Regulatory Announcement
 

EPA Proposes New Regulations for 

the National Renewable Fuel Standard 

Program for 2010 and Beyond 

Introduction 

The U.S. Environmental Protection Agency is proposing revisions to the National 

Renewable Fuel Standard program (commonly known as the RFS program). Today’s 

proposed rule intends to address changes to the Renewable Fuel Standard program as 

required by the Energy Independence and Security Act of 2007 (EISA). The revised 

statutory requirements establish new specific volume standards for cellulosic biofuel, 

biomass-based diesel, advanced biofuel, and total renewable fuel that must be used 

in transportation fuel each year. The revised statutory requirements also include new 

definitions and criteria for both renewable fuels and the feedstocks used to produce 

them, including new greenhouse gas emission (GHG) thresholds for renewable fuels. 

The regulatory requirements for RFS will apply to domestic and foreign producers 

and importers of renewable fuel. 

General Background 

The U.S. Environmental Protection Agency (EPA) is proposing to modify the 

national RFS program. The current Renewable Fuel Standard program (RFS1) was 

established under the Energy Policy Act of 2005 (EPAct) which amended the Clean 

Air Act by establishing the first national renewable fuel standard. The U.S. Congress 

gave EPA the responsibility to coordinate with the U.S. Department of Energy, the 

U.S. Department of Agriculture, and stakeholders to design and implement this new 

program. With the passage of EISA, Congress made several important revisions to 

these renewable fuel standards that require EPA to promulgate new regulations to 

implement these changes. 

New Renewable Volume Standards 

This rule proposes to establish the revised annual renewable fuel standard (RFS2) 

and to make the necessary program modifications as set forth in EISA. Of these 

modifications, several are significantly notable. First, the volume standard under 

Office of Transportation and Air Quality 

EPA-420-F-09-023 

May 2009 
Regulatory Announcement
 

RFS2 was increased beginning in 2008 from 5.4 billion gallons (Bgal) to 9.0 Bgal. Thereafter, 

the required volume continues to increase under RFS2, eventually reaching 36 Bgal by 2022. 

The following chart shows all the volume requirements from EISA. 

Renewable Fuel Volume Requirements for RFS2 (billion gallons) 

Year 

Cellulosic 

biofuel 

requirement 

Biomassbased diesel 

requirement 

Advanced biofuel 

requirement 

Total renewable fuel 

requirement 

2008 n/a n/a n/a 9.0 

2009 n/a 0.5 0.6 11.1 

2010 0.1 0.65 0.95 12.95 

2011 0.25 0.80 1.35 13.95 

2012 0.5 1.0 2.0 15.2 

2013 1.0 a 2.75 16.55 

2014 1.75 a 3.75 18.15 

2015 3.0 a 5.5 20.5 

2016 4.25 a 7.25 22.25 

2017 5.5 a 9.0 24.0 

2018 7.0 a 11.0 26.0 

2019 8.5 a 13.0 28.0 

2020 10.5 a 15.0 30.0 

2021 13.5 a 18.0 33.0 

2022 16.0 a 21.0 36.0 

2023+ b b b b 

a To be determined by EPA through a future rulemaking, but no less than 1.0 billion gallons. 

b

 To be determined by EPA through a future rulemaking. 

EISA Expands Coverage to Include Diesel and Nonroad Fuels 

EISA expanded the program application beyond gasoline to generally cover all transportation 

fuel. This now includes gasoline and diesel fuel intended for use in highway vehicles and engines, and nonroad, locomotive and marine engines. As in RFS1, EPA is proposing that these 

provisions apply to refiners, blenders, and importers of transportation fuel (with limited flexibilities for small refiners), and that their percentage standards apply to the total amount of gasoline 

and diesel they produce for such use. We also propose to use the current definition of motor 

vehicle, nonroad, locomotive, and marine diesel fuel (MVNRLM) to determine the obligated 

volumes of non-gasoline transportation fuel for this rule. 

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Greenhouse Gas Reduction Thresholds 

EISA established new renewable fuel categories and eligibility requirements, including setting 

the first ever mandatory GHG reduction thresholds for the various categories of fuels. For each 

renewable fuel pathway, GHG emissions are evaluated over the full lifecycle, including production and transport of the feedstock; land use change; production, distribution, and blending of 

the renewable fuel; and end use of the renewable fuel. The GHG emissions are then compared 

to the lifecycle emissions of 2005 petroleum baseline fuels (base year established as 2005 by 

EISA) displaced by the renewable fuel, such as gasoline or diesel. The lifecycle GHG emissions 

performance reduction thresholds as established by EISA range from 20 to 60 percent reduction 

depending on the renewable fuel category. 

Lifecycle GHG Thresholds Specified in EISA 

(percent reduction from 2005 baseline) 

Regulatory Announcement
 Renewable fuela 20% 

Advanced biofuel *50%

Biomass-based diesel 50%

Cellulosic biofuel 60% 

a

 The 20% criterion generally applies to renewable fuel from new facilities that commenced construction after December 19, 2007. 

*EPA is proposing to exercise the 10% adjustment allowance provided for 

in EISA for the advanced biofuels threshold to as low as 40% 

In order for renewable fuels to qualify, they must meet or exceed these minimum GHG reduction thresholds. For general information on lifecycle GHG emissions methodology and results 

for renewable fuel pathways, please see the Lifecycle GHG Analysis Fact Sheet. 

Feedstock Production Limitations 

The revised statutory requirements also include new definitions and criteria for both renewable 

fuels and the feedstocks used to produce them. These definitions affect feedstock use for production of compliant renewable fuels and certain restrictions on the type of land that can be used to 

grow those feedstocks. 

Treatment of Required Volumes in 2009 

Under the RFS1 regulations the annual percentage standards that are applicable to obligated 

parties are determined by a formula set forth in the regulations. The formula uses gasoline volume projections from the Energy Information Administration (EIA) and the required volume 

of renewable fuel provided in Clean Air Act section 211(o)(2)(B). Since EISA modified the 

required volumes in this section of the Clean Air Act, it is the new statutory volumes that 

must be used under the RFS1 regulations in generating the standards for 2009. Therefore, in 

a November 21, 2008 Federal Register notice1

, we used the new total renewable fuel volume of 



73 FR 70643 

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Regulatory Announcement
 

11.1 billion gallons as the basis for the 2009 standard, and not the 6.1 billion gallons that was 

required by the Energy Policy Act of 2005. The RFS standard in 2009 will continue to be applicable to producers or importers of gasoline and only for the volume of gasoline that they produce 

or import. 

While this approach applies the total renewable fuel volume standard of 11.1 billion gallons 

required by EISA for 2009, the RFS1 regulatory structure does not provide a mechanism for 

implementing the 0.5 billion gallon requirement for biomass-based diesel. Therefore, we are 

proposing to address this issue by increasing the 2010 biomass-based diesel requirement by 0.5 

billion gallons and allowing 2009 biodiesel and renewable diesel RINs to be used to meet this 

combined 2009/2010 requirement. We believe this would provide similar incentive for biomassbased diesel use in 2009 as would have occurred had we been able to implement this standard 

for 2009. 

Proposed Standards for 2010 

Once the RFS2 program is implemented, we expect to conduct a notice-and-comment rulemaking process each year in order to determine the appropriate standards applicable in the following 

year. We will thus need to issue an NPRM in the spring and a final rule by November 30 of each 

year as required by statute. However, we are proposing the 2010 standards in today’s notice. We 

will consider comments received during the comment period associated with today’s NPRM and 

other information that has become available following the analyses in the NPRM, and we will 

issue a final rule by November 30, 2009 setting the applicable standards for 2010. 

Based on information from the industry, we believe that there are sufficient plans underway to 

build plants capable of producing 0.1 billion gallons of cellulosic biofuel in 2010, the minimum 

volume of cellulosic biofuel required by EISA for 2010. However, we recognize that cellulosic 

biofuel is at the very earliest stages of commercialization and current economic concerns could 

have significant impacts on these near term plans. Therefore, while based on industry plans 

available to EPA, we are not proposing that any portion of the cellulosic biofuel requirement 

for 2010 be waived, we are seeking additional and updated information that would be available 

prior to November 30, 2009 which could result in a change in this conclusion. Similarly, we are 

not aware of the need to waive any other volume mandates for 2010. Therefore, we are proposing that the renewable fuel volume requirements for RFS2 shown in the table above for all renewable fuel categories be used as the basis for the applicable standards for 2010. The proposed 

standards are shown below, each representing the fraction of a refiner’s or importer’s gasoline and 

diesel volume which must be renewable fuel. 

Proposed Standards for 2010 

Cellulosic biofuel 0.06% 

Biomass-based diesel 0.71% 

Advanced biofuel 0.59% 

Renewable fuel 8.01% 

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Regulatory Announcement
 

The proposed 2010 standards shown above were based on currently available projections of 2010 

gasoline and diesel volumes. The final standards would be calculated on the basis of gasoline 

and diesel volume projections from the Energy Information Administration’s (EIA) Short-Term 

Energy Outlook and published by November 30, 2009. 

Program Design and Proposed Implementation Approach 

Today’s notice proposes to revise the RFS program regulations to implement the EISA provisions. In designing this proposed RFS2 program, the Agency is building on the same programmatic structure created to implement the current renewable fuel program. We propose to continue to use the Renewable Identification Number (RIN) system currently in place to track 

renewable fuels and determine compliance with modifications designed to implement the EISA 

provisions. At the same time, we are also proposing and seeking comment on several provisions 

aimed at enhancing the RIN system based on our experience to date implementing RFS1. 

We are proposing that the changes would apply starting January 1, 2010. The current RFS1 

regulations would continue to apply until EPA amends them to implement EISA, and any delay 

in issuance of the RFS2 regulations means that parties would continue to be subject to the RFS1 

regulations until the RFS2 regulations are in effect. Therefore, regulated parties will continue to 

be subject to the existing regulations at least through December 31, 2009, or later if the effective 

date of the RFS2 program were later than January 1, 2010. 

Overview of Impacts of the Rule 

Analyses were conducted to determine the economic impacts of the rule, impacts on energy 

security, fuel costs, petroleum consumption, greenhouse gases, the agricultural sector and emissions affecting air and water quality. 

The revised renewable fuel standards are expected to reduce dependence on foreign sources of 

crude oil, increase domestic sources of energy, and diversify our energy portfolio to help in moving beyond a petroleum-based economy, while at the same time providing important reductions 

in greenhouse gas emissions such as carbon dioxide that affect climate change. The increased 

use of renewable fuels such as ethanol, biodiesel and other renewable fuels is also expected to 

have the added benefit of providing an expanded market for agricultural products such as corn 

and soybeans and open new markets for the development of cellulosic feedstock industries and 

conversion technologies. As we work to implement the requirements of EISA, we will continue 

to assess these impacts. While the volumes of renewable fuel were specified by statute and would 

thus not be based on or revised by these impact assessments, such assessments nevertheless play 

a critical role in the wider public policy considerations of renewable fuels. 

The proposed rule also includes substantial analysis for when we anticipate ethanol production 

to exceed the volume that can practically be blended into gasoline nationwide at 10 volume 

percent level (E10), known as the “blend wall.” The 10% per gallon by volume limit in gasoline is based on a Clean Air Act waiver granted in 1978. The analysis includes a discussion of 


 
Regulatory Announcement
 

distribution issues for E10, E85, and potential mid-level blends such as E15, and how distribution issues may affect when the blend wall is reached. 

In a separate process, the Agency is handling a Clean Air Act waiver request to expand the allowable ethanol content of gasoline up to E15. The Agency is evaluating whether vehicles and 

engines will meet emission and durability standards over their useful lives on E15. 

Greenhouse Gas Emissions 

For the first time in a regulatory program, lifecycle analysis of GHG emissions is being utilized to 

establish those fuels that qualify for the different renewable fuel standards. Based on our lifecycle 

analysis, we believe that the expanded use of renewable fuels would provide significant reductions in GHG emissions over time, such as carbon dioxide. To determine the GHG impacts of 

the RFS2 program, EPA analyses considered the full useful life assessment of the production of 

biofuels compared to the petroleum-based fuels they would replace. Based on a combined use of 

various models, we have analyzed the lifecycle GHG emissions for a number of pathways for producing the increased volumes of renewable fuels that are mandated by EISA. The incremental 

volumes of each biofuel type were then evaluated to determine their average impact on GHG 

emissions compared to the 2005 baseline petroleum fuel they would be displacing. 

We estimate the greater volumes of biofuel mandated by RFS2 will reduce GHG emissions from 

transportation by a total of 6.8 billion tons CO2 equivalent when measured over a 100 year 

timeframe and discounted at 2%. This is equivalent to approximately 160 million tons CO2 

equivalent per year. Determining lifecycle GHG emissions values for renewable fuels using a 0% 

discount rate over 30 years would result in a total of 4.5 billion tons CO2 equivalent, which is 

equivalent to an annual average reduction of 150 million tons of CO2 equivalent. These reductions would be primarily in the form of carbon dioxide, with small contributions from other 

greenhouse gases. The reductions would be equivalent to taking about 24 million vehicles off 

the road. 

Emissions and Air Quality 

The increased use of renewable fuels can also impact criteria air pollutant emissions, with some 

pollutants such as hydrocarbons, nitrogen oxides (NOx), acetaldehyde and ethanol expected to 

increase and other pollutants such as carbon monoxide (CO) and benzene expected to decrease. 

It should be noted that the aggregate nationwide emission inventory impacts presented in 

today’s proposal may not be a good indication of air quality and health impacts, as there can be 

highly localized impacts such as increased emissions from ethanol plants and evaporative emissions from cars, versus decreased emissions from gasoline refineries. 

We project the proposed program will result in significant increases in ethanol and acetaldehyde 

emissions, increasing the total U.S inventories of these pollutants by 30-40% in 2022 relative to 

emissions resulting from the RFS1 mandate. We project more modest increases in NOx, formaldehyde, particulate matter, hydrocarbons, acrolein, and sulfur dioxide We project a decrease 

in ammonia (NH3) emissions (due to reductions in livestock agricultural activity), CO (due to 


 
Regulatory Announcement
 

impacts of ethanol on exhaust emissions from vehicles and nonroad equipment), and benzene 

(due to displacement of gasoline with ethanol in the fuel pool). 

Our estimates of the emissions impacts of the RFS2 program took into account both “downstream” emissions from vehicles and engines and “upstream” emissions from the production and 

distribution of the fuel. Both upstream and downstream emissions are important contributors to 

the overall nationwide effects. 

The atmospheric chemistry related to ambient concentrations of PM2.5, ozone and air toxics is 

very complex, and making predictions based solely on emissions changes is extremely difficult. 

Full-scale photochemical air quality modeling is planned to characterize the air quality and 

health impacts of the program in the final rule. 

Overall Petroleum Consumption 

EPA’s analysis of the petroleum consumption impacts took a similar lifecycle approach to the 

assessment of GHG impacts. For the year 2022, we estimate that the 36 billion gallons of renewable fuel mandated by these rules will increase renewable fuel usage by approximately 22 

billion gallons over the 2022 base volume scenario which will displace about 15 billion gallons 

of petroleum-based gasoline and diesel fuel. This represents about 11% of annual gasoline and 

diesel consumption in 2022, and most of these reductions would result in reduced imports of 

petroleum. 

Fuel Costs 

We cannot predict the selling price of renewable fuels since price fluctuates with demand and 

is driven by many complex market mechanisms. However, we can estimate the costs associated 

with producing, transporting, and blending renewable fuels. 

The RFS2 program is projected to significantly impact the cost of gasoline and diesel, though 

the estimated costs vary based on the price of crude oil that we assumed. In our analysis we used 

both $92 and $53 per barrel crude oil based on price projections made by EIA in 2008. At these 

two crude oil price points, we estimated that gasoline costs would increase by about 2.7 and 10.9 

cents per gallon, respectively, by 2022. Likewise, diesel fuel costs could experience a small cost 

reduction of 0.1 cents per gallon, or increase by about 1.2 cent per gallon, respectively. These 

costs represent the nationwide average impacts including the costs of producing and distributing both renewable fuels and gasoline and diesel, as well as blending costs, but without consideration of the tax subsidies and import tariff for ethanol or the tax subsidies for biodiesel and 

renewable diesel fuel. 

For the nation as a whole, the increases in gasoline and diesel fuel costs are equivalent to $4 billion and $18 billion in 2022 assuming that crude oil is priced at $92 and $53 per barrel, respectively (in 2006 dollars, and amortizing capital costs using a 7% before-tax rate of return). 


 
Regulatory Announcement
 

Economic Impacts and Energy Security 

We estimate that 91% of the petroleum reductions resulting from the use of renewable fuel will 

be met through reductions in net petroleum imports. We estimate the value of the decrease in 

imported petroleum at about $16 billion in 2022 due to increased volumes of renewable fuels 

mandated by RFS2. Net U.S. expenditures on petroleum imports in 2022 are projected to be 

about $208 billion. 

The above estimate of reduced U.S. petroleum import expenditures only partly assesses the 

economic impacts of this proposal. One of the effects of increased use of renewable fuel is that 

it diversifies the energy sources used in making transportation fuel. To the extent that diverse 

sources of fuel energy reduce the U.S. dependence on any one source, the risks, both financial 

as well as strategic, of a potential disruption in supply of a particular energy source are reduced. 

EPA has worked with researchers at Oak Ridge National Laboratory (ORNL) to update a study 

they previously published that has been used or cited in several government actions impacting U.S. oil consumption. Using the updated ORNL estimate, the total energy security benefits 

associated with a reduction of U.S. imported oil is $12.38/barrel. Based upon the $12.38/barrel 

figure, total energy security benefits associated with this proposal were calculated and are shown 

below. 

Total Energy Security Benefits (billions of 2006$) 

Year 2022 

Benefits $3.7 

Agricultural Sector Impacts 

The RFS program is likely to spur the increased use of renewable transportation fuels made at 

least initially, principally from agricultural crops and it is expected that most of these crops will 

be produced in the U.S. As a result, we estimated the change in the price of various agricultural 

products as a result of this rulemaking. The following table includes 2022 estimates for commodity price increases for corn, soybeans, sugarcane and beef: 

Change in U.S. Commodity Prices for 2022 in Comparison to the 


Reference Case (2006$)
 

Corn $0.15/bushel 

Soybeans $0.29/bushel 

Sugarcane $13.34/ton 

Beef $0.93/hundred pounds 

Based on these figures, we estimate that U.S. food costs would increase by $10 per person per 

year by 2022 while net U.S. farm income would increase by $7.1 billion dollars (10.6%). 


 
Due to higher commodity prices, we estimate that U.S. corn exports would drop from 2.7 billion 

bushels to 2.4 billion bushels (a 10% decrease) by 2022, while U.S. exports of soybeans would 

decrease from 1.03 billion bushels to 943 million bushels (a 9.3% decrease). 

For More Information 

For more information on this proposal, including Frequently Asked Questions, please visit the 

RFS website at: http://www.epa.gov/otaq/renewablefuels/index.htm 

Or, contact EPA’s Office of Transportation and Air Quality, Assessment and Standards Division 

information line at: asdinfo@epa.gov, or (734) 214-4636 

Regulatory Announcement
 

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