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Environmental Protection Agency Takes Steps to Approve New Types of Renewable Fuels

On May 21, the US Environmental Protection Agency (EPA) released a pre-publication version of a notice of proposed EPA rulemaking (NPRM) that makes technical amendments to the Renewable Fuels Standard (RFS2).

The proposed rulemaking clarifies some provisions of the RFS and approves new types of renewable fuels that can count toward meeting RFS volumes. Most significantly, the NPRM clarifies that biogas from the following sources can count as cellulosic biofuel: renewable diesel, renewable naphtha, and renewable electricity for use in electric vehicles when produced from landfill gas; and renewable compressed natural gas (CNG) and liquefied natural gas (LNG) from biogas.

The proposed rule establishes that CNG and LNG—and not raw biogas—can generate renewable identification numbers (RINs) under the RFS2. The NPRM evaluates LNG and CNG from landfill biogas and concludes that such fuels can be considered cellulosic biofuels because approximately 90% of the biogas is produced from cellulosic materials. EPA also clarifies that biogas producers who generate LNG or CNG from food and yard waste will be able to generate RINs under the RFS.

Previously, the regulations only specifically mentioned biogas from landfills, waste water treatment, and manure digesters. While current regulations provide a pathway for biogas produced from a manure digester, the EPA, responding to calls from the biogas industry, clarified that manure digesters should rather be considered “waste digesters;” that is, digesters that use not only animal wastes but also biogenic waste oils/fats/greases, separated food and yard wastes, and crop residues.

The rule also explains the contract requirements to track the biogas from generation to end use. EPA also clarifies which entity along the production chain can generate RINs as a biogas producer.

EPA also proposed making amendments to non-biogas fuels. The agency wants to amend the definition of “crop residue” to include corn kernel fiber. EPA also proposes a way to determine the volume of cellulosic RINs produced from various feedstocks that are primarily but not entirely comprised of cellulosic materials. In sum, EPA proposes to allow 100% of the volume of renewable fuel produced from specific cellulosic feedstock sources found in Table 1 of section 80.1426 to generate D-3 or D-7 RINs (depending on the type of finished fuel).

However, separated food waste, separated yard waste, and separated MSW would continue to be treated as before. EPA justifies this in part because attempting to account for variability within feedstocks would impose a significant administrative burden on producers and the agency. All of the feedstocks in Table 1 have adjusted cellulosic content of at least 70%, with an average content of around 85% cellulosic. Thus, EPA would allow biofuel made from the following cellulosic feedstocks to be able to generate applicable cellulosic RINs for 100% of the volume produced: crop residue (now including corn fiber); slash; pre-commercial thinnings and tree residue; annual cover crops; switchgrass; miscanthus; and energy cane.

The NPRM also would allow butanol from corn starch to qualify as an advanced biofuel if it meets the 50% green house gas (GHG) emission reduction threshold. This represents a big win for biofuels company Gevo.

This NPRM should be finalized later this fall, so the impact on volume levels for 2013 will be minor. The EPA is also working on another rulemaking addressing renewable heating fuel, a rule on palm oil, and others that would qualify new biofuel pathways.

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