1. Diesel Emission Reduction Programs
DERA National RFP
Opened April 30, closes June 10
Emphasis on non-attainment and NATA areas
Roughly $1.3 million for Region 4, $300k to $1 million
SEDC priorities now in regional priorities
DERA Tribal RFP
Opened May 14, closes July 15
$1 million
Ports Initiative
High priority topic at the national, regional level
SEDC 10thAnnual Partners meeting
August 17-19

2. Overview: U.S. Renewable Fuels Program
Region 4 Air Directors Meeting
Spring, 2015
Dale Aspy

3. History
Goals: Energy Security, Reduce mobile GHG emissions, rural development
Energy Policy Act of 2005 – Established the first RFS Program Standards
Energy Independence and security act of 2007 modified the clean Air act and significantly changed the program
National Standard but with 4 categories of renewable fuels
Significantly increased volumes of
renewable fuel – to 36 billion gallons
2022 Full Implementation
Expanded to on and off-road gasoline and diesel
Explicit definitions for renewable fuels to qualify
Inclusion of specific types of waivers
Legislation allows renewable fuels used in Home Heating Oil and Jet Fuel to count towards RFS2 program

4. 2007 EISA RFS2 Program - Key Aspects
Established Specific Volume Standards for Renewable Fuel Use in the Transportation Sector – Gasoline and Diesel; On and Off-Road
Establishes four categories of renewable fuels - each With individual volume standards:
cellulosic biofuel
biomass-based diesel
advanced biofuel
total renewable fuel
Set specific qualification requirements for renewable fuels and feedstocks
Definitions for qualifying fuels & feedstocks Used to comply with the categories
Specifically defines cellulosic, biomass-based diesel, etc.
Set minimum lifecycle GHG reduction thresholds for each category of renewable fuel
Applies restrictions on types of feedstocks that can be used to make renewable fuel, and types of land that can be used to grow and harvest feedstocks
Established grandfathering allowances for renewable volumes from certain Existing facilities
The RFS2 Regulations went into effect July 1, 2010.

5. Details of EISA Categories and Standards
Four Separate Standards
Biomass-Based Diesel: Minimum of 1 Bgal by 2012 and beyond
E.g., Biodiesel, “renewable diesel” if fats and oils not co-processed with petroleum
Must meet a 50% lifecycle GHG reduction threshold
Cellulosic Biofuel: Minimum of 16 Bgal by 2022
Renewable fuel produced from cellulose, hemicellulose, or lignin
E.g., cellulosic ethanol, BTL diesel, green gasoline, etc.
Must meet a 60% lifecycle GHG reduction threshold
Total Advanced Biofuel: Minimum of 21 Bgal by 2022 (Minimum of 4 billion additional
Total Advanced Biofuel
Essentially anything but corn starch ethanol
Includes cellulosic biofuels and biomass-based diesel
Total Renewable Biofuel: 36 Bgal by 2022 (Minimum of 15 Bgal additional)
Ethanol derived from corn starch – or any other qualifying renewable fuel
Must meet 20% lifecycle GHG reduction threshold - Only applies to fuel produced in new facilities
Lifecycle GHG reduction comparisons are based on a 2005 petroleum baseline as mandated by EISA.
NOTE: Existing biofuel facilities (domestic and foreign) are not required to meet GHG threshold for conventional biofuel category – facilities are “Grandfathered.”

7. Simplified Process Flow Chart
Approved Feedstock
Provider
Biorefinery : Renewable Fuel Production and RIN Generation with D Code and Equivalence Value
Supply
Transportation
Obligated Parties: Refiner,
Blender, Importer --
Blending Facility
Compliance

8. Who do the standards apply to and how are the standards determined?
Obligated Parties are Refiners, blenders or importers of gasoline or diesel
How are Obligations Determined?
Obligations are calculated every year, based on EISA volume standards and projections of gasoline and diesel production for the coming year.
A formula is used based on the above information to calculate the Renewable Volume Obligations (RVO)
The standards are converted into a percentage which each obligated party must demonstrate compliance with each year (Renewable Volume Obligation)

9. Renewable Identification Numbers (RINs).
RINs generated on or after July 1, 2010 shall not be generated as a 38-digit code, but shall be identified by the information specified in paragraphs (a) through (i) of this section and introduced into EMTS as data elements during the generation of RINs pursuant to § (b). For RINs generated prior to July 1, 2010, each RIN is a 38-digit code of the following form:
KYYYYCCCCFFFFFBBBBBRRD
SSSSSSSSEEEEEEEE

10. D codes
(1) D has the value of 3 to denote fuel categorized as cellulosic biofuel.
(2) D has the value of 4 to denote fuel categorized as biomass-based diesel.
(3) D has the value of 5 to denote fuel categorized as advanced biofuel.
(4) D has the value of 6 to denote fuel categorized as renewable fuel.
(5) D has the value of 7 to denote fuel categorized as cellulosic diesel.

11. “D” Production Requirements

12. Compliance Basics of RFS2
RINs are the currency of the RFS2 program – used for compliance
RINS are generated by renewable fuel producer
Obligated parties must obtain enough RINS in each category to comply
Trade, buy, produce, bank
Types of Fuels are assigned a D Code – determined by EISA definition, restrictions, GHG evaluation, energy calculation
RINs follow product volume
RIN separation from volume may only be performed by an obligated party
RIN credits have a two year life –year generated, plus one year
Program continues to be supplemented by recordkeeping and attest requirements

13. Compliance Basics of RFS2
Standard
Obligation
Allowable D codes
Cellulosic biofuel
RVOCB
3 and 7*
Biomass-based diesel
RVOBBD
4 and 7*
Advanced biofuel
RVOAB
3, 4, 5, and 7
Renewable fuel
RVORF
3, 4, 5, 6, and 7*
RINs That Can Be Used To Meet
Each Standard In RFS2
A renewable fuel may have different pathways and different equivalency values
Example:
Ethanol from Corn = D Code of 6 (Renewable Fuel)
Ethanol from Sugarcane = D code of 5 (Advanced Renewable) RIN Equivalency Values (Examples)
Ethanol is Baseline Value - all other renewable fuels are compared with ethanol) :
Ethanol: 1.0
Biodiesel: 1.5; 1.6
Butanol: 1.3
Non-ester renewable diesel: 1.7

14. Overview: Compliance System
EPA Moderated Transaction System (EMTS):
A closed, EPA-managed system that provides: 1) a mechanism for screening and
2) a means for tracking RIN credits
Screening process checks that the information provided by the RIN generator is consistent with an existing registration
RIN tracking process is similar to a banking system.
Accounts are assigned to registered users.
Transactions are conducted through EMTS which enforces business rules – e.g. a seller must have a sufficient account balance for a buyer to receive their credits.
Sell
Buy
Blenders
Marketers
Other RIN
Owners
Traders
Obligated
Parties
Importers
Producers
EPA
Screening
RIN
Generator
Registration
Fail
Pass
Renewable
Production /
Import
■ = Attached RIN
■ = Separated RIN

15. Setting the EISA RFS2 Standards Each Year
EPA Sets EISA Standards Every Year
Based on projected gasoline / diesel projections
Formula used per regulations to determine the 4 obligations in terms of a percentage of production and EISA volume standards applied for each category
Proposal – Setting Following Year RFS2 Volume Standards
EISA Volumes converted into percent of gasoline and diesel production expected for following year
Standards that apply to refiners, importers, gasoline blenders
Cellulosic standard set based on EIA projections, our market assessment and info through notice and comment
Biomass-Based Diesel Standared EPA must determine the applicable volume of biomass-based diesel at least 14 months prior to the year in which the volume will be required.
Beginning in 2013
Final Standards --- November 30th by Law

16. Setting the standards-Key Facts and Goals
2014 brought a number of new issues that EPA must consider in setting the standards
A key issue is the ethanol “blendwall” – challenges associated with supplying more ethanol to the market than can be provided through blending up to 10% ethanol in gasoline (E10) and can be consumed in other blends or forms
In 2014 – for the first time, EPA is proposed adjustments to the total renewable fuel and advanced biofuel standards to address these market issues
EPA provided a strong indication that this would likely be the case when the Final 2013 RFS Rule was issued last August
EPA’s intention was to put the RFS program on a manageable trajectory that will support continued growth in renewable fuels

17. Ethanol Blendwall

18. Proposal for 2014
The 2014 rulemaking proposed volume requirements for the RFS program outlined a potential path forward for 2014 and beyond
The proposal, issued November 2013, was the starting point in seeking input from the public
EPA held a public hearing December 2013
Comment period closed at the end of February 2014
The proposal offered a number of approaches and ranges of volumes in setting the 2014 standards
Stakeholders weighed with well over 300,000 comments
2014 Standards still haven’t been finalized.
Agency announced last December intention to take action on 2014, 2015 and 2016 this year.
First Action likely in Spring with intention on getting back on schedule for setting current and future annual standards.

19. Consent Decree
The American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) filed suit over the delays in the Agency issuing the annual standards by the Statutory required dates
April 10: EPA announced a proposed settlement with API and AFPM over deadlines for issuing The standards
EPA must seek public comment on the terms of the settlement for 30 days before deciding whether to proceed with the settlement and seek entry of the consent decree
Under the proposed consent decree EPA would issue final annual volume standards for both 2014 and 2015
EPA must propose volume requirements for 2015 by June 1, 2015 and;
finalize 2014 and 2015 Standards (and resolve pending waiver petition for 2014) by November 30, 2015.
While not required Under the Proposed Consent decree, EPA also announced the volume standards rule will include the following elements in addition to the requirements of the consent decree:
re-propose volume requirements for 2014 that reflect the volumes of renewable fuel that were actually used in 2014.
finalize standards for 2016 in same action
EPA will also propose and finalize biomass-based diesel volume requirement for 2017