EO12866_RFS standards 2060-AR43 NPRM FRN_20121010.docx

*** E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0546; FRL-9678-8]

RIN 2060-AR43

Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

SUMMARY: Under section 211(o) of the Clean Air Act, the Environmental Protection Agency 

is required to set the renewable fuel standards each November for the following year. In general 

the standards are designed to ensure that the applicable volumes of renewable fuel specified in 

the statute are used. However, the statue specifies that EPA is to project the volume of cellulosic 

biofuel production for the upcoming year and must base the cellulosic biofuel standard on that 

projected volume if it is less than the applicable volume set forth in the Act. EPA is today 

proposing a projected cellulosic biofuel volume for 2013 that is below the applicable volume 

specified in the Act. Today's action also proposes annual percentage standards for cellulosic 

biofuel, biomass-based diesel, advanced biofuel, and renewable fuels that would apply to all 

gasoline and diesel produced or imported in year 2013. 

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

publication in the Federal Register]. A request for a public hearing must be received by

[insert date 15 days after date of publication in the Federal Register].

ADDRESSES: Submit your comments, identified by

Docket ID No. EPA-HQ-OAR-2012-0546, by one of the following methods:

• www.regulations.gov: Follow the on-line instructions for submitting comments.

• Email: a-and-r-docket@epa.gov.

• Mail: Air and Radiation Docket and Information Center, Environmental Protection 

Agency, Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

• Hand Delivery: EPA Docket Center, EPA West Building, Room 3334, 1301 Constitution 

Ave., NW., Washington, DC 20460. Such deliveries are only accepted during the 

Docket’s normal hours of operation, and special arrangements should be made for 

deliveries of boxed information.

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2012-0546. EPA's policy 

is that all comments received will be included in the public docket without change and may be 

made available online at www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential Business Information (CBI) 

or other information whose disclosure is restricted by statute. Do not submit information that 

you consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The 

www.regulations.gov website is an “anonymous access” system, which means EPA will not 

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Hearing: If we receive a request for a public hearing 

on or before 

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Deleted: ], we will hold the hearing on 

XXXdateXXX at XXXlocationXXX, beginning at 

9:00am local time. If we do not receive a request for 

a public hearing by the deadline, the hearing will be 

cancelled through an announcement in the Federal 

Register.

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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. Why is EPA Issuing This Proposed Rule?

This document proposes the applicable standards that would apply in 2013 under the RFS 

program. We have published a direct final rule which sets the applicable standards for 2013 

in the ‘‘Rules and Regulations’’ section of this Federal Register because we view this as a

noncontroversial action and anticipate no adverse comment. We have explained our reasons for 

this action in the preamble to the direct final rule. If we receive no adverse comment or request 

for public hearing, we will not take further action on this proposed rule. If we receive adverse 

comment or a request for public hearing on a distinct provision of this rulemaking, we will

publish a timely withdrawal in the Federal Register indicating which provisions we are 

withdrawing, and those provisions will not take effect. The provisions that are not withdrawn

will become effective on the date set out in the direct final rule, notwithstanding adverse 

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comment or a request for hearing on any other provision. We would address all public comments 

in any subsequent final rule based on this proposed rule. We do not intend to institute a second

comment period on this action. Any parties interested in commenting must do so at this time. For 

further information, please see the information provided in the ADDRESSES section of this 

document.

B. Does this Action Apply to Me?

Entities potentially affected by this proposed rule are those involved with the production, 

distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable 

fuels such as ethanol and biodiesel. Potentially regulated categories include: 

Category NAICS1

Codes

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. 

C. 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.

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2. Tips for Preparing Your Comments

When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject 

heading, Federal Register date and page number).

• Follow directions - The agency may ask you to respond to specific questions or organize 

comments by referencing a Code of Federal Regulations (CFR) part or section number.

• Explain why you agree or disagree, suggest alternatives, and substitute language for your 

requested changes.

• Describe any assumptions and provide any technical information and/or data that you 

used.

• If you estimate potential costs or burdens, explain how you arrived at your estimate in 

sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal 

threats.

• Make sure to submit your comments by the comment period deadline identified.

Outline of this preamble

I. Executive Summary................................................................................................................ 6

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

B. Summary of Major Provisions in This Notice .................................................................... 8

1. Cellulosic Biofuel Volume for 2013............................................................................... 8

2. Advanced Biofuel and Total Renewable Fuel in 2013 ................................................. 10

3. Proposed Standards for 2013 ........................................................................................ 10

4. Biomass-Based Diesel for 2014.................................................................................... 11

C. Impacts of Proposed Actions............................................................................................ 12

II. Projection of Cellulosic Volume for 2013............................................................................ 13

A. Statutory Requirements..................................................................................................... 14

B. Status of the Cellulosic Biofuel Industry.......................................................................... 14

C. Cellulosic Biofuel Volume Assessment for 2013............................................................. 17

1. Cellulosic Biofuel Facilities Considered in the 2012 Projections ................................ 18

2. Facilities not Included in 2012 Projections................................................................... 22

3. Other Potential Sources of Domestic Cellulosic Biofuel.............................................. 24

4. Imports of Cellulosic Biofuel........................................................................................ 24

5. Summary of Volume Projections.................................................................................. 25

D. Proposed Cellulosic Biofuel Volume for 2013................................................................. 27

III. Assessment of Advanced Biofuel and Total Renewable Fuel for 2013 ............................... 28

A. Statutory Requirements..................................................................................................... 28

B. Assessment of Available Volumes of Advanced Biofuel................................................. 29

1. Biodiesel ....................................................................................................................... 30

2. Imported Sugarcane Ethanol......................................................................................... 31

3. Domestic Production of Other Advanced Biofuel........................................................ 32
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C. Proposed Volume Requirements for Advanced Biofuel and Total Renewable Fuel in 

2013........................................................................................................................................... 34

IV. Proposed Percentage Standards for 2013......................................................................... 36

A. Background....................................................................................................................... 36

B. Calculation of Standards................................................................................................... 36

1. How Are the Standards Calculated? ............................................................................. 36

2. Small Refineries and Small Refiners............................................................................ 39

3. Proposed Standards....................................................................................................... 40

V. Public Participation............................................................................................................... 42

A. How Do I Submit Comments?.......................................................................................... 42

B. How Should I Submit CBI to the Agency?....................................................................... 42

VI. Statutory and Executive Order Reviews........................................................................... 44

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

Improving Regulation and Regulatory Review ........................................................................ 44

B. Paperwork Reduction Act................................................................................................. 44

C. Regulatory Flexibility Act ................................................................................................ 44

D. Unfunded Mandates Reform Act...................................................................................... 45

E. Executive Order 13132: Federalism ................................................................................. 45

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

45

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

Safety Risks .............................................................................................................................. 46

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

Energy Supply, Distribution, or Use......................................................................................... 46

I. National Technology Transfer and Advancement Act ..................................................... 46

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

Populations and Low-Income Populations............................................................................... 46

VII. Statutory Authority ........................................................................................................... 48
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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 were added through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for the RFS program were subsequently modified through 

the Energy Independence and Security Act of 2007 (EISA), resulting in the promulgation of 

major revisions to the regulatory requirements on March 26, 20101. 

The volumes of renewable fuel to be used under the RFS program each year (absent an 

adjustment or waiver by EPA) are specified in CAA 211(o)(2). The volumes for 2013 are shown 

in Table I-1.

Table I-1

Required Applicable Volumes in the Clean Air Act for 2013 (bill gal)

Cellulosic biofuel 1.0a

Biomass-based diesel ≥1.0b

Advanced biofuel 2.75a

Renewable fuel 16.55a

a

Ethanol-equivalent volume

b Actual volume

Under the RFS program, EPA is required to determine and publish annual percentage 

standards for each compliance year by November 30 of the previous year. The percentage 

standards are used by obligated parties to calculate their individual compliance obligations. The 

percentage standards are applied to the volume of gasoline and/or diesel fuel that each obligated 

party produces or imports during the specified calendar year to determine the volumes of 

renewable fuel that they must cause to be used as transportation fuel, heating oil, or jet fuel. The 

percentage standards are calculated so as to ensure use in transportation fuel of the “applicable 

volumes” of four types of biofuel (cellulosic biofuel, biomass-based diesel, advanced biofuel, 

and total renewable fuel) that are either set forth in the Clean Air Act or established by EPA in 

accordance with the Act’s requirements.

The cellulosic biofuel industry is transitioning from research and development (R&D) 

and pilot-scale to commercial scale facilities, leading to substantial increases in production 

capacity. Construction has begun on several facilities with multiple facilities having progressed 

to the start-up phase, and there is a high likelihood that cellulosic biofuel will be produced in 

2012. Based on detailed information from production companies and a consideration of various 

potential uncertainties, we are projecting that 14 million ethanol-equivalent gallons of cellulosic 

biofuel will be available in 2013.

We have evaluated the types of advanced biofuels that can be produced or imported in 

2013 and have determined that there will be sufficient volumes to meet the statutory applicable 

volume of 2.75 billion gallons. Combined with the availability of conventional biofuels such as 

corn ethanol, there will also be sufficient total renewable fuels available in 2013 to meet the 

statutory applicable volume of 16.55 billion gallons.

 

1

75 FR 14670

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A. Purpose of This Proposed Action

EPA is today proposing volume requirements for cellulosic biofuel, advanced biofuel, 

and total renewable fuel for 2013. Table I.A-1 lists the statutory provisions and associated 

criteria relevant to determining the applicable volumes in today’s proposal. We are also 

proposing percentage standards for all four categories of renewable fuel for 2013. 

Table I.A-1

Statutory Provisions for Determination of Proposed Applicable Volumes

Applicable volumes Clean Air Act 

reference

Criteria provided in statute for determination 

of applicable volume

Cellulosic biofuel in 

2013

211(o)(7)(D)(i) Mandatory determination. Required volume 

must be lesser of volume specified in CAA 

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

volume.

Advanced biofuel in 

2013

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

reduced to the projected volume, EPA may 

reduce advanced biofuel by the same or 

lesser volume. No other criteria specified.

Total renewable fuel in 

2013

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

reduced to the projected volume, EPA may 

reduce total renewable fuel by the same or 

lesser volume. No other criteria specified.

EPA must annually determine the projected volume of cellulosic biofuel production for 

the following year. If the projected volume of cellulosic biofuel production is less than the 

applicable volume specified in section 211(o)(2)(B)(i)(III) of the statute, EPA must lower the 

applicable volume used to set the annual cellulosic biofuel percentage standard to the projected 

volume of production. In today's proposal, we present our analysis of cellulosic biofuel 

production and proposed projected volume for 2013. The analyses that led to the proposed 2013 

applicable volume requirement were based on our evaluation of individual producers’ production 

plans and progress to date. For the final rule, we will also consider comments received in 

response to this notice of proposed rulemaking, the estimate of projected biofuel volumes that 

the Energy Information Administration (EIA) is required to provide to EPA by October 31, 

information from Production Outlook Reports, and other information that becomes available.

When we lower the applicable volume of cellulosic biofuel below the volume specified in 

CAA 211(o)(2)(B)(i)(III), we also have the authority to reduce the applicable volumes of 

advanced biofuel and/or total renewable fuel by the same or a lesser amount. Today's proposal 

includes our consideration of the 2013 volume requirements for these biofuels.

Based on the applicable volumes for cellulosic biofuel, biomass-based diesel, advanced 

biofuel, and total renewable fuel presented in today's proposal, we have calculated proposed 
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percentage standards that would apply to all producers and importers of gasoline and diesel in 

2013. The proposed percentage standards are based on an early projection of volumes of 

gasoline and diesel consumption in 2013 from the Energy Information Administration (EIA). 

EPA intends to use updated EIA projections of gasoline and diesel consumption in 2013 in 

calculating the final percentage standards.

EPA has received requests for a waiver of RFS volumes under CAA section 211(o)(7)

based on the impact of drought conditions that are occurring in many areas of the country. We 

have invited comment on these requests in a separate Federal Register notice2. Since we have 

not yet made a determination about whether to waive any of the RFS volume requirements based 

on these waiver requests, they have not been reflected in today's NPRM. Depending on whether 

a decision on these waiver requests is made before or after the applicable 2013 standards are 

finalized, we will adjust those standards either as part of the rulemaking setting the final 

standards, or as an adjustment to the final standards subsequent to the final rulemaking.

B. Summary of Major Provisions in This Notice

1. Cellulosic Biofuel Volume for 2013

The cellulosic biofuel industry in the United States continues to make significant 

advances in its progress towards large scale commercial production. Ongoing research and 

development work has resulted in increasing product yields, while at the same time lowering 

enzyme and catalyst costs. New supply chains have been developed, and several companies 

have reached contract agreements to provide the necessary feedstock for large scale cellulosic 

biofuel production facilities. Companies are continuing to invest significant sums of money to 

further refine cellulosic biofuel production technology and to construct the first commercialscale facilities. From 2007 through the second quarter of 2011over $2.4 billion was invested in 

advanced biofuel production companies by venture capitalists alone.3 For more information on 

the current status of the cellulosic biofuel industry in the United States and the advances being 

made, see Section II.B.

2013 is also expected to be a year of transition for the cellulosic biofuel industry, as many 

companies are shifting their focus from technology development to commercialization. This 

transition began in 2012 with the first commercial production facilities from INEOS Bio and 

KiOR scheduled to come online, and will continue throughout 2013. Abengoa, one of the largest 

producers of ethanol in the United States, is planning to begin producing cellulosic ethanol at 

commercial scale in 2013. Several others companies, including BP, DuPont, and Poet, will be 

constructing their first commercial scale facilities in 2013, with the intention of beginning 

production in 2014. If these facilities are able to operate as anticipated, the uncertainty 

associated with commercial-scale cellulosic biofuel production will be significantly decreased, 

and the expansion of the industry could be rapid.

 

2

77 FR 52715, August 30, 2012

3

Solecki M, Rickey D, Epstein B. Advanced Biofuel Market Report 2011: Meeting the California LCFS. 

Environmental Entrepreneurs. August 22, 2011. 

<http://www.e2.org/ext/doc/E2%20Advanced%20Biofuel%20Mkt%20Report%202011.pdf>.

Deleted: Two

Deleted: Abengoa and Poet, are

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To estimate the volume of cellulosic biofuel that can be made available in the U.S. in 

2013, we researched all potential production sources by company and facility. This included 

sources that were still in the planning stages, those that were under construction, and those that 

are already producing some volume of cellulosic ethanol, cellulosic diesel, or some other type of 

cellulosic biofuel. Facilities primarily focused on research and development were not the focus 

of our assessment as production from these facilities represents very small volumes of cellulosic 

biofuel, and the vast majority of these facilities have not generated RINs for the fuel they have 

already produced. From this universe of potential cellulosic biofuel sources we identified the 

subset that had a possibility of producing commercial volumes of qualifying cellulosic biofuel 

for use as transportation fuel in 2013. To arrive at this proposed projected volume, we took into 

consideration factors such as the current and expected state of funding, the status of the 

technology utilized, progress towards construction and production goals, and other significant 

factors that could potentially impact fuel production or the ability of the produced fuel to 

generate cellulosic Renewable Identification Numbers (RINs) in 2013. Further discussion of 

these factors can be found in Section II.B.

In our assessment we focused on domestic sources of cellulosic biofuel. At the time of 

this rulemaking no internationally-based cellulosic biofuel production facilities have registered 

under the RFS program and therefore no volume from international producers has been included

in our projections for 2013. Of the domestic sources, we estimated that up to four facilities may 

produce commercial-scale volumes of cellulosic biofuel available for transportation use in the 

U.S. in 2013. Two of these four facilities have made sufficient progress to lead us to believe that 

commercial scale production from these two facilities will occur, and we have therefore included 

production from them in our projected available volume for 2013. All four facilities are listed in 

Table I.B.1-1 along with our estimate of the projected 2013 volume for each.

Table I.B.1-1

Projected Available Cellulosic Biofuel Plant Volumes for 2013

Company Location Fuel type

Capacity 

(million gallons 

per year)

Projected 

Start-Up 

Date

Projected available 

volumea

Abengoa Hugoton, KS Ethanol 24 4Q 2013 0

Fiberight Blairstown, IA Ethanol 6 4Q 2013 0

INEOS Bio Vero Beach, FL Ethanol 8.0 4Q 2012 6

KiOR Columbus, MS Gasoline and 

Diesel

11 4Q 2012 8

Various Pilot/ 

Demo Plants

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

Total 49 14

a Volumes listed in million ethanol-equivalent gallons

The variation in expected start-up times, along with the facility production capacities, company 

production plans, and a variety of other factors have all been taken into account in projecting the 

available volume of cellulosic biofuel. For more detailed information on our projections of 

available cellulosic biofuel in 2013 and the companies we expect to produce this volume see 

Section II.

Deleted: ; however their production volumes were 

considered in aggregate.

Deleted: We are not aware

Deleted: any

Deleted: with the intention of exporting their fuel 

into

Deleted: U.S.

Deleted: five

Deleted: can make

Deleted: These

Deleted: The table also includes an estimate of 

the total RIN-generating volume of cellulosic biofuel 

that will be produced from the many small research 

and development and demonstration facilities in the 

United States in 2013.

Deleted: 26

Deleted: 3Q

Deleted: 4

Deleted: 3.8

Deleted: 1

st Half

Deleted: 1

Deleted: 2Q

Deleted: 8

Deleted: 2

nd Half

Deleted: 18

Deleted: Poet-DSM ...

Deleted: 1

Deleted: 73.8

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2. Advanced Biofuel and Total Renewable Fuel in 2013

The statute indicates that we may reduce the applicable volume of advanced biofuel and 

total renewable fuel specified in the statute if we determine that the projected volume of 

cellulosic biofuel production for 2013 falls short of the statutory volume of 1.0 billion gallons. 

As shown in Table I.B.1-1, we have proposed a finding that this is the case. Therefore, we have 

also evaluated whether to propose lowering the applicable volumes for advanced biofuel and 

total renewable fuel. Since the statute provides no criteria or direction for making this 

determination, we have focused our evaluation on the availability of renewable fuels that would 

qualify as advanced biofuel.

The CAA specifies an applicable volume of 2.75 billion gallons of advanced biofuel for 

2013. To determine whether to lower this volume, we first considered the contribution that 

biomass-based diesel will make to the advanced biofuel requirement. We have finalized a 

volume of 1.28 bill gal in a separate action. Since biodiesel has an Equivalence Value of 1.5, 

1.28 billion physical gallons of biodiesel would provide 1.92 billion ethanol-equivalent gallons 

that could be counted towards the advanced biofuel standard of 2.75 billion gallons. Of the 

remaining 830 mill gallons, we project that 14 mill gallons would be met with cellulosic biofuel. 

There are three primary sources of other advanced biofuels that, considered together, are 

projected to have the potential to provide significantly more than the approximately 800 mill gal 

needed to meet the statutory 2.75 bill gal advanced biofuel applicable volume, after cellulosic 

biofuel and biomass-based diesel are taken into account. As described in more detail in Section 

III, these sources include domestic advanced biofuels which are expected to grow steadily 

through 2013, imports of sugarcane ethanol, and biodiesel production in excess of 1.28 bill gal. 

In addition, we believe there will be sufficient volumes of conventional renewable fuel to satisfy 

the 16.55 billion gallon applicable volume of total renewable fuel specified in the Act. Since 

there appears to be adequate supply, we are not proposing to reduce either the advanced biofuel 

volume requirement of 2.75 bill gal, nor the total renewable fuel volume requirement of 16.55 

bill gal.

3. Proposed Standards for 2013

The renewable fuel standards are expressed as a volume percentage and are used by each 

refiner, blender or importer to determine their renewable fuel volume obligations. The 

applicable percentages are set so that if each regulated party meets the percentages, and if EIA 

projections of gasoline and diesel use for the coming year are accurate, then the amount of 

renewable fuel, cellulosic biofuel, biomass-based diesel, and advanced biofuel actually used will 

meet the volumes required on a nationwide basis. 

To calculate the percentage standards for 2013, we have used the proposed projected 

volume of 14 million ethanol-equivalent gallons of cellulosic biofuel and the volume of biomassbased diesel of 1.28 bill gal that we have finalized in a separate action. The applicable volumes 

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used in this proposal for advanced biofuel and total renewable fuel for 2013 are those specified 

in the statute. These volumes are shown in Table I.B.3-1. 

Table I.B.3-1

Proposed Volumes Used to Determine the Proposed 2013 Percentage Standardsa

Cellulosic biofuel 14 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.75 bill gal

Renewable fuel 16.55 bill gal

a All volumes are ethanol-equivalent, except for biomass-based diesel which is 

actual.

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

separate volume requirements shown in Table I.B.3-1. The specific formulas we use to calculate 

the renewable fuel percentage standards are contained in the regulations at §80.1405 and 

repeated in Section IV.B.1. The percentage standards represent the ratio of renewable fuel 

volume to projected 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 available EIA projections. We expect to base the final renewable fuel percentage 

standards on updated projections provided by EIA. At this time EPA has not approved any small 

refinery or small refiner exemptions for 2013, and thus no adjustment has been made to the 

proposed standards to account for such exemptions. The proposed standards for 2013 are shown 

in Table I.B.3-2. Detailed calculations can be found in Section IV.

Table I.B.3-2

Proposed Percentage Standards for 2013

Cellulosic biofuel 0.009%

Biomass-based diesel 1.18%

Advanced biofuel 1.69%

Renewable fuel 10.15%

4. Biomass-Based Diesel for 2014

While Clean Air Act section 211(o)(2)(B) specifies the volumes of biomass-based diesel 

through year 2012, it directs the EPA to establish the applicable volume of biomass-based diesel 

for years after 2012 no later than 14 months before the first year for which the applicable volume 

will apply. EPA proposed an applicable volume of biomass-based diesel for 2013 on July 1, 

2011, and issued a final rule establishing that applicable volume on September 27, 20124. 

In order to determine and propose an applicable volume of biomass-based diesel for 

2014, we are required under 211(o)(2)(B)(ii) to analyze a number of factors, including biodiesel 

production capacity, consumption, and infrastructure capabilities, as well as impacts on 

emissions, costs, energy security, and other factors. The statute also indicates that we should 

take into account a review of the implementation of the program for years prior to 2013. While 

 

4

77 FR 59458

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the industry is currently on track to produce a total annual volume of around 1.3 bill gallons in 

2012, we are still evaluating the potential market impacts of this production level. In order to 

provide sufficient time for this evaluation, as well as the other analyses we are required to 

conduct, we are not proposing an applicable volume of biomass-based diesel for 2014 in today's 

NPRM. Instead, we will issue a separate proposal at a later date.

C. Impacts of Proposed Actions

The anticipated increase in cellulosic biofuel in comparison to the 2012 volume 

requirement will have directionally beneficial GHG impacts as cellulosic biofuels in general 

have at least a 60 percent GHG emissions improvement compared to the gasoline and diesel fuel 

they will replace. Analyses for the March 26, 2010 RFS2 final rule indicated the GHG benefits 

from cellulosic biofuels compared to the petroleum-based fuels they displace could likely range 

well above the 60 percent threshold. 

For advanced biofuel and total renewable fuel, we are not proposing to reduce the 

applicable volumes below the volumes required in the statute. All of the impacts of the biofuel 

volumes specified in the statute were addressed in the RFS2 final rule published on March 26, 

2010. Today's rulemaking simply proposes the standards for 2013 advanced biofuel and total 

renewable fuel whose impacts were previously analyzed. 

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II. Projection of Cellulosic Volume for 2013

In order to project the available production volume of cellulosic biofuel in 2013 for use in 

setting the percentage standard, we collected information on individual facilities that have the 

potential to produce qualifying volumes for consumption as transportation fuel, heating oil, or jet 

fuel in the U.S. in 2013. This section describes the volumes that could be produced or imported 

in 2013 as well as some of the uncertainties associated with those volumes. 

In the past several years the cellulosic biofuel industry has made many significant 

advances. The production cost of cellulosic biofuels continues to fall as a result of ongoing 

technology development and operating experience gained from many research and development 

and demonstration-scale facilities across the country. These important advances include higher 

biofuel yields per ton of feedstock as well as lower enzyme and catalyst costs. As a result of 

these yield increases, the projected capital costs and energy costs to produce a gallon of 

cellulosic biofuel have decreased. New feedstock supply chains, which will be necessary to 

provide the raw materials for the first commercial facilities, have been established, and in several 

cases companies have signed contracts to obtain significant quantities of feedstocks for their first 

commercial facilities. These developments, along with the increased availability of project 

financing, have resulted in the construction of the first commercial-scale cellulosic biofuel 

production facilities. Two commercial-scale facilities are on schedule to begin producing fuel in 

2012. Two more have plans to start-up in 2013, with several more planning construction in 2013 

and start-up in 2014. If these first facilities are successful and operate as designed it will 

significantly decrease the perceived risk associated with similar future facilities and could 

potentially lead to the rapid deployment of cellulosic biofuel production facilities around the 

United States.

Despite significant advances in cellulosic biofuel production technology in recent years, 

RIN-generating cellulosic biofuel production in 2010 and 2011 was zero despite our projections 

that the industry was positioned to produce about 6 million gallons in each of those years.5 A 

discussion of the reasons for this disparity is provided in Section II.B below. 

In today's NPRM we are proposing a volume for 2013 cellulosic biofuel that is based on 

discussions with individual producers. By the time we announce the final 2013 volumes and 

percentage standards, we will have additional information. First, in addition to comments in 

response to today's proposal, we will have updated and more detailed information about how the 

industry is progressing in 2012. Second, all registered producers and importers of renewable fuel 

must submit Production Outlook Reports by June 1 describing their expectations for new or 

expanded biofuel supply for the next five years, according to §80.1449. Finally, by October 31, 

2012, the Energy Information Administration (EIA) is required by statute to provide EPA with 

an estimate of the volumes of transportation fuel, biomass-based diesel, and cellulosic biofuel 

that they project will be sold or introduced into commerce in the U.S. in 2013. All of this 

information will be used in setting the final cellulosic biofuel applicable volume and percentage 

standard for 2013.

 

5

 In the first half of 2010 when the RFS1 program was still effective, some cellulosic biomass ethanol was 

produced. However, this biofuel was not made from cellulosic feedstocks, but rather was categorized as cellulosic 

under the limited provisions of §80.1101(a)(2). 

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Deleted: in November 2012
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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 2013, the statute specifies a 

cellulosic biofuel applicable volume requirement of 1.0 bill gal. The statute requires that if EPA 

determines that the projected volume of cellulosic biofuel production for the following year is 

less than the applicable volume shown in Table II.A-1, then EPA is to reduce the applicable 

volume of cellulosic biofuel to the projected volume available during that calendar year. 

In addition, if EPA reduces the required volume of cellulosic biofuel below the level 

specified in the statute, the Act also indicates that we may reduce the applicable volumes of 

advanced biofuels and total renewable fuel by the same or a lesser volume. Our consideration of 

the 2013 volume requirements for advanced biofuels and total renewable fuel is presented in 

Section III.

B. Status of the Cellulosic Biofuel Industry

As in previous years, cellulosic biofuel production in the United States in 2011 was 

limited to small-scale research and development, pilot, and demonstration-scale facilities. 

Companies such as Abengoa, BP, Coskata, DuPont Danisco, KL Energy, KiOR, Poet, and others 

successfully operated small-scale facilities in 2011. Several of these facilities, including all that 

were part of our 2012 volume projections, are discussed in more detail in Section II.C below. 

While there were numerous small-scale facilities producing cellulosic biofuel in 2011, the total 

volume of fuel produced was very small. Because of the R&D nature of these small facilities 

they are neither designed to produce fuel for commercial sale nor required to report the small 

volumes of fuel they produced. No RINs were generated for volumes that were produced in 

2011, despite all of the companies included in the 2011 projections expressing interest and/or 

intent in doing so. Although EPA has not attempted to accurately assess production volumes, 

based on generally available information we believe that total production in the United States in 

2011 was likely less than one million gallons of cellulosic biofuel across the industry.

Each of the companies included in our 2011 projections for cellulosic biofuel production 

had different reasons for not generating cellulosic RINs in 2011. DuPont had concerns about 

their ability to retain the R&D status of their Vonore, TN facility if they generated RINs and sold 

the cellulosic ethanol they produced from this facility. Fiberight was unable to secure the 

funding required to complete the modifications to their facility to allow for cellulosic ethanol 

production. KL Energy finalized an agreement with Petrobras in the second half of 2010 and 

changed the direction of their facility to focus on using bagasse as a primary feedstock. Finally, 

after completing initial production of cellulosic ethanol Range Fuels shut down operations in 

January 2011 and eventually declared bankruptcy. 

While cellulosic biofuel production in the United States remains limited, the industry 

continues to make significant progress towards producing cellulosic biofuel at prices competitive 
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with petroleum fuels. From 2007 through the second quarter of 2011 venture capitalists invested 

over $2.4 billion in advanced biofuel companies in North America6. Recent advancements in 

enzyme and catalyst technologies are allowing cellulosic biofuel producers to achieve greater 

yields of biofuel per ton of feedstock. These advancements have led to lower operational costs 

as they have driven down the cost for feedstock, energy, and other important inputs on a per 

gallon basis. For example, the estimated cost of cellulosic ethanol production using an 

enzymatic hydrolysis process has decreased from $4-$8 per gallon in 2007 to $2-$3.50 per 

gallon by 20127. NREL similarly reports that advancements in cellulosic ethanol technology 

have resulted in a decrease in modeled costs from more than $6.50 per gallon in 2001 to less than 

$2 per gallon in 2010.8 The same technological advances have also lowered the capital costs of 

cellulosic biofuel production facilities per gallon of annual fuel production, as more gallons of 

biofuel can be produced at a facility without additional equipment or increased feedstock 

requirements.

As cellulosic biofuel producers gain experience and continue to progress towards 

commercial-scale biofuel production, it is reasonable to expect that the production costs and 

capital costs will continue to decline. This is a pattern shown by many new technologies, 

including renewable and emerging energy technologies. One example which has several 

similarities to the cellulosic biofuel industry is the experience with the dry mill corn ethanol 

industry. From 1983, the year in which the first commercial volumes of dry mill ethanol were 

produced, to 2005 the processing cost of corn ethanol decreased by 45%, while the capital costs 

of a dry mill ethanol facility decreased by 88%.9 Many of the drivers for this cost reduction, 

such as higher ethanol yields, reduced enzyme costs, and better fermentation technologies10are 

also expected to be factors in the lower cellulosic biofuel costs expected in the future. While the 

cost reduction percentages observed in the dry mill corn ethanol industry are not directly 

applicable to the cellulosic biofuel industry, the trend of decreasing production and capital costs 

over time is expected to hold true.

Another area where significant progress has been made is that of feedstock supply for 

commercial-scale cellulosic biofuel production facilities. This issue has often been raised as a 

factor that could hinder the development of the cellulosic biofuel industry as many of the 

proposed facilities rely on feedstocks, such as agricultural residues or energy crops, for which 

supply chains have not previously existed. BP Biofuels has begun work to establish energy crop 

plantations to provide the necessary feedstock for their first two commercial-scale production 

facilities. Over the past several years both Abengoa and Poet have been reaching out to farmers 

 

6

Solecki M, Rickey D, Epstein B. Advanced Biofuel Market Report 2011: Meeting the California LCFS. 

Environmental Entrepreneurs. August 22, 2011. Available Online 

<http://www.e2.org/ext/doc/E2%20Advanced%20Biofuel%20Mkt%20Report%202011.pdf>.

7 Nielsen, Peder Holk. “The Path to Commercialization of Cellulosic Ethanol – A Brighter Future.” PowerPoint 

Presentation. Conference Call. February 22, 2012. Available Online 

<http://www.novozymes.com/en/investor/events-presentations/Documents/Cellic3_conf_call_220212.pdf>.

8 NREL. Cellulosic Ethanol Technology on Track to being Competitive With Other Transportation Fuels. February 

2011. NREL/FS-2700-50846. Available Online <http://www.nrel.gov/science_technology/pdfs/50846.pdf>.

9 Hettinga WG, Junginger HM, Dekker SC, Hoogwijk M, McAloon AJ, Hicks KB. Understanding the reductions in 

US corn ethanol production costs: An experience curve approach. Energy Policy 37 (2009): 190-203. Available 

Online <http://ddr.nal.usda.gov/bitstream/10113/22550/1/IND44146988.pdf>.

10 IBID
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in the regions surrounding their first commercial-scale facilities to ensure the availability of the 

necessary feedstock. Because corn cobs and stover are only seasonally available, using them as 

a feedstock for a cellulosic biofuel production facility would require significant feedstock storage 

facilities. In the last two years Abengoa and Poet completed construction of large-scale 

feedstock storage facilities to ensure adequate supply to their cellulosic biofuel production 

facilities throughout the year. Both companies successfully completed fall biomass harvests in 

2011 and have contracted with local farmers to provide feedstock for their cellulosic ethanol 

facilities. This supply chain will not only provide feedstock for their first commercial-scale 

facilities, but also a model that can be re-created at future production facilities.

Several cellulosic biofuel producers are planning to use slash, forest thinnings, and forest 

product residue or the cellulosic portions of yard waste as feedstock. This material has many 

qualities that make it desirable as a cellulosic biofuel feedstock. It is generally inexpensive and 

is readily available in some regions of the United States. It is also available year round rather 

than seasonally, significantly reducing the need for large-scale feedstock storage facilities. 

Securing a sufficient quantity of this feedstock for a commercial-scale facility, however, can be 

challenging. In the summer of 2011 KiOR announced it had signed a feedstock agreement with 

Catchlight Energy to provide all the necessary slash, forest thinning, and forest product residue 

for their first commercial-scale facility. While KiOR plans to transition to planted trees for 

future facilities, KiOR now has secured sufficient feedstock such that they can produce cellulosic 

biofuel and cellulosic RINs using an existing pathway at their first commercial-scale facility. 

INEOS Bio also has a long term agreement with Indian River County to provide vegetative 

waste which will serve as the feedstock for their first facility.

Another appealing feedstock for cellulosic biofuel production is separated municipal 

solid waste (MSW). MSW is already being collected and transported to a centralized facility, is 

consistently available throughout the year, and can be obtained for a very low, or even negative 

cost. MSW often contains contaminants, however, that may make it challenging to process for 

some cellulosic biofuel technologies. EPA also requires that waste separation plans be submitted 

and approved prior to any company generating RINs using separated MSW as a feedstock. In 

June 2012 EPA approved the first waste separation plan under the RFS program for Fiberight’s 

facility in Blairstown, Iowa.

Significant progress has also been made by some companies towards funding the 

construction of their first commercial-scale facilities. In the early years of the cellulosic biofuel 

industry several small start-up companies announced plans to build large commercial-scale 

facilities that were scheduled to begin production in the past few years. The construction of 

many of these facilities was dependent on the companies raising additional funding, either from 

venture capitalists, government grants, or loans backed by government guarantees. So far few of 

the companies that made these early announcements have been able to successfully raise the 

necessary funds and begin construction. Securing this funding proved difficult, and when it did 

not materialize the projects were delayed or cancelled.

The funding profiles of the companies included in our proposed volume for 2013, as well 

as for many of the companies targeting production in 2014, are markedly different. Many of 

these projects have already received, and in several cases have closed on loan guarantees offered 

Deleted: Near the end of 2011

Deleted: received

Deleted: . This plan is currently being evaluated, 

and we anticipate that a decision will be made on 

Fiberight’s separation plan by the time of the final 

rule
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by DOE or USDA. Other companies have filed for and successfully executed IPOs. Several 

cellulosic ethanol projects are being self-financed by large companies such as Abengoa, BP, and 

Poet with significant experience in the biofuel, petrochemical, and specialty chemical markets. 

This solid financial backing has allowed these companies to proceed with construction. With the 

exception of Fiberight, which is retrofitting an existing corn ethanol facility, all of the facilities 

included in our proposed volume for 2013 have already begun the construction of their first 

commercial production facilities. The next section provides additional details on the funding and 

construction status of the projects included in our projected cellulosic biofuel production 

volumes for 2013. 

If these first commercial-scale cellulosic biofuel production facilities are successful, the 

potential exists for a rapid expansion of the industry in subsequent years. Having successful 

commercial-scale facilities would not only provide useful information to help maximize the 

efficiency of future facilities, but would also significantly decrease the technology and scale-up 

risks associated with cellulosic biofuel production facilities and could lead to increased access to 

project funding. Fiberight and ZeaChem both plan to build larger-scale facilities (~25 mill gal 

per year) as soon as they are able to raise the necessary funds. INEOS Bio plans to expand 

production by building additional units near sources of inexpensive feedstock ranging in size 

from 8 to 50 million gallons of ethanol per year. They are currently exploring expansion 

possibilities in the United States and internationally. KiOR has plans for a second commercialscale facility to be built in Natchez, MS, that will be approximately three times larger (~30 mill 

gal per year) than their Columbus, MS, plant and plans to break ground at their second facility 

after their first is fully operational. Abengoa currently anticipates construction of additional 

cellulosic ethanol facilities at multiple locations, likely including co-locating with some of their 

existing starch facilities in the US. Poet has a similar expansion strategy to build cellulosic 

ethanol plants at their grain ethanol facilities, license their technology for use at other grain 

ethanol facilities, and build cellulosic ethanol facilities that use feedstocks such as rice straw, rice 

hulls, woody biomass, or energy crops as a feedstock. Poet’s goal is to be involved in the 

production of 3.5 billion gallons of cellulosic ethanol per year by 2022. Several other 

companies, such as BP, DuPont, and Enerkem are also targeting 2014 for the start-up of 

cellulosic biofuel production facilities and would likely look to build additional facilities 

relatively quickly if successful. While many of these expansion plans are still in the early stages 

and are subject to change, they do point to the potential for cellulosic biofuel production to 

increase rapidly in future years.

C. Cellulosic Biofuel Volume Assessment for 2013

In 2011 no cellulosic biofuel RINs were generated, though some small volumes were 

produced. Announcements of new projects and project funding, changes in project plans, project 

delays, and cancellations occurred. Biofuel producers faced not only the challenge of the scaleup of innovative, first-of-a-kind technology, but also the challenge of securing funding in a 

difficult economy. The cellulosic biofuel industry also is influenced by various tax credits and 

subsidies, and uncertainty about these programs may have had an impact on cellulosic biofuel 

production in 2011.

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Despite these challenges, there are several factors indicating that significant volumes of 

cellulosic biofuel can be produced in 2013. Commercial-scale cellulosic biofuel projects from 

INEOS Bio and KiOR are expected to begin fuel production in 2012 and plan to achieve 

production rates at or near their nameplate capacities in 2013. Another commercial-scale facility

backed by Abengoa, a large company with significant experience in biofuel production, is also 

scheduled to begin producing cellulosic biofuel in 2013. These facilities are indicative of a shift 

across the cellulosic biofuel industry from small-scale R&D and demonstration facilities 

operated by small start-up companies to large commercial-scale facilities backed by large 

companies, many of which have substantial experience in related industries. 

In order to project cellulosic biofuel production for 2013, we have tracked the progress of 

more than 100 biofuel production facilities. From this list of facilities we used publically 

available information, as well as information provided by DOE and USDA, to make a 

preliminary determination of which facilities are the most likely candidates to produce cellulosic 

biofuel and generate cellulosic biofuel RINs in 2013. Each of these companies was investigated 

further in order to determine the current status of their facilities and their likely cellulosic biofuel 

production and RIN generation volumes for the coming years. Information such as the funding 

status of these facilities, current status of the production technologies, announced construction 

and production ramp-up periods, and annual fuel production targets were all considered when we 

met with senior level representatives of each company to discuss cellulosic biofuel target 

production levels for 2013. Our projection of the cellulosic biofuel production in 2013 is based 

on the individual production targets that emerged from these discussions. A brief description can 

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

commercially available in 2013. We will continue to gather more information to help inform our 

decision regarding the final cellulosic biofuel volume to be required for 2013.

In the sections that follow, we first discuss the cellulosic production facilities that were 

part of our volume projections for the 2012 compliance year and the progress that they have 

made. Then we present our consideration of additional facilities that we believe will also 

produce cellulosic biofuel in 2013.

1. Cellulosic Biofuel Facilities Considered in the 2012 Projections

In the January 9, 2012, final rule that established the required 2012 cellulosic biofuel 

volume, we identified six production facilities that we projected would produce cellulosic biofuel 

and make that fuel commercially available in 2012. Two of these production facilities are 

currently structurally complete, three are currently under construction, and one is planning to 

retrofit an existing corn ethanol plant with construction beginning in the second half of 2012. 

None of the facilities have completed the registration process for the RFS program, and they will 

be unable to generate cellulosic RINs until this process is completed. The current status of each 

of these facilities, including target production levels for each facility in 2013, is discussed below.

API

Deleted: produce fuel

Deleted: volumes

Deleted: Two more

Deleted: facilities

Deleted: companies

Deleted: Abengoa and Poet, are

Deleted: rampup

Deleted: , and we will specify the final volume in 

the final rule to be released by November 31, 2012
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American Process Inc. (API) is developing a project in Alpena, Michigan capable of 

producing up to 900,000 gallons of cellulosic ethanol per year from woody biomass. This 

facility will use a technology developed by API called GreenPower+TM. This technology 

extracts the hemicellulose portion of woody biomass using hot water and hydrolyzes it into 

sugars. These sugars are then converted to ethanol or other alcohols, while the remaining portion 

of the woody biomass, containing mostly cellulose and lignin, is processed into wood paneling at 

a co-located facility. At future, larger-scale facilities API anticipates burning the residual 

biomass in a boiler to produce renewable steam and electricity as well as cellulosic biofuel. 

In January 2010 API received a grant from DOE for up to $18 million for the 

construction of their demonstration facility. Construction of the Alpena, Michigan facility began 

in March 2011 and API began commissioning their facility in the summer of 2012. 

Commissioning is expected to be completed by the end of 2012 and production start-up is 

expected to begin in 2013.

Fiberight

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

separated MSW and other waste feedstocks into ethanol. They have successfully completed five 

years of development work on their technology at their small pilot plant in Lawrenceville, 

Virginia. This facility is currently in the process of being upgraded to an integrated 

demonstration plant with initial production of cellulosic ethanol expected in October 2012. 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 modifications necessary to allow for the 

production of cellulosic ethanol at their Blairstown facility. Construction is expected to begin in 

early spring 2013 and will take approximately 6 months to complete. While this is a much 

shorter timeline that most cellulosic biofuel production facilities, it is possible as Fiberight is 

retrofitting an existing corn ethanol plant and will be able to use much of the existing equipment. 

Additionally, Fiberight’s waste separation plan for this facility was approved in June 2012 

allowing Fiberight to generate RINs for the production of cellulosic ethanol using MSW as a 

feedstock. Fiberight is also currently developing a second commercial-scale project based on 

their MSW “hub and spoke” concept. They anticipate that this facility will begin fuel production 

in 2014 and will produce approximately 25 million gallons of cellulosic ethanol per year when 

fully built out.

INEOS Bio

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

cellulosic feedstocks into a syngas and then using naturally occurring bacteria to ferment the 

syngas into ethanol. In January 2011 USDA announced a $75 million loan guarantee for the 

construction of INEOS Bio’s first commercial facility to be built in Vero Beach, Florida. This 

Moved down [1]: In January 2010 API received 

a grant from DOE for up to $18 million for the 

construction of their demonstration facility. 

Deleted: Construction of the Alpena, Michigan 

facility began in March 2011 and API anticipates 

beginning the production of cellulosic ethanol at this 

site in the first half of 2012. API plans to switch fuel 

production at their Alpena facility from ethanol to 

butanol in late 2012 or early 2013. API is also 

developing a list of projects and is currently in the 

process of screening for locations for their next 

project, which will likely produce 10 million gallons 

of cellulosic biofuel per year and be co-located with 

a biomass pellet or biomass-to-electricity facility. 

Production from API’s Alpena facility has been 

included in our proposed volume as one contributor 

to the one million gallons from various pilot and 

demonstration plants in 2013.

Moved (insertion) [1]

Deleted: July

Deleted: 3.8

Deleted: will

Deleted: as soon as Fiberight has secured the 

necessary funds

Deleted: reasonable

Deleted: we have received a

Deleted: from Fiberight 

Deleted: that if

Deleted: would allow

Deleted: Fiberight plans to produce 1 million 

gallons of cellulosic ethanol in 2013.
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was in addition to the grant of up to $50 million INEOS Bio received from DOE in December 

2009. When completed, this facility will be capable of producing 8 million gallons of cellulosic 

biofuel as well as 6 megawatts (gross) of renewable electricity from a variety of feedstocks 

including yard, agricultural, and wood waste. The facility is also permitted to use a limited 

quantity of separated MSW as a feedstock and plans to do so by late 2012. Their ability to 

generate RINs for any fuel generated using separated MSW would be dependent on having an 

approved waste separation plan.

On February 9, 2011, INEOS Bio broke ground on this facility. Since then significant 

progress has been made, and INEOS Bio completed construction on this facility in July 2012. 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. Commercial 

production of cellulosic ethanol has not yet begun, but is expected to begin in the 4th quarter of 

2012. INEOS Bio has reported that they plan to be producing cellulosic ethanol at levels near 

the facility’s capacity of 8 million gallons per year by the end of 2012 and throughout 2013. 

This reported schedule represents a very aggressive ramp-up period. Due to the many challenges 

of starting up a first-of-a-kind facility and the history of production delays in the cellulosic 

biofuel industry, EPA believes a more conservative projection is appropriate. For this proposal 

we project 6 million gallons of cellulosic ethanol from INEOS Bio in 2013. This volume is 

consistent with what would be expected from this facility assuming a six month straight-line 

ramp-up period beginning in January 2013. EPA requests comment on the projected available 

volume from INEOS Bio’s facility in 2013, as well as these assumptions for the appropriate 

ramp-up period for cellulosic biofuel facilities and expectations for production during this rampup phase. INEOS Bio is also exploring several opportunities for additional cellulosic biofuel 

production facilities, both in the United States and internationally. INEOS Bio is targeting 

sources of inexpensive feedstock and see a market for plants with production capacities ranging 

from 8 to 50 million gallons per year.

KiOR

KiOR is working to commercialize a technology capable of converting biomass to a 

biocrude using a process they call Biomass Fluid Catalytic Cracking (BFCC). BFCC uses a 

catalyst developed by KiOR in a process similar to Fluid Catalytic Cracking currently used in the 

petroleum industry. The first stage of this process produces a renewable crude oil which is then 

upgraded to produce primarily gasoline, diesel, and jet fuel as well as a small quantity of fuel oil, 

all of which are nearly identical to those produced from petroleum. 

KiOR’s first commercial-scale facility is located in Columbus, Mississippi and is capable 

of producing approximately 11 million gallons of gasoline, diesel, and jet fuel per year. 

Construction on this facility began in May 2011. KiOR expects production of cellulosic biofuel 

from this facility early in the 4

th quarter of 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. KiOR’s current expectations at their Columbus facility are for a start-up11 period lasting 

9-12 months during which they estimate fuel production will be at 30%-50% of the facility 

capacity after which they plan to approach full production rates at the facility. KiOR has 

 

11 In conversations with KiOR they refer to this as a “line-out” period

Deleted: remains on target to complete

Deleted: April

Deleted: soon after construction and 

commissioning

Deleted: the facility

Deleted: . For this proposal we project 8 million 

gallons of cellulosic ethanol from INEOS Bio in 

2013.

Deleted: low-oxygen 

Deleted: with an oxygen content of approximately 

10%. This bio-crude

Deleted: 2

nd half

Deleted: from 

Deleted: They expect to be producing biofuel

Deleted: a rate consistent with the capacity of the 

Deleted: by the end of 2012
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feedstock supply agreements in place to supply all of the required feedstock for their Columbus 

facility with slash and pre-commercial thinning. They also have off-take agreements with 

several companies for all of the fuel that will be produced. KiOR has also announced plans to 

begin work on their second commercial-scale biofuel production facility in Natchez, Mississippi 

upon the successful start-up of their first facility. It is unlikely this second facility will begin 

production of biofuel in 2013. For 2013 our proposed production projection is for 5 million 

gallons (8 million ethanol-equivalent gallons) of cellulosic biofuel from KiOR’s Columbus

facility. This volume is calculated assuming KiOR will produce at 30% of the facility capacity 

for the first nine months of 2013 (consistent with a 12 month line-out period beginning in 

October 2012) followed by three months of production at the nameplate capacity of the facility. 

These numbers are relatively conservative estimates based on the low end of KiOR’s production 

guidance. EPA believes this is an appropriate approach for this proposal, but we request 

comment on alternative projected available volumes approaches for determining the appropriate 

volume from this facility.

Blue Sugars

Blue Sugars, formerly KL Energy, has developed a process to convert cellulose and 

hemicellulose into sugars and ethanol using a combined chemical/thermal-mechanical 

pretreatment process followed by enzymatic hydrolysis, co-fermentation of C5 and C6 sugars, 

and distillation to fuel-grade ethanol. This production process is versatile enough to allow for a 

wide variety of cellulosic feedstocks to be used, including woody biomass and herbaceous 

biomass such as sugarcane bagasse. In August 2010 Blue Sugars announced a joint development 

agreement with Petrobras America Inc. As part of the agreement Petrobras has invested $11 

million to modify Blue Sugars’ 1.5 million gallons per year demonstration facility in Upton, 

Wyoming to allow it to process bagasse and other biomass feedstocks. The modifications to 

Blue Sugars’ facility were completed in the spring of 2011. Blue Sugars is currently producing 

small volumes of cellulosic ethanol from a bagasse feedstock at this facility and plans to 

continue to do so throughout 2012 and into 2013. In April 2012 Blue Sugars generated 

approximately 20,000 cellulosic biofuel RINs, the first such RINs generated under the RFS 

program. The main purpose of the Upton, Wyoming facility, however, is to further refine Blue 

Sugars’ technology in preparation for their first commercial facilities which may be located in 

the Brazil or the United States.

ZeaChem

ZeaChem successfully completed construction of the core components of their 

demonstration-scale facility in Boardman, Oregon, in January 2012, allowing for the production 

of ethyl acetate from sugars derived from cellulose and hemi-cellulose. When fully operational, 

ZeaChem expects this facility will be capable of producing 250,000 gallons of cellulosic ethanol 

per year. ZeaChem’s production process uses a combination of biochemical and thermochemical 

technologies to produce ethanol and other renewable chemicals from cellulosic materials. The 

feedstock is first fractionated into two separate streams, one containing sugars derived from 

cellulose and hemicellulose and the other containing lignin. The sugars are fermented into an 

intermediate chemical, acetic acid, using a naturally occurring acetogen. The acetic acid is then 

converted into ethyl acetate, which can then be hydrogenated into ethanol. The hydrogen 

Deleted: 11

Deleted: 18

Formatted: Font: Not Italic

Deleted: ¶

¶

KL Energy

Deleted: KL Energy

Deleted: KL Energy’s

Deleted: KL Energy’s

Deleted: KL Energy

Deleted: KL Energy’s

Deleted: Cellulosic ethanol production from KL 

Energy in 2013 has been included as a contributor to 

the one million gallons from various pilot plants and 

demonstration facilities.
*** E.O. 12866 Review - Draft - Do Not Cite, Quote, or Release During Review ***

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necessary for this process is produced by gasifying the lignin stream from the cellulosic biomass. 

Construction is currently underway to add the front-end operations, the conversion of cellulosic 

biomass to sugars, and the back-end process, the upgrading of the chemicals produced to 

transportation fuel, to the existing core facility. ZeaChem plans to begin the production of 

ethanol from cellulosic biomass at this facility by the end of 2012. Work is currently underway 

to add additional process modules that will enable ZeaChem to convert the cellulosic ethanol to 

jet and diesel fuel beginning in 2013. 

ZeaChem’s process is flexible and is capable of producing a wide range of renewable 

chemicals and fuels from many different feedstocks. They plan to use both agricultural residues 

and wood waste at their demonstration facility and have contracts in place for these feedstocks, 

as well as purpose-grown wood, at their first commercial-scale facility. In January 2012 

ZeaChem announced that they had received a $232.5 million conditional loan guarantee offer 

from USDA for the construction of their first commercial-scale facility, which will have a 

capacity of at least 25 million gallons per year. ZeaChem currently has agreements in place to 

provide all of the necessary feedstock for this facility. This facility, however, is not expected to 

begin producing cellulosic biofuel until late 2014 at the earliest. 

2. Facilities not Included in 2012 Projections

In addition to the facilities that were included in our cellulosic biofuel volume projections 

for the 2012 compliance year, there is one additional facility that we believe will produce 

volumes in 2013. Several other large production facilities are planning to begin production of 

cellulosic biofuel in 2014.

Abengoa

Abengoa, a large international biofuels company, is one of two new cellulosic biofuels 

producers expected to begin the production of cellulosic biofuels and RINs from a commercialscale facility in 2013. Abengoa plans to use an enzymatic hydrolysis technology to convert corn 

stover and other agricultural waste feedstocks into ethanol. After successfully testing and 

refining their technology at a pilot-scale facility in York, Nebraska as well as in a demonstrationscale facility in Salamanca, Spain, Abengoa is now working towards the completion of their first 

commercial-scale cellulosic ethanol facility in Hugoton, Kansas. Abengoa has contracts in place 

to provide the majority of feedstocks necessary for this facility for the next 10 years and 

successfully completed their first biomass harvest in the fall of 2011. Construction at this 

facility, which began in September 2011, is expected to take 24 months and be completed in the 

fourth quarter of 2013. All of the major process equipment for this project has been purchased 

and all of the required permits for construction have been approved. Abengoa’s Hugoton facility 

is being partially funded by a $132 million Department of Energy (DOE) loan guarantee.

When completed, the Hugoton plant will be capable of processing 700 dry tons of corn 

stover per day, with an expected annual ethanol production capacity of approximately 24 million 

gallons. Abengoa plans to begin ramping up production at the facility shortly after completing 

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

Deleted: ZeaChem’s only cellulosic biofuel 

production in 2013, therefore, will be from their 

demonstration-scale facility and has been included as

a contributor to the one million gallons we are 

proposing for 2013 from various pilot and 

demonstration-scale facilities.

Deleted: are two

Deleted: facilities

Deleted: These

Deleted: owned by Abengoa and Poet

Deleted: 26

Deleted: by
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second quarter of 2014. After successfully proving their technology at commercial-scale in 

Hugoton, Abengoa currently plans to construct additional similar cellulosic ethanol production 

facilities, either on greenfield sites or co-locating these new facilities with their currently existing 

starch ethanol facilities around the United States. While this facility could produce up to 1 

million gallons of cellulosic ethanol in 2013 even a slight delay would result in no fuel being 

produced in 2013. Given the history of delays in the cellulosic biofuels industry we are not 

including any volume from Abengoa’s Hugoton, KS facility in our proposed projected available 

volume for 2013. 

Poet

Poet has also developed an enzymatic hydrolysis process to convert cellulosic biomass 

into ethanol. Poet has been investing in the development of cellulosic ethanol technology for 

more than a decade and began producing small volumes of cellulosic ethanol at pilot-scale at 

their plant in Scotland, SD in late 2008. In January 2012, Poet formed a joint venture with Royal 

DSM of the Netherlands called Poet-DSM Advanced Biofuels to commercialize and license their 

cellulosic ethanol technology. 

The joint venture’s first commercial-scale facility, called Project LIBERTY, will be 

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

leaves, husks, and some stalk per day into cellulosic ethanol. The facility is projected to have an 

annual production capacity beginning at approximately 20 million gallons per year, increasing 

over time to 25 million gallons per year. In anticipation of the start-up of this facility, Poet 

constructed a 22-acre biomass storage facility and had its first commercial harvest in 2010, 

collecting 56,000 tons of biomass. 

Site prep work for Project LIBERTY began in the summer of 2011, and vertical 

construction of the facility is scheduled to begin in the spring of 2012. Poet was awarded a $105 

million loan guarantee offer for this project from DOE in July 2011, but with the joint venture 

decided to proceed without the loan guarantee. This project is expected to be completed by the 

end of 2013, however at this time EPA is not projecting any commercial cellulosic ethanol 

production from this facility until 2014. After the completion of Project LIBERTY, Poet plans 

to build cellulosic ethanol facilities at all of their existing corn ethanol plants. They are also 

planning to license their technology for use at other grain ethanol plants, as well as build 

additional plants that will process wheat straw, rice hulls, woody biomass or herbaceous energy 

crops. By 2022 Poet has a goal of producing 3.5 billion gallons of cellulosic ethanol per year.

Other companies

There are several more companies planning to begin producing cellulosic biofuel from 

commercial-scale facilities in 2014. Companies such as BP, Coskata, DuPont, Enerkem, and 

several others are all currently targeting 2014 for the start-up of their first commercial facilities. 

These facilities represent approximately 100 million gallons of additional cellulosic biofuel 

production capacity. As with the companies discussed above, most of these companies have 

already begun to develop plans for their successive facilities after the successful completion of 

their initial projects. While they will not contribute any volume in 2013, and have therefore not 

Deleted: end

Deleted: the year

Deleted: We propose that for 2013 cellulosic 

ethanol production from Abengoa’s Hugoton facility 

could be as much as 4 million gallons.

Deleted: and produce

Deleted: volumes of 

Deleted: in the second half of 2013. For 2013 we 

project that Project LIBERTY will produce up to 1 

million gallons of cellulosic ethanol
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been included in our proposed volume, they are a further indication of the potential for the 

significant growth of the cellulosic biofuel industry in the United States in the near future.

3. Other Potential Sources of Domestic Cellulosic Biofuel 

Each of the companies listed in the previous two sections is planning to generate 

cellulosic biofuel RINs using one of the valid RIN-generating pathways listed in Table 1 to 

§80.1426. We are also aware of several companies who may be in a position to produce 

cellulosic biofuel in 2013 but intend to use a production pathway that is not currently approved 

for RIN generation. Three pathways that are currently under evaluation by EPA include the 

following:

• Compressed natural gas (CNG) derived from biogas, where the biogas is 

produced from the cellulosic portion of MSW

• Cellulosic ethanol produced from corn kernel fiber

• Fuel oil produced from woody biomass

If these or other cellulosic biofuel pathways are approved by EPA, they may be used to generate 

cellulosic biofuel RINs in 2013. Because a final determination on these pathways has not been 

made, however, no volume of cellulosic fuel from these pathways has been included in our 

proposed 2013 cellulosic biofuel projection. The status of these pathways will be reevaluated at 

the time of the final rule and volumes from these pathways may be included in our final 

projection if appropriate.

4. Imports of Cellulosic Biofuel

While domestically produced cellulosic biofuels are the most likely source of cellulosic 

biofuel available in the United States in 2013, imports of cellulosic biofuel produced in other 

countries may also generate RINs and participate in the RFS program. While the RFS program 

does provide a financial incentive for companies to import cellulosic biofuels into the United 

States, the combination of local demand, financial incentives from other governments, and 

transportation costs for the cellulosic biofuel has resulted in no cellulosic biofuel being imported 

to the United States thus far. We believe this situation is likely to continue in the near future and 

has not included any cellulosic biofuel imports in our projections of available volume in 2013. 

As in the United States, the production of cellulosic biofuels internationally is currently 

limited to small-scale research and development, pilot, and demonstration facilities. This is 

likely to continue to be the case throughout 2013. Two notable exceptions are facilities built and 

operated by Beta Renewables and Enerkem. Beta Renewables completed construction of their 

first commercial-scale facility located in Crescentino, Italy in the summer of 2012. This facility

is designed to produce approximately 20 million gallons of cellulosic ethanol per year. Beta 

Renewables uses an enzymatic hydrolysis process to produce ethanol from local agricultural 

residues and herbaceous energy crops. 

Deleted: currently being 

Deleted: Chemtex

Deleted: Chemtex is planning to complete

Deleted: When completed, this

Deleted: will be capable of producing

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Deleted: Chemtex
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Enerkem is also in the process of building their first commercial-scale facility in 

Edmonton, Alberta and plans to begin operations in early 2013. Enerkem’s facility will use a 

thermochemical process to produce syngas from MSW and then catalytically convert the syngas 

to methanol. The methanol can then be sold directly or upgraded to ethanol or other chemical 

products. At full capacity this facility will be capable of producing 10 million gallons of 

cellulosic ethanol per year. At this point, neither Beta Renewables nor Enerkem have registered 

their facilities under the RFS program, a necessary step that must be completed before these 

companies can generate RINs for any fuel they import into the United States. Both are planning 

to locate additional plants in the United States in the future and are likely to generate RINs for 

production from domestic facilities in future years.

5. Summary of Volume Projections

The information we have gathered on the potential cellulosic biofuel producers in 2013, 

described above, allows us to project volumes that are reasonably likely to be produced by each 

facility in 2013. For the purposes of this proposed rulemaking we have focused on commercialscale cellulosic biofuel production facilities. We believe our focus on commercial-scale facilities 

is appropriate as the industry transitions from small-scale R&D and pilot facilities to large-scale 

commercial production. It is likely that several small-scale facilities such as API, KL Energy, 

ZeaChem, and others will also produce some cellulosic biofuel in 2013. The volume of fuel 

produced by each individual facility, however, is expected to be small, especially in relation to 

that from the four facilities listed in Table II.C.5-1 below. Additionally, while RINs may be 

generated for any cellulosic biofuel produced from these small facilities, historically many have 

chosen not to do so for a variety of reasons.

In 2013 as many as four domestic cellulosic biofuel production facilities have the 

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

facility production targets for each are summarized in Table II.C.5-1 below. Two of the 

companies that have the potential to produce cellulosic biofuel in 2013, Abengoa and Fiberight, 

are not planning on beginning fuel production until late in the year. Even a small delay in their 

expected production timeline could result in their failure to produce any cellulosic biofuel in 

2013. For the purpose of this proposal, therefore, we are only projecting commercial scale 

cellulosic biofuel production from two companies, INEOS Bio and KiOR. 

When added together, the total projected production volume from commercial-scale 

production facilities in the United States in 2013 is 11 million gallons (14 million ethanolequivalent gallons). This number represents the expected fuel production from each facility, 

taking into account the potential for project delays, difficulty in start-up, and the various other 

factors discussed above. As such, we believe it is an appropriate number for the projected 

available volume in 2013 for this proposal. 

Deleted: Neither Chemtex

Deleted: , however,

Deleted: plans to

Deleted: cellulosic biofuel

Deleted: from their first commercial-scale 

facilities

Deleted: In 2013 we expect cellulosic biofuel 

production from five commercial-scale facilities

Moved down [2]: . Each of these facilities is 

discussed above, and the facility production targets 

for each are summarized in Table II.C.5-1 below. 

Deleted: five

Deleted: A combined volume of one million 

gallons

Deleted: the various pilot and demonstration-scale

Deleted: in 2013 has been included in this 

proposal

Moved (insertion) [2]

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Table II.C.5-1

Projected Available Cellulosic Biofuel for 2013

Company 

Name Location Feedstock Fuel Capacity (MGY)

Production 

Start-Up

2013 

Projected

Available 

Volumea

Abengoa Hugoton, KS Corn Stover Ethanol 24 4Q 2013 0

Fiberight Blairstown, IA MSW Ethanol 6 4Q 2013 0

INEOS Bio Vero Beach, FL Vegetative Waste Ethanol 8 4Q 2012 6

KiOR Columbus, MS Wood Waste Gasoline 

and Diesel

11 4Q 2012 8

Various 

Pilot/ Demo 

Plants

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

Total 49 14

aVolumes in million ethanol-equivalent gallons

Deleted: Potentially

Formatted Table

Deleted: Potentially

Deleted: Volume (MG)

Deleted: Ethanol Equivalent Gallons (MG)

Deleted Cells

Deleted: 26

Deleted: 3

rd Quarter

Deleted: 4

Deleted: 4

Deleted: 3.8

Deleted: 1

st Half

Deleted: 1

Deleted: 1

Deleted: .0

Deleted: 2

nd Quarter

Deleted: 8

Deleted: 8

Deleted: 2

nd Half

Deleted: 11

Deleted: 18

Deleted: Poet-DSM ...

Formatted Table

Deleted: 1

Deleted: 1

Deleted Cells

Deleted: 73.8

Deleted: 26

Deleted: 33

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D. Proposed Cellulosic Biofuel Volume for 2013

In today’s NPRM we are proposing a volume for the 2013 cellulosic biofuel standard that 

is based on production targets developed in consultation with the four companies with the 

potential to produce cellulosic biofuel from commercial-scale facilities in 2013. Many factors 

have been taken into consideration in developing these production targets, such as 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 sum of these individual projected available volumes (14 million ethanol-equivalent 

gallons) is a reasonable representation of likely production at these facilities. Moreover, all of 

the companies included in our 2013 volume projections have invested a significant amount of 

time and resources developing their technologies at R&D and demonstration-scale facilities prior 

to the design and construction of their first commercial-scale facilities. The projects have solid 

financial backing, and in the case of Abengoa, Fiberight, and INOES Bio are backed by federal 

loan guarantees. By the time of our final rule the facilities owned by KiOR and INEOS Bio are 

scheduled to have already begun fuel production. These two facilities make up a significant 

majority of the cellulosic biofuel in our 2013 projection, and their progress towards meeting their 

production goals will be an important piece of information as we consider the appropriate level 

of the cellulosic biofuel standard to finalize.

It is important to note that the final cellulosic biofuel standard for 2013 may be set at a 

volume that differs from the proposed volume. This could happen for a variety of reasons, 

including unexpected project modifications or cancellations or the inclusion of volumes of 

cellulosic biofuel from sources other than those listed above. For example, the proposed 

projected available volume of cellulosic biofuel in 2013 discussed above (14 million ethanolequivalent gallons) does not include potential contributions from cellulosic biofuel produced 

from corn fiber, renewable heating oil, or landfill biogas that is converted to transportation fuel. 

Together, these pathways could generate several tens of millions of gallons of ethanol-equivalent 

renewable fuel. However, since they are currently undergoing an evaluation to determine 

whether they are valid for the generation of cellulosic RINs, we have not included their volumes 

in our 2013 projection in this NPRM. If any of these pathways are approved, additional volume 

from these sources may be added to the target production volumes listed in Table II.C.5-1 for the 

final rule.

We will continue to monitor the progress of the cellulosic biofuel industry, in particular 

the progress of the companies which form the basis of our 2013 volume projection. As time 

progresses and we are able to track whether or not the cellulosic biofuels producers are able to 

meet the construction and ramp-up schedules they have presented, as we consider public 

comments on this proposal, and as we consider the EIA estimated 2013 volume of cellulosic 

biofuel production that they are required to provide to us by October 31 of this year, we will 

have a clearer idea of the appropriate volume of fuel that we can reasonably expect to be 

produced and made commercially available in 2013.

Deleted: five

Deleted: we expect

Deleted: production targets (33

Deleted: 33
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III. Assessment of Advanced Biofuel and Total Renewable Fuel for 2013

As described in Section I, the volumes of renewable fuel to be used under the RFS2 

program each year (absent an adjustment or waiver by EPA) are specified in CAA 211(o)(2). 

For 2013, the applicable volume of advanced biofuel is 2.75 bill gal and the applicable volume of 

total renewable fuel is 16.55 bill gal. However, the statute gives EPA the discretion to reduce 

one or both of these volume requirements in the event that the cellulosic biofuel volume 

requirement is reduced. This section discusses our evaluation of these two volume requirements.

A. Statutory Requirements

According to CAA 211(o)(7)(D)(i), if EPA determines that the projected volume of 

cellulosic biofuel production for the following year is less than the applicable volume provided 

in the statute, then EPA must reduce the applicable volume of cellulosic biofuel to the projected 

volume available during that calendar year. Under such circumstances, EPA also has the 

discretion to reduce the applicable volumes of advanced biofuel and total renewable fuel by an 

amount not to exceed the reduction in cellulosic biofuel. 

Since cellulosic biofuel is also used to satisfy the advanced biofuel standard and the total 

renewable fuel standard, any reductions in the applicable volume of cellulosic biofuel will also 

affect the means through which obligated parties comply with these two other standards. 

Congress presumably established the volume requirements for advanced biofuel and total 

renewable fuel under the assumption that the specified cellulosic biofuel volumes would be 

produced and thus available to help meet these two standards. It is therefore logical to consider a 

possible reduction in the advanced biofuel and total renewable fuel applicable volumes when 

EPA reduces the cellulosic biofuel volume below the applicable volume for cellulosic biofuel set 

forth in the statute. 

In 2013 the applicable volume of cellulosic biofuel specified in the statute represents 

more than a third of the advanced biofuel volume (1.0 bill gal out of 2.75 bill gal), a higher 

fraction than in any previous year. A substantial reduction in the applicable volume of cellulosic 

biofuel could potentially also have a substantial impact on the sufficiency of volumes to meet the 

advanced biofuel and total renewable fuel standards. As described in Section II.D above, we are 

indeed proposing a projected available volume of cellulosic biofuel for 2013 at significantly 

below the statutory applicable volume of 1.0 billion gallons. If we were to finalize a cellulosic 

biofuel applicable volume of 14 mill gallons for 2013, we would have the discretion to reduce 

the advanced biofuel and total renewable fuel applicable volumes by up to 986 mill gallons 

(ethanol-equivalent). Therefore, we believe that an investigation into the need for a reduction in 

the applicable volumes of advanced biofuel and/or total renewable fuel is warranted.

The statute does not provide any 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/or total renewable fuel applicable volumes when we have the discretion 

under CAA 211(o)(7)(D)(i) to do so. However, in general we believe that it would not be 

consistent with the energy security and greenhouse gas reduction goals of the statute to reduce 

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the applicable volume of advanced biofuel set forth in the statute if there are sufficient volumes 

of advanced biofuels available, even if those volumes do not include the amount of cellulosic 

biofuel that Congress may have desired. And, if we do not lower the advanced biofuel standard, 

then our reduction of cellulosic biofuel applicable volume has no impact on the amount of nonadvanced biofuel that could be used in attaining the total renewable fuel standard set forth in the 

Act. Therefore, we believe as a general matter that, when we do not exercise our discretion to 

lower the applicable volume of advanced biofuel under CAA 211(o)(7)(D)(i), our action in 

reducing the cellulosic biofuel applicable volume should not in itself justify a modification of the 

total renewable fuel applicable volume.

B. Assessment of Available Volumes of Advanced Biofuel

Renewable fuels that can be used to meet the standard for advanced biofuel include those 

with Renewable Identification Number (RIN) codes of 3, 4, 5, or 7. Table III.B-1 shows the 

number of each of these types of RIN that was generated in 2011.

Table III.B-1

2011 RINs That Qualified to Meet the Advanced Biofuel Standard12

(million ethanol-equivalent gallons)

D 

code Category Ethanol Biodiesel

Renewable 

diesel

Biogas and 

heating oil

3 Cellulosic biofuel 0 0 0 0

4 Biomass-based 

diesel

0 1,600 76 0

5 Advanced biofuel 186 0 27 8

7 Cellulosic diesel 0 0 0 0

Total 1,895

The total of 1,895 mill ethanol-equivalent gallons is significantly higher than the 1,350 mill gal 

required in 2011 and nearly as high as the 2012 advanced biofuel requirement of 2,000 mill gal. 

This result supports our projection in the rulemaking setting the 2012 standards13 that there was 

no need to reduce the 2012 advanced biofuel requirement despite the significant reduction in the 

applicable volume of cellulosic biofuel.

The statutory volume requirement for advanced biofuel in 2013 is 2,750 mill gal, an 

increase of 750 mill gal over the 2012 requirement of 2,000 mill gal. In order to determine the 

sufficiency of advanced biofuel volumes to meet a requirement for 2,750 mill gal in 2013, we 

first accounted for biomass-based diesel and cellulosic biofuels that would be required under the 

standards we are proposing today. As shown in Table III.B-2, the result is that there would need 

to be about 800 mill ethanol-equivalent gallons of other advanced biofuels in order to meet the 

total advanced biofuel requirement of 2,750 mill gal.

 

12 2011 data from the EPA-Moderated Transaction System (EMTS)

13 77 FR 1320, published on January 9, 2012
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Table III.B-2

Necessary Volume of Advanced Biofuel (mill gal ethanol-equivalent)

2013 Advanced biofuel applicable volume 2,750

Cellulosic biofuel requirement 14

Biomass-based diesel requirement 1,920a

Necessary volume of excess biodiesel, other 

domestic advanced biofuels, and/or imported 

sugarcane ethanol

816

a

 In 2011, a substantial majority of biomass-based diesel was biodiesel. 

Moreover, we expect further increases in biomass-based diesel to be met 

primarily with expanded biodiesel. Therefore, for this analysis we have 

assumed that the 1.28 bill gal requirement is composed entirely of biodiesel with 

an equivalence value of 1.5.

We have identified a variety of sources of advanced biofuel that could meet the need for 

about 800 mill gal of additional advanced biofuel, including the following:

• Biodiesel in excess of that required to meet the volume requirement of 1.28 

bill gal

• Imported sugarcane ethanol

• Domestically produced advanced biofuels such as renewable diesel, heating 

oil, and ethanol from separated food wastes

We have investigated each of these sources as discussed below.

1. Biodiesel

In a separate action, we have finalized a biomass-based diesel volume of 1.28 bill gal for 

2013. However, we believe that biomass-based diesel volumes above 1.28 bill gal are possible. 

Insofar as other sources of advanced biofuel fall short of what is needed to meet the advanced 

biofuel volume requirement, the biodiesel industry has the potential to fill much if not all of the 

gap. As of February 2012, the aggregate production capacity of biodiesel plants in the U.S. is 

estimated to be 2.5 billion gallons per year across 191 facilities.14 We expect the time and 

reinvestment required to ramp up production at existing facilities to be less than the time 

required to build and begin production at new plants, which takes about a year on average.15 

Thus, restarting idled plants is likely to be a cost-effective way of exceeding the applicable 

volumes of 1.28 bill gal in 2013 if a demand for such production exists.

Moreover, the biodiesel industry has demonstrated that it can increase production quickly 

under appropriate circumstances. Total production of biomass-based diesel in 2011 exceeded 1.0 

bill gal, compared to a 2010 production of about 380 mill gallons.16 In response to the NPRM 

 

14 Figures taken from National Biodiesel Board's Member Plant List as of February 7, 2012. 

15 Based on construction times for new plants listed in Biodiesel Magazine from July 2006 through May 2009.

16 All values from EMTS. 2010 estimate consists of approximately 209 mill gallons as recorded through EMTS for 

volume produced under the RFS2 regulations in July through December of 2010, and approximately 171 mill 

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Deleted: are finalizing
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published on July 1, 2011, some stakeholders expressed doubts that such increases could occur 

by 2012.17 Nevertheless, based on the single-year increase of more than 600 mill gal in 2011 and 

the total capacity of existing plants described above, we believe it is reasonable that the industry 

could achieve increases in production of both the 280 mill gallon increment that is reflected in 

the biomass-based diesel requirement for 2013 and an additional "excess" production of several 

hundred million gallons or more.

2. Imported Sugarcane Ethanol 

From the supply perspective, recent production of sugarcane in Brazil has been lower 

than normally expected due to two factors. First, adverse weather conditions have reduced 

production.18 Since the adverse weather conditions are estimated to have reduced cane 

production by about 4%, a return to normal weather conditions should alone restore 

approximately 4% of production. Second, the general economic downturn made credit harder to 

get, delaying the replanting of existing fields. Normally sugarcane fields are replanted every five 

or six years to maximize yield. However, the lack of available credit caused some growers to 

delay the expense of this replanting, with the older fields losing production.19 Nevertheless, in 

2011 Brazil exported around 520 million gallons of which approximately 173 million gallons 

were shipped to the U.S.

The outlook for 2012 and future years suggests a more typical trend in sugarcane ethanol 

with replanted fields beginning to boost sugarcane production in existing plantations and, in 

response to increased worldwide demand, a growth in the acres planted with sugarcane. UNICA, 

a trade association for the sugarcane ethanol industry in Brazil, projects that over the next four 

years, the return to a normal replanting schedule combined with normal weather conditions will 

boost production by 30%. They project that by 2015/2016, ethanol production in Brazil will 

exceed 12 billion gallons of which over 3 billion gallons could be available for export. Even

assuming only modest increases in 2012 production due to the need to replant fields, using the 

UNICA projection for 2015/2016 and assuming a linear increase in export volumes from 2012 to 

2016, 2013 sugarcane ethanol export volumes could easily double to over 1 billion gallons in 

2013. 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.20 Private investment in Brazil is also increasing. For example, Usina de Acucar 

 

gallons as recorded through RIN generation reports submitted by producers for volume produced under the RFS1 

regulations in January through June of 2010.

17 See comments in docket EPA-HQ-OAR-2010-0133 from the American Petroleum Institute, Marathon Petroleum 

Company, and the National Petrochemical Refiners Association.

18 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 

19 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.

20 See http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8987702
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Santa Terezinha, a Brazilian ethanol producer, recently announced plans to invest almost $300 

million in a new mill and sugarcane plantation.21 

Brazil’s sugarcane ethanol production serves both its domestic market as well as the 

export market. The government of Brazil sets a minimum ethanol concentration for its gasoline. 

In 2011, the Brazilian government lowered this concentration to 20%, reflecting the decrease in 

domestic production. Projecting this Brazilian domestic demand into the future can be 

uncertain since the government can reset the minimum ethanol content at any time; in the past 

this adjustment has largely been influenced by the price of ethanol (high prices leading to a 

reduction in the minimum percent). However, these historical changes have typically varied by a 

few percent and have only occurred periodically. Assuming continued tight supplies of 

sugarcane ethanol, we would not expect a near-term increase in the minimum concentration of 

ethanol in gasoline in Brazil and no significant change in demand for ethanol within Brazil over 

the next couple of years. 

Aside from production capability and domestic demand within Brazil, market conditions 

generally determine the availability of sugarcane ethanol imported into the U.S. from Brazil. 

Approved as an advanced biofuel pathway, ethanol produced from sugarcane benefits from the 

RIN value associated with advanced biofuel but also has to compete with other sources of 

ethanol used for blending with gasoline, most notably ethanol made from corn starch (which 

does not qualify as an advanced biofuel). However, the expiration of the tariff applicable to 

imported ethanol has also helped make imported sugarcane ethanol more cost competitive. 

As a result of this investigation, we have concluded that there are no definite barriers to 

the importation of sugarcane ethanol up to the volumes required (considering the availability of 

other advanced biofuels) to meet an advanced biofuel requirement of 2.75 bill gal. 

3. Domestic Production of Other Advanced Biofuel 

Pathways that have been approved for the generation of RINs are provided in the 

regulations in Table 1 to §80.1426. Apart from ethanol made from sugarcane which is permitted 

to generate advanced biofuel RINs, there are currently three pathways through which advanced 

biofuel RINs can be generated. These three are shown in Table III.B.3-1.

 

21 See http://www.bloomberg.com/news/2012-03-08/santa-terezinha-invests-283-million-in-brazil-ethanolprojects.html
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Table III.B.3-1

Pathways for Advanced Biofuel

Fuel type Feedstock Production process 

requirements

Biodiesel, 

renewable diesel

Soy bean oil;

Oil from annual covercrops;

Algal oil;

Biogenic waste oils/fats/greases;

Non-food grade corn oil

One of the following:

Trans-Esterification

Hydrotreating

Includes only processes that 

co-process renewable 

biomass and petroleum

Ethanol, renewable 

diesel, jet fuel, 

heating oil, and 

naphtha

The non-cellulosic portions of 

separated food waste Any

Biogas Landfills, sewage waste treatment 

plants, manure digesters Any

In addition to producers of biomass-based diesel and cellulosic biofuel, there are many 

companies either producing or developing technologies to produce "other advanced biofuels." In 

order to estimate the volumes of other advanced biofuels that could be produced by these 

companies in 2013, we investigated three sources of data:

Production Outlook Reports. Required under §80.1449 for all registered producers, these 

reports contain projections of renewable fuel production for each of the next five years.22

2011 producers. Data from the EPA-Moderated Transaction System (EMTS) was 

reviewed to identify parties that produced some RIN-generating advanced biofuel in 

2011. Insofar as such parties did not provide a projected 2013 volume in a Production 

Outlook Report, they were contacted to update their 2013 projected production volume.

Additional registered producers. We identified parties that were registered as producers 

of advanced biofuel under the RFS program, but neither produced RIN-generating 

volume in 2011 nor provided a projection of 2013 production volume in a Production 

Outlook Report. We contacted such parties to determine what, if any, volume could be 

expected in 2013.

Based on these investigations, we identified twenty domestic companies that are expected to 

produce some other advanced biofuel in 2013. The total projected production volume for these 

companies in 2013 is about 115 mill actual gallons, or 150 million ethanol-equivalent gallons, as 

shown in Table III.B.3-2.

 

22 While the individual reports have not been published since they include company-specific information that could 

impact the competitive nature of the industry, we are providing aggregate results in this NPRM.
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Table III.B.3-2

Projected Domestic Production of Other Advanced Biofuel in 2013

(million ethanol-equivalent gallons)

Ethanol

Renewable 

diesel Heating oil CNG Total

Production Outlook 

Reports

31 35 4 0 70

2011 producers 18 18 0 5 41

Other registered 

producers

0 15 15 9 39

Total 49 68 19 14 150

A projected volume of 150 mill ethanol-equivalent gallons of other advanced biofuel in 2013 is 

also consistent with a 2011 report released by E2/Environmental Entrepreneurs23 which 

estimated that the production capacity of domestic advanced biofuels in 2012 would be about 

180 mill gal.

We are also currently investigating a variety of other potential RIN-generating pathways 

for advanced biofuel that could result in additional volumes in 2013. In addition to potential new 

pathways for cellulosic biofuel that would also count as advanced biofuel as discussed in Section 

II.D, new pathways for advanced biofuel could include certain butanol processes from corn and 

certain ethanol processes from sorghum. We have not yet determined, either through rulemaking 

or approval of an industry petition, whether the pathways are valid for the generation for 

advanced biofuel RINs. However, approval of such advanced biofuel pathways could potentially 

result in 200 million additional ethanol-equivalent gallons of advanced biofuel being qualified to 

participate in the RFS program. Insofar as any of these pathways are approved in time to be used 

in 2013, we may include projected volumes for them as we prepare the final rulemaking setting 

standards for 2013.

C. Proposed Volume Requirements for Advanced Biofuel and Total Renewable Fuel 

in 2013 

As shown in Table III.B-2, in order for an advanced biofuel requirement of 2.75 bill gal 

to be met, there would need to be about 800 mill gal of advanced biofuels in addition to the 

volumes that would need to be produced to meet the biomass-based diesel and cellulosic biofuel 

requirements. After reviewing the projected availability of advanced biofuel volumes from 

various sources, we have determined that there will be more than sufficient volumes available to 

produce or import this 800 mill gal. Given our estimate of about 150 mill gal of domestic 

"other" advanced biofuel, the remaining volume of about 650 mill gal would likely need to come 

from imported sugarcane ethanol and/or biodiesel in excess of 1.28 bill gal. As discussed above, 

we believe that this volume is achievable through a combination of these sources or potentially 

even through one of these individual sources. Therefore, we believe that there is no reason to 

 

23 Solecki, Mary et al, "Advanced Biofuel Market Report 2011, Meeting the California LCFS" August 22, 2011. 

E2/Environmental Entrepreneurs.
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reduce the required volume of 2.75 bill gal advanced biofuel on the basis of available volumes. 

As noted above, maintaining the 2.75 bill gal advanced biofuel volume set forth in the statute 

will result in the GHG emissions and energy security objectives that Congress envisioned in 

enacting this provision. We are not aware of any reasons why it should choose to forgo these 

benefits when they are physically achievable but we invite comment on this issue.

We also expect that there will be sufficient volumes of corn ethanol to meet the need for 

13.8 bill gallons of conventional renewable fuel since domestic production of corn ethanol 

reached this level in 2011.24 Moreover, corn ethanol production capacity continues to increase. 

Since we are not proposing to lower the advanced biofuel standard for 2013, and the need for 

13.8 bill gallons of conventional renewable fuel can be met, we are not proposing to lower the 

applicable volume of total renewable fuel below 16.55 bill gal.

 

24 EIA Monthly Energy Review, February 2012, Table 10.3.
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IV. Proposed Percentage Standards for 2013

A. Background 

The renewable fuel standards are expressed as volume percentages and are used by each 

refiner, blender, or importer to determine their renewable volume obligations (RVO). Since there 

are four separate standards under the RFS2 program, there are likewise four separate RVOs 

applicable to each obligated party. Each standard applies to the sum of all gasoline and diesel 

produced or imported. The applicable percentage standards are set so that if every obligated party 

meets the percentages, then the amount of renewable fuel, cellulosic biofuel, biomass-based diesel, 

and advanced biofuel used will meet the volumes required on a nationwide basis. 

As discussed in Section II.D, we are proposing a required volume of cellulosic biofuel for 

2013 of 11 million gallons (14 million ethanol-equivalent gallons). The volume we select for the 

final rule will be used as the basis for setting the percentage standard for cellulosic biofuel for 

2013. We are also proposing that the advanced biofuel and total renewable fuel volumes would 

not be reduced below the applicable volumes specified in the statute. The biomass-based diesel 

volume for 2013 has been established at 1.28 billion gallons through a separate rulemaking. The 

volumes used to determine the four proposed percentage standards are shown in Table IV.A-1. 

Table IV.A-1

Proposed Volumes for Use in Setting the Applicable Percentage Standards for 2013a

Cellulosic biofuel 14 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.75 bill gal

Renewable fuel 16.55 bill gal

a Due to the manner in which the percentage standards are 

calculated, all volumes are given in terms of 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: 26

Deleted: 33

Deleted: 33
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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.

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.
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Deleted: 49

RDi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

the 48 contiguous states and Hawaii, in year i, in gallons.

GSi = Amount of gasoline projected to be used in Alaska or a U.S. territory in year i if 

the state or territory opts-in, in gallons.

RGSi = Amount of renewable fuel blended into gasoline that is projected to be consumed 

in Alaska or a U.S. territory in year i if the state or territory opts-in, in gallons.

DSi = Amount of diesel projected to be used in Alaska or a U.S. territory in year i if the 

state or territory opts-in, in gallons.

RDSi = Amount of renewable fuel blended into diesel that is projected to be consumed in 

Alaska or a U.S. territory in year i if the state or territory opts-in, in gallons.

GEi = Amount of gasoline projected to be produced by exempt small refineries and 

small refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively. For 2013, this value is zero. See further discussion in 

Section IV.B.2 below.

DEi = Amount of diesel projected to be produced by exempt small refineries and small 

refiners in year i, in gallons, in any year they are exempt per §§80.1441 and 

80.1442, respectively. For 2013, this value is zero. See further discussion in 

Section IV.B.2 below.

The four separate renewable fuel standards for 2013 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 2013 percentage standards will be provided to EPA by EIA by October 31, 

2012. To estimate the gasoline and diesel projected volumes for the purposes of this proposal, 

we have used EIA's Short-Term Energy Outlook (STEO)25 for the gasoline projection and EIA's 

Annual Energy Outlook 2012 Early Release26 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, 2012. To estimate the ethanol and biodiesel 

projected volumes for the purposes of this proposal, we have used the February 2012 values27 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.

 

25 Energy Information Administration/Short-Term Energy Outlook - February 2012, Table 4a, “U.S. Crude Oil and 

Liquid Fuels Supply, Consumption, and Inventories.”

26 Energy Information Administration/Annual Energy Outlook 2012, Early Release (January 23, 2012), Table 2, 

“Energy Consumption by Sector and Source, United States, Reference case.” 

27 Energy Information Administration/Short-Term Energy Outlook - February 2012, Table 8, “U.S. Renewable 

Energy Supply and Consumption (Quadrillion Btu).”
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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 program28, 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. 

40 CFR §§ 80.1141, 80.1142. Because EISA did not alter the small refinery exemption in any 

way, the RFS2 program regulations maintained the exemptions for gasoline and diesel produced 

by small refineries and small refiners through 2010 (unless the exemption was waived). See 40 

CFR §§ 80.1441, 80.1442. 

Congress provided two ways that small refineries can receive a temporary extension of 

the exemption beyond 2010. One is based on the results of a study conducted by the Department 

of Energy (DOE) to determine whether small refineries would face a disproportionate economic 

hardship under the RFS program. The other is based on EPA determination of disproportionate 

economic hardship on a case-by-case basis in response to refiner petitions.

In January 2009, DOE issued a study which did not find that small refineries would face 

a disproportionate economic hardship under the RFS program.29 The conclusions were based in 

part on the expected robust availability of RINs and EPA’s ability to grant relief on a case-bycase basis. As a result, beginning in 2011 small refiners and small refineries were required to 

participate in the RFS program as obligated parties, and there was no small refiner/refinery 

volume adjustment to the 2011 standards as there was for the 2010 standards. 

Following the release of DOE's 2009 small refinery study, Congress directed DOE to 

complete a reassessment and issue a revised report. In March of 2011 DOE re-evaluated the 

impacts of the RFS program on small entities and concluded that some small refineries would 

suffer a disproportionate hardship.30 As a result, EPA exempted these refineries from being 

obligated parties for two additional years, 2011 and 2012.31 The 2012 standards established in 

the January 9, 2012, final rulemaking reflected the exemption of these refineries. 

EPA may extend the exemption for individual small refineries or small refiners on a caseby-case basis if they demonstrate disproportionate economic hardship. 40 CFR §§ 

80.1441(e)(2), 80.1442(h). EPA has granted some exemptions pursuant to this process that 

apply in 2011 and 2012. However, at this time, no exemptions have been approved for 2013. 

 

28 72 FR 23900, May 1, 2007.

29 DOE report “EPACT 2005 Section 1501 Small Refineries Exemption Study”, (January, 2009). 

30 "Small Refinery Exemption Study: An Investigation into Disproportionate Economic Hardship," U.S. Department 

of Energy, March 2011.

31 Since the standards are applied on an annual basis, the exemptions are likewise on an annual basis even though the 

determination of which refineries would receive an extension to their exemption did not occur until after January 1, 

2011.
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Therefore, for this proposal we have calculated the proposed 2013 standards without a small 

refinery/small refiner adjustment.

However, if an individual small refinery or small refiner requests an exemption and is 

approved following the release of this NPRM, 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 2013 RFS standards will not affect the 2013 standards. As stated in 

the final rule establishing the 2011 standards, “EPA believes the Act is best interpreted to require 

issuance of a single annual standard in November that is applicable in the following calendar 

year, thereby providing advance notice and certainty to obligated parties regarding their 

regulatory requirements. Periodic revisions to the standards to reflect waivers issued to small 

refineries or refiners would be inconsistent with the statutory text, and would introduce an 

undesirable level of uncertainty for obligated parties.” Thus, after the 2013 standards are 

finalized, any additional exemptions for small refineries or small refiners that are issued will not 

affect those 2013 standards.

3. Proposed Standards

As specified in the March 26, 2010 RFS2 final rule32, 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. More specifically, the RFS2 regulations provide that production or import of a 

gallon of biodiesel will lead to the generation of 1.5 RINs. In order to ensure that demand for 

1.28 billion physical gallons of biomass-based diesel will be created in 2013, the calculation of 

the biomass-based diesel standard provides that the required volume be multiplied by 1.5. The 

net result is a biomass-based diesel gallon being worth 1.0 gallon toward the biomass-based 

diesel standard, but worth 1.5 gallons toward the other standards.

The levels of the percentage standards would be reduced if Alaska or a U.S. territory 

chooses to participate in the RFS2 program, as gasoline and diesel produced in or imported into 

that state or territory would then be subject to the standard. Neither Alaska nor any U.S. territory 

has chosen to participate in the RFS2 program at this time, and thus the value of the related terms 

in the calculation of the standards is zero.

Note that because the gasoline and diesel volumes estimated by EIA include renewable 

fuel use, we must subtract the total renewable fuel volumes from the total gasoline and diesel 

volumes to get total non-renewable gasoline and diesel volumes. The values of the variables 

described above are shown in Table IV.B.3-1.33 Terms not included in this table have a value of 

zero.

 

32 75 FR 14716, March 26, 2010.

33 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 (2010) EIA State 

Energy Data, Transportation Sector Energy Consumption Estimates. The gasoline and transportation distillate fuel 

oil fractions are approximately 0.2% and 0.7%, respectively. Ethanol use in Alaska is estimated at 11.2% of its 

gasoline consumption (based on the same State data), and biodiesel use is assumed to be zero.
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Table IV.B.3-1

Values for Terms in Calculation of the Standards (bill gal)

Term Value

RFVCB,2013 0.014

RFVBBD,2013 1.28

RFVAB,2013 2.75

RFVRF,2013 16.55

G2013 132.94

D2013 45.06

RG2013 13.90

RD2013 1.02

Using the volumes shown in Table IV.B.3-1, we have calculated the proposed percentage 

standards for 2013 as shown in Table IV.B.3-2.

Table IV.B.3-2

Proposed Percentage Standards for 2013

Cellulosic biofuel 0.009%

Biomass-based diesel 1.18%

Advanced biofuel 1.69%

Renewable fuel 10.15%

Deleted: 033

Deleted: 020
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V. Public Participation 

We request comment on all aspects of this proposal. This section describes how you can 

participate in this process.

A. How Do I Submit Comments?

We are opening a formal comment period by publishing this document. We will accept 

comments during the period indicated under the DATES section above. If you have an interest 

in the proposed standards, we encourage you to comment on any aspect of this rulemaking. We 

also request comment on specific topics identified throughout this proposal. 

Your comments will be most useful if you include appropriate and detailed supporting 

rationale, data, and analysis. Commenters are especially encouraged to provide specific 

suggestions for any changes that they believe need to be made. You should send all comments, 

except those containing proprietary information, to our Air Docket (see ADDRESSES section 

above) by the end of the comment period.

You may submit comments electronically, by mail, or through hand delivery/courier. To 

ensure proper receipt by EPA, identify the appropriate docket identification number in the 

subject line on the first page of your comment. Please ensure that your comments are submitted 

within the specified comment period. Comments received after the close of the comment period 

will be marked “late.” EPA is not required to consider these late comments. If you wish to 

submit Confidential Business Information (CBI) or information that is otherwise protected by 

statute, please follow the instructions in Section VI.B below.

B. How Should I Submit CBI to the Agency?

Do not submit information that you consider to be CBI electronically through the 

electronic public docket, www.regulations.gov, or by 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-2012-0546. You may claim information that you submit to EPA as 

CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD 

ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within 

the disk or CD ROM the specific information that is CBI). Information so marked will not be 

disclosed except in accordance with procedures set forth in 40 CFR part 2.

In addition to one complete version of the comments that include any information 

claimed as CBI, a copy of the comments that does not contain the information claimed as CBI 

must be submitted for inclusion in the public docket. If you submit the copy that does not 

contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does 

not contain CBI. Information not marked as CBI will be included in the public docket without 
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Page 43 of 48

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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Formatted: Right: 0.25"

VI. Statutory and Executive Order Reviews

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

13563: Improving Regulation and Regulatory Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a 

"significant regulatory action” because it raises novel legal or policy issues arising out of legal 

mandates, the President’s priorities, or the principles set forth in the Executive Order. 

Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for 

review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any 

changes made in response to OMB recommendations have been documented in the docket for 

this action.

The economic impacts of the RFS2 program on regulated parties, including the impacts 

of the required volumes of renewable fuel, were already addressed in the RFS2 final rule 

promulgated on March 26, 2010 (75 FR 14670). With the exception of cellulosic biofuel, this 

action proposes the percentage standards applicable in 2013 based on the volumes that were 

analyzed in the RFS2 final rule.

B. Paperwork Reduction Act

This action does not impose an information collection burden under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 CFR 1320.3(b). This 

proposed rule does not impose any additional reporting requirements on regulated parties beyond 

those already required under the RFS program; therefore, there will not be any additional 

reporting burdens on entities impacted by this regulation. This action merely proposes, as 

required by section 211(o) of the Clean Air Act, the RFS annual standards for 2013.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute unless the agency 

certifies that the rule will not have a significant economic impact on a substantial number of 

small entities. Small entities include small businesses, small organizations, and small 

governmental jurisdictions.

For purposes of assessing the impacts of today's rule on small entities, small entity is 

defined as: (1) a small business as defined by the Small Business Administration’s (SBA) 

regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a 

city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field.
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After considering the economic impacts of today’s proposed rule on small entities, we 

certify that this proposed action will not have a significant economic impact on a substantial 

number of small entities. This rule proposes the annual standard for cellulosic biofuel for 2013. 

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. However, we continue to be interested in the potential 

impacts of the proposed rule on small entities and welcome comments on issues related to such 

impacts.

D. Unfunded Mandates Reform Act

This proposed action contains no Federal mandates under the provisions of Title II of the 

Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or tribal 

governments or the private sector. This action implements mandate(s) specifically and explicitly 

set forth by the Congress in Clean Air Act section 211(o) without the exercise of any policy 

discretion by EPA. Therefore, this action is not subject to the requirements of sections 202 or 

205 of the UMRA.

This action is also not subject to the requirements of section 203 of UMRA because it 

contains no regulatory requirements that might significantly or uniquely affect small 

governments. This proposed rule only applies to gasoline, diesel, and renewable fuel producers, 

importers, distributors and marketers and merely proposes the 2013 annual standards for the RFS 

program.

E. Executive Order 13132: Federalism 

This action does not have federalism implications. It will not have substantial direct 

effects on the States, on the relationship between the national government and the States, or on 

the distribution of power and responsibilities among the various levels of government, as 

specified in Executive Order 13132. This action proposes the 2013 annual standards for the RFS 

program and only applies to gasoline, diesel, and renewable fuel producers, importers, 

distributors and marketers. Thus, Executive Order 13132 does not apply to this rule. 

In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between EPA and State and local governments, EPA specifically solicits 

comment on this proposed rule from State and local officials.

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

Governments

This action does not have tribal implications, as specified in Executive Order 13175 (65 

FR 67249, November 9, 2000). This proposed rule will be implemented at the Federal level and 

affects transportation fuel refiners, blenders, marketers, distributors, importers, exporters, and 
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renewable fuel producers and importers. Tribal governments would be affected only to the 

extent they purchase and use regulated fuels. Thus, Executive Order 13175 does not apply to 

this action.

EPA specifically solicits additional comment on this proposed action from tribal officials. 

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

and Safety Risks

EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to those 

regulatory actions that concern health or safety risks, such that the analysis required under 

section 5-501 of the EO has the potential to influence the regulation. This action is not subject to 

EO 13045 because it does not establish an environmental standard intended to mitigate health or 

safety risks and because it implements specific standards established by Congress in statutes 

(section 211(o) of the Clean Air Act). 

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

Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in Executive Order 13211, 

“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” 

(66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. This action simply proposes the annual standards for 

renewable fuel for 2013.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(‘‘NTTAA’’), Public Law 104–113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary 

consensus standards in its regulatory activities unless to do so would be inconsistent with 

applicable law or otherwise impractical. Voluntary consensus standards are technical standards 

(e.g., materials specifications, test methods, sampling procedures, and business practices) that are 

developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations when the Agency decides not to use available and 

applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards. Therefore, EPA is not 

considering the use of any voluntary consensus standards.

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

Minority Populations and Low-Income Populations
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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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VII. Statutory Authority

Statutory authority for this action comes from section 211 of the Clean Air Act, 42 

U.S.C. 7545. Additional support for the procedural and compliance related aspects of today’s 

proposal, come from Sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. 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.

Dated: 

Lisa P. Jackson,

Administrator.

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For the reasons set forth in the preamble, 40 CFR 

part 80 is proposed to be 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)(4) to read as follows:¶

¶

§ 80.1405 What are the Renewable Fuel 

Standards?¶

(a) * * *¶

(4) Renewable Fuel Standards for 2013.¶

(i) The value of the cellulosic biofuel standard for 

2013 shall be 0.020 percent.¶

(ii) The value of the biomass-based diesel standard 

for 2013 shall be 1.18 percent.¶

(iii) The value of the advanced biofuel standard for 

2013 shall be 1.69 percent.¶

(iv) The value of the renewable fuel standard for

2013 shall be 10.15 percent.