Arkansas Renewable Fuels

Arkansas Renewable FuelsArkansas Renewable Fuels

WHY RENEWABLE FUELS?

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Transportation fuel is one of the top three energy use sectors in the United States, accounting for over two‐thirds or 14 million of the 20 million barrels of crude oil consumed daily in 2016.  Of that, the United States imports over half from foreign sources according to the U.S. Energy Information Administration (EIA).  In California, the transportation sector represents roughly half of all energy consumed and is more than 90 percent dependent on petroleum.  Despite the current economic turmoil and volatile oil prices, Californians still consume more than 50 million combined gallons of gasoline and diesel each day, or 1.2 million barrels per day

Product Demand

Renewable Fuels are not only improving the U.S. Economy, they are giving the U.S. consumer a choice at the pump.


Background:  The Renewable Fuel Standard (“RFS”) is a USA federal program that requires transportation fuel sold in the U.S. to contain a minimum volume of renewable fuels.  The RFS originated with the Energy Policy Act of 2005, and was expanded and extended by the Energy Independence and Security Act of 2007 (“EISA”).


The RFS program requires renewable fuel to be blended into transportation fuel in increasing amounts each year, escalating to 36 billion gallons by 2022.  Each renewable fuel category in the RFS program must emit lower levels of greenhouse gases relative to the petroleum fuel it replaces.  

· RFS2 is Federal law in the United States until 2022.

· Refiners must produce/buy volumes of four categories of biofuels over the next seven (7) years.

· 90% of the growth is in cellulosic (non-food) fuel sources that reduce GHG emissions.

· Market opportunity is $700 billion over the next 7 years.


Oil Refiners are classified as Obligated Parties to RFS. They must, “by EPA statute”, produce and/or buy volumes of four categories of biofuels over the next seven years or face stiff fines and penalties that far outweigh annual compliance requirements. 


Renewable Fuel Standard Program

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The chart illustrates the EPA’s RFS statutory annual volume requirements.

Congress created the renewable fuel standard (RFS) program to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil. This program was authorized under the Energy Policy Act of 2005 and expanded under the Energy Independence and Security Act of 2007. 

The RFS program is a national policy that requires a certain volume of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel. The four renewable fuel categories under the RFS are:


  • Biomass-based diesel
  • Cellulosic biofuel
  • Advanced biofuel
  • Total renewable fuel

The 2007 enactment of EISA significantly increased the size of the program and included key changes, including:


  • Boosting the long-term goals to 36 billion gallons of renewable fuel
  • Extending yearly volume requirements out to 2022
  • Adding explicit definitions for renewable fuels to qualify (e.g., renewable biomass, GHG emissions)
  • Creating grandfathering allowances for volumes from certain existing facilities
  • Including specific types of waiver authorities