### Summary of Interagency Working Comments on Draft Language under

EO12866 Interagency Review. Subject to Further Policy Review.

Interagency Comments on U.S. Environmental Protection Agency’s Draft Final Rulemaking

,

“ Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards ,” RIN 2060

- AR43.

Cellulosic mandate comment 1

Background

Cellulosic mandate

— 6 million gallons (page 5 of draft Final Rule , “ we are projecting that
6 million ethanol

- equivalent gallons of cellulosic biofuel will be available in 2013” and page 11, table I.B.3

- 1 ). Cellulosic biofuel credit price

— $0.42 per credit (page 12 of draft Final Rule , “ For the

201 3 compliance period, we have determined that cellulosic biofuel waiver credits can be

made available to obligated parties for end

- of

- year compliance should they need them at a price of $ 0. 42 per credit. ”) 2013 Cellulosic Biofuel (D3), Available RINs to Date

— 0 (Source: EPA’s “ 2013 RFS2

Data ” web site http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm , accessed July 11, 2013) . Plus t

here are some 8332 D7 Cellulosic biodiesel RINs. Those are more flexible

than a D3.

I m plication Implied effective tax on obligated parties

— $2.52 million (6 million cellulosic biofuel
waiver credits times $0.42 per credit) + D5 RIN

Cellulosic mandate comment 2

Background The EPA appears to be relying, once again, on what cellulosic companies are saying may be produced (page 8 of draft Final Rule , “Of the domestic sources, we estimated that up to four facilities may produce commercial scale volumes of cellulosic biofuel ava ilable
for use as renewable fuel in the U.S. in 2013.” Table I.B.1

- 1 in the draft Final Rule lists projected 2013 cellulosic available volumes for KiOR at 5

- 6 million gallons of ethanol equivalent and INEOS Bio at 0

- 1 million gallons.)

Im plication

There may be criticism about Federal mandates to use something that does not exist.

### Summary of Interagency Working Comments on Draft Language under

EO12866 Interagency Review. Subject to Further Policy Review.

Other Specific comments

Comment (discrepancy between p.7 and pp. 17

- 18) : There appears to be a typo on page 7, which refers to investments in cellulosic biofuel production. Page 7 cites $3.4 billion in

investments from 2007

- second quarter 2011

.

p.17

- 18 presents the same $3.4 billion figure as invested through second quarter 2012 . I believe the figu re cited in an earlier EPA document for 2007

- 2011 investments was on the order of $2.3 billion. Presumably, the dates listed on page 7 should be through second quarter 2012.

p.7 (EPA text)

“ Companies are continuing to invest significant sums of money to further refine cellulosic biofuel production technology and to construct the first commercial scale

facilities. From 2007 through the second quarter of 2011 over $3.4 billion was invested in advanced biofuel production companies by venture capitalists alo ne. 1 “ Solecki M, Dougherty A, Epstein B. Advanced Biofuel Market Report 2012: Meeting

U.S. Fuel Standards. Environmental Entrepreneurs. September 6 , 201 2 . Available

Online < http://www.e2.org/ext/doc/E2AdvancedBiofuelMarketReport2012.pdf >.

p.17

- 18 (EPA text)

“ From 2007 through the second quarter of 2012 venture capitalists invested over $3.4

billion in advanced biofuel companies in North America 2 . “

Comment (pp. 46

- 47) : note that the increased production of soyoil in 2013 referred to on pp. 46

- 47 (see EPA text below) is projected on a crop year (the 2013/14 marketing year is October 2013

- September 30, 2014) basis. Consequently, the 13% increase in production would only begin to be available to the market beginning in October 2013. This should b e taken in to account when considering the actual availability of soybean oil for biodiesel production in calendar year 2013. Soybeans are crushed for soybean oil and meal throughout the marketing year, and not immediately upon harvest.

p.46

- 47 (EPA t ext) “According to USDA, domestic soybean production is expected to increase by 13% in 2013 compared to 2012. If this occurs, then domestic production of soy oil would increase by about 320 mill gal. This is more than enough to increase 2013 biodiesel production to the required volume of 1.28 bill gal compared to 2012 production while having essentially no impact on the volume of soy oil used for non

- biodiesel purposes. Moreover, there would still be excess soy oil on the order of 250 mill gal that cou ld be exported or, alternatively, used to produce biodiesel in excess of 1.28 bill gal”

1 Solecki M, Dougherty A, Epstein B. Advanced Biofuel Market Report 2012: Meeting U.S. Fuel Standards. Environmental Entrepreneurs. September 6 , 201 2 . Availabl e Online

< http://www.e2.org/ext/doc/E2AdvancedBiofuelMarketReport2012.pdf >.

2 Solecki M, Dougherty A, Epstein B. Advanced Biofuel Market Report 2012: Meeting U.S. Fuel Standards. Environmental Entrepreneurs. September 6 , 201 2 . Available Online

< http:// www.e2.org/ext/doc/E2AdvancedBiofuelMarketReport2012.pdf >.

### Summary of Interagency Working Comments on Draft Language under

EO12866 Interagency Review. Subject to Further Policy Review.

ERS comment (p. 47) : the use of alternative feedstocks would not be by fiat, as suggested on p.47, but would be determined by relative prices and other factors.

p. 47 (EPA text) “In addition to soy oil, it is also possible that other qualifying feedstocks could be available to produce biodiesel in excess of 1.28 bill gal in 2013. For instance, while production of non

- food grade corn oil has been relatively constant over the last several years, exports have risen over this same time period. In 2012, more than one third of the 320 mill gal of corn oil produced was exported instead of being used domestically. These
exports could be diverted to biodiesel production wit hout any impact on other domestic markets for corn oil. Taken together, the use of both soy oil and corn oil could provide

more than 500 mill ethanol

- equivalent gal of biodiesel in excess of the 1.28 bill gal requirement.”