EPA Finalizes 2013 Renewable Fuel Standards

EPA Finalizes 2013 Renewable Fuel Standards to Help Promote American Energy Independence, Reduce Carbon Pollution

EPA also announces steps to address concerns about the E10 blend wall

WASHINGTON – As part of an ongoing effort to enhance energy security and reduce carbon pollution, the U.S. Environmental Protection Agency (EPA) today finalized the 2013 percentage standards for four fuel categories that are part of the Renewable Fuel Standard (RFS) program established by Congress. Most of these fuels are produced by American farmers and growers domestically and help reduce the carbon pollution that contributes to climate change.

The final 2013 overall volumes and standards require 16.55 billion gallons of renewable fuels to be blended into the U.S.fuel supply (a 9.74 percent blend). This standard specifically requires:
•           Biomass-based diesel (1.28 billion gallons; 1.13 percent)
•           Advanced biofuels (2.75 billion gallons; 1.62 percent)
•           Cellulosic biofuels (6.00 million gallons; 0.004 percent)

These standards reflect EPA’s updated production projections, which are informed by extensive engagement with industry and a thorough assessment of the biofuels market.

During this rulemaking, EPA received comments from a number of stakeholders concerning the “E10 blend wall.” Projected to occur in 2014, the “E10 blend wall” refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10. Most gasoline sold in the U.S. today is E10. In the rule issued today, EPA is announcing that it will propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal.

EPA is also providing greater lead time and flexibility in complying with the 2013 volume requirements by extending the deadline to comply with the 2013 standards by four months, to June 30, 2014.

A January 2013 ruling by the U.S. Court of Appeals required the agency to reevaluate projections for cellulosic biofuel to reflect market conditions; the final 2013 standard for cellulosic biofuel announced today was developed in a manner consistent with the approach outlined in that ruling.

The Energy Independence and Security Act (EISA) established the RFS program and the annual renewable fuel volume targets, which steadily increase to an overall level of 36 billion gallons in 2022. To achieve these volumes, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

More information on the standards and regulations: http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm
More information on renewable fuels: http://www.epa.gov/otaq/fuels/renewablefuels/index.htm

January 2013 Question of the Month

Question of the Month: What provisions in the enacted “fiscal cliff” legislation relate to alternative fuels and advanced vehicles?

Answer: On January 2, 2013, President Obama signed Public Law 112-240, the American Taxpayer Relief Act of 2012. In addition to averting tax rate increases and postponing government spending reductions, this legislation extends several tax credits and other incentive programs related to Clean Cities portfolio items. Updated information on these incentives is available on the Alternative Fuels Data Center (AFDC) Federal Laws and Incentives page. The changes are also summarized below.

The American Taxpayer Relief Act retroactively extends several tax credits that had expired on December 31, 2011. The following incentives are now effective through December 31, 2013:

• Alternative Fuel Excise Tax Credit: (Public Law 112-240, Section 412)
• Alternative Fuel Infrastructure Tax Credit: (Public Law 112-240, Section 402)
• Alternative Fuel Mixture Excise Tax Credit: (Public Law 112-240, Section 412)
• Biodiesel Income Tax Credit: (Public Law 112-240, Section 405)
• Biodiesel Mixture Excise Tax Credit: (Public Law 112-240, Section 405)

The legislation expands the tax definition of second generation biofuel (previously referred to as cellulosic biofuel) to include biofuel from cultivated algae, cyanobacteria, or lemna, and extends two incentives related to these fuels through December 31, 2013:

•   Second Generation Biofuel Plant Depreciation Deduction Allowance: (Public Law 112-240, Section 410)
• Second Generation Biofuel Producer Tax Credit: (Public Law 112-240, Section 404)

Section 403 of the Act expands the Qualified Plug-In Electric Drive Motor Vehicle Tax Credit to include a credit for eligible two- and three-wheeled plug-in electric drive vehicles, valid through December 31, 2013.

In addition, Section 701 extends discretionary funding for the following U.S. Department of Agriculture programs through September 2013:

• Advanced Biofuel Production Grants and Loan Guarantees
• Advanced Biofuel Production Payments:
• Biodiesel Education Grants:
• Biomass Research and Development Initiative:
• Ethanol Infrastructure Grants and Loan Guarantees:

To view the full text of the American Taxpayer Relief Act, select the Enrolled Bill version from this website.

The changes outlined above became effective immediately. It may take time, however, for the relevant agencies to update documentation to reflect these extensions and changes. For further information, please refer to the following websites:

• U.S. Internal Revenue Service, Forms & Publications
• U.S. Department of Agriculture, Rural Development Energy Programs     

Clean Cities Technical Response Service Team

technicalresponse@icfi.com

800-254-6735