Summary
The content of this article is misleading. The EPA is simply enacting the provisions of the Energy Independence and Security Act of 2007. Furthermore, the EISA legislation sets Renewable Fuel Standards for total volume along with subsets requiring a minimum amount of a particular fuel. After these specialized fuels are accounted for, the 2009 RFS of 11.1 billion gallons per year leaves 10.5 billion gallons to be fulfilled with any renewable fuel. This volume does not necessarily have to be provided by corn based ethanol, although on a practical matter it will. Theoretically 10.5 billion gallons could be filled with biodiesel. It all depends on relative economics, supply and the distribution system.
Analysis
The Renewable Fuel Standards were enacted with the Energy Independence and Security Act of 2007 legislation. The Legislation st the standards for Total Renewable Fuels in the upcoming years.
In 2009, the Renewable Fuels Standard is 11.1 billion gallons (BG). OF this total, at least 600 million gallons must be advanced biofuels. Of the 600, at least 500 million gallons must be biomass based diesel or from a practical standpoint, biodiesel.
The definitions of what is a renewable fuel, an advanced biofuel or a biomass based diesel are also contained in the legislation. (see pages 70 to 78 or so of the legislation) After the 600 million gallons is accounted for, that leaves 10.5 BG of renewable fuels required to satisfy the mandate.
For example, the 10.5 BG may be satisfied with corn based ethanol. Theoretically, it could be satisfied with sugar based ethanol or even biodiesel. They are all renewable fuels according to the definition in the legislation.
The flexibility to meet the balance of the 10.5 BG requirement with a variety of renewable fuels can put pressure on corn based ethanol producers in the futures. The relative economics of each along with the ability of the distribution system to enable their individual use will ultimately determine how much corn based ethanol is used in 2009.
One thing is certain: There is adequate domestic ethanol refining capacity to satisfy the 10.5 BG volume.
The 10.21% figure cited in the article is the obligated party's requirement for 2009. This figure is a calculation done by the EPA in a proscribed manner. They use a gasoline demand estimate for 2009, adjust for Hawaii and Alaska and then make a further adjustment for the small refiner exemption. The RFS volume is then divided by this gasoline volume and a result is obtained. The specific calculation is available on the EPA website.www.epa.gov/otaq/renewablefuels/index.htm
The RFS standard is the hard and fast number, the percentage figure is a calculation based on estimated gasoline demand.
