EPA Proposes Updates to the Renewable Fuel Standard: The Renewables Enhancement and Growth Support

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By S. Patricia Batres-Marquez, Decision Innovation Solutions (10/26/2016)
11107 Aurora Avenue, Urbandale, IA 50322
http://www.decision-innovation.com/

On October 3, the U.S. Environmental Protection Agency (EPA) released its proposed Renewables Enhancement and Growth Support (REGS) rule, which would make several changes to the Renewable Fuel Standard (RFS) program regulations. According to the EPA, the proposed regulations are intended to reflect changes in the marketplace and to advance the increasing use of ethanol fuels (conventional and advanced) and non-ethanol advanced and cellulosic biofuels.

Overall, according to the EPA’s pre-publication of the proposed rule (2016), some of the proposed regulatory changes would support expansion in the use of higher-level ethanol blends, while others intend to increase the economics and efficiency of the production of biofuels, particularly advanced and cellulosic fuels that have lower carbon footprints. Table 1 has some proposed key actions included in the EPA’s REGS rule.

Table 1. Proposed Key Actions in EPA’s Renewables Enhancement and Growth Support Rule

Proposed Key Actions in EPA's Renewable Enhancement and Growth Support Rule

 

 

 

 

 

 

 

 

 

 

We present some of these proposed regulations in the following sections.

Biointermediates

The REGS rule is proposing changes in the RFS regulations to clearly specify appropriate requirements when renewable fuel is produced through sequential operations at more than one facility using existing pathways, something that was not envisioned when the RFS regulations were originally implemented. As indicated by EPA, since the current RFS regulatory program was implemented in 2010, the EPA has received several requests from companies about the possible use of renewable biomass that has been substantially preprocessed at one facility to produce feedstock that is used at a different facility to produce renewable fuel for which renewable identification numbers (RINs) would be generated. This preprocessed biomass is denoted as biointermediate. 

EPA is proposing to define a biointermediate as any renewable fuel feedstock that meets all of the following criteria:

  • It is derived from renewable biomass
  • It does not meet the definition of renewable fuel and RINs were not generated for it
  • It is produced at a facility that is registered with the EPA, but which is different than the facility at which it is used to produce renewable fuel
  • It is made from the feedstock and will be used to produce the renewable fuel in accordance with the process(es) listed in the approved pathway
  • It is processed in such a way that it is substantially altered from the feedstock listed in the approved pathway

The EPA also is proposing that any feedstock listed in Table 1 to 40 CRF 80.1426 (see here) or in an approved pathway pursuant to 40 CRF 80.1416 (see previous reference) is not a biointermediate, and that mere “form change” to renewable biomass does not produce a biointermediate. EPA offers some examples of physical preprocessing involving changes in biomass that would not result in a biointermediate such as chopping biomass into small pieces, pressing it, or grinding it into powder; filtering out suspended solids from recycled cooking and trap grease; degumming vegetable oils; drying wet biomass; and adding water to biomass to produce a slurry. Since these activities do not generate biointermediates, they can be performed at a different facility from the one producing the renewable fuel, and there would be no need for additional recordkeeping, reporting, and registration requirements that the regulation is proposing to require for biointermediate producers. 

EPA is proposing registration, reporting, recordkeeping, and product transfer document (PTD) requirements for parties involved in the production of biointermediates, and modified requirements for renewable fuel producers using biointermediates in their renewable fuel production. Both biointermediate and renewable fuel producers would be liable if they violate these requirements.

According to the proposed rules, both the biointermediate producer and the renewable fuel producer have to keep records and report to the EPA about their corresponding supplier. The biointermediate producer has to inform the EPA who supplied the feedstocks used to produce the biointermediate, and the renewable fuel producer has to inform the EPA who supplied the biointermediate used to produce the renewable for which RINs were generated.

EPA mentioned in the proposed rule two companies, Sweetwater Energy and Ensyn, which have developed technologies where cellulosic biomass can be preprocessed and concentrated at one facility before shipment to another facility for conversion to renewable fuel. The preprocessed, concentrated feedstock is a biointermediate.  

Undenatured ethanol that is later denatured at a different facility would be considered a biointermediate. Currently RFS regulations do not consider undenatured ethanol a renewable fuel until a producer adds denaturant to it in accordance with the requirements of the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department at 27 CFR parts 19-21, for which RINs are generated. For this reason and following the proposed definition of a biointermediate, the producer of undenatured ethanol would be required to register as a biointermediate producer, and the party that denatured the ethanol would be required to register as a renewable fuel producer.

Although not in the short-term, EPA expects the use of biointermediates holds considerable promise for the future increase in cellulosic and advanced biofuel production, as storage and transportation costs of bulky feedstock can be reduced by using technologies that produce biointermediates.

The EPA seeks comment not only on the proposed biointermediate regulations, but also comment from potential producers of biointermediates on the current status of operations, prospective production volumes, timelines for production, and information regarding the use of biointermediates in the production of renewable fuel in the future.

Ethanol Flex Fuel

E16-50 blends are considered gasoline under EPA’s current regulation and as such are subject to the same EPA requirements that apply to gasoline, even though these blends may not be used in conventional gasoline vehicles. E85 encompasses ethanol blends that contain from 51 to 83 volume percent ethanol for use in flexible fuel vehicles (FFVs). Such blends have been sold under the name E85 for several years. Under the Fuel and Fuel Additive (F&FA) program, E51-83 blends are part of the ethanol family and are not subject to EPA’s gasoline regulations.

Currently the only fuel quality requirement for E85 is that it must be substantially similar (sub-sim) to the fuel used for FFV certification testing. In order to comply with this requirement, the EPA has required E85 blenders to use only certified gasoline, gasoline blendstocks for oxygenate blending (BOBs), and denatured fuel ethanol (DFE) as E85 blendstocks, in accordance with practices used in producing such blends for vehicle certification. This guarantees the resulting blending meets the gasoline fuel specifications. Following these requirements, EPA also is guaranteed that E85 fuel quality meets the same sulfur, benzene, and Reid vapor pressure (RVP) requirements that apply to gasoline and is adequate to maintain the in-use emission performance for FFVs. Nonetheless, EPA indicates other less expensive blendstocks, for example natural gasoline, are currently available in the marketplace that do not have the same standards. EPA considers that allowing the use of natural gasoline blendstocks to produce E85 (E51-83 blends) may reduce the cost and increase the use of E85. 

In the proposed rule, EPA indicates E16-50 gasoline blends currently are produced for use in FFVs using blender pumps at fuel retailer facilities. In practice, a blender pump mixes gasoline (E0 or E10) and E85 parent blends at different ratios to produce different E16-50 blends. Therefore, blender pump operators are considered gasoline refiners. As indicated by EPA, E16-50 blender pumps are a recent development. Gasoline refiners manufacture gasoline by refining crude oil or by mixing blendstocks of undefined quality in large volumes. Therefore, they have to comply with EPA gasoline quality standards by testing every batch, although EPA doesn’t consider these sampling, testing, recordkeeping, and reporting requirements suited for fuel retail.

EPA is proposing to refer to all higher level ethanol blends (E16-83) that may only be used in FFVs as ethanol flex fuel (EFF) and to regulate all these blends in the same manner. According to EPA, the proposed standards for EFF will address the public health and welfare effect of EFF and its impact on emissions control devices on FFVs and FFV engines, plus it will provide new flexibility. These standards are patterned on the EPA’s federal gasoline quality regulations and are meant to offer a comparable level of emission control performance when EFF is used in FFVs compared to the use of gasoline in conventional gasoline vehicles.

Carbon Capture and Storage (CSS) Implementation under the RFS Program

EPA indicates carbon capture and storage is a technology that could be important in reducing GHG emissions from stationary sources. EPA has received requests under the RFS program to use CCS to lower the lifecycle GHG emissions related with ethanol produced as renewable fuel. Using such a technology, a renewable fuel producer would be able to capture, treat, and compress CO2 generated from the ethanol fermentation process. The EPA is proposing registration, recordkeeping, reporting and RIN generation requirements that would be used in case EPA were to permit CCS as a lifecycle GHG emission reduction technology in regard to the RFS program.

New Pathway for Short-Rotation Hybrid Poplar and Willow trees as a Feedstock

Under the new proposal, EPA is seeking to approve new fuel pathways for ethanol and naphtha produced using short-rotation hybrid poplar and willow trees through a process that converts cellulosic biomass to fuel for the generation of cellulosic biofuel (D-code 3) RINs. In addition, EPA is proposing to approve new fuel pathways for diesel, jet fuel, and heating oil produced from short-rotation hybrid poplar and willow through a production process that transforms cellulosic biomass to fuel for the generation of cellulosic biomass-based diesel (D-code 7) RINs. Based on its own analysis, EPA indicates that through a variety of processing technologies, the fuel produced from short-rotation hybrid poplar and willow trees meets the 60 percent GHG emissions reduction threshold required to qualify as cellulosic biofuel.

Generating RINs for Renewable Electricity

Based on 2011-2014 sales data, EPA estimates the current electric vehicles (EVs) fleet includes about 120,000 battery electric vehicles and 150,000 plug-in hybrid electric vehicles. According to EPA estimates, if this fleet were to be charged only with renewable electricity, about 30 million RINs could be potentially generated. The EPA indicates it has received several registration requests for approval under the existing RFS regulations for generating RINs for renewable electricity from biogas, and these requests differ in their approach. Some parties are interested in generating RINs for the electricity used by a fleet of EVs, a number of charging stations, or groups of interested EV owners. Others are interested in generating RINs for the electricity used by all of the EVs produced by an EV producer. This creates conflict among the different elements of the RIN generation structure. Because of the variety of the registration requests submitted for the generation of RINs for renewable electricity so far, in order to avoid double-counting of RINs for the same amount of electricity, EPA indicates approval of any of these proposed systems may disqualify the approval of others. The EPA is seeking comment on potential RIN generation structures for renewable electricity to help resolve the many issues related with choosing a suitable structure and its design. EPA also is seeking comment on determining which of these structures would best further the goals of the RFS program.

Renewable Volume Obligation (RVO) Reporting

EPA is proposing to revise RVO reporting requirements for obligated parties. Within this context, EPA is proposing that obligated parties, starting in the 2017 compliance year, would report the constituent products described in 40 CFR 80.1407(c) and (e) (see here) separately and not as a total. With this new regulation, EPA would track more easily the production of gasoline and diesel by obligated parties, and corroborate the accuracy of the reported volumes. Also, starting in the 2017 compliance year, EPA is proposing that obligated parties report heating oil production volumes as part of their annual compliance report. This would allow accuracy in RVOs calculations.

Oil from Corn Oil Extraction

EPA already has established two pathways for biomass-based diesel (D-code 4) and advanced biofuel (D-code 5) made from “non-food grade corn oil” as described in Table 1 to 40 CRF 80.1426 (pathways F and H, see here).  Under the current RFS regulation, “corn oil extraction” is defined as “the recovery of corn oil from thin stillage and/or the distillers grains and solubles produced by a dry mill corn ethanol plant, most often by mechanical separation.” 

As EPA indicates, as the industry has evolved and matured, not only are new procedures being used to extract corn oil, but also corn oil is extracted at different locations in the ethanol production process. According to EPA, the timing and method of corn oil extraction are not relevant for GHG reduction to be accomplished in the context of pathways F and H, as long as three conditions are met: “1) the corn is converted to ethanol, 2) the corn oil is extracted at a point in the dry mill ethanol production process that renders it unfit for food uses without further refining, and 3) the resulting DGS from the dry mill operation is marketable as animal feed.” Hence, the EPA is proposing a revised definition of “corn oil extraction” to include these three points. The revised definition would include corn oil recovered at any point downstream of when a dry-mill corn ethanol grinds the corn, provided the three conditions are met, since typically corn ground at a dry mill ethanol plant is not suitable for food uses. With this proposed expanded definition, EPA indicates that corn oil recovered before fermentation from the slurry or liquefaction tanks and corn oil recovered after fermentation from the thin stillage and/or DGS would be included. Recovery of corn oil by a third-party from DGS produced by a dry mill corn plant also would be included.

Renewable diesel and biodiesel produced from non-cellulosic portions of separated food waste

EPA already has a petition to approve a pathway for the use of non-cellulosic portions of separated food waste to produce biodiesel. The EPA also indicates the process to convert food waste to biodiesel would be similar to the process EPA modeled for waste oils/fats/greases biodiesel. Also, EPA asserts converting waste food to biodiesel would have negligible GHG emissions associated with its production, as in the case of conversion of waste oils/fats/greases, resulting in similar lifecycle emission in both processes. Consequently, EPA is proposing to amend the pathway described in Rows F and H of table 1 to 40 CFR 80.1426 (see here), so that D-code 4 and D-code 5 RINs would be generated with the production of biodiesel and advanced biofuel, respectively, using non-cellulosic portions of separated food waste.
Additional revisions to the RFS included in the EPA’s proposed Renewables Enhancement and Growth Support Rule for which EPA is seeking comment are shown in Table 2.

Table 2. Other Revisions to the RFS program included in the EPA's Proposed Renewables Enhancement and Growth Support Rule

Other Revisions to the RFS Program

 

 

 

 

 

 

 

 

The EPA’s Renewables Enhancement and Growth Support Rule proposes major revisions and additions to the RFS program and includes a wide variety of issues, given the diversity of products the program encompasses. By seeking to allow new feedstocks and new technologies, and by proposing to rename higher-level ethanol blends and redefine some processes, the EPA indicated the proposed changes intend to align the current regulations with recent developments in the marketplace to increase production of biofuels, particularly cellulosic and other advanced biofuel. 

The period for public comment will be open for 60 days after this proposed rule is published in the Federal Register.

Sources

U.S. Environmental Protection Agency (EPA), 2016. Renewables Enhancement and Growth Support Rule.  (accessed 10/18/2016)