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EPA Takes Important First Step in RFS Implementation

The U.S. Environmental Protection Agency released its interim rule governing the implementation of the Renewable Fuels Standard included in the Energy Policy Act of 2005. The EPA's interim rule provides guidance to oil companies as the RFS is introduced.

"This is an important and logical first step toward complete implementation of the RFS," says RFA President Bob Dinneen. "This interim rule provides maximum flexibility to refiners, which will help lower consumer gasoline prices at the pump. At the same time, this rule preserves the certainty of market demand that is critical to the continued investment in domestically produced renewable fuels such as ethanol and biodiesel."

The interim rule imposes the RFS requirement of 4 billion gallons of renewable fuel use in 2006 in the aggregate, rather than on a refiner-by-refiner basis, because the details of the credit trading program have not yet been resolved. Should the nation fall short of 4 billion gallons of renewable fuel use in 2006 for any reason, the deficit would be added to the 4.7 billion gallon requirement for 2007. Virtually all the stakeholders agree, however, that the demand for high octane, clean-burning gasoline components will result in well more than 4 billion gallons of ethanol and biodiesel being used next year.

The RFS is a nationwide program establishing baselines for the use of renewable fuels. As outlined by the EPACT of 2005, the U.S. will be required to use 4 billion gallons of renewable fuel beginning in 2006. That usage will increase to 7.5 billion gallons in 2012.

Currently, 94 ethanol refineries nationwide have the capacity to produce over 4 billion gallons annually. There are 30 ethanol refineries and nine expansions under construction with a combined annual capacity of nearly 1.8 billion gallons.