STANDARDS FOR 2014 ................................................... 89

A. Background........................................................................................................................... 89

B. Calculation of Standards....................................................................................................... 89

1. How Are the Standards Calculated? ................................................................................. 89

2. Small Refineries and Small Refiners................................................................................ 92

3. Proposed Standards........................................................................................................... 93

VI. PUBLIC PARTICIPATION............................................................................................. 95

A. How Do I Submit Comments?.............................................................................................. 95

B. How Should I Submit CBI to the Agency?........................................................................... 95

VII. STATUTORY AND EXECUTIVE ORDER REVIEWS ................................................ 97

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review ............................................................................ 97

B. Paperwork Reduction Act..................................................................................................... 97

C. Regulatory Flexibility Act .................................................................................................... 97

D. Unfunded Mandates Reform Act.......................................................................................... 98

E. Executive Order 13132: Federalism ..................................................................................... 98

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments. 99

G. Executive Order 13045: Protection of Children from Environmental Health Risks and 

Safety Risks .................................................................................................................................. 99

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy 

Supply, Distribution, or Use ......................................................................................................... 99

I. National Technology Transfer and Advancement Act ......................................................... 99

J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority 

Populations and Low-Income Populations................................................................................. 100

VIII. STATUTORY AUTHORITY ........................................................................................ 101

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a. Option 1: Advanced Biofuel 

Availability 818180¶

b. Option 2: Full Reduction in Cellulosic 

Biofuel 828381¶

c. Option 3: 

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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 was 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 publication of major 

revisions to the regulatory requirements on March 26, 2010.

1

 

The national volumes of renewable fuel to be used under the RFS program each year 

(absent an adjustment or waiver by EPA) are specified in CAA section 211(o)(2). The volumes 

for 2014 are shown in Table I-1. Note that cellulosic biofuel and biomass-based diesel 

categories are nested within advanced biofuel, which is itself nested within the renewable fuel 

category.

Table I-1

Required Applicable Volumes in the Clean Air Act for 2014 (billion gallon)

Cellulosic biofuel 1.75a

Biomass-based diesel ≥1.0b

Advanced biofuel 3.75a

Renewable fuel 18.15a

a

Ethanol-equivalent volume

b Actual 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 calculated so as to ensure use in transportation fuel of the national “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. The percentage standards are used by obligated parties 

(generally, producers and importers of transportation fuel) to calculate their individual 

compliance obligations. The percentage standards are applied to the volume of non-renewable 

transportation fuel that each obligated party produces or imports during the specified calendar 

year to determine the volumes of renewable fuel that must be used as transportation fuel, heating 

oil, or jet fuel. 

We have evaluated the availability of qualifying renewable fuels and factors that in some 

cases limit supplying those fuels to the vehicles and equipment that can consume them. Based 

on this evaluation we believe that reductions in the volumes of cellulosic biofuel, advanced 

biofuel, and total renewable fuel required under the statute are warranted for 2014 due to an 

inadequate domestic supply of these fuels (see Section IV.A for further detail). We are also 

 

1

75 FR 14670

Deleted: .

Deleted: bill gal)

Comment [A1]: Throughout the document, EPA 

should be consistent with the use of “billion gallon,” 

and “million gallon.” When abbreviation is used, 

such as “bill gal,” and “mill gal,” they should be 

defined when first appear. 

Response: Text changed to clarify term definitions.
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proposing to maintain the same volume for biomass-based diesel for 2014 and 2015 as was 

adopted for 2013. The volumes that we are proposing for 2014 are shown below.

Table I-1

Proposed 2014 Volume Requirementsa

Cellulosic biofuel 23 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.21 bill gal

Renewable fuel 15.21 bill gal

a All volumes are ethanol-equivalent, except for 

biomass-based diesel which is actual.

A. Purpose of This Action

EPA is today proposing annual volume requirements for obligated parties for cellulosic 

biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel for 2014. Table I.A-1 

lists the statutory provisions and associated criteria relevant to determining the national 

applicable volumes used to set the applicable standards in today’s proposed rule.

Comment [A2]: Because these numbers are not 

transparent and are so different from what analysts 

would expect, it might make sense to say something 

in the Exec. Summary.

Response: Clarifying text was added to point 

readers to appropriate sections for details.

Formatted Table
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Table I.A-1

Statutory Provisions for Determination of Applicable Volumes

Applicable volumes Clean Air Act 

reference

Criteria provided in statute for determination 

of applicable volume

Cellulosic biofuel in 

2014

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.

Biomass-based diesel in 

2014 and 2015

211(o)(2)(B)(ii) 

and (v)

Required volume for years after 2012 must 

be at least 1.0 bill gal, and must be based on 

a review of implementation of the program 

and an analysis of several factors.

Advanced biofuel in 

2014

211(o)(7)(D)(i) If applicable volume of cellulosic biofuel is 

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No 

criteria specified.

211(o)(7)(A) EPA may waive any portion of the statutory 

volume requirements if implementation of 

those requirements would severely harm the 

economy or environment of a State, region, 

or the United States, or there is an inadequate 

domestic supply.

Total renewable fuel in 

2014

211(o)(7)(D)(i) If applicable volume of cellulosic biofuel is 

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No 

criteria specified.

211(o)(7)(A) EPA may waive any portion of the statutory 

volume requirements if implementation of 

those requirements would severely harm the 

economy or environment of a State, region, 

or the United States, or there is an inadequate 

domestic supply.

Under the statute, 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 available during the year. In today's 

proposed rule, we present our analysis of cellulosic biofuel production and projected volume for 

2014. This analysis provides our evaluation of individual producers’ production plans and 

progress to date, and includes an assessment of the probabilities associated with production 

schedules from each of these producers. Deleted: integrates information provided by EIA 

with

Comment [A3]: Reviewers disagrees with this 

characterization.

Response: Text was modified to be more accurate.
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While CAA section 211(o)(2)(B) specifies the volumes of biomass-based diesel to be 

used in the RFS program through year 2012, it directs the EPA to establish the applicable 

volume of biomass-based diesel for years after 2012. The statute also lists the factors that must 

be considered in this determination. In today's action we are proposing volume requirements for 

biomass-based diesel for both 2014 and 2015.

There are two different authorities in the statute that permit EPA to reduce volumes of 

advanced biofuel and total renewable fuel below the volumes specified in the statute. 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. We can also reduce the 

applicable volumes of advanced biofuel or total renewable fuel under the general waiver 

authority provided at CAA 211(o)(7)(A) under certain conditions. Today's proposal uses a 

combination of these two authorities to reduce volumes of both advanced biofuel and total 

renewable fuel to address two important realities:

• Limitations in the volume of ethanol that can be consumed in gasoline given practical 

constraints on the supply of higher ethanol blends to the vehicles that can use them 

and other limits on ethanol blend levels in gasoline – a set of factors commonly 

referred to as the ethanol “blendwall”

• Limitations in the ability of the industry to produce sufficient volumes of qualifying 

renewable fuel

As summarized below in Section I.B.3 and described in detail in Section IV, today's action lays 

out a framework for determining the applicable volume requirements that addresses these two 

realities. We are proposing to use this framework to establish the volume requirements in 2014 

and anticipate that, subject to adjustments made in the course of this rulemaking, it would also be 

applied to later years.

In today's proposed rule we have also provided the annual percentage standards (shown 

in Section I.B.4 below) that would apply to all producers and importers of gasoline and diesel in 

2014. The percentage standards, which establish the legal requirement for the obligated parties,

are based on the 2014 applicable volumes that we project for the four types of renewable fuel 

and a projection of volumes of gasoline and diesel consumption in 2014 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This Notice

1. Cellulosic Biofuel Volume for 2014

The cellulosic biofuel industry continues to transition from research and development 

(R&D) and pilot scale to commercial scale facilities, leading to significant increases in 

production capacity. RIN generation from the first commercial scale cellulosic biofuel facility 

Deleted: then 

Deleted: could 

Comment [A4]: Align with statements elsewhere 

on forward guidance 

Response: Text modified in Section IV.
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began in March 2013.2 A second facility began producing fuel in July 2013 with several others 

expected to follow in 2014. Based on information we have collected from these companies, we 

have identified five companies we expect to produce cellulosic biofuel in 2014. There are an 

additional three companies that may be in a position to produce cellulosic biofuel if additional 

pathways are approved by EPA. Each of the relevant facilities is listed in Table I.B.1-1 along 

with our estimate of their projected 2014 volume. Based on the information we have received 

from these companies, our conversations with other government agencies, and EPA's own 

engineering judgment we are projecting that 13 - 36 million ethanol-equivalent gallons of 

cellulosic biofuel will be available in 2014. This projected range does not include any volume 

from facilities that could use pathways which have not yet been approved. If production 

volumes from these facilities were included, we would project a production range of 56 - 86 

million ethanol-equivalent gallons.

As part of estimating the volume of cellulosic biofuel that would be made available in the 

U.S. in 2014, 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 is expected to produce commercial volumes of qualifying cellulosic biofuel for use in 

2014. To arrive at a projected volume for each facility, we developed company specific 

projections based on 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 qualify 

for cellulosic biofuel Renewable Identification Numbers (RINs) in 2014. 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 proposed rule 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 2014. 

 

2 A RIN is unique number generated by the producer and assigned to each gallon of a qualifying renewable fuel 

under the RFS program, and is used by refiners and importers to demonstrate compliance with the volume 

requirements under the program.

Deleted: and discussions with EIA

Comment [A5]: See comment, bottom of page 8

Response: Test was not modified.

Deleted: e

Comment [A6]: EIA will provide its required 

letter to EPA in October which will reflect the latest 

assessment. 

Response: Text was modified to acknowledge 

forthcoming letter from EIA.

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Deleted: worked closely with EIA to developto 

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Comment [A7]: EIA-EPA coordination effort 

just started. There are historic MOUs in place 

sharing EIA data with EPA but nothing comparable 

from EPA to EIA.

Response: Text was modified to be more accurate.

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Table I.B.1-1

Projected Available Cellulosic Biofuel Plant Volumes for 2014

Company Location Fuel type

Capacity 

(million gallons 

per year)

First 

Production 

Projected 2014 

available volumea

Companies with Approved Pathways

Abengoa Hugoton, KS Ethanol 24 1Q 2014b0 – 18

DuPont Nevada, IA Ethanol 30 2H 2014b0 – 2

INEOS Bio Vero Beach, FL Ethanol 8 3Q 2013 2 – 8

KiOR Columbus, MS Gasoline and 

Diesel

11 March 2013 4 – 15

Poet Emmetsburg, IA Ethanol 25 1H 2014b0 – 6

Total for companies with approved pathways 13 - 36c

Companies with Proposed Pathways

CNG/LNG 

Producers

Various CNG/LNG Various Various 35 – 50

Edeniq Various Ethanol Various 1H 2014b0 - 7

Ensyn Stanley, WI Heating Oil 3 2007 0 – 5

Total for both companies with approved pathways and those with proposed pathways 56 - 86c

a Volumes listed in million ethanol-equivalent gallons

b Start-up dates for these facilities are projections

c Total volumes are the result of Monte Carlo simulations rather than the sum of the low and high end of the range of 

projected available volume for each company. See Section II.C for more detail.

In projecting the actual volume of cellulosic biofuel that will be available for use in 2014, 

we have taken into account variation in expected start-up times, along with the facility 

production capacities, company production plans, the progress made in 2013, expected 

production distribution and a variety of other factors. Section II discusses in greater detail our 

projections of cellulosic biofuel in 2014 and the companies we expect to produce this volume. 

In response to a recent court decision, we are also proposing to rescind the cellulosic 

biofuel standards for 2011. In January 2013, the United States Court of Appeals for the District 

of Columbia Circuit issued a decision interpreting the statutory requirements for EPA’s 

cellulosic biofuel projections, in the context of considering a challenge to the 2012 cellulosic 

biofuel standard. The Court found that in establishing the applicable volume of cellulosic 

biofuel for 2012, EPA had used a methodology in which “the risk of overestimation [was] set 

deliberately to outweigh the risk of underestimation.” The Court held EPA’s action to be 

inconsistent with the statute because EPA had failed to apply a “neutral methodology” aimed at 

providing a prediction of “what will actually happen,” as required by the statute. As a result of 

this ruling, the Court vacated the 2012 cellulosic biofuel standard. See API v. EPA, 706 F.3d 

474 (D.C. Cir. 2013). EPA later removed the 2012 cellulosic biofuel requirement from the 

regulations.3 Since we used essentially the same methodology to develop the 2011 cellulosic 

biofuel standard as we did to develop the 2012 standard, we believe it would be appropriate to 

rescind the 2011 cellulosic biofuel standard as well and accordingly are proposing to do so in 

 

3

[XXcite final 2013 standards rule when published in the Federal Register]

Formatted Table

Comment [A8]: This capacity # is variable. EIA 

is using 23 MMG.

Response: Text added to address this issue (footnote 

to this table)

Deleted: 2014

Deleted: 4

Comment [A9]: Shouldn’t this be 2013?

Response: Yes, text edited

Deleted: 2014

Comment [A10]: Is this the best information 

given the new information on the lawsuits and 

KiOR’s deteriorating cash position? 

Response: KiOR projection has been adjusted based 

on new information to address this issue

Comment [A11]: EPA never identifies in this 

NPRM who these producers are. 

Response: No changes made to the text. EPA has 

withheld the names of these companies as this 

estimate is based on a small number (3) of 

companies and facility capacity information that may 

be considered CBI.
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today’s action. All of the money paid by obligated parties to purchase cellulosic waiver credits 

to comply with the 2011 cellulosic biofuel standard would be refunded if this action is finalized.4

2. Biomass-Based Diesel in 2014 and 2015

While 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. Moreover, the statute requires that we finalize these biomass-based diesel volume 

requirements no later than 14 months before the first year for which that volume requirement 

will apply. We did not propose a volume requirement for biomass-based diesel in the February 

7, 2013 Notice of Proposed Rulemaking because at that time we were still evaluating the 

potential market impacts of current production levels. In order to provide sufficient time for this 

evaluation, as well as the other analyses we are required to conduct, we delayed our proposal for 

the 2014 volume requirement for biomass-based diesel. 

In today's action we are proposing to maintain the applicable volume of 1.28 bill gallons 

for biomass-based diesel for both 2014 and 2015. This proposal is based on a consideration of 

the factors specified in the statute, including biodiesel production, consumption, infrastructure, 

climate change, energy security, the agricultural sector, air quality, and others. Section III 

provides additional discussion of our assessment of the proposed volume of 1.28 billion gallons 

of biomass-based diesel.

3. Advanced Biofuel and Total Renewable Fuel in 2014

Since the RFS2 program began in 2010, EPA has considered reductions in advanced 

biofuel and total renewable fuel authorized under the cellulosic waiver provisions of 

211(o)(7)(D)(i). In the past we have focused primarily on the availability of advanced biofuels 

in determining whether reductions in the required volume of cellulosic biofuel should be 

accompanied by reductions in the required volumes of advanced biofuel and total renewable fuel. 

The total volume of renewable fuel in the form of ethanol that could reasonably be available and 

supplied to vehicles as either E10 or higher ethanol blends given various constraints (notably 

those collectively referred to as the blendwall), was not a limiting factor for years prior to 2014. 

However, for 2014 and later years, the total volume of ethanol that can be consumed, and the 

total volume of non-ethanol renewable fuels that could reasonably be available, are together 

expected to be less than the volume requirements established in EISA for advanced biofuel and 

total renewable fuel. Therefore, we are proposing reductions in the volume requirements for 

these categories of renewable fuel to address these concerns.

In order to determine the nessesary reductions in EISA volume requirements, EPA must 

consider the capabilities of the relevant industries to make qualifying renewable fuels available, 

 

4

In 2011 obligated parties purchased 4,248,388 cellulosic biofuel waiver credits at a price of $1.13 per gallon-RIN 

for a total cost of $4,800,678.

Comment [A12]: Does the statute specify similar 

factors to be considered for other biofuel categories? 

Does EPA consider these factors for other biofuel 

categories? 

Response: These factors are only required to be 

considered for BBD for 2014. Text was modified to 

clarify this fact.

Deleted: billbillbill

Deleted: the 

Deleted: We evaluated three potential approaches 

for reducing the applicable volume requirements for 

advanced biofuel and total renewable fuel. Each of 

these approaches would require use of a combination 

of the cellulosic and general waiver authorities at 

211(o)(7)(D)(i) and 211(o)(7)(A), respectively, to 

address supply concerns associated with the 

blendwall; the approaches differ primarily with 

regard to how the advanced biofuel requirement 

would be adjusted using these authorities. The first 

approach would lower the statutory volumes for 

advanced biofuels only to the extent that additional 

volumes are not projected to be available; the 

general waiver authority would be used to ensure 

that the total volume of renewable fuel would 

address supply concerns associated with the 

blendwall. The second approach would make 

reductions in advanced biofuel and total renewable 

fuel that are equal to the proposed reductions in 

cellulosic biofuel and would use the general waiver 

authority to make further reductions to the total 

renewable fuel requirement necessary to address the 

blendwall

Comment [A13]: The first and second 

“approaches” are outcomes, rather than approaches. 

In particular, what is called the “second approach” 

might be an outcome that results from application of 

the third approach: the only “approach” that is 

actually an approach as opposed to an outcome.

Response: Suggested deletions were not 

incorporated.

Deleted: . ¶

Deleted: The third approach that we evaluated, and 

the one that we are proposing today, includes

Deleted: includes both a consideration of

Deleted: capabilitycapabilitycapability

Deleted: ycapability
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

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either through domestic production or importation, and also the capability of the relevant 

industries to ensure that those renewable fuels are used as transportation fuel, heating oil, or jet 

fuel. The use of renewable fuels includes a consideration of the infrastructure available for 

distributing, blending, and dispensing renewable fuels, as well as appropriate vehicles in the fleet 

that can consume various renewable fuels, such as flex-fuel vehicles (FFVs). Our proposed 

framework for addressing both availability of qualifying renewable fuels and constraints on their 

consumption would make use of a combination of the cellulosic waiver authority at 

211(o)(7)(D)(i) and the general waiver authority at 211(o)(7)(A). As described in detail in 

Section IV.A.2, we interpret the term "inadequate domestic supply" as it is used under the 

general waiver authority to include consideration of factors that affect consumption of renewable 

fuel.We believe the framework being proposed today best approximates the multiple goals that 

Congress intended in the RFS program, and we would intend this framework to apply not just to 

2014, but to later years as well. However, we are soliciting comment on alternative approaches 

as well. We discuss the proposed framework and the alternative approaches in Section IV. 

We believe that our proposed framework for determining appropriate volumes of total 

renewable fuel and advanced biofuel would simultaneously address the ethanol blendwall and 

limitations in availability of qualifying renewable fuels. For total renewable fuel, we would 

project the volume of ethanol that could reasonably be consumed as E10 and higher ethanol 

blends, and would add to that the volume of all non-ethanol renewable fuels that could 

reasonably be expected to be available. For advanced biofuel, we would sum the ethanolequivalent volumes of the cellulosic biofuel requirement, the biomass-based diesel requirement, 

and the additional non-ethanol advanced biofuels that could reasonably be expected to be 

available and be consumed. In this process we have projected ranges that encompass the most 

likely outcomes, and we propose several approaches to determining the most likely value for the 

final rule.

4. Proposed Annual Percentage Standards for 2014

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. 

Four separate percentage standards are required under the RFS program, corresponding to 

the four separate volume requirements shown in Table I-1. The specific formulas we use in 

calculating the renewable fuel percentage standards are contained in the regulations at 40 CFR 

§80.1405 and repeated in Section V.B.1. The percentage standards represent the ratio of 

renewable fuel volume to projected non-renewable 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. The proposed standards for 2014 are shown in Table 

I.B.4-2. Detailed calculations can be found in Section V, including the projected 2014 gasoline 

and diesel volumes used.

Deleted: 

Comment [A14]: It would be helpful if EPA can 

explain why it is necessary to include this particular 

phrase in this sentence.

Response: This text has been in previous annual 

rules and clarifies that the required volumes may not 

be exactly realized in-use due to uncertainty in 

gasoline and diesel projections. Text was modified 

to clarify.
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Table I.B.4-2

Proposed Percentage Standards for 2014

Cellulosic biofuel 0.017%

Biomass-based diesel 1.16 %

Advanced biofuel 1.36 %

Renewable fuel 9.33 %

Comment [A15]: Need to recalculate based on 

different G and D values

Response: Values have been recalculated.
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II. Proposed Cellulosic Biofuel Volume for 2014

In order to project the volume of cellulosic biofuel production in 2014 for use in setting 

the applicable percentage standard, we considered information we received from EIA and 

information we collected from 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 2014. This 

section describes the volumes that we project will be produced or imported in 2014 as well as 

some of the uncertainties associated with those volumes. 

In the past several years the cellulosic biofuel industry has continued to progress. The 

first cellulosic biofuel RINs under the current RFS regulations were produced in 2012 at two 

small demonstration scale facilities. During 2013, the first commercial scale cellulosic biofuel 

facilities have successfully completed commissioning and began fuel production, and several 

more large scale commercial production facilities are expected to begin fuel production in 2014. 

Projected costs for the production 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 advances, 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. EPA has also approved new pathways to increase the variety of fuels for 

which cellulosic RINs can be generated and the feedstocks from which these fuels can be 

produced. These factors have combined to continue to reduce the perceived technical, financial, 

and regulatory risks associated with the cellulosic biofuel industry and place the cellulosic 

biofuel industry on firm ground for future growth.

Although the cellulosic biofuel industry faces many challenges and RIN-generating 

cellulosic biofuel production continues to be limited, the industry is growing incrementally, both 

in the United States and around the world.5 New facilities projected to be brought online in the 

United States in 2014 would increase the production capacity of the cellulosic industry by 

approximately 600 percent. The following section discusses the companies the EPA reviewed in 

the process of projecting cellulosic biofuel production for use as a transportation fuel in the 

United States in 2014. Information on these companies forms the basis for our projection that 

the volume of cellulosic biofuel produced in 2014 is likely to be in the range of –13 – 36 million 

gallons. EPA will continue to monitor the progress of these facilities, as well as any others of 

which we become aware that have the potential for cellulosic biofuel production in 2014, in 

order to have the most up to date information possible to set the cellulosic biofuel standard in the 

final rule.

 

5 As of July 31, 2013, 215,044 RINS that can be used to fulfill the cellulosic biofuel standard (D3 and D7 RINS) 

have been generated.

Deleted: – including information from EIA –
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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 2014, the statute specifies a 

cellulosic biofuel volume requirement of 1.75 billion gallons. 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 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 2014 volume requirements for advanced biofuels and total renewable fuel is presented in 

Section IV.

B. Cellulosic Biofuel Volume Assessment for 2014

In order to project cellulosic biofuel production for 2014, we have tracked the progress of 

several dozen potential cellulosic biofuel production facilities. As for the 2013 annual volumes, 

we have focused on facilities with the potential to produce commercial volumes of cellulosic 

biofuel rather than small R&D or pilot scale facilities as the larger commercial scale facilities are 

much more likely to generate RINs for the fuel they produce and the volumes they produce will 

have a far greater impact on the cellulosic biofuel standard for 2014. From this list of facilities 

we used publically available information, as well as information provided by DOE, EIA, 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 2014. Each of these 

companies was investigated further in order to determine the current status of its facilities and its 

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 ramp-up periods, and annual fuel 

production targets were all considered when we spoke with representatives of each company to 

discuss cellulosic biofuel target production levels for 2014. 

For each company included in our 2014 volume projections EPA has established a range 

of potential production volume such that it is possible, but highly unlikely that the actual 

production will be above or below the range.6 The low end of the range for each company is 

designed to represent the volume of fuel EPA believes each company is likely to produce if they 

are unable to begin fuel production on their expected start-up date and/or experience challenges 

that result in reduced production volumes or a longer than expected ramp-up period. Experience 

to date with cellulosic biofuel production facilities is that historically they have been unable to 

achieve announced start-up dates and production volumes in their first few years of expected 

production. To project a low end of the range of production volumes, therefore, we must 

 

6

For the purposes of the Monte Carlo simulation, discussed in more detail later, this range will be treated as 

representing the 90% confidence interval.

Deleted: Throughout this process EPA has been in 

regular contact with EIA to discuss relevant 

information and EIA’s assessment of potential 

cellulosic biofuel producers. 

Comment [A16]: Reviewers disagree with this 

characterization.

Response: Text modified to address this comment, 

reference to contact with EIA retained.
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

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consider the likely minimum volume of fuel new facilities are likely to produce if they 

experience similar delays and setbacks. The low end of the range for any facilities that have not 

yet begun producing cellulosic biofuel is set at zero in our assessment. This reflects the 

uncertainties related to these facilities’ start-up dates, the possibility that any remaining 

construction and commissioning timelines may be delayed, and the possibility that initial fuel 

volumes are likely to be small.

If a facility has already begun production any uncertainty related to its start-up date is no 

longer relevant and the remaining uncertainty primarily relates to the facility’s ability to achieve 

steady state production and target yields as it progresses towards production rates that reflect the 

facility’s nameplate capacity. For these facilities, production history is a significant factor in 

establishing the low end of the projected production range. It is important to note that the low 

end of the range does not represent a worst-case scenario. The worst-case scenario for any of 

these facilities is zero, as it is always possible that extreme circumstances or natural disasters 

may result in extended delays, project cancellation, or liquidation. While not denying this 

possibility for any of the facilities included in our projections, several have made sufficient 

progress that we believe a non-zero value for the low end of the range is appropriate. For these 

facilities we believe it is highly unlikely that the production volume will fail to exceed the low 

end of their projected production range in 2014. Further discussion on the basis for the low end 

of the projected production range for each facility is included in the company descriptions in the 

following sections.

To determine the high end of the range of expected production volumes for each 

company we considered a variety of factors, including company history, expected start-up date 

and ramp-up period, facility capacity, and others mentioned above. As a starting point, EPA 

calculated a production volume using the expected start-up date and facility capacity assuming 

our best-case scenario benchmark of a six-month straight-line ramp-up period. Any production 

volumes that exceeded this volume were not considered to be credible, even for the high end of 

the range of expected production volumes. If the production estimate EPA received from a 

company was lower than the volume calculated using the methodology above, EPA used the 

company production targets instead. In some cases these volumes were discounted further based 

on the history of these companies or EPA’s engineering judgment. More information on the 

process used to project the high end of the range of expected production volumes for each 

company can be found below. This process is similar to the process used in the 2013 standards

NPRM to calculate the expected production for each company.

We believe our range of projected production volumes for each company represents the 

range of what is likely to actually happen for each company. A brief description can be found 

below for each of the companies we believe will produce cellulosic biofuel and make it 

commercially available in 2014. We will continue to gather more information to help inform our 

decision regarding the cellulosic biofuel volume to be required for 2014 in the final rule. In the 

sections that follow, we first discuss domestic cellulosic biofuel production facilities with an 

approved RIN generating pathway, followed by facilities with pathways that have been proposed 

or are currently being evaluated by EPA, and finally foreign cellulosic biofuel producers.

Deleted: information received from EIA, 

Deleted: e

Comment [A17]: Spell out when first appears

Response: Text modified to address the comment

Deleted: These projections are made in 

coordination with EIA as well as each of the 

individual companies. 
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EPA has determined a range of potential production volumes for each company rather 

than a single value as a range better reflects the uncertainty associated with the production from 

each company. Additionally, there are a large number of companies that EPA must assess and 

aggregate to produce a single national volume covering the entire cellulosic biofuel industry. 

We believe that our projected production volume for the cellulosic biofuel industry as a whole is 

more accurate if it is done in such a way as to reflect the uncertainty associated with each of the 

companies that contribute to the projection. As discussed in more detail in Section II.C below, 

EPA is using a Monte Carlo simulation as a tool to combine our production projections for each 

individual company to determine a reasonable range of cellulosic biofuel production in 2014 for 

the entire industry in a way that reflects the uncertainty across the full suite of facilities. This 

projected range will help to provide a basis for public comment and to inform our ultimate 

decision on the single value for the final rule that best represents the projected volume of 

cellulosic that will be available in 2014.

1. Potential Domestic Producers with Approved Pathways

The companies and facilities discussed in this section all have the potential to produce 

cellulosic biofuel for use as transportation fuel, heating oil, or jet fuel in the United States in 

2014. Two of the facilities discussed here successfully began producing cellulosic biofuel at 

commercial-scale in 2013. The remaining seven are in various stages of construction. All seven 

of these facilities project the successful completion of construction of commercial scale facilities 

and initial fuel production in 2014. The strong financial incentive provided by the cellulosic 

RINs, combined with the fact that all these facilities are located in the United States and intend to 

use approved pathways, give us a high degree of confidence that any fuel they produce will also 

generate corresponding cellulosic biofuel RINs.7

In order to generate RINs, each of these companies must register under the RFS program 

and comply with all applicable recordkeeping and reporting requirements. This includes using 

an approved RIN-generating pathway and verifying that their feedstocks meet the definition of 

renewable biomass. 

Abengoa

Abengoa, a large international biofuels company, has developed 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. 

After successfully proving their technology at commercial scale in Hugoton, Abengoa currently 

 

7

In 2012, approximately 20,000 gallons of cellulosic biofuel produced in the US was exported to Brazil to be used 

for promotional purposes. We believe the circumstances surrounding this export of cellulosic biofuel were unique, 

including significant investment in the company that produced the fuel by Petrobras, and are unlikely to be repeated 

by the companies included in future years.

Comment [A18]: Not sure that Monte Carlo is 

the best was to get the numbers we are looking for.

Response: Text modified to address this comment –

points to further discussion in Section IV

Comment [A19]: Name the two for clarity.

Response: Text modified to address this comment
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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.

Abengoa has contracts in place to provide the majority of feedstocks necessary for the 

Hugoton 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 approximately two years 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 producing fuel at the facility in January 2014, shortly after 

completing construction in late 2013, and to be producing fuel at rates near the nameplate 

capacity by the end of the second quarter of 2014. They are currently projecting 17 – 20 million 

gallons of cellulosic ethanol production from this facility in 2014. This range of volumes is 

consistent with the 18 million gallons EPA would project if we assume production starts on 

January 1, 2014 and use the six-month ramp-up period as a benchmark best case scenario for 

new cellulosic biofuel production facilities. To date construction at the Abengoa facility has 

proceeded as expected and EPA has no reason to believe this facility is less likely to achieve 

their production targets than any other new first-of-a-kind cellulosic biofuel facility. EPA is 

therefore using 18 million gallons of cellulosic ethanol as the high end of the projected 

production range from Abengoa in todays proposed rule. For the low end of the production 

range, EPA is projecting a volume of 0 gallons, consistent with our projections for all facilities 

that have not yet begun producing commercial volumes of cellulosic biofuel. This significantly 

reduced volume reflects the fact that no commercial scale cellulosic biofuel facility has yet been 

able to achieve its target date for the first production of fuel. Any delay in the start-up date of 

this facility would have a significant negative impact on production in 2014 and may result in 

production being delayed until 2015. 

Cool Planet Biofuels

Cool Planet Biofuels has developed a process to convert a variety of forms of cellulosic 

biomass into a renewable gasoline product. Their process uses pressure and heat to convert the 

cellulosic biomass to a hydrocarbon stream in a biomass fractionator which is then upgraded 

using proprietary catalysts into a renewable gasoline product. Cool Planet Biofuels plans to 

deploy relatively small scale production units capable of producing 10 million gallons of fuel per 

year that can be located near readily available sources of cellulosic biomass. In December 2012 

Cool Planet Biofuels began producing fuel from their 400,000 gallon per year demonstration 

scale facility that is currently being used for testing purposes.

Cool Planet Biofuels plans to begin producing fuel at their first commercial scale unit, 

with a nameplate capacity of 10 million gallons per year by the end of 2014. The location of this 

facility has not yet been announced, and it is unclear whether Cool Planet Biofuels has raised 

Comment [A20]: Refer to communications from 

Abengoa.

Response: Reference to email from Abengoa added 

as a footnote
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sufficient funds for the construction of this facility. Cool Planet Biofuels claims that the very 

short construction time they anticipate for their facility relative to cellulosic biofuel production 

facilities of similar size, which generally take at least two years to build, is made possible by 

their use of very little novel equipment. The majority of the facility is composed of units already 

used in commercial operation in other applications that will be purchased from vendors and 

assembled by Cool Planet Biofuels. The facility will be constructed on cargo container skids and 

then transported to the fuel production site. 

EPA believes that it may be possible for Cool Planet Biofuels to produce cellulosic 

biofuel from their first commercial scale production facility in 2014, but any production from 

this facility is highly uncertain. Historically the construction of cellulosic biofuel production 

facilities has taken multiple years, with delays to the initial construction schedules common. 

Cool Planet’s unique construction plan may allow for a reduced construction timeframe; 

however we do not believe it would be appropriate to rely on this in projecting available volumes 

of cellulosic biofuel in 2014. We have therefore not included any volume from Cool Planet 

Biofuels in our projection of the potentially available volume of cellulosic biofuel in 2014 in 

today’s proposal.

DuPont

DuPont has developed an enzymatic process to convert corn stover into cellulosic 

ethanol. DuPont has invested hundreds of millions of dollars to develop this technology and 

since 2009 has operated a small demonstration scale facility in Vonore, Tennessee. In addition 

to developing technology for converting cellulosic biomass to ethanol, DuPont has been working 

with corn producers, equipment manufacturers, and Iowa State University to develop expertise in 

the collection, transportation, and storage of the biomass feedstock for their cellulosic ethanol 

facilities. On March 29, 2013 DuPont signed an agreement with USDA to promote the 

sustainable harvesting of feedstocks for cellulosic biofuel facilities. 

On November 30, 2012 DuPont began the construction of their first commercial scale 

cellulosic ethanol facility in Nevada, Iowa. When completed, this facility will have a nameplate 

production capacity of 30 million gallons of cellulosic ethanol per year. DuPont currently plans 

to achieve mechanical completion at this facility in June 2014 and to begin production in the 

second half of 2014. They are currently projecting the production of approximately 3 million 

gallons of cellulosic ethanol from this facility in 2014; however they acknowledge that even 

slight delays in their expected construction timeline could have significant impacts on their fuel 

production in 2014. Using EPA’s best-case benchmark of a six month straight-line ramp-up 

period assuming a production startup date of October 1, 2014 would result in an expected 

production of approximately 2 million gallons in 2014. Due to the start-up date that is late in the 

year, however, even a relatively minor delay in the construction and commissioning timeline or 

unforeseen challenges in start-up would result in no production from this facility in 2014. We 

have projected a range or 0 – 2 million gallons of cellulosic biofuel from DuPont’s Nevada, Iowa 

facility in 2014.

Fiberight
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Page 21 of 102

Fiberight uses an enzymatic hydrolysis process to convert the biogenic portion of 

separated municipal solid waste (“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. Additional construction will be required at this facility 

before the production of cellulosic biofuel can begin, and the company expects that this 

construction 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. Because of the 

uncertainty surrounding Fibright’s funding status, the lack of progress towards the completion of 

the modifications at their Blairstown, Iowa facility, and their history of production delays EPA is 

not including any volume from Fiberight in today’s proposal.

INEOS Bio

INEOS Bio has developed a process for producing cellulosic ethanol by first gasifying 

cellulosic feedstocks into a synthesis gas (“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 food and yard waste, 

agricultural residues, slash and pre-commercial thinnings, and tree residues from tree 

plantations.

8

 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 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. On July 31, 2013, INEOS Bio announced they had 

begun producing cellulosic ethanol at commercial scale from their Vero Beach facility. INEOS

 

8 Both slash and pre-commercial thinnings and tree residue from tree plantations must come from non-federal 

forestland to qualify as a feedstock in the RFS program. Additionally slash and pre-commercial thinnings must 

come from land that is not ecologically sensitive forest land.

Deleted: 

Deleted: .

Deleted: ,,,

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Deleted: 
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Bio has previously reported that they plan to be producing cellulosic ethanol at levels near the 

facility’s capacity of 8 million gallons by the end of 2013. If they are able to achieve these 

production rates by the end of 2013, production in 2014 may be at or near the nameplate capacity 

of 8 million gallons of cellulosic ethanol. 

There is, however, significant uncertainty in the ability of this facility to achieve these 

production volumes in 2014. The facility has not yet reached production rates consistent with its 

nameplate capacity and production ramp-up could take longer than expected. INEOS Bio also 

experienced several setbacks to production related to weather-caused power losses at the facility. 

While they are working to protect against these issues in the future by enabling the facility to 

operate in a self-sustaining mode, the possibility of future interruption due to serious weather 

events will still exist. For this proposed rule we are projecting a production range of 2 – 8 

million gallons of cellulosic ethanol from INEOS Bio’s Vero Beach facility in 2014. The low 

end of the range accounts for the possibility of both an extended ramp-up period and 

interruptions to production continuing into 2014.

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. 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. On March 17, 2013 KiOR generated 

their first cellulosic biofuel RINs from this facility. KiOR initially announced that they expected 

the start-up period at their Columbus facility to last 9-12 months, during which time they 

estimate fuel production will average 30%-50% of the facility capacity and production rates at or 

near nameplate capacity following. On August 8, 2013 KiOR reduced its production targets for 

2013 from 3-5 million gallons to 1-2 million gallons. KiOR has feedstock supply agreements in 

place to supply all of the required feedstock for their Columbus facility with slash and precommercial thinning. They also have off-take agreements with several companies for all of the 

fuel that will be produced. 

In today’s proposal we are projecting a production range of 4 – 15 million ethanolequivalent gallons in 2014 from KiOR’s Columbus, MS facility. The high end of our proposed 

production projection (9.5 million gallons or 15 million ethanol-equivalent gallons) has been 

calculated assuming this facility produces at a rate of 50% of nameplate capacity in the first three 

months of 2014 and at full capacity for the remaining nine months. This projection is in line 

with KiOR’s expectations for this facility, assuming a 12 month ramp-up period starting in 

March 2013. It is less than we would calculate using our best case scenario, six month straightDeleted: 
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line ramp-up period, which would lead to full nameplate production (17 million ethanolequivalent gallons) in 2014. The low end of the range (2 million gallons or 4 million ethanolequivalent gallons) reflects the fact that KiOR has yet to achieve steady state production at their 

facility and therefore have not yet begun work to optimize the efficiency and yields of their 

Columbus facility. As a result production rates have thus far been well below nameplate 

capacity. If further modifications are required to address these issues, KiOR could face an 

extended period with no production. We believe this is appropriate in light of KiOR’s recent 

reduction in its production targets for the remainder of 2013.

LanzaTech

LanzaTech has developed a process for the production of ethanol from feedstock streams 

that contain carbon monoxide. The LanzaTech process can utilize industrial waste gas streams 

or syngas produced from the gasification of agricultural residues, woody biomass, or other 

cellulosic feedstocks.9 These gas streams are dispersed into a liquid medium where they are 

converted into ethanol or other chemicals by LanzaTech’s proprietary microbes. LanzaTech is 

currently using this technology at two demonstration scale facilities in China, producing ethanol 

from waste gasses at steel mills in partnership with Baosteel and Capital Steel.

On January 3, 2012 LanzaTech purchased the former Range Fuels facility in Soperton, 

Georgia. LanzaTech is currently in the process of assessing the equipment in place at this 

facility. After making any necessary modifications to the existing gasifiers they plan to install 

units to allow for the production of ethanol from syngas produced from the gasification of local 

woody biomass. LanzaTech believes the current production capacity of the gasifiers when used 

in combination with their ethanol producing microbes is approximately 4 – 6 million gallons per 

year, with the potential for further expansion to allow for the production of 20 – 30 million 

gallons per year at this site. At this point, however, LanzaTech is not projecting initial ethanol 

production from this facility until late 2014 or early 2015. EPA has therefore not included any 

volume from LanzaTech in our cellulosic biofuel projections in this proposed rule.

Poet

Poet has 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, South Dakota 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 commercial scale facility, called Project LIBERTY, will be 

located in Emmetsburg, Iowa. This facility is designed to process 770 dry tons of corn cobs, 

 

9 RIN generation would be limited to fuels produced using approved sources of biomass such as agricultural residue, 

tree residue from a tree plantation, or slash and pre-commercial thinnings. LanzaTech would be required to meet all 

recordkeeping and reporting requirements to demonstrate the feedstock is renewable biomass sourced from land that 

meets all of the land use requirements of the RFS program.

Comment [A21]: Given these concerns perhaps a 

zero on the low end would be more appropriate or a 

derating of the 15 MMG high end?

Response: Text and production range modified 

based on new information to address this comment.
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leaves, husks, and some stalk per day into cellulosic ethanol. The facility is projected to have an 

annual production of approximately 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 in the first half of 

2014 and will be followed by a commissioning period before the plant begins cellulosic ethanol 

production. Poet currently projects that production from Project LIBERTY will be between 7 

and 12 million gallons of cellulosic ethanol in 2014. Using the six month best-case ramp-up 

period, with production beginning on July 1, 2014, would result in a volume projection of 6 

million gallons from this facility. In today’s proposed rule, EPA is therefore setting the high end 

of Poet’s projected production range at 6 million gallons of cellulosic ethanol. The low end of 

the projected production range for Poet’s Project LIBERTY is 0 gallons in 2014. This number 

reflects the fact that any significant delay in the start-up date or difficulties encountered in the 

commissioning or start-up phases of production are likely to result in little to no production from 

this facility in 2014. While EPA has no reason to believe this facility will be any more prone to 

these types of challenges than any other commercial scale cellulosic biofuel production facility, 

our experience suggests that these types of delays are common and should be considered when 

projecting the low end of the range for production volume in 2014.

Sweetwater Energy

Sweetwater Energy has also developed a technology for converting cellulosic biomass, 

primarily agricultural residues and woody biomass, to cellulosic sugars. Sweetwater Energy uses 

a modular approach, building relatively small facilities near the source of feedstock and 

transporting the sugars they produce to a larger facility to be converted into renewable fuels or 

chemicals. They currently have two arrangements in place with corn ethanol facilities in the 

United States to provide cellulosic sugars in sufficient quantity for the production of 3.6 million 

gallons of cellulosic ethanol from each of these facilities. Both of Sweetwater Energy’s 

cellulosic sugar production modules are scheduled to begin production in the summer of 2014. If 

both these facilities begin producing sugars that are converted to cellulosic biofuel on July 1, 

2014, our best case scenario benchmark six month straight-line ramp-up period would project a 

volume of 2 million ethanol-equivalent gallons. At this time, however, cellulosic RINs would 

not be able to be generated for any fuel produced using Sweetwater Energy’s cellulosic sugars,

since the existing RFS registration regulations were not designed to allow the subdivision of 

processes between multiple facilities. Until this is resolved, fuel production processes of this 

type will not be able to generate RINs. We therefore have not included any volume from 

Sweetwater Energy in our projections of cellulosic biofuel for 2014.

2. Potential Domestic Producers without Existing Pathways
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In addition to the facilities discussed above, there are a number of companies with the 

potential to produce cellulosic biofuel from domestic facilities in 2014 from pathways that have 

not been approved for RIN generation by EPA. Some of these pathways were addressed in a 

notice of proposed rulemaking published by EPA on June 14, 2013, while others are currently 

being evaluated by EPA. As the companies discussed in this section do not yet have approved 

RIN generating pathways for the fuels they plan to produce, there is additional uncertainty 

regarding RIN production from them in 2014.10 Nevertheless, if the pathways are approved by 

EPA these facilities represent a significant potential source of cellulosic biofuel. The ranges 

projected for each company reflect only the uncertainty associated with production volumes,

assuming pathway approval occurs.11 EPA will decide whether or not to include any volume 

from these pathways based on the status of these pathways at the time of the final rule.

Compressed Natural Gas (CNG) and Liquified Natural Gas (LNG) Producers

One of the new pathways proposed by EPA for the production of cellulosic biofuel is for 

the production of CNG or LNG from landfill biogas if used as a transportation fuel. The 

production potential for this type of cellulosic biofuel is very large with many landfills currently 

capturing biogas. The use of CNG and LNG as a transportation fuel in 2014 is expected to be 

approximately 700 million ethanol-equivalent gallons.12 To generate RINs for landfill biogas, 

however, companies must be able to demonstrate that any fuel for which they generate RINs is 

used as transportation fuel. This can be done by fueling vehicles with CNG/LNG onsite or 

through contractual mechanisms.

In this proposed rule, we are projecting a production range of 35-50 million ethanolequivalent gallons from landfill biogas in 2014. The high end of the range represents the 

permitted capacity of all of the facilities currently registered to produce advanced biofuel RINs 

from landfill biogas while the low end represents the current production rate of advanced biofuel 

from landfill biogas. In the case of CNG and LNG from landfill biogas, EPA believes a different 

methodology for projecting the high end of the production range is appropriate, as the 

uncertainties surrounding RIN generation are significantly different. The only change at issue in 

the proposal to approve this pathway for the generation of cellulosic biofuel RINs is a change in 

the type of RIN that is generated, allowing for the generation of cellulosic biofuel instead of 

advanced biofuel RINs based on new information of the composition of the feedstock. In this 

case production facilities already exist and are already capturing landfill biogas at or near their 

registered capacities. Similarly, the amount of CNG and LNG currently being used as 

transportation fuel far exceeds the combined production capacity of all of the registered facilities. 

RIN generation is therefore limited by the companies’ ability to demonstrate the use of the 

biogas as a transportation fuel.13 As part of the registration process for the generation of 

advanced biofuel RINs, each of these facilities submitted documentation that included contracts 

 

10 At the time of this proposal, EPA has not yet completed our determination of whether or not the fuels discussed in 

this section meet all of the requirements to generate cellulosic biofuel RINs.

11 In projecting potential production volumes EPA has assumed that the pathways are all approved as of January 1, 

2014. Approval subsequent to that date would reduce potential volumes, depending on the producer at issue.

12 EIA Annual Energy Outlook 2013. Transportation Sector Energy Use by Mode and Type, Reference case. 

13 See CFR 80.1426 for requirements for generating RINs from biogas. Formatted: Font: Italic
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with parties capable of using CNG/LNG as transportation fuel who had access to the same 

common carrier pipeline network as the biofuel producers. 

We believe the sum of the maximum permitted capacities of all of the facilities currently 

registered to produce advanced biofuel RINs from landfill biogas is an appropriate volume to use 

for the high end of the projected production range. It is also the case, however, that these 

facilities would appear to have the capability to realize value from advanced RIN production if 

they were to produce at their facility capacity and are not currently doing so. There may be 

additional factors that EPA is unaware of at this time that is limiting production. To account for 

this, we are setting the low end of the range for the production of cellulosic RINs from 

CNG/LNG produced from landfills equal to 35 million gallons, the current production rate when 

projected over a full year.

Edeniq

Edeniq has developed a proprietary process that would allow corn ethanol producers to 

generate cellulosic ethanol from corn kernel fiber at the producers’ existing production facilities. 

Their process involves the addition of the CellunatorTM, a proprietary milling technology 

designed to increase the uniformity of the feedstock particles, along with a unique combination 

of enzymes to convert the cellulosic material in the corn kernel into sugars and ultimately 

cellulosic ethanol. Edeniq claims that their technology would not only allow corn ethanol 

producers to produce cellulosic ethanol from low value feedstock already present in their facility, 

but also would increase the yields of ethanol produced from starch by 2-4%. Several commercial 

plants are currently using the Cellunator technology to increase their yields of ethanol from 

starch. Edeniq has been testing their technology, including both the Cellunator and the 

additional enzymes, at a demonstration scale facility in Visalia, California, since June 2012 and 

announced in May 2013 that they had successfully completed a trial run at this facility with a 

continuous run time of greater than 1000 hours. 

Several plants are evaluating Edeniq’s proprietary system to produce cellulosic ethanol 

from corn kernel fiber. These evaluations have included commercial scale trials. If the pathway 

for the production of cellulosic ethanol from corn kernel fiber is approved, these facilities would 

be in position to begin generating cellulosic RINs shortly after approval. Other facilities 

currently using the Cellunator would only have to make minor modifications to their operations, 

including the addition of Edeniq’s suite of enzymes to produce cellulosic ethanol. Edeniq 

currently projects approximately 7 million gallons of cellulosic ethanol production using their 

technology in 2014 and has provided EPA with detailed information on the expected production 

volumes and dates of initial cellulosic ethanol production for facilities expected to utilize their 

technology. In today’s proposed rule, we have included a projected production volume of 0 – 7 

million gallons. The low end of this range reflects the fact that Edeniq’s technology has not yet 

been used to generate commercial scale volumes of cellulosic biofuel. The high end of the range 

reflects Edeniq’s own projections, which EPA has reviewed and believes are reasonable given 

the nature of Edeniq’s technology, the deals they currently have in place, and their experience 

with the installation and operation of the various components of their technology. This volume 

is also dependent on the finalization of EPA’s proposed rule clarifying that the definition of crop 

residue includes corn kernel fiber.

Deleted: havehavehave

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Deleted: havehavehave

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Ensyn

Ensyn has developed a technology called Rapid Thermal Processing (RTP) that uses heat 

to thermally crack carbon based feedstocks into a liquid bio-oil product they call renewable fuel 

oil (RFO). This conversion takes place in less than two seconds and is similar to the fluid 

catalytic cracking (FCC) process used in many refineries. Ensyn is currently using this 

technology in two commercial facilities located in Wisconsin and Ontario, Canada to produce 

renewable chemicals, food additives, and heating oil. They estimate that they have up to 3 

million gallons of additional capacity at these two facilities that could be utilized if the fuel were 

eligible to generate RINs under the RFS program as home heating oil. This facility has a history 

of consistent production and we therefore believe this projection of 3 million ethanol-equivalent 

gallons is an appropriate number to use as the high end of the projected range.

The RFS regulations currently require that, to qualify as “heating oil” for which RINs 

may be generated, the fuel must be: #1 diesel fuel, #2 diesel fuel, or any non-petroleum diesel 

blend that is sold for use in furnaces, boilers, and similar applications and which is commonly or 

commercially known or sold as heating oil, fuel oil, and similar trade names, and that is not jet 

fuel, kerosene, or MVNRLM diesel fuel. EPA has proposed a rule to amend this definition to 

include any “fuel oil that, pursuant to §80.1450(b)(1)(ix) and (d)(4), 80.1451(b)(1)(ii)(T), 

80.1453(d) and 80.1454(b)(7), is demonstrated to be used to heat interior spaces of homes or 

buildings to control ambient climate for human comfort, is capable of flowing at 60 degrees 

Fahrenheit and 1 atmosphere of pressure, and is not used for any other purpose.”14 This 

amendment could allow the RFO produced by Ensyn to qualify for RINs if it were used to heat 

buildings where people live, work, recreate, or conduct other activities and it meets the other 

required components of the proposed definition. However, even if the definition of home 

heating oil is changed as proposed, and its fuel meets the new definition, Ensyn would still face 

several challenges to generating cellulosic biofuel RINs. Ensyn would have to secure approved 

sources of renewable feedstock for their existing production facilities, increase production at 

these facilities, and find customers willing to make the modifications necessary to use Ensyn’s 

RFO as home heating oil. Any of these steps could result in delays in the increased production 

or qualifying use of RFO until 2015. For this proposal EPA is projecting a range of production 

of 0 – 3 million gallons (0 – 5 million ethanol-equivalent gallons) from Ensyn’s facilities in 

2014.

3. Potential Foreign Sources of Cellulosic Biofuel 

In addition to the potential sources of cellulosic biofuel located in the United States 

discussed above there are several foreign cellulosic biofuel companies that may produce 

cellulosic biofuel in 2014. All of these facilities utilize fuel production pathways that have been 

approved by EPA for cellulosic RIN generation provided eligible sources of renewable feedstock 

are used. These companies would therefore be eligible to register these facilities under the RFS 

program and generate RINs for any fuel imported into the United States. Currently, however, 

 

14 77 FR 61313 (October 9, 2012).

Deleted: RTPRTPRTP

Comment [A22]: Suggest including a definition 

of this term at this first use.

Response: Text edited to address this comment

Comment [A23]: Block quote? 53 words

Response: text edited to address this comment
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none of these facilities have expressed interest in registering their facilities under the RFS 

program or exporting the fuel they produce to the United States. Further, demand for the 

cellulosic biofuels they produce is expected to be high in local markets. Production volumes 

from these foreign facilities have therefore not been included in our projection of potentially 

available volume for 2014. EPA plans to continue to monitor the progress of these foreign 

facilities and may include volumes from these facilities should their plans change in the future.

Beta Renewables

Beta Renewables has developed a biochemical technology to convert cellulosic biomass 

into cellulosic sugars, which can then be used in the production of fuels or chemicals. Their first 

commercial scale facility was built in Crescentino, Italy and began producing cellulosic ethanol 

in commercial quantities in June 2013. This facility uses Arundo donax and wheat straw as 

feedstocks and has an annual production capacity of 20 million gallons of ethanol per year. 

Ethanol produced at this facility would be eligible to generate cellulosic RINs if Beta 

Renewables registers its facility and imports the cellulosic ethanol into the United States for use 

as a transportation fuel.

Enerkem

Enerkem plans to use a thermochemical process to produce syngas from MSW and other 

waste materials and then catalytically convert the syngas to methanol. The methanol can then be 

sold directly or upgraded to ethanol or other chemical products. Their first commercial scale 

facility in Edmonton, Alberta, Canada is scheduled to complete construction and begin 

producing methanol in 2013 with ethanol production following in 2014. At full capacity this 

facility will be capable of producing 10 million gallons of cellulosic ethanol per year. Despite 

their relative close proximity to the United States, Enerkem has indicated to EPA that they do not 

intend to export cellulosic biofuel into the United States from their Edmonton facility. 

GranBio

GranBio began construction on its first commercial cellulosic ethanol production facility 

in São Miguel dos Campos, Brazil in December 2012. It is largely funded by a 300.3 million 

Reais loan from BNDES, Brazil’s national social and economic development bank. This facility, 

which will use technology licensed from Beta Renewables, will have a nameplate capacity of 22 

million gallons of ethanol per year and is scheduled to be completed in the first half of 2014. 

The feedstock for this facility will be excess bagasse not currently used to provide process heat 

or electricity at sugarcane ethanol production facilities.

Raizen

Raizen, a joint venture between Royal Dutch Shell and Cosan SA, is planning to build a 

10.5 million gallon per year cellulosic ethanol plant attached to their Costa Pinto sugarcane mill 

in Piracicaba, Brazil. This facility will use a biochemical conversion technology developed by 

Iogen and Codexis to convert sugarcane bagasse to ethanol. The facility is currently scheduled 

Comment [A24]: How is EPA addressing Beta 

Renewable’s NC project? 

Response: Text edited to address this comment
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to complete construction in the second half of 2014 and, if successful, will be the first of up to 8 

cellulosic ethanol production facilities built by Raizen in Brazil.

4. Summary of Volume Projections for Individual Companies

The information we have gathered on cellulosic biofuel producers, described above, 

allows us to project a range of production volumes for each facility in 2014. As in 2013, we 

have once again focused on commercial scale cellulosic biofuel production facilities. This focus 

is appropriate, as the volume of cellulosic biofuel produced from R&D and pilot scale facilities is 

quite small in relation to that expected from the commercial scale facilities for which we have 

projected volumes in 2014 and historically R&D and demonstration scale facilities have not 

generated RINs for any fuel they have produced.

In 2014, as many as twelve domestic cellulosic biofuel production facilities have the 

potential to produce fuel at commercial scale. Each of these facilities is discussed above, and the 

projected available volumes for each are summarized in Table II.B.4-1 below. Two of the 

companies that have the potential to produce cellulosic biofuel in 2014, INEOS Bio and KiOR, 

are currently producing cellulosic biofuel. The production of RIN generating fuel from the 

remaining 10 facilities is more uncertain as these facilities have either yet to complete 

construction or do not currently have a valid pathway for generating cellulosic RINs.

We have also identified four foreign facilities with the potential to produce cellulosic 

ethanol in 2014. At this point we do not believe any of these facilities are likely to export any of 

the fuel they produce to the United States. We will continue to monitor the status of these 

facilities and may include volume from them in our final rule if appropriate. We ask for 

comment on this analysis and are especially interested in data that would support cellulosic 

volume estimates.

Comment [A25]: Contradicts chart IIB41below

Response: Table II.B.4-1 edited to match this 

statement

Deleted: 
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Table II.B.4-1

Projected Available Cellulosic Biofuel for 2014

Company 

Name Location Feedstock Fuel

Design

Capacity 

(MGY)

First Production

2014 Projected 

Available Volume

(ethanol-equivalent)

Domestic Facilities; Approved Pathways

Abengoa Hugoton, KS Corn Stover Ethanol 24 1

st Quarter 2014 0 – 18

CoolPlanet 

Biofuels

TBD TBD Gasoline 10 2

nd Half 2014 0

DuPont Nevada, IA Corn Stover Ethanol 30 2

nd Half 2014 0 – 2

Fiberight Blairstown, IA MSW Ethanol 6 Unknown 0

INEOS Bio Vero Beach, FL Vegetative Waste Ethanol 8 3

rd Quarter 2013 2 – 8

KiOR Columbus, MS Wood Waste Gasoline 

and Diesel

11 1

st Quarter 2013 2 – 9.5

(4 – 15)

LanzaTech Soperton, GA Wood Waste Ethanol 5 1

st Half 2015 0

Poet Emmetsburg, IA Corn Stover Ethanol 25 1

st Half 2014 0 – 6

Sweetwater 

Energy

Various Ag. Residue Ethanol 7 1

st Half 2014 0

Domestic Facilities; Proposed Pathways

CNG/LNG 

Producers

Various Biogas from 

Landfills

CNG/ 

LNG

Various N/A 35 – 50

Edeniq Various Corn Kernel Fiber Ethanol Various 1

st Half 2014 0 – 7

Ensyn Stanley, WI Wood Waste Heating 

Oil

3 2007 0 – 3

(0 – 5)

Foreign Facilities

Beta 

Renewables

Crescentino, Italy Wheat straw, 

Arundo Donax

Ethanol 20 2Q 2013 0

Enerkem Edmonton, 

Alberta

Seperated MSW Methanol, 

Ethanol

10 1

st Half 2014 0

GranBio São Miguel dos 

Campos, Brazil

Bagasse Ethanol 22 1

st Half 2014 0
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Raizen Piracicaba, Brazil Bagasse Ethanol 10.5 1

st Half 2014 0 Comment [A26]: Paragraph above says 2nd half

Response: Text edited to address this comment
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C. Proposed Cellulosic Biofuel Volume for 2014

As discussed in the preceding sections we have used information from a variety of 

sources, including EIA, USDA, and the companies themselves, to determine a projected range of 

production of cellulosic biofuel for each company in 2014. These volumes are summarized in 

Table II.B.4-1 above. These volumes form the basis for our projection of cellulosic biofuel 

production in 2014. We do not believe, however, that a simple summation of the low end and 

high end of the projected production volumes for each company would result in an appropriate 

projected range of production volumes across the cellulosic biofuel industry. It is highly 

unlikely that every company will produce at or near the low end, or conversely the high end, of 

its range of projected production volumes. It is also the case that the production expectations 

within the projected ranges differ for facilities in different stages. The uncertainties associated 

with cellulosic biofuel production vary in both type and degree among facilities that have already 

begun production, those that are currently in or will soon be approaching the commissioning of 

their facilities, and those that are still undergoing significant construction operations. 

EPA is using a Monte Carlo simulation to account for the need to aggregate across 

several ranges, with different producers having different production probability distributions 

across their expected production range. As discussed above, the high and the low end of each 

range represents values such that it is possible but highly unlikely that volumes would be higher 

or lower than this range. EPA will therefore treat these individual ranges as representing the 

90% confidence interval of a distribution of possible volumes. In other words, the low end of the 

range for a producer would represent the 5th percentile and the high end of the range would 

represent the 95th percentile. This approach is consistent with EPA’s judgment that, while the 

ranges shown in Table II.B.4-1 are intended to encompass the vast majority of possible volumes, 

there remains a small possibility that volumes outside of those ranges are possible. We believe it 

is reasonable to treat these values as a 90% confidence interval for purposes of the Monte Carlo 

analysis, though we request comment on treating them as a different confidence interval such as 

80% or 95%.

For the purposes of the Monte Carlo analysis, EPA must also identify an uncertainty 

distribution for production for each facility. These distributions reflect our expectation for the 

most likely distribution of production volumes within the projected range when taking into 

account the many different uncertainties associated with the production volume from each 

facility. While each facility faces its own set of unique circumstances and challenges in 

producing cellulosic biofuels at commercial scale, many can be grouped into one of several 

general categories, the impact of which will vary with the progress achieved at that facility to 

date. One source of uncertainty in the projected production volume of a new cellulosic biofuel 

facility is related to the completion of the construction and commissioning phases of the facility. 

This includes uncertainty in the construction schedules, modifications to the design during the 

construction or commissioning phase, challenges encountered in scaling up the technology to 

commercial scale, unexpected delays or repairs due to weather events, or any of a number of 

other reasons. Delays of this type will result in a later than expected start-up date which may 

result in significantly decreased production volumes in 2014 or the start of production being 

delayed until 2015. The uncertainty related to delays in the completion of the construction of a 
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facility decreases the closer the project is to completion, and is entirely irrelevant to facilities that 

have already begun production.

A second source of uncertainty is that associated with the ramp-up phase of new 

facilities. Lower than expected product yields, feedstock supply and handling challenges, 

contamination of chemical or biological catalysts, and a number of other issues can cause 

reduced production during the ramp-up phase and/or a longer than expected ramp-up period 

before reaching production levels that correspond to the nameplate capacity of the facility. 

Facilities that face these types of challenges during the ramp-up phase of production are very 

likely to still achieve some level of production, but that level may vary depending on the severity 

and duration of the challenges they face. The closer a facility is to achieving production rates 

that correspond to the nameplate capacity of the facility, the less likely they are to see reductions 

in their expected production due to challenges in the ramp-up phase.

A third source of uncertainty is the ability of the facility to maintain consistent production 

at or near nameplate capacity after the ramp-up phase has been successfully completed. A 

number of factors including, but not limited to feedstock supply interruption, significant issues 

with feedstock quality, loss of power or other essential utilities at the facility, and interruptions in 

production due to accidents, operator error, or weather events could cause fuel production at a 

facility to decrease or cease altogether. While the uncertainty associated with these issues is 

never completely absent, it does decrease over time if a facility is able to consistently achieve 

production levels at or near nameplate capacity with few or no interruptions to production.

The degree to which these three sources of uncertainty impact expected production of 

cellulosic biofuel in 2014 varies greatly with the progress achieved by the facility to date. To 

represent this uncertainty for facilities expected to begin operations in different timeframes, we 

used three different standardized uncertainty distributions. The three standard curves that 

represent the expected production distributions from cellulosic biofuel production facilities are 

shown in Figure II.C-1 below. Comment [A27]: EPA should also seek 

comments on the probability distribution assumption 

and assignment to facilities in the Monte Carlo 

simulation analysis. 

Response: Text modified to address this comment
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Figure II.C-1

Standardized Distributions Used to Project Aggregate Cellulosic Biofuel Productiona

a

The skewed distribution is based on a Weibull distribution with a shape 

parameter of 0.5.

Facilities that have already begun producing cellulosic biofuel in 2012 or earlier and have 

at least a full year of production history do not face uncertainty associated with delays in the 

construction and commissioning of the facility. They may, however, face some uncertainty in 

their ramp-up schedule relative to the progress they have achieved to date, as well as the risk of 

unexpected shutdown or slowdown faced by all facilities. For facilities facing these uncertainties 

we expect that the most likely production volume is towards the middle of the range, with 

decreasing production probabilities as the high and low ends of the production ranges are 

approached. A normal curve is appropriate for this expected production distribution. In 2014, 

however, there are no commercial scale cellulosic biofuel production facilities that meet these 

criteria.

Facilities that began producing cellulosic biofuel in 2013 no longer face uncertainty due 

to potential delays in the completion of construction and the commissioning of the facility. 

There is, however, uncertainty regarding these facilities ramp-up schedules which can have a 

significant impact on the production volumes from these facilities. We believe that the expected 

production of these facilities would be best represented by a right-skewed or Weibull curve, with 

the most likely production volume near, but not at, the low end of the range and the production 

probabilities gradually towards the high end of the range.

Facilities not expected to begin producing cellulosic biofuel until 2014 face uncertainty 

associated with a delay in the completion in the construction and commissioning of the facility. 

Given this uncertainty, we believe that the most likely production volume is at the low end of the 

range with decreasing probability as the high end of the range is approached. To represent this 

asymmetrical uncertainty, we believe a half-normal curve is a reasonable representation of the 

expected production distribution from these facilities. 

Comment [A28]: This doesn’t look like a 

Weibull distribution with a shape parameter of 0.5. 

The shape implies that the shape parameter should 

be greater than 1. 

Response: Text was modified to clarify nature of 

Weibull curve.

Deleted: are

Comment [A29]: 

We have a hard time with the economic justification 

for the half normal distribution. For Abengoa, 

Dupont and Poet this means the mode (most likely 

value) is 0. 

A gamma distribution might be more useful. 

Response: Added text to Section IV.B.4 to address 

this comment.
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The type of uncertainty distribution used to represent the expected production within the 

projected range for each company is shown in Table II.C-1.

Table II.C-1

Standard Distributions Used to Project Cellulosic Biofuel Production in 2014

Company Distribution Curve 5

th Percentile Volumea

(ethanol-equivalent)

95th Percentile Volumea

(ethanol-equivalent)

Abengoa Half-Normal 0 18

DuPont Half-Normal 0 2

INEOS Bio Right-Skewed 2 8

KiOR Right-Skewed 4 15

Poet Half-Normal 0 6

CNG/LNG Producers Normal 35 50

Edeniq Half-Normal 0 7

Ensyn Normal 0 5

a

For half-normal distributions, the low end of the range was represented by the 0th percentile and the high end of the 

range was represented by the 90th percentile.

To aggregate the production distributions for each of the companies into a single 

distribution representing cellulosic biofuel production across the entire industry, we performed 

two Monte Carlo simulations in which each of the distributions was randomly sampled in an 

iterative fashion. Each of the distributions was sampled 3000 times and the results of all the 

iterations were then summed to produce a distribution for cellulosic biofuel. For the uncertainty 

distributions where the low end of the projected range was zero, it was possible for the Monte 

Carlo simulation to select a negative volume for these companies. In these cases, the volume 

was set to zero. 

We generated two separate aggregate distributions to represent total cellulosic biofuel 

using the Monte Carlo process. Given the uncertainty surrounding the timing and approval of 

the proposed RIN-generating pathways that would be used by CNG/LNG producers, Edeniq, and 

Ensyn, the first aggregate distribution only included volumes from those facilities using RINgenerating pathways that have already been approved. The result of this Monte Carlo simulation 

forms the basis for the range of cellulosic biofuel production included in this proposal. 

Comment [A30]: From a numerical perspective 

we need to see some sense of how accurate the 

Monte Carlo approximations are. In other words, 

how close is the Monte Carlo estimate of the mean 

of the joint distribution to the actual mean? There are 

various algorithms to estimate this quantity.

If EPA believes a more precise methodology is 

necessary, we can calculate the sum of differently 

distributed (independent) random variables through 

the convolution process, which uses multiple 

integrals. Using numerical integration, we can bound 

the error to ensure we are close. 

Response: Added text to Section IV.B.4 to address 

this comment.
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Figure II.C-2

Results of Monte Carlo Simulation for Cellulosic Biofuel Production 

(Approved Pathways Only)

The second Monte Carlo simulation included volumes from all eight facilities for which we have 

projected a range of volumes in 2014. The results of this simulation would be more 

representative of the volume of cellulosic biofuel included in our final rule in the event that the 

proposed RIN-generating pathways discussed above are approved for RIN generation before the 

2014 applicable volumes are finalized. 

5th percentile = 13

Mean = 23

95th percentile = 36

0%

2%

4%

6%

8%

10%

12%

14%

16%

710121517202225273032353740424547505355 Percent of observations

Million gallons
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Figure II.C-3

Results of Monte Carlo Simulation for Cellulosic Biofuel Production 

(All Approved and Proposed Pathways)

In today’s NPRM we are proposing a volume for the 2014 cellulosic biofuel standard of 

13 - 36 million ethanol-equivalent gallons. This volume is expected to be comprised of 6 - 26 

million gallons of ethanol and 4 - 15 million ethanol-equivalent gallons of cellulosic 

hydrocarbons.15 The proposed range is derived from the 90% confidence interval of the Monte 

Carlo simulation that includes all the companies we expect to produce commercial volumes of 

cellulosic biofuel in 2014 using pathways in the current RFS regulations. As discussed in 

Section II.B, many factors have been taken into consideration in developing the individual 

company projections, such as the information from EIA, 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, and many others. We believe the range of volumes 

proposed (13 - 36 million ethanol-equivalent gallons) resulting from the Monte Carlo simulation 

is a reasonable representation of expected production in 2014 across the industry. 

Our proposed range reflects EPA’s best estimate of the range of cellulosic biofuel 

volumes that will actually be produced in 2014. In the final rule EPA will determine a single 

volume that represents EPA’s best estimate of the volume that will actually be produced in 

 

15 These volumes are also the result of our Monte Carlo simulation. Similar to the individual company production 

projections, the low and high ends of the ranges cannot be simply added together to calculate the high and low ends 

of our total cellulosic biofuel production projection in 2014. Cellulosic hydrocarbons include both cellulosic 

gasoline and cellulosic diesel.

5th percentie = 56

Mean = 71

95th percentile = 86

0%

2%

4%

6%

8%

10%

12%

14%

16% 4447515457606467707477808487909497 100 103 107 Percent of observations

Million gallons

Cellulosic biofuel - All potential volumes
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2014.16 EPA invites comment on the best approach to determine a single value from a range 

developed using the approach described above. For example, EPA could use the mean (average 

value), median (50th percentile), or mode (the volume that occurs most frequently). It may also 

be reasonable to use a value representing higher or lower values in the distribution, such as the 

25th or 75th percentile if there is reason to believe these would provide a more accurate projection 

of actual production in 2014.17 We have determined the volumes represented by each of these 

methods and presented the values in Tables II.C-2 and II.C-3 below. 

Table II.C-2

Potential Approaches to Determining the Final Cellulosic Biofuel Requirement

(Approved Pathways Only)a

(million ethanol-equivalent gallons)

Mean 23

50th percentile 22

Mode 22

25th percentile 18

75th percentile 27

aAll volumes are ethanol-equivalent gallons

Table II.C-3

Potential Approaches to Determining the Final Cellulosic Biofuel Requirement

(All Approved and Proposed Pathways)a

(million ethanol-equivalent gallons)

Mean 71

50th percentile 70

Mode 70

25th percentile 64

75th percentile 76

aAll volumes are ethanol-equivalent gallons

In today's NPRM, we are proposing to use the mean value for the final volume requirement for 

cellulosic because we believe it best represents a neutral aim at the volumes that could 

reasonably be supplied. However, we request comment on whether one of the alternative values 

shown in Table II.C-2 would be more appropriate as the basis for the required volume of 

cellulosic biofuel in the final rule.

It is important to note that the final cellulosic biofuel standard for 2014 may be set at a 

volume outside the proposed range of 13-36 million ethanol-equivalent gallons. If EPA finalizes 

the pathways discussed in the recent proposed rulemaking18 before the applicable volume of 

cellulosic biofuel for 2014 is finalized, volumes of fuel from companies intending to utilize these 

pathways may be included in our projected available volume for 2014 as discussed above. 

 

16 See API v. EPA, 706 F.3d 474 (D.C. Cir. 2013). 

17 This could be the case if there was reason to believe there was a systematic bias such that the ranges tended to 

over or under estimate the actual production volumes.

18 78 FR 36042 (June 14, 2013)))).

Comment [A31]: Reviewers recommend 

including the estimate that would be reflected in the 

EIA Administrator’s letter to EPA. 

Response: We will incorporate a discussion of 

projections in the EIA letter when we receive that 

letter. We have modified the expected production 

ranges from KiOR and INEOS, and these ranges 

now result in ranges expected in EIA’s letter to EPA.

Comment [A32]: Given the track record of 

optimistic projections and its need to rescind the 

2011 and 2012 standards, reviewers recommend 

that the low range or some low percentile might be 

preferable to the mean.

Response: Text not modified. We are taking 

comment on whether a lower percentile may be more 

appropriate.

Formatted: Font: Italic
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Foreign producers of cellulosic biofuel who inform EPA of their intent to export the fuel they 

produce to the United States may also be included. Finally, a variety of factors may affect our 

production projections for the companies considered in this proposal, including unexpected 

project modifications or cancellations or the inclusion of volumes of cellulosic biofuel from 

sources other than those listed above.

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 2014 volume projection. 

We expect that for the final rule there will be greater certainty on the appropriate volume of fuel 

that we can reasonably expect to be produced and made commercially available in 2014. We 

request comment on our analysis and estimates.19

D. Rescission of the 2011 Cellulosic Biofuel Standards

On January 25, 2013, the United States Court of Appeals for the District of Columbia 

Circuit issued its decision concerning a challenge to the 2012 cellulosic biofuel standard. The 

Court found that in establishing the applicable volume of cellulosic biofuel for 2012, EPA had 

used a methodology in which “the risk of overestimation [was] set deliberately to outweigh the 

risk of underestimation.” The Court held EPA’s action to be inconsistent with the statute 

because EPA had failed to apply a “neutral methodology” aimed at providing a prediction of 

“what will actually happen,” as required by the statute. As a result of this ruling, the Court 

vacated the 2012 cellulosic biofuel standard, and we removed the 2012 requirement from the 

regulations in a previous action. Industry had also challenged the 2011 cellulosic biofuel 

standard by, first, filing a petition for reconsideration of that standard, and then seeking judicial 

review of our denial of the petition for reconsideration. This matter was still pending at the time 

of the D.C. Circuit’s ruling on the 2012 cellulosic biofuel standard. Since we used essentially 

the same methodology to develop the 2011 cellulosic biofuel standard as we did to develop the 

2012 standard, we requested, and the Court granted, a partial voluntary remand to enable us to 

reconsider our denial of the petition for reconsideration of the 2011 cellulosic biofuel standard. 

Given the Court’s ruling that the methodology EPA used in developing the 2012 cellulosic 

biofuel standard was flawed, we have decided to grant reconsideration of the 2011 cellulosic 

biofuel standard, and are today proposing to rescind the 2011 cellulosic biofuel standard. If this 

proposal is finalized, the money paid by obligated parties to purchase cellulosic waiver credits to 

comply with the 2011 cellulosic biofuel standard would be refunded.

 

19 Since EPA is proposing to reduce the applicable volume of cellulosic biofuel under section 211(o)(7)(D), EPA 

will be required to make available cellulosic biofuel credits. EPA will set the price for the cellulosic biofuel credits 

in the final rule, using the same approach to applying the criteria in section 211(o)(7)(D)(ii) that was used in setting 

the price for cellulosic biofuel credits for 2013. See [cite to 2013 FRM].
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III. Proposed National Volume Requirement for Biomass-Based Diesel in 2014 and 2015

EPA set the national volume requirement for biomass-based diesel for 2013 at 1.28 

billion gallons of biomass-based diesel.20 This national volume is then used to determine the 

applicable percentage standard that determines the specific renewable volume obligations for 

refiners and importers. Subsequently, EPA received two Petitions for Reconsideration 

requesting that EPA reconsider the final rule setting the 2013 biomass-based diesel volume 

requirement at 1.28 bill gal.21 After review and consideration of the issues raised by petitioners, 

EPA denied both petitions.22

In today's action, we are proposing an applicable volume of 1.28 billion gallons biomassbased diesel for 2014 and 2015. In proposing the 2015 applicable volume of biomass-based 

diesel, we are not at this time proposing the percentage standards that would apply to obligated 

parties in 2015. The percentage standards for 2015 will be proposed in a subsequent rulemaking 

as required by the statute once the requisite gasoline and diesel fuel volumes for 2015 are 

determined. 

A. Statutory Requirements

Section 211(o)(2)(B)(i) of the Clean Air Act specifies the applicable volumes of 

renewable fuel on which the annual percentage standards must be based, unless the applicable 

volumes are waived or adjusted by EPA in accordance with the Act.23 Applicable volumes are 

provided in the statute for years through 2022 for cellulosic biofuel, advanced biofuel, and total 

renewable fuel. For biomass-based diesel, applicable volumes are provided through 2012. For 

years after those specified in the statute (i.e. 2013+ for biomass-based diesel and 2023+ for all 

others), EPA is required under 211(o)(2)(B)(ii) to determine the applicable volume, in 

coordination with the Secretary of Energy and the Secretary of Agriculture, based on a review of 

the implementation of the program during calendar years for which the statute specifies the 

applicable volumes and on analysis of the following factors:

• The impact of the production and use of renewable fuels on the environment, including 

on air quality, climate change, conversion of wetlands, ecosystems, wildlife habitat, 

water quality, and water supply;

• The impact of renewable fuels on the energy security of the United States;

• The expected annual rate of future commercial production of renewable fuels, including 

advanced biofuels in each category (cellulosic biofuel and biomass-based diesel);

 

20 77 FR 59458 (September 27, 2012). .

21

 Letter dated November 20, 2012 to Honorable Lisa Jackson from Richard Moskowitz, American Fuel & 

Petrochemical Manufacturers, “Re: Petition for Reconsideration – Docket No. EPA-HQ-OAR-2010-0133...; Letter 

dated November 26, 2012 to Honorable Lisa Jackson from Robert L. Greco, III, American Petroleum Institute, “Re: 

Request for Reconsideration of EPA’s Final Rulemaking “2013 biomass-Based Diesel Renewable Fuel Volume

22 78 FR 49411, August 14, 2013.

23 For example, EPA may waive a given standard in whole or in part following the provisions at CAA 211(o)(7).

Deleted: .
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• The impact of renewable fuels on the infrastructure of the United States, including 

deliverability of materials, goods, and products other than renewable fuel, and the 

sufficiency of infrastructure to deliver and use renewable fuel;

• The impact of the use of renewable fuels on the cost to consumers of transportation fuel 

and on the cost to transport goods; and

• The impact of the use of renewable fuels on other factors, including job creation, the 

price and supply of agricultural commodities, rural economic development, and food 

prices.

The statute also specifies that the applicable volume of biomass-based diesel cannot be less than 

the applicable volume for calendar year 2012, which is 1.0 bill gallons. The statute does not, 

however, establish any other numeric criteria or overarching goals for EPA to achieve in setting 

the applicable volumes in years after those specifically set forth in the provision.

Finally, the statute also specifies the timeframe within which these volumes must be 

promulgated: the applicable volumes must be established no later than 14 months before the first 

year for which such applicable volume will apply. We did not propose a 2014 volume for 

biomass-based diesel in the February 7, 2013 NPRM because at that time we were still 

evaluating the potential market impacts of current production levels. In order to provide 

sufficient time for this evaluation, we delayed our proposal for the 2014 volume requirement for 

biomass-based diesel. Consequently, today we are proposing volume requirements for both 2014 

and 2015.

B. Compliance with 2013 Volume Requirement of 1.28 Billion Gallons

In making a determination regarding the volume requirement for biomass-based diesel to 

propose for 2014 and 2015, we first investigated the recent historical and current circumstances 

in the biodiesel market. According to data collected through the EPA-Moderated Transaction 

System (EMTS) production of biodiesel in 2011 exceeded 1.0 bill gal24 and in 2012 exceeded 

1.14 bill gal.25 This demonstrates that the industry was able to meet the applicable 2012 volume 

requirement of 1 bill gal. billion gallons. It also provides evidence that the industry will meet 

the 1.28 billion gallon requirement in 2013. Additional volumes above 1.28 billion gallons are 

possible in 2013, and may be used to help meet the advanced biofuel standard. Indeed current 

production rates in the biodiesel industry for the first six months of 2013 are almost 40% above 

 

24 Fuels and Fuel Additives 2011 EMTS Data, http://www.epa.gov/otaq/fuels/rfsdata/2011emts.htm (last accessed 

June 27, 2013).

25 Fuels and Fuel Additives 2012 EMTS Data, http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm (last accessed 

June 27, 2013).

Comment [A33]: Does this include the 

fraudulent RINs? If so, this seems using this 

benchmark may not be advisable.

Response: We have edited text to address this issue. 

and focus on 2012 data.

Deleted: bill galgalgal

Deleted: bill galgalgal
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monthly production rates for the same time period in 2012 and are consistent with a total 

production volume of at least 1.5 billion gallons for 2013.26 

While annual production volume has been increasing, a review of EIA’s Monthly 

Biodiesel Production Reports27 since 2009 indicates that there has been some variability both in 

monthly production volume and in the number of facilities producing that volume. For example, 

there were significant biodiesel facility closures during the 2009 and 2010 calendar years. Since 

that time, the overall number of biodiesel facilities in operation has stabilized while overall 

capacity in the biodiesel industry has remained stable from 2009-2012 at more than 2 billion 

gallons. It is also clear that overall industry-wide utilization rates have increased during this time 

period from 25% in 2009 to approximately 46% in both 2011 and 2012. Thus it is clear that total 

production capacity at facilities already operating is above 1.28 bill gal. Nevertheless, there are 

indications that new or idle facilities will begin production in response to the 1.28 billion gallons

mandate for 2013. Specifically, EIA’s monthly reports indicate that nine additional producers 

have become operational in the U.S. since the rule for 2013 biomass-based diesel was finalized.28 

The latest EIA monthly biodiesel report, available for April 2013, indicates that U.S. production 

was 106 million gallons in April 2013, and came from 114 biodiesel plants in 38 states with total 

operating capacity of 2.2 billion gallons per year.29 As described in Section IV.B.2.b, total 

biodiesel production by the end of 2013 could be as high as 1.7 billion gallons, and the facilities 

contributing to this production collectively have a capacity of well over 2 billion gallons.

We also investigated the impact of the 1.28 billion gallon requirement on the price and 

supply of agricultural commodities and food prices. Since the start of the RFS program, we have 

increased our understanding of the impact that higher biodiesel production volumes have in both 

these areas. Soybean prices were significntly higher in 2011 than in 2010 and 2009. While 

many different factors are known to influence food prices, USDA has found that, “any increase 

in farm prices for corn and soybeans due to increased biofuels production has likely had only a 

small effect on U.S. food prices.”30 With regard to agricultural supply and prices, since their 

peak in August and September of 2012 during the height of uncertainty about the effects of the 

 

26

 Fuels and Fuel Additives 2013 EMTS Data, http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm (last accessed 

June 27, 2013).

27

 The U.S. Energy Information Administration as part of it responsibilities under section 1508 of the 2005 Energy 

Policy Act, amended its ICR and has began collecting and publishing biodiesel production information on a monthly 

basis including production of biodiesel in a given month, the number of plants operating and contributing to the 

monthly total volume by state, and their total operating capacity for the year. U.S. Energy Information 

Administration/Monthly Biodiesel Production Report, Form EIA-22m Monthly Biodiesel Production Survey.

U.S. Energy Information Administration, Monthly Biodiesel Production Report, For 2012 data collected showed that 

2012 production was 969 milmilmilmillion gallons, which was up from production 967 million gallons during 2011. 

28 EIA data indicates that in December 2011, after the close of the comment period, 103 biodiesel plants existed with 

an operating capacity of 2.1 billion gallons per year. In March 2012, 104 biodiesel plants were operational and the 

report indicates that for the first quarter of 2012 production was up 78% over the first quarter of 2011. As EPA 

finalized the 2013 volume mandates in September 2012 there were 105 biodiesel producers operating in the U.S. By 

late November 2012 that number had increased to 112. 

29 http://www.eia.gov/biofuels/biodiesel/production/ (last accessed June 27, 2013).

30 Testimony of Joseph Glauber, Chief Economist, U.S. Department of Agriculture to the House Energy & 

Commerce Committee. Overview of the Renewable Fuel Standards: Government Perspectives. June 26, 2013. 

http://energycommerce.house.gov/hearing/overview-renewable-fuel-standard-government-perspectives (last 

accessed July 15, 2013).

Deleted: bill galgalgal

Comment [A34]: Please explain the reason for 

not using EIA biodiesel data.

Response: EIA biodiesel data was in fact used. No 

change to text.

Deleted: bill galgalgal

Comment [A35]: The latest biodiesel report with 

data for June 2013 was released on August 29, 2013 

Response: Text was edited to address this issue.

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal
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2012 drought, prices of soybeans and soybean products have been trending downward. The 

USDA World Agricultural Supply and Demand Estimates (WASDE) Report’s estimate31 of 

soybean prices for the 2012/2013 marketing year have declined from an August 2012 range of 

$15-17 per bushel to a June 2013 estimate of $14.35 per bushel for the 2012/2013 marketing 

year. WASDE’s June Outlook Report estimates that for the 2013/2014 marketing year (which 

includes the months of October through December 2013) soybean prices will range from $9.75 –

$11.75 per bushel, which is in line with the projections used by EPA in the 2013 biomass-based 

diesel volume final rule.32 

Further discussion of the factors we must consider, in the context of the biomass-based 

diesel volume of 1.28 billion gallons for 2013, is contained in both the final rule adopting this 

level for 201333 and in EPA’s denial of two petitions requesting the Agency reconsider the 2013 

biomass-based diesel final rule.34 As discussed in that final rule, the assessment of these factors 

supported a volume of 1.28 billion gallons for 2013. As we would expect that the impacts of 

1.28 billion gallons in 2014 and 2015 would not be materially different, we are not repeating the 

discussion of those analyses here. 

C. Determination of Applicable Volume for 2014 and 2015 

The biodiesel industry clearly has demonstrated that it can produce the volumes of 

biomass-based diesel up to the minimum required by the statute, and that 1.28 billion gallons of 

biodiesel is readily attainable. We have no real concerns that a level of 1.28 billion gallons will 

be achieved effectively -in 2013, and that once it is met, that this level of production and 

consumption can also be achieved in years after 2013. Production costs associated with 1.28 

billion gallons of biodiesel could be affected by various factors, including the expiration of the 

biodiesel tax credit and projected lower soy oil prices.

EPA’s evaluation of the applicable volume that we should set for biomass-based diesel

takes into account the context of the larger advanced biofuel and total renewable fuel volume 

requirements. The biomass-based diesel standard is a subset of both the advanced biofuel and 

total renewable fuel standards, and biomass-based diesel volumes can be used to meet all three 

standards. As discussed in Section IV below, we are proposing to reduce the applicable volumes 

of advanced biofuel and total renewable fuel. The reductions are designed to address several 

factors that affect achievement of the volume goals that Congress established in the statute for 

these categories of renewable fuel. These factors include limitations in production or 

 

31 See http://www.usda.gov/oce/commodity/wasde/index.htm (last accessed June 7, 2013); The WASDE report is 

a monthly report published by the U.S. Department of Agriculture (USDA) providing comprehensive forecast of 

supply and demand for major crops both for the US and globally. Throughout the growing season and afterwards, 

estimates are compared with new information on production and utilization, and historical revisions are made as 

necessary. It is widely considered to be the benchmark to which all other private and public agricultural forecasts 

are compared.

32 CompareCompareCompareCf. 77 FR 59458 at 59465, with the May 10, 2013 WASDE Report released on May 

10, 2013, Table 518-15. See http://www.usda.gov/oce/commodity/wasde/index.htm (last accessed June 7, 2013).

33 77 FR 59458 (September 27, 2012).

34 78 FR 49411, August 14, 2013. 

Comment [A36]: There are a several difficulties 

with this discussion. See supplemental comments.

Response: Discussion of ag prices has been moved 

to Section IV.B.2.b.

Deleted: billbillbill

Deleted: billbillbill

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: and efficiently 

Comment [A37]: See supplemental comments on 

biodiesel costs

Response: No changes to text here, but discussion of 

biodiesel credit credit in Section IV.B.2.b has been 

expanded.

Deleted: bill galgalgal

Deleted: 

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Formatted: Font: Italic

Deleted: ompare

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importation of the necessary volumes, and factors that limit supplying those volumes to the 

vehicles that can consume them. These same factors impact our consideration of the biomassbased diesel volume requirement for 2014. For example, EPA considers the availability of 

feedstock for production of biodiesel. 

More importantly, the production and use of biomass-based diesel can be supported by 

both the need to comply with the required volume for biomass-based diesel as well as the need to 

comply with the required volume for advanced biofuel, or even the volume for total renewable 

fuel. This provides EPA additional flexibility in considering the appropriate national volume to 

set for the biomass-based diesel volume requirement, as this requirement is not the only 

mechanism in the RFS program that can support production and use of biomass-based diesel. 

For example, while the applicable volume that EPA sets for biomass-based diesel will ensure 

that at least that volume of biomass-based diesel would be produced and used, the advanced 

biofuel standard provides an alternative potential source of support for production and use of 

additional volumes of biomass-based diesel. It does this because obligated parties have 

discretion whether to choose biomass-based diesel or another advanced biofuel to satisfy their 

advanced biofuel obligation. EPA believes there is value in providing obligated parties increased 

flexibility in how they meet their required volume obligations in 2014. As discussed in Section 

IV, EPA is reducing the statutory volumes of advanced biofuel and total renewable fuel based on 

concerns of inadequate domestic supply of these renewable fuels. Providing obligated parties 

additional flexibility to address future supply circumstances is of increased importance under 

these circumstances. 

In setting the applicable volume for biomass-based diesel for 2013, EPA discussed 

various impacts of requiring volumes of biomass-based diesel in light of the relevant factors to 

be considered under CAA section 211(o)(2)(B)(ii).35 EPA believes this analysis continues to be 

appropriate, and supports the proposed applicable volume of biomass-based diesel for 2014. In 

considering all of these factors, EPA sees no need to reduce the biomass-based diesel volume 

requirement from 2013 levels. We have a high degree of confidence that this volume could be 

achieved effectively, and without any real risk of production or supply problems assuming the 

biodiesel tax credit is extended to 2014 and 2015. We also see no need to increase it. We 

believe that volumes of biomass-based diesel above 1.28 billion gallons can, and likely will, be 

produced in 2014 to meet the requirements of the advanced biofuel standard. EPA does not 

expect that there would be a significant difference between additional volumes of biomass-based 

diesel above 1.28 billion gallons and other advanced biofuels, as far as the overall impact of the 

fuels in terms of the factors to consider under section 211(o)(2)(B)(ii). Any such differences 

would also be hard to quantify. At the same time, providing obligated parties the discretion to 

choose the method to comply with their advanced biofuel volume requirement most appropriate 

for their circumstances is likely to reflect the most effective or efficient way to achieve the 

advanced biofuel volume requirements, given the market circumstances present in 2014. In 

addition, as noted above, providing obligated parties additional flexibility to address the 2014 

supply circumstances is of increased importance under the supply circumstances discussed in 

 

35 77 FR 59458 (September 27, 2012), especially sections IV and V of the preamble.

Deleted: and efficiently

Comment [A38]: See supplemental comments on 

biodiesel costs

Response: No changes to text here, but discussion of 

biodiesel credit credit in Section IV.B.2.b has been 

expanded.

Deleted: .

Comment [A39]: Reviewers believe that this 

would depend significantly on the future of the 

biodiesel tax credit. 

Response: Text modified in next paragraph and later 

in Section IV.

Deleted: chosechosechose

Deleted: that is 
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Section IV. Therefore we are not proposing to increase the volume of biomass-based diesel that 

will be required in 2014 and 2015.36 

In the overall context of the RFS program, the level of the biomass-based diesel 

applicable volume is uncertain because of the expiration of the biodiesel tax credit at the end of 

2013. However, if the tax credit is extended that 1.28 billion gallons could be seen as the 

minimum amount of biomass-based diesel that is required, recognizing that additional volumes 

of biomass-based diesel may and likely will be used, along with other advanced biofuels, to 

satisfy the volume requirements for advanced biofuel and total renewable fuel. Having 

considered the statutory factors in the context of proposing the volume requirements for 

advanced biofuel and total renewable fuel, we believe the minimum required volume of biomassbased diesel should be set at the same level as 2013. This approach would recognize the 

likelihood that volumes of biomass-based diesel could be produced and consumed above the 

required volume level, and that obligated parties could well choose to use more biomass-based 

diesel than is required to satisfy their volume obligations for advanced and total renewable fuel. 

A volume requirement of 1.28 billion gallons for biomass-based diesel in 2014 and 2015 would 

provide an assured minimum volume level for biomass-based diesel while also providing a clear 

opportunity for greater growth as part of the advanced biofuel category. Greater use of biomassbased diesel would be a recognized compliance path for the advanced and total renewable fuel 

volume obligations being proposed today. The proposed levels of those standards provide a 

significant opportunity for greater volumes of biomass-based diesel to be produced and used if 

the market chooses them. We request comment on this proposed approach to the biomass-based 

diesel volume requirement for 2014 and 2015.

 

36 While the statute requires EPA to establish the applicable volume of cellulosic biofuel at projected production

levels, this is not thecase with respect to the applicable volume of biomass-based diesel. For biomass based- diesel, 

EPA may set the applicable volume at any level above 1 billion gallons after consideration of the factors set forth in 

the statute and consultation with the Departments of Agriculture and Energy. 

Deleted: section 

Deleted: can 

Deleted: bill galgalgal
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IV. Proposed National Volume Requirements for Advanced Biofuel and Total 

Renewable Fuel for 2014

As described in Section I, the national volumes of renewable fuel to be used under the 

RFS program each year are specified in CAA 211(o)(2). For 2014, the applicable volume of 

advanced biofuel is 3.75 billion gallons and the applicable volume of total renewable fuel is 

18.15 billion gallons. However, two statutory provisions authorize EPA to reduce these 

volumes. EPA may reduce these volumes if it reduces the applicable volume for cellulosic 

biofuel, or if the criteria are met under the general waiver authority.37 We are proposing to 

exercise our discretion under these provisions to reduce the applicable volumes of advanced 

biofuel and total renewable fuel to address several factors – commonly referred to as the ethanol 

blendwall – that affect achievement of the volume goals that Congress established in the statute. 

These factors include limitations in production or importation of the necessary volumes, and 

factors that limit supplying those volumes to the vehicles that can consume them such as limited 

access of FFVs to retail stations offering E85. Based on a detailed analysis of these limitations, 

we are proposing reductions in the statutory volumes of both advanced biofuel and total 

renewable fuel as shown below.

Table IV-1

Proposed Volumes for 2014 (billion gallons)

Statutory volume

Proposed volume

Range Mean

Advanced biofuel 3.75 2.01 - 2.51 2.21

Total renewable fuel 18.15 14.98 - 15.53 15.21

In proposing these reductions, we are proposing to use a combination of the cellulosic 

biofuel waiver authority and the general waiver authority to ensure that the proposed volumes are 

reasonably achievable given limitations in the volume of ethanol that can be practically 

consumed in motor vehicles considering constraints on the supply of higher ethanol blends to the 

vehicles that can use them and other limits on ethanol blend levels approved for use in motor 

vehicles and the volume of non-ethanol renewable fuels that we expect would be reasonably 

achievable. To accomplish this, we are proposing an approach involving the following three 

steps:

• First, we would determine the total volume of ethanol that can reasonably be supplied 

to and consumed by consumers as both E10 and higher ethanol blends such as E15 or 

E85. We would then add to this the volume of all non-ethanol biofuels that we expect 

could be reasonably available for meeting all four of the applicable volume 

requirements (cellulosic biofuel, biomass-based diesel, advanced biofuel, and total 

renewable fuel). The results of this first step would identify the level of renewable 

fuel that can adequately be produced and supplied to consumers in light of the 

 

37 See CAA section 211(o)(7)(D) and (A).

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: See CAA section 211(o)(7)(D) and (A).

Formatted Table
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blendwall and other relevant constraints, and would form the basis for the required 

volume of total renewable fuel as adjusted pursuant to EPA’s waiver authorities. 

• Second, we would determine the volumes of all sources of advanced biofuel that 

could be reasonably achieved to ensure that the required volume of advanced biofuel 

be set no higher than the volume that is projected to be available. 

• Third, we would determine an appropriate level of advanced biofuel at or below the 

projected available volume determined in the second step. This level would include 

the required levels of cellulosic biofuels and biomass-based diesel, which are set 

separately, as well as any additional volumes of non-ethanol advanced biofuels 

projected to be reasonably achievable. This approach would account for the 

contribution of ethanol volumes in the advanced biofuel category to the supply 

concerns related to total renewable fuel, most notably the factors commonly referred 

to as the blendwall. While ensuring that both advanced biofuel and non-advanced 

renewable fuels play a role in addressing the ethanol blendwall, it would also support 

Congress’s goal in the RFS program of continued growth in the advanced biofuel 

category, as reflected in the volume requirements established in the statute. As 

discussed in detail in Section IV.C.2, we have examined several alternative 

approaches to this third step, but we believe this approach best accommodates the 

objectives of the RFS program, while accounting for the limitations in the ability to 

produce and consume renewable fuels. We request comment, however, on alternative 

approaches and on all aspects of the framework discussed in this section. 

We anticipate that the framework described in this section would apply not only to 2014, but to 

subsequent years as well. The specific estimates of volumes for each potential source of 

renewable fuel would be different in each future year, but the manner in which we aggregate 

those estimates to determine appropriate volume requirements would follow the overall approach 

described above.

A. Statutory Authorities for Reducing Volumes to Address Insufficient Availability 

and the Ethanol Blendwall

In establishing the annual volume objectives in the statute, Congress intended that 

volumes of renewable fuel, advanced biofuel, and cellulosic biofuel increase every year through 

2022, and that volumes of biomass based diesel be at least equal to the statutory volume for 

2012, while granting EPA discretion to increase this volume based on consideration of several 

specified factors. However, Congress recognized that circumstances could arise that might 

require a reduction in the volume objectives specified in the statute as evidenced by the different 

waiver provisions in CAA 211(o)(7). As described in more detail below, we believe that 

limitations in production or importation of qualifying renewable fuels, and factors that limit 

supplying those volumes to the vehicles that can consume them, both constitute circumstances 

that warrant a waiver under section 211(o)(7) as discussed below. With regard to the ethanol 

blendwall, a decrease in total gasoline consumption since EISA was enacted in 2007, coupled 

with limitations in the number and geographic distribution of retail stations that offer higher 

Comment [A40]: All of this seems to be 

dependent on the relationship between oil and 

biodiesel feedstock prices and the value of RINs, 

which is itself a function of the values selected. 

There is no real discussion below of how the 

available supply relates to these key factors. There 

should be such an analysis.

Response: Text in Section IV.B.1.c modified to 

request comment on this issue.

Deleted: believe 

Deleted: could 

Comment [A41]: Align with forward guidance 

wording elsewhere

Response: Text edited here and at the end of Section 

IV.

Comment [A42]: This language is not strong 

enough if we want the market to understand that this 

is a long tem methodology.

Response: Text at the end of Section IV was 

modified.
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ethanol blends such as E85 and the number of FFVs that have access to E85, as well as other 

market factors, combine to place significant restrictions on the volume of ethanol that can be 

supplied to and consumed by consumers. Based on the types of renewable fuel that we project 

are likely to be available in 2014 and the volume that is likely to be non-ethanol, we believe that 

the ethanol blendwall represents a circumstance that warrants a reduction in the mandated 

volumes for 2014.

The statute provides two separate authorities that permit EPA to reduce volumes of 

advanced biofuel or total renewable fuel under certain conditions: the cellulosic waiver authority 

and the general waiver authority. Applying a combination of these two authorities is the most 

appropriate way to address limitations in production or importation of the necessary volumes, 

and factors that limit supplying those volumes to the vehicles that can consume them, including 

the ethanol blendwall. This section discusses both of these statutory authorities and the manner 

in which we believe they can be used together to set standards for 2014.

1. Cellulosic Waiver Authority

Under CAA section 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 “[f]or 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 biofuel. As EPA has discussed before, this indicates a clear Congressional intention 

that under this provision EPA may reduce both the total renewable and advanced biofuel volume 

together, not one or the other. 

As described in the May 26, 2009 NPRM for the RFS regulations, 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.38 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. Using this authority 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. Further discussion of this provision can be found in the final 

rule establishing the 2013 RFS standards.39

 

38 See 74 FR 24914-15.

39 78 FR 49794, August 15, 2013.

Deleted: See 74 FR 24914-15.

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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 based on a reduction in cellulosic 

biofuel volumes under CAA section 211(o)(7)(D)(i). EPA can consider the criteria described in 

sections 211(o)(2)(B)(ii) and 211(o)(7)(A) in determining appropriate reductions in advanced 

biofuel and total renewable fuel under the cellulosic waiver authority at section 211(o)(7)(D)(ii), 

or any other factors that may be relevant. However, EPA must provide a reasoned explanation 

for any decision to reduce the advanced biofuel and total renewable fuel volume requirements 

under the cellulosic biofuel waiver authority.

2. General Waiver Authority

CAA 211(o)(7)(A) provides that EPA, in consultation with the Secretary of Agriculture 

(USDA) and the Secretary of Energy (DOE), may waive the applicable volume requirements of 

the Act in whole or in part based on a petition by one or more States, by any person subject to the 

requirements of the Act, or by the EPA Administrator on her own motion. Such a waiver must 

be based on a determination by the Administrator, after public notice and opportunity for 

comment, that: 

• Implementation of the requirement would severely harm the economy or the 

environment of a State, a region, or the United States; or 

• There is an inadequate domestic supply.

In this Notice, EPA is proposing to utilize the general waiver authority to waive applicable 

volume requirements based on the authority under the statute to act on the Administrator’s own 

motion. We have initiated discussions with both USDA and DOE on the proposed approach to 

determining the applicable volume requirements that is described in this section.

Because this provision provides EPA the discretion to waive the volume requirements of 

the Act "in whole or in part," we interpret this section as granting authority to waive any or all of 

the four applicable volume requirements in appropriate circumstances. Thus, for example, 

unlike the cellulosic waiver authority, a reduction in total renewable fuel pursuant to the general 

waiver authority would not automatically result in the same reduction in advanced biofuel, and 

would not be limited by the reduction in cellulosic biofuel. 

EPA has not previously interpreted or applied the waiver provision in CAA section 

211(o)(7)(A)(ii) related to "inadequate domestic supply."40 As explained in greater detail below, 

we believe that this ambiguous provision is reasonably and best interpreted to encompass the full 

range of constraints, including fuel infrastructure and other constraints that could result in an 

inadequate supply of renewable fuel to the ultimate consumers. This would include, for instance, 

factors affecting the ability to produce or import qualifying renewable fuels as well as factors 

affecting the ability to distribute, blend, dispense, and consume those renewable fuels.

 

40

 EPA has applied the waiver provision in section 211(o)(7)(A)(i) related to severe harm to the economy. See 77 

FR 70752 (November 27, 2012), 73 FR 47168 (August 13, 2008).

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The waiver provision at CAA 211(o)(7)(A)(ii) is ambiguous in several respects. First, it 

does not specify what the general term "supply" refers to. The common understanding of this

term is an amount of a resource or product that is available for use by the person or place at 

issue.41 Hence the evaluation of the supply of renewable fuel product is best understood in terms 

of the person or place using the product. In the RFS program, various parties interact across 

several industries to affectaffect the ultimate use of renewable fuel by consumers of 

transportation fuel. For example, supplying renewable fuel to obligated parties and terminal 

blenders is one part of this process, while supplying renewable fuel to the ultimate consumer as 

part of transportation fuel is a different and later aspect of this process. This is clearly the case 

with respect to the renewable fuels ethanol and biodiesel, which are typically supplied to the 

obligated parties and terminals as a neat fuel, but in almost all cases are supplied to the consumer 

as a blend with conventional fuel (ethanol and gasoline or biodiesel and diesel). The waiver 

provision does not specify what product is at issue (for example, neat renewable fuel or blended 

renewable fuel with transportation fuel) or the person or place at issue (for example, obligated 

party or ultimate consumer), in determining whether there is an “inadequate domestic supply.”

The waiver provision also does not specify what factors are relevant in determining the 

adequacy of the supply. Adequacy of the supply would logically be seen in terms of the parties 

who use the supply of renewable fuel. Adequacy of supply could affect various parties, 

including obligated parties, terminal operators, and consumers. Adequacy of supply with respect 

to the consumer might well involve consideration of factors different from those involved when 

considering adequacy of supply to the obligated parties. We believe that interpreting this waiver 

provision as authorizing EPA to consider the adequacy of supply of renewable fuel to all of the 

relevant parties, including the adequacy of supply to the ultimate consumer of transportation 

fuel, is consistent with the common understanding of the terms used in this waiver provision, 

especially in the context of a fuel program that is aimed at increasing the use of renewable fuel 

by consumers. In our view, this is the most reasonable and appropriate construction of this 

ambiguous language in light of the overall policy goals of the RFS program. 

EPA has reviewed other fuel related provisions of the Clean Air Act with somewhat 

similar waiver provisions, and they highlight both the ambiguity of the RFS general waiver 

provision and the reasonableness of applying the latter broadly to include adequacy of supply to 

the ultimate consumer of transportation fuel. For example, CAA section 211(k)(6)(A)(ii) allows 

EPA to defer application of reformulated gasoline (RFG) requirements in a state that opts in to 

the RFG program if EPA determines that "there is insufficient domestic capacity to produce 

reformulated gasoline." A related RFG waiver provision concerning the application of RFG 

requirements in the Ozone Transport Region, section 211(k)(6)(B)(i) and (iii), provides for a 

waiver of RFG requirements based on "insufficient capacity to supply reformulated gasoline." 

For these RFG waiver provisions, Congress more clearly and explicitly indicated that the 

capacity to supply RFG could include consideration of factors beyond those concerning the 

 

41

 example,E.g., see http://oxforddictionaries.com/us/definition/american_english/supply (a stock of a resource from 

which a person or place can be provided with the necessary amount of that resource: "There were fears that the 

drought would limit the exhibition’s water supply.”); http://www.macmillandictionary.com/us/dictionary/american/supply 

( “A limited oil supply has made gas prices rise.” and “Aquarium fish need a constant supply of oxygen.”). 

Comment [A43]: The concept of supply also has 

something to do with prices. The amount of supply 

that is available generally varies with the price level, 

with more being available if the price is higher. 

Response: No changes made.

Deleted: a 

Deleted: effect

Deleted: effect

Deleted: e

Deleted: For 

Deleted: example

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capacity to produce RFG. The language of the RFS general waiver provision Congress, in 

comparison, used a single, broader and clearly ambiguous phrase – "inadequate domestic supply"

– without elaboration or clarification as to whether it refers solely to production capacity or also 

includes additional factors relevant to the ability to supply the fuel to various persons such as the

ultimate consumer. As in the RFG provision, however, the adequacy of supply referred to in the 

RFS general waiver provision can logically – and we believe should – be read to include factors 

beyond capacity to produce that impact the ability of consumers to use the fuel as a 

transportation fuel. 

CAA section 211(c)(4)(C)(ii) provides EPA with waiver authority to address "extreme 

and unusual fuel or fuel additive supply circumstances ... which prevent the distribution of an 

adequate supply of the fuel or fuel additive to consumers." The supply circumstances must be 

the result of a natural disaster, an Act of God, a pipeline or refinery equipment failure or another 

event that could not reasonably have been foreseen, and granting the waiver must be "in the 

public interest." In this case, Congress clearly specified that the adequacy of the supply is 

judged in terms of the availability of the fuel for use by the ultimate consumer, and includes 

consideration of the ability to distribute the required fuel or fuel additive to the ultimate 

consumer. Although the RFS waiver provision does not contain any such explicit clarification 

from Congress, its broad and ambiguous wording provides EPA the discretion to reasonably 

interpret the scope of the RFS waiver provision. EPA’s interpretation of the RFS waiver 

provision is consistent with the view, expressed more explicitly in the section 211(c) waiver, that 

the adequacy of the supply of a fuel or fuel additive can reasonably be judged in terms of 

availability for use by the consumer, and can include consideration of the capacity to distribute 

the product to the ultimate consumer. 

CAA section 211(m)(3)(C) allows EPA to delay the effective date of oxygenated gasoline 

requirements for certain carbon monoxide nonattainment areas if EPA finds "an inadequate 

domestic supply of, or distribution capacity for, oxygenated gasoline . . . or fuel additives"

needed to make oxygenated gasoline. Here, Congress chose to expressly differentiate between

"domestic supply" and "distribution capacity," indicating that each of these elements was to be 

considered separately. This would indicate that the term inadequate supply, although ambiguous 

for the reasons discussed above, could in appropriate circumstances be read as more limited in 

scope. In contrast to the RFS waiver provision, the section 211(m) waiver provision includes 

additional text that makes clear that EPA’s authority includes consideration of distribution 

capacity – reducing the ambiguity inherent in using just the general phrase "inadequate domestic 

supply." Presumably this avoids a situation where ambiguity would result in an overly narrow 

administrative interpretation. The oxygenated gasoline waiver provision is also instructive in 

that it clarifies that it applies separately to both finished oxygenated fuel and to oxygenated fuel 

blending components. That is, there could be an adequate supply of the oxygenate, such as 

ethanol, but not an adequate supply of the blended fuel which is sold to the consumer. The RFS 

waiver provision employs the phrase “inadequate domestic supply” without further specification

or clarification, thus providing EPA the discretion to determine whether the adequacy of the 

supply of renewable fuel can reasonably be judged in terms of availability for use by the ultimate 

consumer, including consideration of the capacity to distribute the product to the ultimate 

consumer. In contrast to the section 211(m) waiver provision, Congress arguably did not

mandate that the RFS waiver provision be interpreted as providing authority to address problems 
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affecting the supply of renewable fuel to the ultimate consumer. However, the RFS waiver 

provision does provide EPA the discretion to adopt such an interpretation, resulting in a policy 

approach consistent with that required by the less ambiguous section 211(m) waiver provision.42

As the above review of various waiver provisions in Title II of the Clean Air Act makes 

clear, Congress has used the terms "supply" and "inadequate supply" in different waiver 

provisions. In the RFS general waiver provision, Congress spoke in general terms and did not 

address the scope of activities or persons or places that are the focus in determining the adequacy 

of supply. In other cases, Congress provided, to varying degrees, more explicit direction. 

Overall, the various waiver provisions lend support to the view that it is appropriate, where 

Congress has used just the ambiguous phrase "inadequate domestic supply" in the RFS waiver 

provision, to consider supply in terms of distribution and use by the ultimate consumer, and that 

the term “inadequate supply” of a fuel need not be read as referring to just the capacity to 

produce renewable fuel or the capacity to supply it to the obligated parties. 

We are aware that prior to final adoption of the Energy Independence and Security Act of 

2007, Congress had before it bills that would have provided for an EPA waiver in situations 

where there was "inadequate domestic supply or distribution capacity to meet the requirement."43 

EPA is not aware of any conference or committee reports, or other legislative history, explaining 

why Congress ultimately enacted the language in EISA in lieu of this alternative formulation. 

There is no discussion, for example, of whether Congress did or did not want EPA to consider 

distribution capacity, whether Congress believed the phrase "inadequate domestic supply" was 

sufficiently broad that a reference to distribution capacity would be unnecessary or superfluous, 

or whether Congress considered the alternative language as too limiting, since it might suggest 

that other types of constraints on delivering renewable fuel to the ultimate consumer should not 

be considered for purposes of granting a waiver.44 Given the lack of interpretive value typically 

given to a failure to adopt a legislative provision, and the lack of explanation in this case, we find 

the legislative history to be uninformative with regard to Congressional intent on this issue. It 

does not change the fact that the text adopted by Congress, whether viewed by itself or in the 

context of other fuel waiver provisions, is clearly ambiguous. 

We believe the term "inadequate domestic supply" should be interpreted to authorize 

EPA to consider the full range of constraints, including fuel infrastructure and other 

constraints,that could result in an inadequate supply of renewable fuels to consumers. Under this 

interpretation, we would not limit ourselves to consideration of the capacity to produce or import 

renewable fuels but would also consider practical and other constraints related to the fuel 

delivery infrastructure and their effect on the volume of qualifying renewable fuel that would be 

supplied to the ultimate consumer. 

 

42

 In CAA section 211(h)(5)(C)(ii), Congress authorized EPA to delay the effective date of certain changes to the 

federal requirements for Reid vapor pressure in summertime gasoline, if the changes would result in an "insufficient 

supply of gasoline" in the affected area. As with the RFS general waiver provision, Congress did not specify what 

considerations would warrant a determination of insufficient supply. EPA has not been called upon to apply this 

provision to date and has not interpreted it. 

43 H.R. 6 and S. 606 as reported by Senate Envt. & Public Works in Senate Report 109-74.

44 There are, for example, legal constraints on the amount of certain renewable fuels that may be blended into 

transportation fuels. 

Deleted: termtermterm

Deleted: in the RFS waiver provision

Deleted: ,

Deleted: 

Deleted: 

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This interpretation is consistent with the provisions of section 211(o) and promotes 

Congress’s purposes in establishing the RFS program, which are to ensure that certain volumes 

of renewable fuel are used by the ultimate consumer as a replacement for the use of fossil based 

transportation fuel.45 The RFS program does not achieve the desired benefits unless renewable 

fuels are actually used to replace fossil based transportation fuels. For example, the greenhouse 

gas reductions and energy security benefits that Congress sought to promote through this 

program are realized only through the use by consumers of renewable fuels that reduce or 

replace fossil fuels present in transportation fuel. Imposing RFS volume requirements on 

obligated parties without consideration of the ability of the obligated parties and other parties to 

deliver the renewable fuel to the ultimate consumers, would achieve no such benefits and would 

fail to account for the complexities of the fuel system that delivers transportation fuel to 

consumers. We do not believe it would be appropriate to interpret the RFS general waiver 

provision more narrowly and limit EPA's consideration of factors related to the distribution and 

use of renewable fuels by the ultimate consumers of these fuels.

We invite comment on all aspects of our proposed interpretation of the waiver provision based 

on "inadequate domestic supply." Whether or not circumstances projected for 2014 justify a 

waiver on this basis is discussed in Sections IV.B and IV.C.

3. Combining Authorities for Reductions in Advanced Biofuel and Total Renewable Fuel

The two primary drivers that we have considered in today's NPRM for reductions in the 

required volumes are limitations in the availability of qualifying renewable fuels and factors that 

constrain supplying those volumes to the vehicles that can consume them. These two drivers are 

both relevant forms of inadequate domestic supply, which authorize reductions under the general 

waiver authority and can also justify reductions under the cellulosic biofuel waiver authority. 

We believe that reducing both total renewable and advanced biofuel are appropriate responses to 

these circumstances, and we propose to use a combination of the two waiver authorities 

discussed above to achieve this result as neither authority independently is sufficient to justify 

the necessary volume reductions. As discussed in Section II, EPA is proposing to reduce the 

applicable volume of cellulosic biofuel based on a projection of production for 2014. Given this 

reduction in the cellulosic biofuel volumes, EPA is also proposing to reduce the applicable 

volume of advanced biofuel using the cellulosic biofuel waiver authority in Section 

211(o)(7)(D)(i). We are proposing a larger reduction in total renewable fuel volume than in the 

advanced biofuel volume. In effect, one part of the reduction in total renewable fuel would be 

 

45

 See CAA section 211(o)(1)(I) (renewable fuel defined as “fuel ... used to replace or reduce the quantity of fossil 

fuel present in a transportation fuel”), section 211(o)(2)(A)(i) (EPA’s regulations must “ensure that transportation 

fuel sold or introduced into commerce in the United States ... contains at least the applicable volume of [renewable 

fuels]”). Also see CAA section 211(o)(1)(A), definition of “additional renewable fuel.” As one example, in the 

RFS program fuels with multiple end uses such as biogas or electricity are not considered a renewable fuel absent a 

demonstration that they will be used by the ultimate consumers as transportation fuel. As noted above, ethanol is 

almost always used as a renewable fuel in the form of E10 or higher, not as neat ethanol. The supply of neat 

ethanol, or biogas or electricity, does not by itself determine the supply of the fuel ethanol used as a transportation 

fuel. 

Deleted: 

Deleted: 

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based on both the general waiver authority and the cellulosic biofuel waiver authority, and the 

remainder of the reduction in total renewable fuel would be based solely on the general waiver 

authority. Below we discuss the basis for each of the proposed volume reductions. 

B. Determination of Reductions in Total Renewable Fuel

As a first step in our proposed framework for setting the applicable volumes for total 

renewable fuel and advanced biofuel, we would estimate the volume of ethanol that can 

reasonably be expected to be available and consumed and the volume of non-ethanol renewable 

fuel that can reasonably be expected to be available and consumed. Taken together, these two 

considerations would determine the required volume of total renewable fuel. For ethanol, the 

issue is the use of the fuel in the transportation sector, as the purpose of the RFS program is to 

ensure that renewable fuels are used to replace or reduce the use of fossil fuel based 

transportation fuel.46 Thus availability and consumption of the renewable fuel are both relevant 

factors for achieving the national volumes under the RFS program. For ethanol blends, there are 

legal constraints on the amount of ethanol that can be blended into gasoline and practical 

constraints on the volume of ethanol that can be consumed as transportation fuel, 

notwithstanding the ability to produce higher volumes. For non-ethanol renewable fuels, the 

primary issue is the availability of volumes of the renewable fuel, and much less so the ability to 

consume it in the transportation sector if it is available. For purposes of this proposal, we 

generally refer to the consumption concerns related to ethanol, and the availability concerns 

related to non-ethanol forms of renewable fuel, recognizing the primary concern that is raised for 

each of these types of renewable fuel.

1. Estimating Ethanol Volumes that Could Reasonably Be Consumed

The volume of ethanol that could reasonably be consumed is a function of the total 

demand for gasoline and the consumption of ethanol as E10, E15, or E85.

47

 All vehicles and 

engines are capable of operating on E10, so at a minimum, the total volume of ethanol that can 

be consumed can be calculated by assuming that all gasoline is E10. Higher volumes of ethanol 

can be consumed insofar as E15 - E85 is viable.

The total demand for gasoline has been decreasing due to the recent GHG and CAFE 

standards for vehicles, contrary to the projections that were available in 2007 when the Energy 

Independence and Security Act (EISA) was enacted. Comparing the projections for 2014 

gasoline demand in EIA's 2007 and 2013 Annual Energy Outlooks indicates that in 2007, the 

expected 2014 gasoline energy demand was 18.68 Quad Btu and could have absorbed 15.43 

 

46 Renewable fuels in heating oil and jet fuel are also valid under the RFS program, but ethanol is not used in these 

contexts. See CAA section 211(o)(1)(J) (the definition of renewable fuel), and CAA section 211(o)(2)(A) (the 

rulemaking authority related to ensuring renewable fuels are sold or introduced into commerce).

47 Intermediate blends are also possible, but for this assessment we have focused on E85 volumes. There are 

currently very few retail stations offering E15. While a variety of blend levels are possible for E85 from 51% to 

83%, in today's NPRM we have assumed that the ethanol content of E85 is 74% consistent with the value used by 

EIA.

Deleted: See CAA section 211(o)(1)(J) (the 

definition of renewable fuel), and CAA section 

211(o)(2)(A) (the rulemaking authority related to 

ensuring renewable fuels are sold or introduced into 

commerce).

Comment [A44]: Both the practical amount of 

ethanol that can be consumed, and supply volume of 

non-ethanol biofuels, are both likely to be sensitive 

to prices paid by consumers or received by 

producers, both of which can be significantly 

influenced by RIN values that are in turn influenced 

by the level of the various RFS requirements. The 

analysis of “reasonable” volumes does not consider 

prices at all. 

Response: Text modified in Section IV.B.1.c to 

address the impact of the standards on availability 

and consumption.

Deleted: .

Comment [A45]: Are there any places in the 

nation where they cannot blend ethanol or cannot 

blend to E10?

Response: Text modified to acknowledge potential 

for small amounts of E0.

Comment [A46]: It also makes sense to 

acknowledge that three may be some circumstances 

where gasoline is not blended at 10 percent. For 

instance if a terminal is short ethanol, and a shipment 

is a few days away, it might blend at 5 percent. 

Setting the number at exactly 10 percent leaves little 

room for the day-to-day operational challenges that 

might affect the industry.

Response: NPRM requests comment on potential 

volumes of E0. Text added to discuss ethanol 

content of E10.

Deleted: Stakeholders have noted that t

Deleted: the

Formatted: Font: Italic
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 55 of 102

billion gallons of ethanol as E10, while in 2013 the expected 2014 gasoline energy demand is 

15.94 Quad Btu and could absorb 13.17 billion gallons ethanol as E10. The difference between 

these two projections thus represents about 2.3 billion gallons of ethanol. That is, the gasoline 

pool will be able to absorb about 2.3 billion gallons less ethanol as E10 in 2014 than it was 

expected to absorb in the 2007 projection. If 15.43 billion gallons of ethanol were to be 

consumed in 2014, the gasoline energy demand projected in AEO2013 would require about 3.4 

billion gallons of E85. 

Table IV.B.1-1

Reduced Gasoline Demand in 2014

Motor gasoline

(Quad Btu)a

E85

(Quad Btu)a

Total energy

(Quad Btu)a

Equivalent E10 

volume (bill gal)

AEO2007b18.67 0.01 18.68 154.30

AEO2013b15.84 0.10 15.94 131.67

Difference 22.63

a Higher heating value

b

Table 2, total consumption for all sectors.

For purposes of determining the total renewable fuel volume requirement for 2014,

consistent with the waiver authorities we are proposing to exercise in this action, we have 

assessed the volume of E85 that can reasonably be supplied to and consumed by consumers,

based on a variety of factors that limit supplying E85 in the transportation sector. In doing so, 

we are not mandating that this amount of E85 be produced and consumed. The industries 

involved will decide what actually occurs in the marketplace. Obligated parties can take actions 

to facilitate the sale of E85, to the extent they can and choose to do so, or they can obtain RINs 

from non-ethanol sources of renewable fuel such as renewable diesel, heating oil, and biogas. 

We expect that the parties involved will resolve this through their business decisions. However, 

we believe that the amount of renewable fuel reflected in this E85 assessment reflects a volume 

that is reasonably achievable and can be supplied to consumers. 

There are a variety of sources we have used to make an estimate of the volume of E85 

that could be supplied in the transportation sector in 2014. For the purposes of this estimate, and 

to simplify the calculations and the discussion, we have assumed that the volumes of E15 that are 

consumed in 2014 will be negligible, as there are currently very few retail stations offering E15. 

According to EIA, actual consumption of E85 in 2012 was about 40 million gallons.

48

 

There are indications that actual consumption of E85 was higher than this, as the EIA volume 

does not necessarily account for consumption in all states. Nevertheless, the actual volume 

consumed was small fraction of the consumption capacity of the FFVs currently in use. The low 

consumption is most likely due primarily to limited access to retail stations offering E85 and the

fact that in 2013 E85 was x percent more expensive than E10.on an energy equivalent basis in 

2012. Demand for E85 also was limited by consumers’ unfamiliarity with E85, poor information 

about where it is sold, how it is priced, and whether it will work in one’s car. Other factors, such 

as consumerAt this time, available information regarding the level of E85 consumption in 2013 

 

48 EIA, "U.S. Refinery and Blender Net Production", April 29, 2013.

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Comment [A47]: Actual value is 0.0041 Quad 

Btu.

Response: Table has been modified.

Comment [A48]: Report the conversion factor 

used.

Response: Footnote added.

Comment [A49]: Incorrect cite. Page 136 of aeo 

2013

Response: Citation was verified as being correct. 

No change made.

Deleted: ¶

Deleted: mill galgalgal

Comment [A50]: Please double check this 

estimate with EIA.

Response: Text changed to clarify source.

Deleted: the price of 

Deleted: only about 13% lower than the price of 

Deleted: in 2013

Deleted: 49. Since the volumetric energy content 

of E85 is about 22% below that of E10, the price of 

E85 was actually higher than the price of E10 

Deleted: Other factors such as 

Deleted: knowledge and information about the 

availability and pricing of E85, as well as about

whether the consumer has an FFV capable of using 

such fuel, may also play a role. 

Deleted: 4/29/13
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 56 of 102

is limited, and we expect that better and more detailed information will be available – including 

through the notice and comment process – by the time we promulgate a final rule. We solicit 

comment and information on 2013 consumption of E85 and its relevance to projecting 

reasonable levels of consumption in 2014. 

The volume of E85 that can and will be sold is likely highly dependent on price. A 

survey conducted by the National Association of Convenience Stores found that 71% of 

customers indicated that price was the most important factor in determining where they buy 

gasoline.50 If E85 were to be priced in such a way that it provided greater value for consumers 

than E10 we anticipate that many consumers who own an FFV and have access to E85 would 

choose to purchase E85 over E10, just as they have in Brazil. 

The product cost relationship between E85 and E10 is primarily dependent on the prices 

of corn and crude oil.

51 The price differential between E85 and E10 also depends on relative 

convenience costs (discussed further below) and also reflects the price of RINs. Corn and crude 

oil are the contributors to the cost of production of the gasoline and ethanol, respectively, used in 

the United States. The RIN price functions as a mechanism to reduce the price of ethanol until it 

is at or below price parity with gasoline on an energy-equivalent basis even if the relative prices 

of corn and oil would not otherwise support such a pricing structure. The net effect of a 

reduction in the price of blended ethanol is that the price of E85 should fall relative to the price 

of E10, since E85 contains more ethanol than E10. The significant rise on the price of D6 (nonadvanced) RINs and the subsequent drop in the retail price of E85 relative to E10 over the course 

of 2013,53 indicates that RINs are already functioning in this manner. While we currently have 

insufficient data to allow us to correlate sales volumes of E85 with its price relative to gasoline 

on an energy basis, we would expect E85 consumption to increase if the price of E85 decreases 

relative to the price of E10. We also request comment on the manner and extent to which RIN 

prices are affecting gasoline and E85 prices? What effects are market participants seeing and 

what evidence do they see? Are the effects uniform throughout the nation? Is it affected by 

market structure and if so how?

Due to the paucity of data correlating E85 sales with its price relative to E10, we have 

turned to other sources to help inform our projections. For instance, even without further 

reductions in the price of E85 relative to the price of E10, higher E85 consumption in 2014 could 

reasonably be expected compared to 2012 based on business-as-usual growth in the number of 

FFVs in use and the number of retail stations offering E85. The combined effect of these two 

factors could raise the total E85 consumption volume to 80 million gallons if the purchasing 

behavior of individual FFV owners remains constant.54 However, it remains unclear what 

fraction of current E85 consumption is for government-owned fleets which may already be 

 

50 2013 NACS Retail Fuels Report.

51Other factors, including Federal and State taxes and subsidies and distribution costs, may also affect the price 

relationship. It is therefore very difficult to accurately predict fuel prices.

53 http://e85prices.com, August 26, 2013. E85 prices have fallen steadily since the beginning of 2013 relative to E10 

prices, and are current at about 20% lower than the price of E10. 

54 While there are many different factors that may potentially influence consumer purchasing behavior with respect 

to E10 and E85, we believe the primary factor will be the relative price of the two products.

Comment [A51]: This fails to discuss 

convenience,

Response: Text was modified to acknowledge this.

Deleted: The price 

Deleted: ,

Comment [A52]: A few comments:

1. Inconvenience cost of E85. This analysis ignores 

the paucity of E85 distribution stations across the 

U.S. While price is certainly a significant factor in 

the amount of E85 that will be sold, The reviewer 

also believes the “inconvenience” of getting E85 to 

be a significant driver in the economics of E85. 

Specifically, since there are far fewer E85 

distribution stations than E10 stations, E10 stations 

will, on average, be easier to access than E85 

stations. Thus, there is a lower “inconvenience cost” 

associated with filling your car with E10 since. 

This issue is discussed well below so the suggested 

edits sidestep this issue to avoid confusion and to 

avoid duplicate wording.

Response: Text was modified.

Deleted: and,

52 and is reflected in the price of 

RINs

Comment [A53]: Flip these 

Response: Text was moedified.

Deleted: can function

Deleted: function

Comment [A54]: E85prices.com is not the most 

complete data set for this type of analysis. The 

reviewer suggests using the WEX data set employed 

by OPIS and others.

Response: No changes to text. EPA is in the 

process of obtaining WEX data, but it is unlikely to 

be available for this NPRM.

Formatted: Not Highlight

Formatted: Highlight

Formatted: Highlight

Comment [A55]: It is inappropriate to use prices 

from E85prices.com. They are anecdotal and not 

statistically valid.

Response: No changes to text. E85prices.com 

tracks with data from Minnesota. 

Deleted: -

Deleted: mill galgalgal

Comment [A57]: The reasoning here runs the 

risk of being circular. Projections of increasing E85 

consumption depend on low E85 prices but those 

...

Comment [A56]: What is the basis for this 

estimate?

...

Formatted: Font: Not Bold
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 57 of 102

required to consume E85. Consumption of E85 by fleets would not be expected to change as the 

price of E85 changes relative to the price of E10.

Based on historical market practices with diesel fuel, in the March 2010 RFS final rule 

we presented a means for estimating the E85 consumption capacity of FFVs.55 We defined 

“reasonable access” to E85 as a situation in which one out of every four service stations to which 

an FFV owner had access offered E85, such that an FFV owner could be considered to have a 

reasonable option of refueling on E85. All other FFVs would then be assumed not to have 

reasonable access to E85, and would therefore always refuel on gasoline (here presumed to be 

E10).

We have used this one-in-four access to estimate the volume of E85 that could be 

consumed by FFVs in 2014. Based on projections of the number of retail stations likely to offer 

E85 in 2014, we estimated that approximately 8.6% of FFVs would have access to E85. As a 

thought exercise, we then estimated that the energy56 consumed by all FFVs in 2014 would be 

about 9% of all the energy consumed by all light-duty vehicles and trucks. If all FFVs that had 

reasonable access to E85 actually consumed E85, the total volume of E85 consumed would be 

1,275 million gallons. Details of these calculations can be found in a memorandum in the 

docket.57

We recognize that the average FFV will not consume E85 anything approaching 100% of 

the time. However, the lower the price of E85 compared to the price of E10, the greater the 

likelihood that FFV owners will opt to purchase E85. E85 prices have fallen steadily since the 

beginning of 2013, and are current at about x% higher than the price of E10 on an energy content 

adjusted basis. . In order to further incentivize FFV owners to purchase E85, the price 

difference may also need to reflect the inconvenience of a greater frequency of refuelings for a 

vehicle operating on E85, and potentially the greater driving distance to a station offering E85. 

Under these conditions, FFV owners that have access to E85 would have an equal economic 

incentive to purchase either E10 or E85. With no clear economic advantage of one fuel over the 

other, the highest E85 consumption that one could reasonably expect would be that half of FFVs 

owners that have access to E85 would purchase it. If this occurred it would bring the maximum 

volume of E85 consumed in 2014 to about 640 mill gal .million gallons. 

There are a variety of other sources providing estimates of potential E85 consumption in 

2014. For instance, in their comments on the NPRM, the University of Illinois included an 

article from the February 13, 2013 issue of Farmdoc Daily in which the projected E85 

consumption volume could be 300 million gallons under appropriate conditions of lower E85 

prices in comparison to E10 prices. million gallonsEIA’s projected gasoline and ethanol 

 

55 See discussion at 75 FR 14761, March 26, 2010.

56 From all fuel sources, including both E10 and E85.

57 "Application of one-in-four E85 access methodology to 2014",",",," Memorandum from David Korotney to EPA 

docket EPA-HQ-OAR-2013-0479.

Deleted: W

Deleted: We

Comment [A58]: The math here is wrong. 

Response: Math was verified as being correct. No 

change to text. Memo to docket will provide details.

Deleted: mill gal.

Deleted: It is likely that FFVs having access to 

E85 will not use E85 

Comment [A59]: This example is really a red 

herring. While it may be there just to make a point, 

it is not presented that way. The average FFV 

probably consumed less than a tank full of E85 over 

the course of last year. The idea that they would go 

to 100 percent is not simply “not likely.” It is 

impossible. And is likewise impossible that they 

would come even close. 

Response: Discussion of 1,275 mill gal eliminated.

Deleted: 20

Deleted: 20%

Deleted: lower 

Deleted: .

Deleted: This is just below the difference of 22% 

that would be needed in order to reach energy parity

Deleted: 58.

Deleted: accommodate 

Comment [A61]: Understand the source, but this 

seems high. If there were no economic advantage, 

but assuming 3⁄4 of the stations sell gasoline only, 

why would we reasonably expect the E85 station get 

3 times the business as a non-E85 gas station?

...

Deleted: .

Comment [A60]: What is the basis for this 

estimate?

Response: Details will be in a memo to the docket. 

No change to text.

Formatted: Font: Italic

Deleted: mill galgalgal

Comment [A62]: That is a misstatement of what 

...

Deleted: Likewise, EIA's Annual Energy Outlook 

2013 projects E85 consumption of 1,021 mill 

...

Deleted: in 2014 based on projections of market 

conditions under the influence of the RFS program. 

Comment [A64]: Not very relevant, since this is 

driven by a very different assumption about the 

...

Comment [A63]: You cannot reasonably cite 

numbers that EIA has updated ...

Deleted: EIA also provided a more recent 

Deleted: ionprojection of 

Deleted: ,
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 58 of 102

consumption for 2014 in the July Short Term Energy Outlook. The volume of E85 that would 

need to be consumed based on these values is about 400 million gallons.

60

In the context of EPA's response to requests for a waiver of the 2012 renewable fuel 

volume requirements due to drought, the Department of Energy provided its own analysis of the 

maximum volume of E85 that could be consumed based on technical analysis of retail station 

throughput.61 Based on assumptions about E85 tank sizes at retail stations and the associated 

refill frequencies, DOE estimated that the maximum sales of E85 would be 600 million gallons. 

However, this volume assumes that the number of retail stations offering E85 is about 2,300. 

We estimate that the number of stations offering E85 will be closer to 3,300 in 2014, which 

would correspond to a maximum E85 throughput of about 860 gal.million gallons.

Based on the discussion above, we have reason to believe that the market is reasonably 

capable of supplying and consuming higher volumes of E85 in 2014 than was actually consumed 

in 2012. A summary of all of the sources is provided below.

Table IV.B.1-2

Projections of 2014 E85 Consumption, Ordered from Lowest to Highest

Actual 2012 consumption 40 mill gal

Scaling up 2012 consumption to account for BAU growth in E85 

stations and more FFVs 80 mill gal

EIA Short Term Energy Outlook, July 2013 400 mill gal

We recognize that the actual volume of E85 consumed is highly dependent upon its price relative 

to the price of E10, as well as the various business decisions made by the parties involved with 

making E85 available to FFV owners. As discussed above, our goal is to generate an estimate of 

the amount of E85 that could reasonably be supplied to and consumed by consumers in light of 

the various circumstances involved with distribution and sale of E85. The various parties 

involved in producing and distributing gasoline and ethanol will determine what in fact will 

occur in 2014. Here we are assessing the volume of E85 that could reasonably be supplied to 

and consumed by consumers, and including that volume as part of the total renewable fuel 

volume. Once the applicable volume requirements are set, the parties in the market will 

determine whether this volume of E85 is in fact consumed, or whether other renewable fuels are 

consumed instead of the volume of ethanol that we estimate could be consumed as E85.

 

60 Based on a total gasoline consumption of 132.79 bill gal, assumed to be E10, and a total ethanol consumption of 

13.58 bill gal.billion gallons. Ethanol content of E85 is assumed to be 74%.

61 "Department of Energy Analyses in Support of the EPA Evaluation of Waivers of the Renewable Fuel 

Standard",",",," November 2012, EPA-HQ-OAR-2012-0632-2544.

Deleted: irtheir 

Deleted: mill gal.59

Comment [A65]: Even this number has a 

problem. It is based on what EIA thinks will 

happened given the RFS. To cite it as justification 

for the RFS is circular. Moreover it can only happen 

with a high RIN price, but we are trying to avoid that 

here.

Response: Discussion of STEO has been eliminated.

Deleted: gal

Comment [A66]: Not sure which edition of 2013 

STEO used. Please cite. Gasoline volume is for 

2013 not 2014 as intended.

Regardless of which edition of the STEO EPA is 

using, 400 million gal does not compute. 10 percent 

of 132.79 billion gallons of Gasoline consumption is 

13.279. 13.58 billion gallons of total ethanol 

consumption minus 13.279 of E10 is more like 300 

million gallons (of ethanol). Maybe EPA assumed 

400 million gallons of actual E85 consumption, 

including the gasoline portion? None of this takes 

into account the STEO also assumes denaturant in 

...

Deleted: mill gal.

Comment [A67]: Why are you citing year old 

DOE analysis when EIA has current analysis? ...

Deleted: mill 

Comment [A68]: What is the basis for assuming 

that the number of stations with E85 will grow 40 

...

Deleted: galgal

Comment [A69]: This table includes data that are 

modified without being so identified. Please see an 

...

Deleted: University of Iowa comments

Comment [A70]: This should have been Illinois, 

not Iowa.

...

Deleted: 300 mill gal

Deleted: DOE estimate of maximum throughput 

from 2012 waiver denial

Deleted: 600 mill gal

Deleted: All FFVs with access to E85 use it 50% 

of the time, assuming that access is defined as one-

...

Deleted: 640 mill gal

Deleted: DOE estimate, after adjusting for 

projected number of E85 stations in 2014

Deleted: 860 mill gal

Deleted: AEO2013 projection

Deleted: 1,021 mill gal

Deleted: All FFVs with access to E85 use it 100% 

of the time, assuming that access is defined as one-

...

Deleted: 1,275 mill gal

Deleted: 

Deleted: ,
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 59 of 102

For purposes of determining the appropriate adjustment to the total renewable fuel 

volume under the general waiver authority, we believe that it would be most appropriate to 

project a range of E85 that reflects the volume that could reasonably be consumed in 2014, using 

the values in Table IV.B.1-2 as a guide. For the purposes of this NPRM, we are estimating a 

range of 40 - 400 million gallons of E85 consumption for 2014. This estimated range of E85 

encompasses the most likely possibilities. Volumes below 40 million gallons are possible, but 

we believe that they are unlikely given that this volume has been consumed in the past. 

Likewise, volumes above 400 million gallons are possible, but we believe that they are unlikely 

since they would require substantial changes in the E85 market. We believe that such changes 

are unlikely to occur in the timeframe available. For instance, the estimate of 640 million

gallons in Table IV.B.1-2 assumes that FFV owners that have access to E85 have an equal 

economic incentive to purchase either E10 or E85. This would require that the price of E85 be 

reduced below energy parity to address the inconvenience of greater frequency of refuelings for a 

vehicle operating on E85, potentially greater driving distances to a station offering E85, and any 

other reasons FFV owners may have for resisting the use of E85 (for example, unfamiliarity with 

a new fuel, not knowing that they own an FFV, etc). We believe it is unlikely that the price of 

E85 relative to E10 will reflect all of these factors in the short time available between this 

proposal and the beginning of 2014, and thus E85 volumes as high as 640 million gallons are 

unlikely in 2014. However, 400 million gallons of E85 may be achievable if the price of E85 

only partially reflects these factors. The projection of 400 million gallons is also the most recent 

of the projections shown in Table IV.B.1-2 that are derived from sources outside of EPA. 

Therefore we believe that 400 million gallons is a reasonable upper end of the range of possible 

volumes of E85 for 2014. 

For the final rule, we will need to determine a single value of reasonable total ethanol 

consumption in 2014 for purposes of exercising the waiver authority and setting the total 

renewable fuel volume. Given that 2014 is the first year for which we are proposing to exercise 

the general waiver authority to address constraints associated with the ethanol blendwall, that 

there remain significant uncertainties associated with determining adequacy of supply of ethanol 

to ultimate consumers, and that there is a relatively short time period in which to achieve 

infrastructural and market changes that would affect ethanol consumption in 2014, we anticipate 

basing our final determination on a stochastic projection of reasonable ethanol consumption for 

2014. We anticipate that actual levels of E85 consumption in 2013 will be highly relevant to 

determining an appropriate value, and as discussed above, we expect to have better and more 

detailed information on 2013 consumption by the time we promulgate a final rule. In light of 

current uncertainties and the limited information available at this time, we are proposing that the 

specific volume of E85 that we would use in determining total ethanol consumption for 2014 

would be based on the mean value form the Monte Carlo analysis within the finalized range of 

potential E85 volumes discussed above. Based on the Monte Carlo analysis discussed in more 

detail in Section IV.B.4 below, the mean value for E85 consumption would be 180 million

gallons. As noted below, this analysis is based on a half-normal distribution, consistent with our 

view that the reasonable level of consumption will be towards the lower end of the range. 

However, we request comment on whether an alternative mid-range value would be more 

appropriate, such as the median (50th percentile) or the mode (highest frequency value). Further, 

we request comment more generally on the range of E85 consumption that could reasonably be 

Deleted: mill galgalgal

Comment [A71]: Too high

Response: E85 range has been changed.

Deleted: mill galgalgal

Deleted: mill galgalgal

Deleted: mill galgalgal

Deleted: mill galgalgal

Comment [A72]: Liquid fuels prices can change 

VERY quickly, as illustrated by recent market 

developments. If RIN prices or oil prices were to 

skyrocket, or if corn prices were to plummet, prices 

could change very quickly. 

Response: Text was modified.

Deleted: mill galgalgal

Deleted: mil galgalgal

Deleted: mill galgalgal

Deleted: conservative 

Comment [A73]: This adjective is more 

appropriate given the level on uncertainty in 

projecting E85 consumption.

Response: Text was modified.

Deleted: mill gal.

Comment [A74]: Mean is the wrong value given 

asymmetric risk..

Response: Text was modified to address this 

comment.

Comment [A75]: Although the results of the E85 

results are not presented here, they were presented in 

the slide deck that EPA presented in the conference 

call scheduled on 9/6. 

We are concerned about the bimodal nature of the 

distribution in that slide – is it possible that an error 

was made with the Monte Carlo simulation for E85 

consumption? 

Response: No error was identified in the analysis. 

No change to text.
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 60 of 102

achieved under appropriate conditions in 2014, including the methodologies and approaches that 

would provide a projection of E85 that could reasonably be consumed in light of the various 

factors affecting the distribution and sale of E85. We request comment in particular on 

methodologies and approaches that would be appropriately conservative in light of the 

considerations, such as uncertainty and the short-time frame for market changes, highlighted 

above.

As described at the beginning of this section, the purpose of projecting potential 

consumption of E85 is to provide a basis for estimating the total volume of ethanol that could 

reasonably be consumed in 2014 in any gasoline-ethanol blend. To this end, we assumed that all 

gasoline-powered vehicles would use either E10 or E85. We have not assumed that any gasoline 

would be E0 since E10 is commonly used in small nonroad engines in addition to E10 used in 

cars and trucks. However, we request comment on whether including some E0 in the gasoline 

pool would be appropriate in this calculation to represent its use in small nonroad engines, and if 

so what volume would be reasonable given that many of these small engines use E10 today.

We assumed that the total energy consumption for all gasoline-powered vehicles and 

engines would be 14.33 Quadrillion Btu.

62

 Based on a denatured ethanol energy content of 

77,000 Btu/gal and a gasoline (E0) energy content of 115,000 Btu/gal, we determined that an 

E85 consumption range of 40 - 400 million gallons would correspond to a total ethanol 

consumption volume of 12.91 - 13.15 bill gal. This ethanol volume would include non-advanced 

ethanol such as that made from corn as well as advanced biofuels such as sugarcane ethanol or 

other domestically-produced advanced ethanol. 

2. Estimating Availability of Non-Ethanol Renewable Fuel Volumes

In addition to the volume of ethanol that could reasonably be consumed in 2014, the total 

volume of renewable fuel depends on the volume of non-ethanol renewable fuels that are 

projected to be available in 2014. These include both advanced and non-advanced non-ethanol 

renewable fuels of all types that could reasonably be supplied to meet all four standards.

a. Non-Ethanol Cellulosic Biofuel

The production of non-ethanol cellulosic biofuel in 2014 is projected to be between 4 and 

15 million ethanol-equivalent gallons. This volume could be significantly greater if pathways for 

the generation of cellulosic biofuel RINs from landfill biogas are approved and the definition of 

home heating oil is adjusted as proposed in EPA’s RFS Pathways II rulemaking. 78 FR 36042 

(June 14, 2013). For more details on the potential production of non-ethanol cellulosic biofuels 

in 2014, and the companies expected to produce these fuels, see Section II. 

 

62 EIA Annual Energy Outlook 2013, Table 37. Represents lower heating value.

Comment [A76]: The short time frame for 

market changes points to the fact that the costs of an 

estimation error are asymmetric. A standard built on 

a too-low estimate will forego GHG emissions 

reductions, while a standard based on a too-high 

estimate will induce market distortions that can be 

costly in the long run and even more costly in the 

short run, far outweighing the GHG emissions 

benefits based on the SCC according to the 

reviewer’s estimates. This reasoning provides a 

policy/economic basis for using an asymmetric loss 

function. An asymmetric loss function would lead 

one to use a more conservative estimate than the 

middle of the range. For example, using a Lin-Lin 

loss function leads to using a quantile of the 

distribution, for example the 25% quantile if the cost 

of overestimation is three times the cost of an 

underestimate of the same magnitude. Such a 

procedure has a strong economic/policy basis, we do 

not have a view as to whether it has a legal basis in 

the context of the RFS.

Response: Text was modified.

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Comment [A77]: EPA’s assumptions of E10 

consumption + 180 mllion gallons of E85 

consumption brings them to 12.91 – 13.15 billion 

gallons of ethanol consumption. That’s below the 

blend wall, much less the blend wall plus E85. EPA 

appears to be calculating it on a Btu basis, but not 

sure why since E10 is purely volumetric.

Response: Text was modified to clarify. Variability 

in E85 demands that we use energy, not volume.
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 61 of 102

b. Biomass-Based Diesel

Obligated parties are required to fulfill a renewable volume obligations (RVO) based on a 

national applicable volume for biomass-based diesel of 1.28 billion gallons of biodiesel (1.92 

billion ethanol-equivalent gallons) in 2013.63 As described in Section III, in today's NPRM we 

are proposing that the national applicable volume for biomass-based diesel remain the same for 

2014. However, this proposed requirement is not based exclusively on projected availability and 

we recognize that it does not represent the maximum volume that could be available for purposes 

of satisfying the total renewable fuel volume requirements. 

There is a large amount of excess production capacity for biomass-based diesel, including 

at facilities that were in operation in 2012. The total production capacity for all facilities that 

produced some volume in 2012 is 2.4 billion gallons, and the production capacity for all facilities 

that utilized at least 20% of their individual production capacities in 2012 was about 1.6 bill gal. 

billion gallons. 

Figure IV.B.2.b-1

Distribution of Capacity Utilization for Registered Parties that

Produced Some Biodiesel in 2012

While there is a large amount of excess production capacity, the degree to which it will 

be used to produce biodiesel in excess of 1.28 billion gallons depends on a variety of factors. 

One of those factors is the federal tax credit for biodiesel that was most recently extended 

through the end of 2013 under the American Taxpayer Relief Act of 2012. Under this Act, 

parties that produce a mixture of biodiesel and diesel fuel can claim a $1.00-per-gallon credit 

 

63 77 FR 59458, September 27, 2012 (establishing the national applicable volume for BBD), CITE (establishing the 

percentage standards for obligated parties for 2013).

0

5

1 0

1 5

2 0

2 5

3 0

3 5

4 0

4 5

5 0

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Number of biodiesel producers

Fraction of production capacity actually used

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Formatted: Font color: Text 1

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Comment [A78]: The reviewer believes that this 

is an unrealistically high estimate of operable 

capacity. We don’t believe that EMTS data should 

be used in this manner.

Response: Text modified to clarify actual capacity. 

Data on production capacity added to docket.

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*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 62 of 102

against their tax liability.64 This tax credit has enabled biodiesel to be more competitive with 

other advanced biofuels. However, as of this writing it is unclear if this tax credit will apply in 

2014. Since many expect the tax credit to have a direct impact on the economic attractiveness of 

biodiesel, the fact that it does not yet apply in 2014 adds uncertainty to the volume of biodiesel 

above 1.28 bill gal that may be produced and consumed. 

Nevertheless, the volume of biodiesel that already has been produced in 2013 provides 

another benchmark for what could occur in 2014. According to production data available 

through EMTS, the total volume of biomass-based diesel produced through July 2013 was 875 

million gallons. Depending on how monthly production continues through the remainder of 

2013, we would expect total 2013 biodiesel production to be between 1.5 and 1.7 billion gallons. 

A projection of 1.5 billion gallons results from the assumption that the January - July average 

production rate continues through the rest of 2013, while a projection of 1.7 billion gallon results 

from the assumption that the July production rate continues through the rest of 2013. If the trend 

in production follows the downward trend that occurred in 2012 in the August - December 

timeframe, the total 2013 production would be 1.57 gal.billion gallons.

Figure IV.B.2.b-2

Projected Production of Biomass-Based Diesel in 2013

In the past some stakeholders have expressed concern that there may be limitations in 

biodiesel consumption that could be imposed by manufacturer warranties and cold-weather 

operation, and that this could impact use of biodiesel above 1.28 billion gallons. However, we 

do not believe that this is the case for 2014. For instance, most diesel engines are warrantied by 

 

64 See Section 405. 

0

2 0

4 0

6 0

8 0

100

120

140

160

180 Physical gallons (mill gal)

2012

2013

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Comment [A79]: Seems like supply would 

collapse if credit is not extended.

Response: Text was modified.

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Comment [A80]: Is there normally seasonality. 

If so, why different this year.

Response: Text was modified to acknowledge this 

possibility.

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*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 63 of 102

their manufacturer to B5. That is, the use of biodiesel in concentrations above 5vol% will void 

these warranties. While not a legal limitation on the use of biodiesel, it does present a practical 

limitation. Assuming a total diesel consumption volume of about 47.8 bill galbillion gallons for 

2014,

65 B5 for the diesel pool as a whole would correspond to a biodiesel volume of 2.4 bill gal8 

billion gallons. However, some diesel truck engines have been warrantied by their 

manufacturers to consume B20, starting in 2011.66 This could potentially raise the limit on 

biodiesel consumption even higher assuming retailers would dedicate a pump exclusively for 

B20 to this pool of diesel fuel consumers. Since 2.4 bill gal8 billion gallons is significantly 

higher than the range of biodiesel volumes we are considering in this proposal, manufacturer 

warranties may not represent a limitation on biodiesel use in 2014. However, this estimate also 

does consider consumer response to the issue.

At the same time, even biodiesel blends as low as B5 cannot be utilized year-round due to 

cold weather constraints. The cloud point for B5 soy methyl ester (SME) blended with No. 2 

diesel is estimated to be approximately 5 °F. Thus, the use of B5 is highly unlikely in any region 

where temperatures regularly drop below 5 °F. Assuming that biodiesel cannot be blended in 

such regions during any month where the 10% percentile temperature falls below 5 °F would 

result in a reduction of the 2014 biomass-based diesel volume by only about 3%. This would 

still permit more than 2 billion gallons of biodiesel to be consumed in 2014. Thus, it appears that 

for 2014, the ability to consume biodiesel in the vehicle fleet is not constrained by cold weather.

There are a variety of other sources that provide benchmarks for what volumes of 

biodiesel could be reasonably available in 2014 in excess of 1.28 billion gallons. For instance, in 

the March 2010 RFS final rulemaking, we projected that there could be 1.39 billion gallons

biodiesel in 2014 based on an assessment of available feedstocks. This analysis was done in the 

context of our projections out to 2022 demonstrating how the statutory volume requirements 

might be met. 

In the 2013 standards final rule,

67 we assessed potential feedstocks for biodiesel 

production, concluding that excess soy oil and corn oil could be used to produce an additional 

200 million gallons of biodiesel in 2013 above the 1.28 billion gallon requirement. For 2014 the 

additional biodiesel from these sources could be higher. According to USDA, domestic soybean 

production is expected to increase by 13% in the 2013 soybean marketing year which extends 

through September 2014, in comparison to the 2012 marketing year.68 If this occurs, then 

domestic production of soy oil could increase by about 240 million gallons. Regarding corn oil, 

more than one third of the 320 million gallons total production was exported in 2012. These 

exports could be diverted to biodiesel production depending on relative prices and other factors. 

Taken together, the use of both additional soy oil production and the diversion of corn oil 

exported could bring the total biodiesel production volume to about 1.62 billion gallons.

 

65 EIA Annual Energy Outlook 2013, Table 11.

66 Very few automobiles warrantied by manufacturers to consume B20 have been sold in the U.S. As such, this 

volume of biodiesel was assumed to be negligible for purposes of this estimate.

67 78 FR 49794, August 15, 2013.

68 Pete Riley, "Grains and Oilseeds Outlook; 2013 Agricultural Outlook Forum," USDA/Farm Service Agency, 

February 22, 2013. 13% is assumed to apply only during the first 9 months of 2014.

Deleted: 56 

Comment [A81]: 56 billion gallons is EIA’s 

demand for all distillate not on and off road 

distillate. Transportation sector diesel demand is ~ 

47.8 billion gallons (Table 36 EIA AEO 2013).

Response: Table 11 of AEO2013 includes a separate 

line for total diesel consumption. No change made 

to text.

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Page 64 of 102

We continue to receive requests for approval of additional RIN-generating pathways for 

new feedstocks to expand the availability of feedstock types and for new production processes

to produce biodiesel.69 While the degree to which these new processes and feedstocks may be 

viable for the 2014 production year is uncertain, given their directional impacts on lowering cost 

and improving feedstock availability, we would expect that approval of such new pathways 

would add biodiesel production volume in 2014. For example, since the adoption of the final 

rule in March 2010, we have added canola and camelina oil as valid biodiesel feedstocks and 

analyzed the potential to produce up to 600 million gallons of biodiesel from these new 

feedstocks by 2022 through expanded crop production.70 These feedstocks were added in 

response to industry requests based on their intention to expand production of these feedstocks to 

support biodiesel production. Since canola and camelina are established crops that can be grown 

for biodiesel use today, some portion of these maximum volumes could be produced in 2014, 

adding to the volume of feedstock otherwise available for biodiesel production. 

We are aware of three other sources that provide potential benchmarks for biodiesel 

production volume in 2014. In 2011, IHS Global Insight estimated the potential for biodiesel 

production over the following decade.71 Under specified assumptions for crude oil price, crop 

yields, technology, and tax policies, this report concluded that it would be economically feasible 

to produce 1.54 billion gallon biodiesel in the U.S. in calendar year 2014. This estimate assumed 

that the biodiesel tax credit would be extended beyond 2013, and did not examine a case in 

which the tax credit is not extended.

In their comments on the NPRM for the 2013 standards, the University of Illinois 

provided the results of an analysis of both production and consumption limitations for ethanol 

and biodiesel. They concluded that 1.7 billion gallons of biodiesel could be available without 

overwhelming feedstock supplies, but provided little detail on the limits of feedstock supply. 

Darling International, Inc. also evaluated available feedstocks and concluded that 1.9 billion

gallons of biodiesel could be produced without diverting feedstocks from domestic food 

requirements. 

Based on the discussion above, we have good reason to believe that the volume of 

biodiesel that can be produced in 2014 will be higher than the applicable volume requirement of 

1.28 billion gallons. A summary of all of the sources we have considered is provided below.

 

69 For example, as of June 2013, EPA had 5 petitions for new biodiesel pathways under review and had approved 3 

additional petitions for new biodiesel pathways. 

70 See, for example, the final rules adding giant reed and napier grass feedstocks (74 FR 41703) and final rule adding 

camelina and energy cane as feedstocks and renewable gasoline and renewable gasoline pathways (74 FR 14190)

71 John R. Kruse, "Biodiesel Production Prospects for the Next Decade",",",," March 11, 2011.

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Comment [A82]: Neutral?

Response: Comment did not indicate in what 

manner the text is not neutral. No change made to 

text.

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Deleted: ,
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 65 of 102

Table IV.B.2.b-1

Projections of 2014 Biomass-Based Diesel Ordered from Lowest to Highest (million gallons)

Biomass-based diesel volume requirement 1,280 

Projection from RFS2 final rule 1,390 

IHS Global Insight report 1,540 

Extrapolated 2013 production 1,570 

All registered biodiesel facilities that operated at least 20% of 

capacity in 2012 1,600 

Additional soy oil production and diversion of exported corn 

oil to biodiesel production 1,620 

University of Illinois estimate in their comments 1,700 

Darling International, Inc. estimate in their comments 1,900 

Production capacity of all registered biodiesel facilities that 

produced some biodiesel in 2012 2,400 

As with E85, we believe that it would be most appropriate to project a range of possible 

biodiesel production volumes for 2014, using the values in Table IV.B.2.b-1 as a guide. For the 

purposes of this NPRM, we are estimating a range of 1.28 - 1.6 billion gallons of biodiesel 

production for 2014. While it would not be below 1.28 billion gallons, as that is the required 

volume, it could be above the high end of 1.6 billion gallons. However we estimate that it would 

be unlikely to be above this value. For instance, the estimate from Darling international, Inc. 

was based on extrapolating the historically high production rate from December 2011 into the 

future. The circumstances in December 2011 were unique: the tax credit for biodiesel was to 

expire at the end of that month, prompting a jump in production. Thus while it is possible that 

the production rate from December 2011 might be sustained in the future, it may be unlikely, 

especially since monthly production rates have been highly variable over the last several years. 

Likewise the analysis provided by the University of Illinois did not provide sufficient detail to 

permit a reasonable assessment of whether feedstock supplies would indeed be sufficient to 

support 1.7 billion gallons of biodiesel. Finally, while total actual production of biodiesel in 

2013 could potentially be as high as 1.7 billion gallons, one of the contributing factors to this 

high volume is the tax credit which is set to expire at the end of 2013. 

c. Non-Ethanol Advanced Biofuel

Non-ethanol advanced biofuel other than cellulosic biofuel and biomass-based diesel has 

a D code of 5, and could include biodiesel and renewable diesel that is co-processed with 

petroleum,

72 heating oil, biogas, jet fuel, naphtha, and LPG. In 2012, RINs were generated for 

only three of these fuel types, as summarized in the following table.

 

72 Biodiesel and renewable diesel that is co-processed with petroleum does not meet the requirements for biomass 

based diesel (D4 RIN), however it may qualify as an advanced biofuel (D5 RIN)))).

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Comment [A83]: As written, it appears that these 

projections are independent of EPA’s decision with 

respect to the RFS targets for biomass-based diesel 

and advanced biofuels. 

Response: No change made to text here. Text added 

to Section IV.B.1.c to acknowledge impact of 

standards of availaility and consumption.

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Comment [A84]: One consideration for further 

analysis would be to look at the impacts of the 

expiration of the biodiesel tax credit at the end of 

2009.Total production levels dropped by 33.4% from 

2009 to 2010 using data from EIA. 

A paper prepared for the National Biodiesel Board 

looks further at the impact of the expiration of the 

tax credit in 2009:

http://www.biodiesel.org/reports/20110608_gen425.pdf

Response: Text modified to cite NBB report.

Deleted: ,

Deleted: 
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 66 of 102

Table IV.B.2.c-1

Other Non-Ethanol Advanced Biofuel Produced in 2012

(million ethanol-equivalent gallons)

Heating oil 0.2

Biogas 2.9

Renewable diesel 20.5

Total 23.6

These volumes were produced domestically and there were no volumes of non-ethanol advanced 

biofuel imported into the U.S. in 2012. 

In order to estimate a range of possible volumes of other non-ethanol advanced biofuel 

for 2014, we examined the Production Outlook Reports that are required to be submitted by all 

registered renewable fuel producers under §80.1449.

Table IV.B.2.c-2

Projections from Production Outlook Reports for Other Non-Ethanol Advanced Biofuel 

Production in 2014 (million ethanol-equivalent gallons)

Biodiesel 0.2

Biogas 45.8

Naphtha 6.6

Renewable diesel 79.1

Total 131.7

Because biogas cannot be used in conventional gasoline or diesel vehicles, we investigated more 

closely whether the 45.8 million gallons shown in the above table was realistic for 2014. 

According to EPA's Landfill Methane Outreach Program, about 360 million ethanol-equivalent 

gallons of biogas is currently being purified and injected into existing natural gas pipelines.73 

Under §80.1426, this biogas can generate advanced biofuel RINs if it is demonstrated to have 

been used to fuel CNG vehicles and meets all other regulatory requirements. However, this 

amount of biogas is approximately equal to the total volume of CNG used in all CNG vehicles 

each year. While establishing contracts to ensure that all CNG vehicles are fueled with landfill 

biogas rather than fossil-based natural gas is highly unlikely to occur in the short term given the 

rapid expansion underway of CNG vehicles in the marketplace, we believe it is reasonable that 

some smaller portion of all CNG vehicles could be fueled with landfill biogas in 2014. Since the 

45.8 million ethanol-equivalent gallons of biogas from the Production Outlook Reports, shown in 

Table IV.B.2.c-2, represents about 13% of the annual CNG vehicle consumption, it is reasonable 

to expect that this volume could be used in 2014 to fuel CNG vehicles and thus generate 

advanced biofuel RINs. We request comment, however, on whether this level of consumption 

can reasonably be achieved within the relevant time frame.

 

73 Based on list of operational landfill gas (LFG) energy projects provided at http://www.epa.gov/lmop/projectscandidates/operational.html.

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Comment [A85]: AEO 2013 shows 51 TBTU of 

compressed/liquefied natural gas in the 

transportation section (Table 2) which is about 650 

million ethanol equivalent gallons. 

Response: Text modified to clarify source of 

comparison.

Comment [A86]: But it is 10-0 percent of output 

to a specific use. How do you make sure that gas 

was used for vehicles.

Response: Regs contain mechanisms to ensure use 

in vehicles. No change made to text.

Comment [A87]: This raises some issues that 

may not be addressed in this Rule. Drop-in 

replacement fuels can meet the cellulosic mandate 

while not being bound by the blend wall. By adding 

bio-gas with only a contractual requirement that it be 

consumed as a transportation fuel, this could be 

potentially a very inexpensive source of cellulosic 

credits, and adds considerable uncertainty that a 

drop-in replacement fuel will ever be competitive.

At $1 per RIN, this provision is worth about $13 per 

MMBTU for the price of writing a contract. 

From EPA there is approximately 1.3 billion ethanol 

equivalent gallons of landfill gas going to direct use 

applications (102 BCF/year). For $13/MMBTU, one 

could expect more than 5 percent of this gas 

applying for credits.

http://epa.gov/lmop/documents/pdfs/overview.pdf

Response: No changes made to the text. RFS does 

not limit cellulosic biofuel to drop-in or even liquid 

fuels. Allowing bio-gas to generate cellulosic RINs 

has been proposed in a separate rulemaking and is 

outside the scope of this rule.
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 67 of 102

Therefore, based on the actual production in 2012 and the projected production for 2014, 

for this NPRM we have used a range of 24 - 132 million gallons to represent non-ethanol 

advanced biofuel with a D code of 5. While the actual volume could be above 132 million

gallons, we believe this is unlikely as this volume is based on the projections made by the 

producers themselves in light of their assessment of their own capabilities and plans. Likewise, 

while the actual volume could be below 24 million gallons, we believe this is unlikely since the 

industry has demonstrated that it can produce at this level. For the final rule we will update this 

range based on more recent data on actual production in 2013 and more recent versions of the 

Production Outlook Reports.

d. Non-Ethanol Non-Advanced Renewable Fuel

To determine a range for the non-ethanol non-advanced renewable fuel volume, we used 

the same approach as for the non-ethanol advanced biofuel volume. That is, we used actual 2012 

production to represent the low end of the range and 2014 projections from Production Outlook 

Reports to represent the high end of the range. This approach resulted in a range of 1 - 25 

million gallons, mostly representing production of biodiesel at facilities that have been 

grandfathered under §80.1403 and which may use feedstocks for which there is currently no 

valid RIN-generating pathway, such as sunflower or cottonseed oil. For the final rule we will 

update this range based on more recent data on actual production in 2013 and more recent 

versions of the Production Outlook Reports.

3. Treatment of Carryover RINs in 2014

In the final rule establishing the applicable standards for 2013, we estimated the volume 

of ethanol that would need to be consumed to meet the statutory volume requirements prior to 

consideration of RINs carried over from 2012 in 2013.74 The total estimated volume of ethanol 

was 14.5 bill gal. If no ethanol blends higher than E10 were consumed in 2013, the total volume 

of E10 would be 131.1 billion gallons (ignoring small amounts of E0) and the maximum volume 

of ethanol that could be consumed would thus be 13.1 billion gallons. On the basis of these 

estimates, the volume of ethanol that is estimated to exceed the amount that could be consumed 

as E10 in 2013 was 1.4 billion gallons.

In addition to the option of using E85 and/or more non-ethanol renewable fuels, the 2013 

standards final rule also pointed to the substantial number of RINs carried over from 2012 into 

2013 that could be used in lieu of physical volumes. We determined that there would be about 

2.6 billion such carryover RINs available in 2013. If the 1.4 billion gallons of ethanol that is in 

excess of that which can be consumed as E10 in 2013 is covered entirely by carryover RINs, 

then there would still be at least 1.2 billion RINs that could be carried over from 2013 and 

available for use in 2014. 

 

74 78 FR 49794, August 15, 2013.

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As described in the 2007 rulemaking establishing the RFS program,

75 carryover RINs are 

intended to provide flexibility in the face of a variety of circumstances that could limit the 

availability of RINs. More specifically, carryover RINs provide a mechanism for offsetting the 

negative effects of fluctuations in either supply of or demand for renewable fuels. The flexibility 

afforded by these carryover RINs was evidenced in the recent response of the market to the 

drought in 2012. The flexibility of these carryover RINs is also what we highlighted in the 2013 

standards final rulemaking as providing the opportunity for compliance despite potential 

constraints on physical ethanol consumption.

In the context of determining the appropriate volume requirements for 2014, it would be 

appropriate to consider carryover RINs that may be available. However, we believe it is also 

important to the viability of the market that some carryover RINs continue to be available to 

address unforeseen circumstances that could limit the availability of RINs following the 

establishment of the RFS standard. In 2013 this was not a concern, since even if the 1.4 billion

gallons of ethanol that is estimated to be in excess of that which can be consumed as E10 in 2013 

is covered entirely by carryover RINs, there would remain at least 1.2 billion additional, unused 

carryover RINs. For 2014, however, if we accounted for all 1.2 billion carryover RINs in setting 

the applicable standards, obligated parties would be left with no flexibility for addressing other 

unforeseen circumstances. We believe that a standard-setting process that included an 

assumption that the carryover RIN balance would be reduced to zero would be contrary to the 

original intention of the provision for carryover RINs. Were unforeseen circumstances to occur, 

the only flexibility remaining to avoid noncompliance would be a waiver of the RFS standards 

under our general authority (beyond that being proposed today). This process requires notice 

and comment and thus could be delayed beyond the time period during which the unforeseen 

circumstances were occurring. For this reason, we have not accounted for carryover RINs in our 

assessment of the reductions in the statutory volume requirements that would be appropriate in 

setting the RFS standards for 2014. For years after 2014, if circumstances differ substantially 

from those described here for 2013 and 2014, or if further analysis of the RINs market suggests 

additional adjustments, we may again consider the existence of carryover RINs in the standardsetting process depending on the number of carryover RINs expected to be available and 

projections of supply and consumption of renewable fuels.

4. Proposed Range for the Volume Requirement for Total Renewable Fuel

As discussed in the preceding sections, we have estimated volume ranges for five 

different categories of renewable fuel as a step towards estimating the volume requirement for 

total renewable fuel for 2014. These ranges are summarized below.

 

75 72 FR 23900, May 1, 2007.

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Deleted: For years after 2014

Comment [A88]: The purpose of the suggested 

wording is to enhance forward guidance. One could 

read the wording as implying that at some future date 

EPA might tighten up on the stock of RINs. If there 

is some probability of that happening, then RIN 

prices will go up today (option value) and 

compliance cost will increase today (measured in 

terms of price spreads and thus SCC-comparisons). 

So including this optionality is costly. The wording 

here restricts this optionality. The second clause 

leaves open the possibility that if analysis of the 

RINs market suggests that an additional stock of 

RINs are needed to maintain liquidity/avoid 

manipulation, then that could be added in a later rule.

Response: Text was modified.
*** EO12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

Page 69 of 102

Table IV.B.4-1

Volume Ranges for Estimating Total Renewable Fuel Volume for 2014 

(million ethanol-equivalent gallons)

Ethanol that can be consumed 12,914 - 13,152

Available volumes of non-ethanol cellulosic biofuel 4 – 15

Available volumes of biomass-based diesel 1,920 - 2,400a

Available volumes of non-ethanol advanced biofuel 24 – 132

Available volumes of non-ethanol non-advanced renewable fuel 1 – 25

a Represents a physical volume range of 1.28 - 1.6 billion gallons

By aggregating these five categories, we can estimate the total volume of renewable fuel that 

represents both the volume of ethanol that could reasonably be consumed as E10 and higher 

ethanol blends, and the volume of all non-ethanol renewable fuels that could reasonably be 

available to meet the four applicable standards. However, we do not believe that a simple 

summation of the five ranges would be appropriate (i.e. basing the low end of the range of total 

renewable fuel on the sum of the low ends of the ranges for each of the five different categories, 

and likewise for the high end of the range). Doing so would tend to exaggerate the width of the 

range for the required volume of total renewable fuel as it is highly unlikely that 2014 volumes 

for each of these categories will simultaneously be at the extreme low or high end of the 

proposed ranges, and would also mischaracterize biofuel categories wherein one end of the range 

is expected to be more likely than the other. 

In order to aggregate the ranges in Table IV.B.4-1 into a single range for total renewable 

fuel, we used a Monte Carlo analysis to account for the need to aggregate multiple ranges, each 

having different likely distributions of likelihood across their range. As discussed in the 

preceding sections, the high and the low end of each range represents values such that it is 

possible but unlikely that volumes would be outside of those ranges. We have therefore treated 

these individual ranges as representing the 90% confidence interval of a distribution of possible 

volumes. In other words, the low end of the range would represent the 5th percentile and the 

high end of the range would represent the 95th percentile. This approach is consistent with our 

judgment that, while the ranges shown in Table IV.B.4-1 are intended to encompass the vast 

majority of possible volumes, there remains a small possibility that volumes outside of those 

ranges are possible. We believe it is reasonable to treat these ranges as representing 90% 

confidence intervals for purposes of the Monte Carlo analysis, though we request comment on 

treating them as a different confidence interval such as 80% or 95%.

For the purposes of the Monte Carlo analysis, we are also proposing an appropriate shape 

to represent the applicable distribution of volumes within each range. The shape of the 

distribution of volumes is based on factors unique to each source of renewable fuel. We 

identified three standardized distributions that we can use to reasonably represent uncertainty in 

the distribution of volumes for each of the sources of renewable fuel under consideration.

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Figure IV.B.4-1

Standardized Distributions Used to Aggregate Rangesa

a The skewed distribution is based on a Weibull distribution with a shape 

parameter of 0.5.

In the case of biomass-based diesel, we are proposing that the applicable volume requirement for 

2014 would be 1.28 billion gallons. Since this volume would be required, there is no realistic 

likelihood that the actual volume will be below 1.28 billion gallons. While production volumes 

of biomass-based diesel in 2013 are expected to substantially exceed the required volume of 1.28 

billion gallons, this is likely driven in large part by the tax credit, currently scheduled to expire at 

the end of the year, and on RIN prices which have been high in 2013. Without this tax credit in 

place demand for biomass-based diesel beyond the required volume is uncertain. For 2014 we 

believe any additional incremental volumes would be progressively less likely than the required 

volume. This suggests that a half-normal distribution would be the most appropriate way to 

represent volumes of biomass-based diesel. With regard to non-ethanol cellulosic biofuel, we 

developed a distribution that was based on an aggregation of projected volume ranges for each 

cellulosic biofuel facility.76 For the total volume of ethanol that could reasonably be consumed, 

we chose a half-normal distribution representing ethanol in E10 and E85 because there is little 

historical information on how market prices for E85 might respond to higher RIN prices, nor on 

how FFV owners might respond to changes in the relative price of E85 and E10. In the future it 

may be more appropriate to use a skewed or normal distribution for the total volume of ethanol 

to reflect a growing understanding of the impact that RIN prices have on the retail price of E85 

and the impact that E85 prices have on consumer choice. For volumes of non-ethanol advanced 

biofuel and non-ethanol non-advanced renewable fuel, we chose normal distributions because we 

believe there is an equal likelihood that the volumes that could be made available would be on 

either the low end of the respective ranges or the high end of the respective ranges. We do not 

believe that actual historical volumes, which form the basis for the low end of the range in both 

 

76 See infra Section II.C for more discussion.

Likelihood of occurence

Volume of renewable fuel

Skewed

Normal

Half-normal

Comment [A89]: This doesn’t look like a 

Weibull distribution with a shape parameter of 0.5. 

The shape implies that the shape parameter should 

be greater than 1.

Response: Text was changed to clarify.

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Deleted: See Section II.C for more discussion.

Formatted: Font: Italic
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cases, should also be used as justification for using skewed distributions. The distributions that 

we used for each of the five categories of renewable fuel are shown below.

Table IV.B.4-2

Standard Distribution Assumptions Used in Estimating Total Renewable Fuel Volume for 2014

Ethanol that could reasonably be consumed Half-normal

Available volumes of non-ethanol cellulosic biofuel Combineda

Available volumes of biomass-based diesel Half-normal

Available volumes of non-ethanol advanced biofuel Normal

Available volumes of non-ethanol non-advanced renewable fuel Normal

a As described in Section II.C, this distribution is a combination of the distributions for all 

facilities projected to produce non-ethanol cellulosic biofuel.

Based on the estimated ranges and distributions, we used a Monte Carlo process to 

aggregate the five distributions into a single distribution representing total renewable fuel. The 

Monte Carlo process randomly samples each of the five distributions in an iterative fashion. The 

results of all the iterations were then summed to produce a distribution for total renewable fuel. 

The figure below shows the resulting distribution after 3000 iterations.

Comment [A90]: But the normal distribution 

would have some probability of negative volumes. 

So there are not symmetric at the very low and high 

ends.

We need an appendix describing the Monte Carlo. 

How were the draws chosen and what was the 

estimated variance? 

In other words how close are these values to the true 

means of the distributions you created?

Response: Memo with details of analysis will be 

added to the docket. No change made to text.

Comment [A91]: We understand the rationale of 

the half normal distribution but think it is a not the 

best representation of a the probability density of 

any particular fuel. As shown in Figure IV.B.4-1

The mode of the half normal distribution is at 0. 

Even discretizing the function as described, we set 

the .05 percentile as the mode, and have no 

probability below the .05 percentile. 

Response: Text modified to acknowledge concerns 

about the mode.

Comment [A92]: What is combined? Why not 

set the same as KiOR – skewed as in table II.C.1?

Response: Text was modified to clarify.

Deleted: 
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Figure IV.B.4-2

Results of Monte Carlo Simulation for Total Renewable Fuel

Based on this approach to aggregating the five ranges shown in Table IV.B.4-1, the 

volume of total renewable fuel that we are proposing for 2014 would fall within the range of 

14.98 - 15.53 bill galionlons.

77

 Given that the applicable volume in the statute is 18.15 bill 

galionlons, this range represents a reduction of 2.62 - 3.17 bill galionlons. Within the 

uncertainties discussed above for each of the components, a range of 14.98 - 15.53 bill gal 

represents a volume of renewable fuel that reasonably accounts for both limitations in the 

volume of ethanol that can be supplied to and consumed by consumers as well as limitations in 

the availability of non-ethanol renewable fuels. 

The distribution generated by the Monte Carlo process also provides a basis for 

determining a specific value within the range that represents a reasonably achievable volume if 

the actual values for some of the input volumes fall at the high end of their respective ranges 

while the actual value of other input volumes fall at the low end of their ranges. These include 

the mean, the mode (highest frequency value) and the median (50th percentile). It may also be 

reasonable to use a value representing higher or lower values in the distribution, such as the 25th 

or 75th percentile. For example, this analysis represents a reasonable approach to assessing the 

values of renewable fuel that could reasonably be available and consumed in 2014, but there is 

uncertainty in this analysis and thus different approaches could be taken to addressing this 

uncertainty. The table below shows the values for each of these approaches that correspond to 

the distribution in Figure IV.B.4-2.

 

77

 The numbers are expressed as two significant digits to reflect that the applicable volumes in the statute are 

expressed this way. 

5th percentile = 14,976

95th percentile = 15,533

0%

2%

4%

6%

8%

10%

12%

14%

16% 14,874 14,930 14,985 15,040 15,096 15,151 15,207 15,262 15,317 15,373 15,428 15,483 15,539 15,594 15,650 15,705 15,760 15,816 15,871 15,927 Percent of observations

Million gallons

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Comment [A93]: As stated before, this needs a 

reference to a docket document explaining the 

methodology and estimate error (variance) from the 

Monte Carlo simulation

Response: Details of Monte Carlo analysis will be 

added to docket.
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Table IV.B.4-3

Potential Approaches to Determining the 

Final Total Renewable Fuel Volume Requirement

(million ethanol-equivalent gallons)

Mean 15,213

Mode 15,121

25th percentile 15,086

50th percentile 15,186

75th percentile 15,319

In today's NPRM, we are proposing to use the mean value for the final volume requirement for 

total renewable fuel because we believe it best represents a neutral aim at renewable fuel 

volumes that could reasonably be supplied. However, we request comment on whether one of 

the alternative values shown in Table IV.B.4-3 would be more appropriate as the basis for the 

required volume of total renewable fuel in the final rule.

C. Determination of Reductions in Advanced Biofuel

The second step in our proposed framework for setting the applicable volume standards 

would be to determine an appropriate reduction in advanced biofuel that accounts for the 

availability of advanced biofuels in light of the significant shortfall in cellulosic biofuel 

compared to the statutory volume, as well as the contribution of ethanol in this category to the 

supply concerns related to total renewable fuel. The proposed volume of advanced biofuel 

should also support the goals of the RFS program for continued growth in the advanced biofuel 

category as reflected in the increasing gap between the cellulosic biofuel and advanced biofuel 

volumes set by EISA. 

1. Available Volumes of Advanced Biofuel in 2014

Using a process similar to that for total renewable fuel in Section IV.B above, we 

determined the maximum volume of advanced biofuel that can reasonably be available in 2014. 

This volume defines the upper limit for any potential volume requirement we would propose for 

advanced biofuels under the overall approach we are proposing. As described more fully in 

Section IV.A above, availability is one important factor to consider in determining the 

appropriate volume of advanced biofuel to require. However, as discussed in Section IV.C.2 

below, for 2014 additional considerations lead us to propose to set the advanced biofuel volume 

requirement at a level below the total available volume.

In this section we describe the estimation of reasonable ranges for four separate 

categories of advanced biofuel, including:

• Cellulosic biofuel

• Biomass-based diesel

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• Domestic Production of Other Advanced Biofuel

• Imported Sugarcane Ethanol

a. Cellulosic biofuel

As discussed in Section II above, the production of cellulosic biofuel in 2014 is projected 

to be between 13 and 36 million ethanol-equivalent gallons. This range can be separated into 

ethanol and non-ethanol components as shown below.

Table IV.C.1.a-1

Projected Volumes of Cellulosic Biofuel for 2014

(million ethanol-equivalent gallons)

Ethanol 6 – 26

Non-ethanol 4 – 15

Total 13 – 36

The projected volume could be significantly greater if pathways for the generation of cellulosic 

biofuel RINs from landfill biogas and corn kernel fiber are approved and the definition of home 

heating oil is adjusted as proposed in EPA’s RFS Pathways II rulemaking. For more details on 

the potential production of non-ethanol cellulosic biofuels in 2014, and the companies expected 

to produce these fuels, see Section II. 

b. Biomass-Based Diesel

The range of biomass-based diesel that we used in estimating the availability of advanced 

biofuel is the same as the range that we used in determining the proposed volume of total 

renewable fuel. Table IV.B.2.b-1 lists the sources that we used to conclude that there could be

1.28 - 1.6 billion gallons of biodiesel production in 2014. We have used this range as the basis 

for a distribution of biodiesel production volumes based on a standard half-normal distribution.

c. Domestic Production of Other Advanced Biofuel

In Section IV.B.2.c above we used 2012 production data and Production Outlook Reports 

to develop a range of 24 - 132 million gallons representing non-ethanol advanced biofuel with a 

D code of 5. These same sources were used to develop a range of ethanol advanced biofuel with 

a D code of 5.

In 2012, 28 million gallons of ethanol advanced biofuel (other than cellulosic ethanol) 

was produced in the U.S. Based on Production Outlook Reports, we project that domestic 

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production of such biofuel using some combination of sugarcane, grain sorghum, and separated 

food wastes could be as high as 142 million gallons. Based on these sources, for this NPRM we 

have used a range of 28 - 142 million gallons to represent domestic production of ethanol 

advanced biofuel with a D code of 5.

d. Imported Sugarcane Ethanol

Sugarcane ethanol qualifies as advanced biofuel, and historically the U.S. has imported 

substantial volumes of it. Imports from the last ten years are shown below. While ethanol 

imported into the US is not produced exclusively from sugarcane, it has historically been the 

primary feedstock for ethanol imported into the U.S. and is expected to continue to be the 

primary feedstock of ethanol imported into the U.S. in future years. While the generation of 

advanced biofuel RINs from sugarcane ethanol is not limited to ethanol imported from Brazil, 

historically Brazil has been the source of the majority of ethanol imported into the United States. 

As such, this section focuses on the availability of sugarcane ethanol imported from Brazil.

Figure IV.C.1.d-1

Historical Imports of Ethanol into the U.S.

Source: EIA, "U.S. Imports by Country of Origin." 

As some stakeholders have noted before, imported volumes of ethanol have been highly variable. 

As a commodity traded on the world market, the market clearing price and quantity of Brazilian 

ethanol sold into the U.S. market fluctuates over time. Significant factors that can affect the price 

and quantity of ethanol imported into the U.S. include:

• Sugarcane harvest (both acres planted and yield)

• Worldwide market for sugar

• Worldwide demand for sugarcane ethanol

0

100

200

300

400

500

600

700

800

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Imported ethanol (mill gal)

From other countries

From Brazil and CBI

Average imports from 

Brazil is 223 mill gal

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• Brazilian demand for ethanol, including the minimum ethanol content of gasoline as 

specified by the Brazilian government

• Potential for exporting corn-ethanol from the U.S. to Brazil

• Opportunities for sale of sugarcane ethanol in the U.S. which is a function of the RIN 

price for advanced biofuel, legal and practical constraints on the volume of ethanol 

that can be consumed, state Low Carbon Fuel Standards (LCFS) program demand, 

and the availability and price of competing advanced biofuels such as biodiesel

• Import and export tariffs

Production of sugarcane in Brazil in recent years has been lower than normally expected 

due to two factors. First, adverse weather conditions reduced production.78 For example, 

adverse weather conditions are estimated to have reduced cane production by about 4% in the 

2011/2012 marketing year.79 Thus, a return to more typical weather conditions, such as occurred 

in the 2012/2013 agricultural marketing year, in the timeframe that this rulemaking considers 

would by itself restore approximately 4% of production. Second, the general global economic

downturn in recent years made obtaining credit more difficult in the Brazilian sugar cane 

industry, resulting in delayed 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, resulting in older fields losing 

production.80 It appears that credit conditions have eased and that more direct investment in 

sugar cane production and milling in Brazil is occurring. 

Some parties expected a more typical trend in sugarcane ethanol production for the 

2012/2013 through the 2014/2015 harvest years, with replanted fields boosting 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.81 Private investment in Brazil may also be increasing. For 

example, Usina de Acucar Santa Terezinha, a Brazilian ethanol producer, last year announced 

plans to invest almost $300 million in a new mill and sugarcane plantation.82 Such information 

suggests that sugarcane and ethanol production in the 2013/14 and 2014/15 harvest years could 

be higher than production in 2011 and 2012.

 

78 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 

79 The sugar marketing year in Brazil’s center-south sugar-producing region, where the large majority of production 

occurs, runs from May through April.

80 On 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.

81 See http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8987702

82 See http://www.bloomberg.com/news/2012-03-08/santa-terezinha-invests-283-million-in-brazil-ethanolprojects.html.
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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 in part the 

decrease in domestic ethanol production. However, given the more optimistic production 

outlook, Brazil raised the minimum ethanol concentration to 25%, effective May 1, 2013.83 The 

25% concentration rate is the highest allowed by law in Brazil. The ability of the Brazilian 

government to reset the minimum ethanol content introduces some uncertainty in projecting 

future Brazilian demand. However, historically, adjustments have been infrequent, relatively 

small in degree (a few percent), and largely influenced by the price of ethanol (high prices 

leading to a reduction in the minimum). Indeed, as evidenced by the reduction to a 20% 

blending rate in 2011, the Brazilian government considers the likely supply of sugarcane ethanol 

to support its domestic needs in setting the minimum ethanol content of its blended fuel.

The Iowa State/CARD model projects that Brazil will produce roughly 8.7 billion gallons

of ethanol in 2014. Non-fuel use and Brazilian ethanol exports to countries other than the U.S. is 

estimated to be around 500 million gallons, which leaves roughly 8.2 billion gallons for Brazilian 

consumption and for exports to the U.S. If the minimum blending rate for ethanol in motor 

vehicles in Brazil is set at 25% (the current rate), Iowa State estimates that Brazil will consume 

roughly 5.9 billion gallons of ethanol. At a 20% minimum blend rate, ethanol demand in Brazil 

would be roughly 5.2 billion gallons. Therefore, even with the 25% minimum blending 

requirement for ethanol in vehicles, Brazil should have up to 2.8 billion gallons available for a 

wide variety of domestic uses as well as the potential to export ethanol to the U.S.84 Thus, 

assuming that the 25% blending rate remains in effect through 2014 (including both the 2013/14 

sugarcane season which ends in May 2014 and the subsequent 2014/15 sugarcane season), the 

analyses referenced below suggest that more than enough ethanol should be available assuming 

normal weather patterns to support both the Brazilian domestic demand as well as export to the 

U.S. in 2014.

The historical volumes of sugarcane ethanol imports into the U.S. from Brazil are 

indicative of Brazilian production and export capacity, and thus provide several benchmarks for 

the volume that could potentially be imported into the U.S. in 2014. For instance, the average 

import volume over the last ten years is 223 million gallons, while the maximum volume was 

560 million gallons in 2006. In 2010 Brazil had its largest ethanol production volume in recent 

history, and in that same year it exported 490 million gallons to the U.S. Finally, the largest total 

export volume from Brazil to all other countries was 1.35 billion gallons in 2008.

There are several other sources providing estimates of what import volumes of Brazilian 

sugarcane ethanol may be possible in 2014. In an addendum to its Annual Energy Outlook 2013, 

EIA included an estimate of sugarcane ethanol imports of 719 mill gal for 2014. In their 

comments on the 2013 standards NPRM, the Brazilian Ministry of Mines and Energy indicated 

that Brazil could achieve exports of 800 million gallons to the U.S. in 2014. A recent report from 

 

83 Platts, "Brazil to raise ethanol mix in gasoline to 25% from 20% May 1," 

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8194390.

84 Personal Communication with Dr. Bruce Babcock, Iowa State, June 27, 2013.

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Comment [A95]: This information appears to be 

taken from Table 11 of the AEO2013 Reference 

Case. Please cite and include the original number in 

millions of barrels per day.

Response: Source cited.

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Iowa State University indicated that total ethanol imports could be 310 - 820 million gallons in 

2014, depending on whether the biodiesel tax credit remains in effect.85 

The Food and Agricultural Policy Research Institute (FAPRI) publishes several different 

documents that also provide some benchmarks. The 2012 World Agricultural Outlook projected 

that total net exports of ethanol from Brazil could be 1,259 mill gal in 2014,86 while their Biofuel 

Baseline projects that total ethanol imports into the U.S. could reach 496 million gallons in 

2014.87 

Based on the discussion above, we have compiled a list of benchmarks that we believe 

can be used to estimate a range of import volumes for Brazilian sugarcane ethanol.

Table IV.C.1.d-1

Projections of 2014 Imported Sugarcane Ethanol Ordered from Lowest to Highest

(million gallons)

Average import volumes from 2003 - 2012 223 

ISU Staff Report - biodiesel tax credit in place 310 

Ethanol exported from Brazil to the U.S. when ethanol 

production was at its historical maximum (2010) 490 

FAPRI Biofuel Baseline 496 

Production Outlook Reports 510 

Historical maximum ethanol imported into the U.S. from 

Brazil (2006) 560 

AEO2013 719 

Projection from Brazilian Ministry of Mines and Energy 800 

ISU Staff Report - biodiesel tax credit not in place 820 

FAPRI 2012 World Agricultural Outlook - total Brazilian 

exports in 2014 1,259 

Historical maximum ethanol exported from Brazil (2008) 1,350 

For the purposes of this NPRM, we estimate, based on a review of the benchmarks shown 

in the table above, that a range of 300 - 800 million gallons of Brazilian sugarcane ethanol could 

be available for import to the U.S. for 2014. We do not believe that it would be appropriate to 

use either the highest or lowest values in the table since they are unlikely to reasonably represent 

the market circumstances in 2014.

 

85 Bruce A. Babcock et al, "Biofuel Taxes, Subsidies, and Mandates: Impacts on US and Brazilian Markets," Staff 

Report 13-SR 108, May 22, 2013.

86 FAPRI-ISU 2012 World Agricultural Outlook, "Ethanol Trade"""."

87 FAPRI-MU Biofuel Baseline, March 2013. FAPRI-MU Report #02-13. Values for the 2013/2014 agricultural 

year were averaged with those from the 2014/2015 agricultural year assuming that the year begins in September and 

ends in August.

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Comment [A96]: As written, it appears that 

these projections are independent of EPA’s decision 

with respect to the 2014 RFS targets for advanced 

biofuels and implementation of California’s LCFS 

program. This also seems to ignore the past practice 

of two-way trade in ethanol between the United 

States and Brazil, which could support much higher 

volumes of sugarcane ethanol exports to the United 

States. 

Response: No changes made to text here. Section 

IV.B.1.c acknowledges that standards impacts 

potential availability and consumption.
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While the volumes of sugarcane ethanol imported into the U.S. in 2012 were about 500 

million gallons, and in 2013 could reach a similar level, we believe it is reasonable to use 300 

million gallons as the low end of the range for 2014. There has been significant variability in 

sugarcane ethanol imports in the past, so volumes below 500 million gallons are possible

depending on market factors and relevant public policies in both countries. While volumes 

above 800 million gallons are possible, we believe that they are unlikely given that the Brazilian 

agency responsible for projections of exports indicated that 800 million gallons would be 

achievable in 2014, and 800 million gallons would be a substantially higher import volume of 

Brazilian sugarcane ethanol than in any previous year. 

We have used a projected range of 300 - 800 million gallons for imported sugarcane 

ethanol in our estimate of the total volume of advanced biofuel that could be available in 2014. 

However, as described in Section IV.C.2 below, we are not proposing to use only availability in 

the determination of the applicable volume requirement for advanced biofuel. Thus the proposed 

volume requirement for advanced biofuel would not require the use of 300 - 800 million gallons

of sugarcane ethanol, and the actual volume of sugarcane ethanol that is imported will be highly 

dependent upon competition in the U.S. market with other advanced biofuels that could be 

available.

e. Summary

As discussed in the preceding sections, we have estimated volume ranges for six different 

categories of advanced biofuel as a step towards estimating the availability of advanced biofuel 

for 2014. We also identified which of the three standardized curves shown in Figure IV.B.4-1 

would be most appropriate for each category. A discussion of the standardized distributions for 

cellulosic biofuel, biomass-based diesel, and domestic non-ethanol advanced biofuel are 

provided in Section IV.B.4 above. For volumes of ethanol advanced biofuel, we chose a normal 

distribution because we believe there is an equal likelihood that the volumes that could be made 

available would be on either the low end of the range or the high end of the range. A normal 

distribution for ethanol advanced biofuel is also consistent with our approach to non-ethanol 

advanced biofuel, as both ranges were developed from the same sources. For volumes of 

imported sugarcane ethanol, the most recent historical data on actual imports suggests that the 

middle of the range 300 - 800 million gallons is likely, and this suggests that a normal 

distribution is more reasonable than a skewed distribution. The advanced biofuel ranges and the 

assumed standardized distributions are summarized below.

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Table IV.C.1.e-1

Volume Ranges for Estimating Advanced Biofuel Availability for 2014 

(million ethanol-equivalent gallons)

Available volumes of non-ethanol cellulosic 

biofuel 4 – 15 Skewed

Available volumes of ethanol cellulosic 

biofuel 6 – 26 Combinationa

Available volumes of biomass-based diesel 1,920 - 2,400b Half-normal

Available volumes of domestic non-ethanol 

advanced biofuel 24 – 132 Normal

Available volumes of domestic ethanol 

advanced biofuel 28 – 142 Normal

Available volumes of imported sugarcane 

ethanol 300 – 800 Normal

a As described in Section II.C, this distribution is a combination of the distributions for all 

facilities projected to produce non-ethanol cellulosic biofuel.

b Represents a physical volume range of 1.28 - 1.6 billion gallons

As for the total renewable fuel volume, the high and the low end of each range represents 

values such that it is possible but unlikely that volumes would be higher or lower than this range. 

EPA therefore treated each individual range in Table IV.C.1.e-1 as representing the 90% 

confidence interval of the applicable standardized distribution. We then used a Monte Carlo 

process in which each of the six distributions were randomly sampled in an iterative fashion. 

The results of all the iterations were then summed to produce a distribution for advanced. The 

figure below shows the resulting distribution after 3000 iterations.

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Figure IV.C.1.e-1

Results of Monte Carlo Simulation for Advanced Biofuel Availability

Based on this approach to aggregating the six ranges shown in Table IV.C.1.e-1, we 

believe that available volumes of advanced biofuel are likely to fall within the range of 2.50 -

3.21 billion gallons. Given that the volume requirement in the statute is 3.75 billion gallons, this 

range of availability represents a reduction of 0.54 - 1.25 billion gallons. 

2. Availability, Growth, and the E10 Blendwall

While projected availability defines the upper limit of the volume requirement we would 

set for advanced biofuel, we have also considered two other factors: the contribution of ethanol 

in the advanced category to the supply concerns discussed above with respect to total renewable 

fuel, and the RFS program's goal of growth in the advanced biofuel category. 

The RFS volume requirements that Congress established in CAA 211(o)(2)(B) increase 

steadily between 2009 and 2022. Over this period, the amount of total renewable fuel which is 

not advanced biofuel (largely corn starch based ethanol) was intended by Congress to grow 

slowly up to 15.0 billion gallons in 2015, and then stay at that level for subsequent years. 

Cellulosic biofuel was intended to grow very dramatically, from 0.5 billion gallons in 2012 to 

16.0 billion gallons in 2022. Non-cellulosic advanced biofuel was expected to grow steadily 

every year, increasing from 1.5 billion gallons in 2012 to 5.0 billion gallons in 2022. This 

anticipated growth of the advanced biofuel category is also evident from its increasing role as a 

component of the applicable volume of total renewable fuel, growing from 5.4% in 2009, to 

5th percentile = 2,496

95th percentile = 3,212

0%

2%

4%

6%

8%

10%

12%

14%

16% 2,215 2,291 2,367 2,443 2,519 2,594 2,670 2,746 2,822 2,898 2,974 3,050 3,126 3,202 3,278 3,354 3,430 3,506 3,582 3,658 Percent of observations

Million gallons

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Deleted: Options for Determining Appropriate 

Reductions in Advanced Biofuel

Comment [A97]: The first and second 

“approaches” are actually outcomes. In particular, 

what is called the “second approach” might be an 

outcome that results from application of the third 

approach: the only “approach” that is actually an 

approach as opposed to an outcome.

Response: No changes made to text.

Deleted: Below we discuss three approaches that 

could be taken to determine an appropriate volume 

of advanced biofuel for 2014. We believe that 

Option 3 best addresses the dual concerns of 

constraints on ethanol supply to and consumption by 

consumers and limited availability of advanced 

biofuels while also effectuating Congress’s intention 

that the volume requirement for advanced biofuel 

continues to grow.

Deleted: a. Option 1: Advanced Biofuel 

Availability¶

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20.7% in 2014, and 61.1% in 2022. Advanced biofuel must meet a GHG reduction threshold of 

50%, compared to a 20% threshold for non-advanced renewable fuel.88 Thus, increased 

substitution of advanced biofuels for fossil fuels would result in lower lifecycle GHG emissions 

from transportation fuels.

 

In previous rulemakings where we considered reductions in the applicable annual volume 

of advanced biofuel following a reduction in the statutory volume for cellulosic biofuel, we 

focused on the availability of advanced biofuel (and in some cases available carryover RINs) 

when making determinations as to whether a reduction in advanced biofuel volumes was 

warranted. Using availability to set the applicable volume of advanced biofuel for 2014 and 

beyond would be consistent with past practice, and would reflect placing sole emphasis on its 

availability and the growth in advanced biofuels that results. However, the approach we used in 

previous annual rulemakings was based on the circumstances in previous years. In particular, 

supply concerns related to the legal constraints on the amount of ethanol that can be blended into 

gasoline and practical constraints on the volume of ethanol that can be consumed were not a 

limiting factor in previous years and so were not discussed as a potential basis for determining 

volumes. As discussed in Section IV.B.1 above, constraints on ethanol consumption are a 

limiting factor in 2014. 

Moreover, using availability as the sole basis for determining advanced biofuel volumes 

would ignore the impact that ethanol within the advanced biofuel category have on the supply 

concerns related to constraints on ethanol consumption in blends higher than E10. While the 

available volume of advanced biofuel would be predominantly non-ethanol, a substantial volume 

would be ethanol.89 For an advanced biofuel availability of 2.50 - 3.21 billion gallons (see 

Figure IV.C.1.e-1), the fraction that is ethanol ranges from an average of about 18% at the low 

end of the range to an average of about 25% at the high end of the range. Since any advanced 

biofuel that is ethanol contributes to the concerns related to total ethanol consumption, it is 

appropriate to consider reductions in the required volume of advanced biofuel beyond the 0.54 -

1.25 billion gallon reduction needed to ensure that the volume required is available. 

Under the cellulosic waiver authority we have the discretion to reduce advanced biofuel 

by up to the same amount that we reduce cellulosic biofuel. Our proposed cellulosic biofuel 

volume requirement of 13 - 36 million gallons for 2014 corresponds to a reduction of 1,714 -

1,737 million gallons in comparison to the statutory volume of 1,750 million gallons. million

gallons

A reduction of 1,714 - 1,737 million gallon in the advanced biofuel requirement would 

allow for overall growth in non-cellulosic advanced biofuel, consistent with overall levels of 

non-cellulosic advanced biofuels that Congress specified for 2014 in 211(o)(2)(B). The table 

below shows that this approach would ensure that the required volume of non-cellulosic 

advanced biofuel – comprised of biomass-based diesel and other advanced biofuel – that would 

be needed to meet the requirements would remain at 2.0 billion gallons, the volume that would 

 

88 Renewable fuels grandfathered under the provisions of §80.1403 are not required to meet any GHG threshold.

89 While production volumes of ethanol that can qualify as an advanced biofuel, both domestically and 

internationally are significant, consumption of this fuel will be constrained.

Deleted: bill galgalgal

Deleted: 

Deleted: bill galgalgal

Deleted: ¶

For these reasons, we invite comment on the Option 

1 approach but are not proposing it.¶

¶

¶

b. Option 2: Full Reduction in Cellulosic Biofuel¶

Deleted: Thus, a second option would be to reduce 

the advanced biofuel volume by the same amount 

that we reduce the cellulosic biofuel volume. 

Deleted: mill galgalgal

Deleted: mill galgalgal

Deleted: mill galgalgal

Deleted: This is approximately twice the size of 

the reduction in advanced biofuel that would result 

from accounting for availability alone, as in Option 

1, and would result in an advanced biofuel volume 

requirement of 2,013 - 2,036 mill galgalgal

Deleted: . 

Deleted: mill galgalgal

Deleted: bill galgalgal
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have been needed to meet the statutory level of 3.75 billion gallons of advanced biofuel if 1.75 

billion gallons of cellulosic biofuel were available.90

Table IV.C.2.b-1

Impact on Other Advanced Biofuel of Reducing the Advanced Biofuel Requirement by an 

Amount Equal to the Reduction in Cellulosic Biofuel (million ethanol-equivalent gallons)

Required volumes without a 

reduction in cellulosic biofuel 

or advanced biofuel

Required volumes with a 

reduction in advanced biofuel 

equal to reduction in cellulosic

Cellulosic biofuel 1,750 13 – 36

Biomass-based diesela1,920 1,920

Other advanced biofuelb80 80

Total advanced biofuel 3,750 2,013 - 2,036

a

 Represents a physical volume of 1.28 bill gal biodiesel.

b

 Can include biomass-based diesel with a D code of 4 that is in excess of that required to meet the biomass-based 

diesel requirement of 1.28 bill gal, as well as any other forms of advanced biofuel with a D code of 5 such as 

renewable diesel, heating oil, biogas, and imported sugarcane ethanol. 

However, under EPA’s broader waiver authorities, EPA can waive statutory volume 

requirements by accounting for the capability of the relevant industries to make qualifying 

renewable fuels available and also the capability of the relevant industries to ensure that those 

renewable fuels are used as transportation fuel. Heating oil or jet fuel considering the 

infrastructure available for distributing, blending and dispensing renewable fuels as well as 

appropriate vehicles in the fleet that can consumer various renewable fuels, such as FFVs. we 

have therefore summed the applicable volume requirements for cellulosic biofuel and biomassbased diesel, and then adding available volumes of non-ethanol advanced biofuel, including any 

biodiesel in excess of the 1.28 billion gallon requirement as well as other available non-ethanol 

advanced biofuels such as renewable diesel, heating oil, and biogas. We consider only nonethanol sources of advanced biofuel, as these fuels are not limited by their ability to be consumed 

by the E10 blendwall or sale as higher level ethanol blends. This approach would help to ensure 

that the advanced biofuel requirement would include all available volumes of advanced biofuel 

which do not contribute to the supply concerns related to constraints on ethanol consumption. It 

would also provide for additional growth in volumes of advanced biofuel that would otherwise 

be lost due to the shortfall in cellulosic biofuel. Once the advanced biofuel volume requirement 

 

90 The 2.0 bill gal billion gallons is composed of the proposed volume of biomass-based diesel, 1.92 

billbillbillbillion gallons ethanol equivalent, and the remaining volume of non-cellulosic advanced biofuel, 0.08 

billbillbillbillion gallons.

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: -

Deleted: -

Deleted: This approach to setting the advanced 

biofuel volume requirement would minimize the 

impact of the advanced biofuel category on the 

supply problems associated with constraints on 

ethanol consumption. However this approach would 

ignore the availability of non-cellulosic advanced 

biofuel to fill the shortfall in cellulosic biofuel. It 

would reduce the market opportunities for other 

advanced biofuels (as compared to the other 

options), and thereby hinder the development of 

advanced biofuels that might otherwise help to meet 

the broader energy security and GHG reduction 

goals of Congress for the RFS program. Finally, as 

discussed below, this approach would result in 

greater reductions in advanced biofuel than are 

needed to account for the contribution of ethanol 

advanced biofuels to the blendwall. For these 

reasons, we invite comment on this approach but are 

not proposing it.

Deleted: c. Option 3: Availability, Growth, and 

the E10 Blendwall

Deleted: Neither Option 1 nor Option 2 address all 

the factors we believe are important in the 

determination of the applicable advanced biofuel 

volume requirement. For instance, under Option 1 

(using just availability to determine the appropriate 

volume of advanced biofuel), the significant impacts 

of constraints on ethanol consumption and the 

factors leading to a reduction in the total volume of 

renewable fuel would not be reflected at all in our 

determination of the advanced biofuel requirement. 

On the other hand, under Option 2 (reducing the 

advanced biofuel requirement by the same amount 

that we reduce cellulosic biofuel), would impose 

unnecessary constraints on non-ethanol advanced 

biofuels even though they do not contribute to the 

constraints on the volume of ethanol that can 

reasonably be consumed. 

Deleted: For these reasons we are proposing a 

third option that would address these issues by first 

summing

Deleted: For these reasons we are proposing a 

third option that 

Deleted: would address these issues by first 

Deleted: ing

Deleted: bill galgalgal

Deleted: Under this approach, wewewe

Deleted: we
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Page 84 of 102

was set, the market would determine which advanced biofuels would be produced and sold to 

meet the advanced biofuel requirement, including whether they would be ethanol or non-ethanol. 

Thus under this approach we would not be mandating or determining what renewable fuels 

would in fact be produced and sold. 

We once again used a Monte Carlo approach to aggregate the ranges for cellulosic 

biofuel, biomass-based diesel, and non-ethanol advanced biofuel. The ranges and standardized 

distributions we used in this process are shown in Table IV.C.2.c-1, and the resulting distribution 

for advanced biofuel is shown in Figure IV.C.2.c-1.

Table IV.C.2.c-1

Proposed Volume Ranges for Estimating Advanced Biofuel Requirement for 2014 

(million ethanol-equivalent gallons)

Proposed requirement for cellulosic biofuel 13 - 36 Combineda

Proposed requirement for biomass-based 

diesel 1,920b

n/a

Available volumes of excess biomass-based 

diesel 0 - 480c Half-normal

Available volumes of domestic non-ethanol 

advanced biofuel 24 - 132 Normal

a As described in Section II.C, this distribution is a combination of the distributions for all facilities 

projected to produce cellulosic biofuel.

b

 Represents a physical volume of 1.28 billion gallons

c

 Represents a physical volume range of 0 - 320 million gallons

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Figure IV.C.2.c-1

Results of Monte Carlo Simulation for Advanced Biofuel Requirement

For the reasons discussed above, we propose that the advanced biofuel volume 

requirement would be set within the range of 2.01 - 2.51 billion gallons. Given that the volume 

requirement in the statute is 3.75 billion gallons, this proposed range of advanced biofuel would 

represent a reduction of 1.24 - 1.74 billion gallons. In comparison, the reduction in cellulosic 

biofuel that we are proposing in today's NPRM is 1.71 - 1.73 billion gallons, and the reduction in 

total renewable fuel that we are proposing is 2.62 - 3.17 billion gallons.

.

The approach we are proposing in today's NPRM is based upon and fully consistent with

the authorities provided in the statute for waiving volumes. The proposed reductions in the 

volumes of advanced biofuel and total renewable fuel are based on our determination that the 

industry and market will be unable to supply sufficient volumes in 2014 to meet the statutory 

mandates, either because of projected limitations in production and importation of qualifying 

renewable fuels, or projected limitations in the available infrastructure to ensure that those fuels 

are supplied to and consumed by end-use consumers. All of these limitations represent forms of 

inadequate supply and are permissible bases for exercising both the general waiver authority and 

the cellulosic waiver authority.

5th percentile = 2,012

95th percentile = 2,508

0%

2%

4%

6%

8%

10%

12%

14%

16% 1,934 1,982 2,030 2,078 2,125 2,173 2,221 2,269 2,317 2,364 2,412 2,460 2,508 2,555 2,603 2,651 2,699 2,747 2,794 2,842 Percent of observations

Million gallons

Deleted: based on the Option 3 approach, 

Deleted: bill gal.

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: bill galgalgal

Deleted: The Option 3 approach to setting the 

advanced biofuel volume requirement would 

generate a volume that falls approximately midway 

between Options 1 and 2 for 2014

Deleted: Figure IV.C.2.c-2¶

Comparison of Three Options to Determination of 

2014 Advanced Biofuel Volume

Comment [A98]: Delete chart.

Response: Chart was deleted.

Deleted: ¶

1.80 2.00 2.20 2.40 2.60 2

Advanced bi

Option 3: 

Option 2: Same reduction as c

Option 1: Availability only

2.01 - 2.51

2.01 - 2.04
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Page 86 of 102

As for the required volume of total renewable fuel, there are a variety of ways in which a 

specific value within the proposed range can be chosen for the volume of advanced biofuel that 

we require in the final rule. The table below shows the values that correspond to the distribution 

in Figure IV.C.2.c-1 using several possible approaches.

Table IV.C.2.c-2

Potential Approaches to Determining the 

Final Advanced Biofuel Volume Requirement

(million ethanol-equivalent gallons)

Mean 2,208

Mode 2,082

25th percentile 2,088

50th percentile 2,177

75th percentile 2,298

In today's NPRM we are proposing to use the mean value of 2,208 million gallons for the final 

volume requirement for advanced biofuel because we believe it best represents a neutral aim at 

advanced biofuel volumes that could reasonably be supplied. However, we request comment on 

whether one of the alternative values shown in Table IV.C.2.c-2, or some other approach, would 

be more appropriate as the basis for the required volume of advanced biofuel in the final rule.

D. Summary of Proposed Volume Requirements for 2014

For the reasons discussed above, we are proposing the volumes of total renewable fuel 

and advanced biofuel as shown below.

Table IV.D-1

Proposed Volumes for 2014 (billion gallons)

Statutory volume

Proposed volume

Range Mean

Advanced biofuel 3.75 2.01 - 2.51 2.21

Total renewable fuel 18.15 14.98 - 15.53 15.21

For the final rule, we may revise these ranges based on additional information that becomes 

available after publication of this NPRM. This information could include more recent 

Production Outlook Report required under §80.1449, production and consumption data for 2013, 

and information from stakeholders. If the ranges are modified, the mean value within those 

ranges may change as well. 

With regard to the mean, we request comment on whether it is the most appropriate way 

to determine the volume within each of the ranges that we would require in the final rule, or 

whether instead one of the alternatives shown in Tables IV.B.4-3 or IV.C.2.c-2, or some other 

approach, would be more appropriate. 

Deleted: mill galgalgal

Comment [A99]: The asymmetric risk of picking 

a volume that is too high instead of one that is too 

low suggests that picking the mean will result in too 

high a volume.

Response: Text was modified in Section IV.B.1 to 

address this comment.

Comment [A100]: See extended supplemental 

comment on Monte Carlo aggregation methodology 

and reporting.

Response: Changes to text made throughout as 

appropriate to clarify.

Comment [A101]: It would be helpful to include 

in this table, or elsewhere, the Total Ethanol value. 

This can be constructed from figures given above but 

given its central importance it is worth summarizing 

here.

Response: Total ethanol volume provided in Table 

IV.B.4-1. No change to text here.

Formatted Table
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Page 87 of 102

We note that the two ranges shown in Table IV.D-1 were not independently derived and 

thus cannot be treated independently from one another in the determination of the appropriate 

volumes to finalize. Many of the same ranges of biofuel availability that were used in estimating 

the range of total renewable fuel were also used in estimating the range of advanced biofuel. 

This fact can be seen in the distribution of results from the Monte Carlo process, which shows a 

distinct correlation between total renewable fuel and advanced biofuel.

Figure IV.D-1

Results of Monte Carlo Process for Both Total Renewable Fuel and Advanced Biofuel

Because of this correlation, decisions for both total renewable fuel and advanced biofuel need to 

take this relationship into account. For example, it would not be appropriate to finalize a volume 

for total renewable fuel that is at the high end of its proposed range, while also finalizing a 

volume for advanced biofuel that is at the low end of its proposed range. Doing so would result 

in a demand for renewable fuels that either could not be filled with available volumes or could 

not reasonably be consumed.

The ranges that we are proposing for advanced biofuel and total renewable fuel determine 

the range of non-advanced renewable fuel that would be needed. The majority of non-advanced 

renewable fuel is ethanol made from corn starch, though as discussed in Section IV.B.2.d we 

would also expect some non-ethanol renewable fuel as well, in the range of 1 - 25 million

gallons. Taking this non-ethanol renewable fuel into account, we used the results of the Monte 

Carlo process that generated the ranges shown in Table IV.D-1 to determine that the volume of 

corn-ethanol that would be needed would be 12.91 - 13.34 billion gallons. This range represents 

a reduction of 1.06 - 1.49 billion gallons in comparison to the 14.4 billion gallons that would 

have been required if the statutory volumes for advanced biofuel and total renewable fuel were 

promulgated, and if all non-advanced renewable fuel used to meet the total renewable fuel 

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

14,800 15,000 15,200 15,400 15,600 15,800 16,000

Advanced biofuel (mill gal)

Total renewable fuel (mill gal)

Proposed range

Proposed range

Boundary encompassing 

90% of observations

Deleted: mill gal.

Deleted: bill gal.

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volume were in fact corn ethanol. However, it represents an increase in comparison to 2012 

corn-ethanol consumption which was about 12.5 billion gallons91 and a projected 2013 cornethanol consumption of about 12.3 billion gallons.

92

 For comparison, this reduction in cornethanol volume for 2014 is about 90% of the size of the proposed reduction in advanced biofuel. 

Thus under our proposed approach, both non-advanced renewable fuels and advanced biofuels 

are contributing to the necessary reductions needed to attain renewable fuel volumes that can 

reasonably be supplied to and consumed by consumers. 

E. Volume Requirements for 2015

The issues concerning availability of qualifying renewable fuels and the ethanol 

blendwall that provided the impetus for the approach described above will continue to be 

relevant in 2015 and beyond. We would intend to propose the same general approach in 

determining appropriate volume requirements for 2015 and beyond as we have in today's 

proposed rule, subject to potential adjustments to that approach based on comments received in 

response to this NPRM. We would also use the most recently available information to update 

the projected range of potential volumes in each of these areas:

• Volume of E15 - E85 that could be consumed

• Available volumes of cellulosic biofuel

• Available volumes of biomass-based diesel

• Available volumes of advanced biofuel

• Available volumes of non-advanced renewable fuel

In 2015 the total renewable fuel volume in the statute increases from 18.15 billion gallons

to 20.5 billion gallons, and the advanced biofuel volume increases from 3.75 billion gallons to 

5.5 billion gallons. If these increases in the statutory volume requirements are larger than 

increases in the availability of qualifying non-ethanol renewable fuels and/or the ability of the 

market to absorb higher level ethanol blends such as E85, the reductions in the volume 

requirements for advanced biofuel and total renewable fuel may be larger in 2015 than we are 

proposing for 2014. We will provide a detailed assessment of these issues when we propose the 

volume requirements for 2015.

 

91 EIA Monthly Energy Review for June 2013, Table 10.3. Corn-ethanol exports were about 740 mill 

galgalgalmillion gallons in 2012 based on EIA Exports By Destination.

92 EIA AEO2013, Table17. Assumes corn-ethanol exports of 885 mill galgalgalmillion gallons per EIA.

Deleted: bill galgalgal

Deleted: bill galgalgal

Comment [A102]: Align with forward guidance 

wording elsewhere

Response: Text modified.

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V. Proposed Percentage Standards for 2014

A. Background 

The renewable fuel standards are expressed as volume percentages and are used by each 

refiner or importer to determine their 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.C, we are proposing a required volume of cellulosic biofuel for 

2014 of 23 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 2014. We are also 

proposing to reduce the advanced biofuel and total renewable fuel volumes. The biomass-based 

diesel volume for 2014 has been proposed to be maintained at 1.28 billion gallons. The volumes 

to be used to determine the four proposed percentage standards are shown in Table V.A-1. 

Table V.A-1

Proposed Volumes for Use in Setting the Applicable Percentage Standards for 2014a

Cellulosic biofuel 23 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.21 bill gal

Renewable fuel 15.21 bill gal

a Due to the manner in which the percentage standards are 

calculated, all volumes are given in terms of ethanolequivalent 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 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): 

Deleted: renewable volume obligations (

Deleted: )

Formatted Table
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(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%CB,i

CB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV 1.5

Std 100%

BBD,i 

BBD,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%AB,i

AB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%RF,i

RF,i

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. This value excludes diesel used in ocean-going vessels.

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.

Deleted: 

(Gi RGi) (GSi R

Std 100%CB,i

¶

¶

(Gi RGi) (GSi RGSi) 

R

Std 100%BBD,i

¶

¶

(Gi RGi) (GSi RGSi) G

Std 100%AB,i

¶

¶

(Gi RGi) (GSi RGSi) G

R

Std 100%RF,i

¶

Field Code Changed

Field Code Changed

Field Code Changed

Field Code Changed
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Page 91 of 102

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 2014, this value is zero. See further discussion in 

Section V.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 2014, this value is zero. See further discussion in 

Section V.B.2 below.

The four separate renewable fuel standards for 2014 are based on the 49-state gasoline 

and diesel consumption volumes projected by EIA. 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 projected volumes of gasoline and diesel that will be used to 

calculate the final 2014 percentage standards will be provided to EPA by EIA by October 31, 

2013. To estimate the gasoline and diesel projected volumes for the purposes of this proposal, 

we have used EIA's Short-Term Energy Outlook (STEO)93 for the gasoline projection and EIA's 

Annual Energy Outlook 2013 Early Release94 for the diesel projection. Gasoline and diesel 

volumes are adjusted to account for renewable fuel contained in the EIA projections. The 

projected volumes of ethanol and biodiesel used to calculate the final percentage standards will 

be provided to EPA by EIA by October 31, 2013. To estimate the ethanol and biodiesel 

projected volumes for the purposes of this proposal, we have used the February 2013 values95 for 

ethanol and biodiesel provided in the STEO. Using the most recent available EIA data for 

purposes of this proposal allows us to provide the affected industries with a reasonable estimate 

of the standards for planning purposes.

 

93 Energy Information Administration/Short-Term Energy Outlook – June 2013, Table 4a, “U.S. Crude Oil and 

Liquid Fuels Supply, Consumption, and Inventories.”

94 Energy Information Administration/Annual Energy Outlook 2013, April 2013, “Energy Consumption by Sector 

and Source, United States, Reference case.” 

95 Energy Information Administration/Short-Term Energy Outlook – June 2013, Table 8, “U.S. Renewable Energy 

Consumption (Quadrillion Btu).”

Comment [A103]: EIA projections are for 50 

states and territories. The reviewer disagrees with 

this characterization.

Response: Deleted “49-state”.
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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,

96 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 noted above.97 

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).98 

Congress provided two ways that small refineries could receive a temporary extension of 

the exemption beyond 2010. One was 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. In March of 2011, DOE evaluated 

the impacts of the RFS program on small entities and concluded that some small refineries would 

suffer a disproportionate hardship.99 The other way that small refineries could receive a 

temporary extension is based on EPA determination of disproportionate economic hardship on a 

case-by-case basis in response to refiner petitions.100 EPA has granted some exemptions 

pursuant to this process, as recently as 2013. However, at this time, no exemptions have been 

approved for 2014. Therefore, for this proposal we have calculated the 2014 standards without a 

small refinery/small refiner adjustment.

However, if an individual small refinery or small refiner requests an exemption and is 

approved prior to issuance of the final rule, the final standards will be adjusted to account for the 

exempted volumes of gasoline and diesel. Any requests for exemptions that are approved after 

the release of the final 2014 RFS standards will not affect the 2014 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 2014 standards are 

finalized, any additional exemptions for small refineries or small refiners that are issued will not 

affect those 2014 standards.

 

96 72 FR 23900, May 1, 2007.

97 40 CFR §§ 80.1141, 80.1142. 

98 See 40 CFR §§ 80.1441, 80.1442.

99 "Small Refinery Exemption Study: An Investigation into Disproportionate Economic Hardship," U.S. Department 

of Energy, March 2011.

100 40 CFR §§ 80.1441(e)(2), 80.1442(h). 

Deleted: ,

Deleted: 40 CFR §§ 80.1141, 80.1142. 

Deleted: See 40 CFR §§ 80.1441, 80.1442.

Deleted: 40 CFR §§ 80.1441(e)(2), 80.1442(h). 

Moved (insertion) [0]

Moved (insertion) [0]

Moved (insertion) [0]
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3. Proposed Standards

As specified in the March 26, 2010 RFS2 final rule,

101 the percentage standards are based 

on energy-equivalent 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 ethanolequivalence. For example, 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 2014, 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 non-renewable gasoline and diesel volumes. The values of the variables 

described above are shown in Table V.B.3-1.102 Terms not included in this table have a value of 

zero.

Table V.B.3-1

Values for Terms in Calculation of the Standards (bill gal)

(billion gallons)

Term Value

RFVCB,2014 0.023

RFVBBD,2014 1.28

RFVAB,2014 2.21

RFVRF,2014 15.21

G2014 132.79

D2014 47.45

RG2014 13.84

RD2014 1.32

 

101 75 FR 14716, March 26, 2010.

102 To 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 (2011) 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 7.8% of its 

gasoline consumption (based on the same State data), and biodiesel use is assumed to be zero.

Deleted: ,

Comment [A104]: No exempt refineries 

assumed this time. So all calculations should be 

transparent. Please show conversions used and 

original EIA data as a footnote. Diesel forecast 

should be available from STEO.

Response: Our diesel estimate comes from 

AEO2013. Footnote added with details.

Comment [A105]: This appears to be the 2013 

value. June 2013 STEO projected gasoline 

consumption for 2014 is 8.68 million barrels per day 

= 133.06 billion gallons per year

Response: Will update to Sept 2013 STEO per 

comment calcs.

Comment [A106]: Not clear how this was 

calculated. See attached Excel file.

Response: Our diesel estimate for the proposed rule 

comes from AEO Transportation Distillate estimate.
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Using the volumes shown in Table V.B.3-1, we have calculated the proposed percentage 

standards for 2014 as shown in Table V.B.3-2.

Table V.B.3-2

Proposed Percentage Standards for 2014

Cellulosic biofuel 0.017%

Biomass-based diesel 1.16%

Advanced biofuel 1.36%

Renewable fuel 9.33%

Comment [A107]: Need to recalculate based on 

different G and D values

Response: Values recalculated.
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VI. 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 e-mail. 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-2013-0479. 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 
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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.
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VII. 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 volumes of renewable fuel specified in the statute, were already addressed in the RFS2 

final rule promulgated on March 26, 2010 (75 FR 14670). With the exception of biomass-based 

diesel, this action proposes standards applicable in 2013 that would be reduced from those 

analyzed in the RFS2 final rule. The impacts of the proposed 2014 and 2015 volumes of 

biomass-based diesel were addressed in the final rule establishing the 2013 volume requirement 

of 1.28 bill gal (77 FR 59458).

B. Paperwork Reduction Act

There are no new information collection requirements associated with the standards in 

this notice of proposed rulemaking. The standards being proposed today would not impose new 

or different reporting requirements on regulated parties. The existing information collection 

requests (ICR) that apply to the RFS program are sufficient to address the reporting requirements 

in the regulations.

An agency may not conduct or sponsor, and a person is not required to respond to, a 

collection of information unless it displays a currently valid OMB control number. The OMB 

control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. 

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 Procedures 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 proposed rule on small entities, small 

entity is defined as: (1) a small business as defined by the Small Business Administration’s 
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(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 that the annual volume requirement for cellulosic 

biofuel for 2014 would be reduced from the statutory volume of 1.75 billion gallons. We are 

also proposing to reduce the annual volume requirements for advanced biofuel and total 

renewable fuel. The impacts of the RFS2 program on small entities were already addressed in 

the RFS2 final rule promulgated on March 26, 2010 (75 FR 14670), and this proposed rule will 

not impose any additional requirements on small entities beyond those already analyzed. 

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 2014 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 2014 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.

Deleted: bill gal.
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F. Executive Order 13175: Consultation and Coordination with Indian Tribal 

Governments

This proposed 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 proposed 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 2014.

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.
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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 lowincome 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.
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VIII. 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. sections 

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, Renewable Fuel.

Dated: 

Gina McCarthy,

Administrator.
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For the reasons set forth in the preamble, 40 CFR part 80 is amended 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, 7542, 7545, and 7601(a).

2. Section 80.1405 is amended by adding paragraph (a)(5) to read as follows:

§ 80.1405 What are the Renewable Fuel Standards?

(a) * * *

(5) Renewable Fuel Standards for 2014.

(i) The value of the cellulosic biofuel standard for 2014 shall be 0.017 percent.

(ii) The value of the biomass-based diesel standard for 2014 shall be 1.16 percent.

(iii) The value of the advanced biofuel standard for 2014 shall be 1.36 percent.

(iv) The value of the renewable fuel standard for 2014 shall be 9.33 percent.