Current U.S. Environmental Protection Agency Renewable Fuels Activities

1. Current U.S. Environmental Protection Agency Renewable Fuels Activities September 2006

2. Recent Renewable Fuels Developments in U.S. • Passage of the Energy Policy Act of 2005 • Established a new national renewable fuels program (the Renewable Fuels Standard) to be implemented by EPA • President Bush’s State of the Union Speech • Replace > 75 percent of Middle East oil imports by 2025 • Make cellulosic ethanol cost competitive by 2012 • State bans on MTBE going into affect • Ethanol preferred alternative • Removal of the oxygen mandate for Reformulated Gasoline (RFG) • Reduces need to add ethanol as an oxygenate • States continue to pass renewable fuel mandates and incentives

3. Three areas of Federal activity • Regulations to implement a renewable fuels mandate • Voluntary programs to encourage production and use of renewable fuels with greatest potential environmental benefit • Research into fuel properties and emissions impacts

4. Renewable Fuels Standard

5. Proposed Regulations Signed September 7, 2006 • Described in detail a program to assure the required amount of renewable fuel used in the U.S. transportation sector • Assessed impacts • Cost of producing and distributing renewable fuel • Cost for reformulating fuel to accept the renewable fuel and still meet fuel specifications • Vehicle emissions impacts and lifecycle GHG • Final rule expected early 2007

6. RFS--The Program Basics • EPA regulations must ensure the use of renewable fuelsused by transportation meet minimum volumes • 2006: 4.0 billion gallons/yr • 2007: 4.7 • 2008: 5.4 • 2009: 6.1 • 2010: 6.8 • 2011: 7.4 • 2012: 7.5 • 2013+: Same percent of renewables for 2012 (250 million gallons of which must be cellulosic ethanol)

7. Proposed Rule…. • Defines who are the liable parties • Refiners/blenders/importers • Establishes a credit trading program • Not every gallon of gasoline has to contain renewables • Not every refiner’s production has to contain renewables • Establish “appropriate” credit for different renewables • 1.0 gallon of cellulosic ethanol worth 2.5 gallons of ethanol from sugars or starch • Other renewables (e.g. biodiesel) based on energy content compared to denatured ethanol • Provide for… • Deficit carryover from one year to the next • Small refiner exemptions during first five years

8. Ethanol Corn Other Starches Cellulose Sugar Biodiesel (ester) and Renewable Diesel Veg Oils and Animal Fats ETBE Others… Potentially Qualifying Renewable Fuels

9. Promoting Renewable Fuel Blends with the Greatest Environmental Benefit

10. E-85 and Biodiesel • Working to promote the use of E-85 and biodiesel through a voluntary partnership program (involving automakers, oil refiners, fuels producers, fleet owners, states…) • This effort is designed to: • Maximize the environmental benefits of these fuels • Create a voluntary complement to the goals set forth in the Renewable Fuels Standard • Help meet the Administration’s goals of improving energy security

11. E - 85 • E85 is a blend of 85% renewable ethanol and 15% gasoline • Only specially-designed Flex Fuel Vehicles can run on E85 • Benefits--Relative to Regular Gasoline • Reduced petroleum consumption • Decreased emissions of benzene, a harmful air toxic • Reduced greenhouse gas emissions of approximately 20% • Benefits--Relative to E - 10 • E-85 consumes over 8 times the ethanol, making it easier to meet the RFS targets while reducing ethanol transportation and blending costs • Reduced volatility and therefore reduced VOC and NOx emissions • Potentially better energy efficiency (further distance driven per Btu) • 5 million flex-fueled vehicles (FFVs) are on the road today • Automakers are planning increased production volumes However, only about 1% of current FFVs are fueled with E85…

12. Expanding Use of E85 • Lack of awareness • Many FFV drivers are not aware that their vehicle can run on E-85 • Much of the general public is not aware of E-85’s environmental and energy security benefits • Lack of infrastructure • Only 600 out of approximately 170,000 gas stations in the US offer E-85 • Most of these are independent stations concentrated in the Midwest • Lack of an economic incentive • Because of E-85’s reduced fuel economy (miles per gallon), it must be priced significantly lower than gasoline • Historically, E-85 prices have not been competitive, although higher gas prices and increasing ethanol production will make E85 more competitive

13. Biodiesel • Renewable fuel derived from natural oils like soybean oil • Can be used with petroleum based diesel fuel in existing diesel engines Benefits • Significant reductions in PM, CO, and toxics • NOx increases of 10% for B100, although only 0.5% for B5 • 70.5% reduction in lifecycle GHG emissions (for every gallon of petrodiesel displaced) • For B5, GHG emissions are reduced by 3.5% • Adds cetane and lubricity • Relatively easy to blend But currently not cost competitive withpetroleum diesel EPA’s Focus • “Low-blends” of biodiesel (B5-B20)

14. Voluntary Program Efforts • Address the barriers to using E-85 and biodiesel • Form a partnership with automakers, petroleum companies, fuels producers, corporate fleets, and states • Raise consumer awareness of the benefits of E-85 and B5 • Provide greater access to E-85 by increasing the number of E85 fueling pumps available • Help large corporate and state fleets convert a significant portion of their vehicles to E85 • Encourage FFV drivers, corporate fleets, and heavy-duty diesel fleets to fuel with E-85 and/or biodiesel • Increase the number of gallons of E-85 and biodiesel in the fuel supply

15. Research and Analysis • Testing to determine emission impacts of emerging renewable fuels, especially on latest technology engines • Toxic emissions as well as criteria polutants • Lifecycle GHG emissions of various renewable fuels • Economic impacts (farmers, refiners, consumers) • Energy security benefits

16. Contact Information Robert Larson Associate Director Transportation and Climate Division US Environmental Protection Agency Email: Robert Larson/AA/USEPA/US@EPA