EO 12866 Interagency Comments 

DRAFT, DELIBERATIVE, DO NOT CITE OR QUOTE 6/4/20155/28/20155/27/2015

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I. Executive Summary

D. Outlook for 2017 and Beyond

We recognize that a number of challenges must be overcome in order to fully realize the 

potential for greater use of renewable fuels in the United States. We also recognize that the RFS 

program plays a central role in creating the incentives for realizing that potential. The standards 

being proposed would require that significant progress is made in overcoming those challenges. 

We expect future standards to both reflect and anticipate progress of the industry and market in 

providing for continued expansion in the supply of renewable fuels. 

We believe that the supply of renewable fuels can continue to increase in the coming 

years despite the constraints associated with shortfalls in cellulosic biofuel production and other 

advanced biofuels, and constraints associated with supplying renewable fuels to the vehicles and 

engines that can use them. As described in Section II.B, we believe that the market is capable of 

responding to ambitious standards by expanding infrastructure and modifying fuel pricing to 

provide incentives for the production and use of renewable fuels. While we do not believe that 

the statutory volumes can be reached within the next several years, the market is capable of 

attaining volumes significantly higher than in the past. 

In future years, we would expect to use the most up-to-date information available to 

project the growth that can realistically be achieved considering the ability of the RFS program 

to spur growth in the volume of ethanol, biodiesel, and other renewable fuels that can be supplied 

and consumed by vehicles. In particular we will focus on the emergence of advanced biofuels 

including cellulosic biofuel. Many companies are continuing to invest in efforts ranging from 

research and development to the construction of commercial-scale facilities to increase the 

production potential of next generation biofuels. We will continue to evaluate new pathways 

especially for advanced biofuels and respond to petitions, expanding the availability of 

feedstocks, production technologies, and fuel types eligible under the RFS program.

In addition to ongoing efforts to evaluate new pathways for advanced biofuel production, 

we are aware that other actions can also play a role in improving incentives provided by the RFS 

program to helping overcome challenges that limit the potential for increased volumes of 

renewable fuels. Such actions could potentially include amendments to program regulations that 

would help enable and potentially accelerate growth in renewable fuel volumes over time. We 

are currently considering ideas and various options for such actions. The details of such actions 

are beyond the scope of this current rulemaking, but we will continue to engage interested 

stakeholders as we move forward.

There are also other approaches to determining volume requirements for future years that 

could potentially help to ensure growth in supply of renewable fuel. For instance, our proposed 

approach to determining the volume requirements for advanced biofuel and total renewable fuel 

in 2015 and 2016 is one of determining the maximum achievable supply by acknowledging 

constraints on supply to consumers resulting from the E10 blendwall, limitations in production 

Commented [OMB1]: The forward guidance is an important 

part of the proposed rule because capital investments that increase 

the consumption of renewable fuels depend on expectations of future 

profitability, and therefore partly on expectations of future standards. 

Several statements in the draft text in this section indicate EPA’s 

intention to increase the volume of renewable fuels over time. The 

proposed edits instead indicate an intention to increase the share of 

renewable fuels over time. The distinction between volumes and 

share is not as important in the year of the proposed standards (e.g., 

2015 or 2016) because the volumes are converted to shares. 

However, this is an important distinction for 2017 and beyond. The 

reason is that future gasoline consumption depends on many factors 

and is highly uncertain; there may be future surprises to fuel 

consumption compared to current EIA projections, as there have 

been in the past. Given the blendwall considerations that are 

discussed at length in the proposed standards, if there are 

consumption surprises—either upward or downward—the EPA may 

want to change the growth rates of the volumes. For example, if 

gasoline consumption is unexpectedly low, maintaining the growth 

rates of volumes could become extremely costly, in which case it 

may be desirable to slow the growth rate of the volumes. The 

process of doing so would create uncertainty in the market as to 

what the new path would look like, thereby delaying capital 

investments and slowing the overall progress of the program. On the 

other hand, if the stated intention is to increase the share of 

renewable fuels, the same growth rate in the share of renewable fuels 

could be maintained even in the event of a surprising consumption 

drop. Therefore, using shares rather than growth rates would prevent 

uncertainty about future gasoline consumption from generating 

additional uncertainty about the standards. Suggest including 

discussion of percentage methodology in here or some other 

appropriate place in the document.

Response: A percentage or share-based approach to setting 

standards would represent a fundamental change to the program. 

We do not believe that an annual rulemaking is the appropriate 

venue to propose such a change.
EO 12866 Interagency Comments 

DRAFT, DELIBERATIVE, DO NOT CITE OR QUOTE 6/4/20155/28/20155/27/2015

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and import capabilities, and the ability of the market to respond to the standards we set. As 

described in Section II.D.2, there are a variety of ways that the market could respond to our 

proposed standards with widely varying levels of E85.

However, we recognize that since the majority of renewable fuel today is currently 

consumed as 10 percent ethanol blends, changes in demand for gasoline can have a significant 

impact on the ability of the marketplace to blend fixed volumes of renewable fuels. As such, an 

alternative approach to characterizing expected growth in renewable fuels would be to project 

the share of the fuel pool that can reasonably be expected to be comprised of renewable fuel over 

time. In this way, increases or decreasesreductions in gasoline demand would be reflected in 

corresponding increases or decreases in mandated renewable fuel volumes and vice versa. The 

distinction between volumes and renewable share (share of the market, expressed as a 

percentage) is not important once the annual standards are established because the volumes are 

converted to shares (percentage standards) and changes in gasoline and diesel fuel volume then 

automatically lead to corresponding changes in renewable fuel volumes. However, this could be 

explicitly considered in the context of evaluating potential future renewable fuel volume 

requirements. fFuture gasoline consumption depends on many factors and is highly uncertain; 

there may be unanticipated changes in fuel consumption compared to current EIA projections, as 

there have been in the past. For example, if EPA were to adopt an outlook for future years based 

on a growth rate for the renewable share of the fuel pool, it would be easier to maintain such a 

growth rate - rather than maintaining an outlook for specific volumes - if gasoline consumption 

becomes unexpectedly low. We recognize that projections of expected future growth in 

renewable fuels can be expressed in terms of either absolute volumes or as a share of the 

transportation fuel pool, and stakeholders may see advantages in the latter. EPA is interested in 

stakeholder views on this approach.we expect there may be additional conversation on this issue 

in the future.