Policy update

U.S. EPA Renewable Fuel Standard 2

Alternative fuels Life-cycle analyses

On February 3, 2010, the United States Environmental Protection Agency (EPA) finalized revisions to the National Renewable Fuel Standard. The new rule (RFS2), which incorporates changes mandated by the 2007 Energy Independence and Security Act (EISA), is a major amendment of the original standard (RFS1) created under the Energy Policy Act of 2005.

RFS2 represents a hybrid approach that superimposes a performance-based standard on a set of volumetric targets. In contrast to RFS1, which was limited to gasoline, the new rule expands the RFS program to cover gasoline and diesel intended for use in highway and nonroad vehicles and engines. RFS2 classifies renewable fuels according to four nonexclusive categories, based on GHG-reduction thresholds and feedstock types, and sets volumetric requirements for each. EISA sets the total renewable fuel volume target for 2010 at 12.95 billion gallons. (The original target reflected in RFS1 for 2012, 7.5 billion gallons per year, has already been surpassed; total U.S. renewable fuel production in 2009 was 10.3 billion gallons).

By requiring that any renewable fuel must meet a minimum GHG-reduction threshold of 20% to be eligible for a Renewable Identification Number (RIN), and setting higher reduction thresholds for three of the four fuel categories it defines, RFS2 promotes lower-carbon fuels and next-generation biofuels. It is the first national regulation adopted anywhere in the world that recognizes the potential for significant contributions to lifecycle GHG emissions from indirect land-use change (ILUC). (At the state level, California has already incorporated ILUC GHG emissions in carbon-intensity calculations under its Low Carbon Fuel Standard [LCFS].)

The combination of volumetric targets, corresponding GHG-reduction threshold requirements, and incorporation of GHG emissions from indirect land-use change is expected to reduce annual GHG emissions by 138 million metric tons (MMT) in 2022. Under the new requirements, renewables will displace 13.6 billion gallons of gasoline and diesel, with net economic and human health benefits of $8.5 to $21.5 billion in 2022. According to ICCT estimate, if the goal of producing 16 billion gallons of cellulosic ethanol is met by 2022, RFS2 may reduce the carbon intensity of regulated fuels by 6.5% relative to their carbon intensity in 2009.