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Renewable Fuels Standard (RFS) Implementation Presentation to Governors’ Ethanol Coalition – October 2, 2006 Greg Krissek, Director of Governmental Affairs.

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Presentation on theme: "Renewable Fuels Standard (RFS) Implementation Presentation to Governors’ Ethanol Coalition – October 2, 2006 Greg Krissek, Director of Governmental Affairs."— Presentation transcript:

1 Renewable Fuels Standard (RFS) Implementation Presentation to Governors’ Ethanol Coalition – October 2, 2006 Greg Krissek, Director of Governmental Affairs

2 Federal RFS – Timeline of Events ● August 8, 2005 – Energy Policy Act of 2005 (EPAct) signed into law provides for gradual and increasing phase-in of the use of renewable fuels, such as ethanol and biodiesel, growing to 7.5 bgy in 2012 schedule as follows:

3 RFS Schedule YearRFS (bgy) 20064.0 20074.7 20085.4 20096.1 20106.8 20117.4 20127.5

4 Federal RFS – Timeline of Events ● December 30, 2005 – US EPA issues default rule for 2006 pursuant to EPAct for renewable fuel in calendar year 2006 nationally totaling 2.78 percent by volume equating to 4 billion gallons Not specific to individual regulated parties

5 Federal RFS – Timeline of Events ● May 7, 2006 – provisions of EPAct eliminate federal RFG oxygen standard in gasoline In essence, MTBE use in US gasoline pool ceases – replaced by ethanol (in part due to anti-backsliding provisions) boosting ethanol demand by approximately 25% including in several new regions of the country

6 U.S. Ethanol Industry Today ● Annual production record in 2005 of 4 bgy ● 105 plants in 19 states with over 5.0 bgy capacity today (RFA: Sept. 2006) ● 42 Plants under construction, combined w/ 7 expansions, will increase industry capacity in excess of 3.0 bgy (RFA: Sept. 2006) ● Dozens of additional plants in various stages of development

7 Ethanol Production Growth in the U.S. 2006 = 18% US Corn Crop Can replace ~4% gasoline Average growth = 75 mmgy gal/yr Average growth = 720 mmgy gal/yr End of 2007 expect 8.2 Billion gallons capacity = 30% US corn crop US Fuel Ethanol Capacity

8 Federal RFS – Timeline of Events ● September 7, 2006 – EPA proposes rule to carry out RFS for 2007- 2012 More information available at http://www.epa.gov/otaq/renewablefuels/ http://www.epa.gov/otaq/renewablefuels/ ● October 13, 2006 – EPA will hold public hearing in Chicago for stakeholder comment ● November 11, 2006 – Deadline for written comments on EPA’s proposed rule must be filed

9 RFS Proposed Rule – Key Components ● Volumes of Renewable Fuel Use Each Year USDOE Energy Information Administration (EIA) gasoline projections by October 31 EPA renewable fuels projections (volume percentage) by November 30 Compliance required by specific regulated parties

10 RFS Proposed Rule – Key Components ● Credit Trading Mechanism Flexibility for obligated parties (refiners, blenders, distributors, importers, etc.) for renewable fuel use as geographically and economically sensible Credits generated if party blends in excess of that year’s volumetric requirement Cellulosic ethanol credit – 2.5 per gallon Credit has a lifespan of 12 months Undercomplying obligated parties will evaluate whether to obtain credits or actual product

11 RFS Proposed Rule – Key Components ● Compliance for Credit Trading will require a reporting system – Renewable Identification Numbers (RINs) generated by production plants and attached to bills of lading obligated parties show compliance by accumulating sufficient RINs (actual use or credit acquisition) relatively extensive tracking system

12 RFS Proposed Rule – Continued Items for Discussion ● RINs relationship to various modes of shipment from plants, storage and transport in distribution system, and co-mingling of product ● Rollover of credits due to industry expansion surpassing annual RFS requirements – possibility for dampening growth Proposed cap at 20% on rollover RINs or credits

13 RFS Proposed Rule – Continued Items for Discussion Extensive detail of the proposed rule should lead to additional comments and input. Will that slow the process for finalizing the final rule?

14 Thank you! w w w. i c m i n c. c o m gkrissek@icminc.com 316/977-6549


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