Federal Legislation

 

Renewable Fuels Standard    

Prohibition on Franchise Agreement Restrictions Related to E85 Infrastructure 

Infrastructure Development Grants for Mid-Level Blends of Ethanol

 

Renewable Fuels Standard (RFS)

The Energy Policy Act of 2005 (EPAct 2005, P.L. 110-58), established the first-ever Renewable Fuels Standard (RFS) in federal law, requiring increasing volumes of ethanol and biodiesel to be blended with the U.S. fuel supply between 2006 and 2012. 

The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6) amended and increased the RFS, requiring 9 billion gallons of renewable fuel use in 2008, stepping up to 36 billion gallons by 2022. 

 


Under the modified RFS, corn-based ethanol (conventional biofuel) is essentially capped at 15 billion gallons by 2015, while 21 of the 36 billion gallons in 2022 must be derived from advanced biofuel such as cellulosic and non-corn-based ethanol.

RFS Schedule under the Energy Independence and Security Act of 2007

Biofuel Definitions:

Conventional Biofuels (Corn Ethanol)
Renewable fuel that is derived from corn starch. The renewable fuel produced from facilities that commence construction after the date of enactment (December 19, 2007) must achieve a 20% reduction in greenhouse gas (GHG) emissions compared to baseline lifecycle GHG emissions of gasoline and diesel.

Advanced Biofuels
Renewable fuel other than ethanol derived from corn starch, that is derived from renewable biomass and has lifecycle GHG emissions, as determined by the EPA Administrator that are at least 50% less than baseline GHG emissions. This term includes "cellulosic biofuels" and "biomass-based diesel." The schedule for Advanced Biofuels includes the schedule for Cellulosic Biofuels, Biomass-Based Diesel, and Undifferentiated Advanced Biofuels.

Cellulosic Biofuels
Renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass and that has lifecycle GHG emissions, as determined by the EPA Administrator, that are at least 60% less than the baseline lifecycle GHG emissions.

Biomass-Based Diesel
Renewable fuel that is biodiesel as defined in section 312(f) of the Energy Policy Act of 1992 (42 U.S.C. 13220(f), which according to the EPA is, a diesel fuel substitute produced from nonpetroleum renewable resources that meets the registration requirements for fuels and fuel additives established by the EPA under section 7545 of the Clean Air Act." It is derived from renewable biomass and has lifecycle GHG emissions, as determined by the EPA Administrator that are at least 50% less than baseline GHG emissions. It does not include the co-processing of biomass with a petroleum feedstock, which is classified as an "advanced biofuel."

Undifferentiated Advanced Biofuels
Renewable fuel other than ethanol derived from corn starch, that is derived from renewable biomass and has lifecycle GHG emissions, as determined by the Administrator that are at least 50% less than baseline GHG emissions. This term includes "cellulosic biofuels," "biomass-based diesel" and "co-processed renewable diesel."

ACE was the first ethanol association to back the concept of a Renewable Fuels Standard a decade ago and is proud to be taking the lead on ensuring the RFS is set at levels progressive enough to ensure ethanol a long-term, central role in the nation's energy strategy. The RFS is critically important to provide lenders, investors, farmers, and ethanol producers with a signal that a substantial, sustainable market exists for this renewable fuel.

Related Reading:

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Prohibition on Franchise Agreement Restrictions Related to E85 Infrastructure

Section 241 of The Energy Independence and Security Act of 2007 (P.L. 110-140) amends the Petroleum Marketing Practices Act to prohibit for a franchisor (i.e. oil company) to restrict a franchisee from installing E85 infrastructure through a franchise agreement.

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Infrastructure Development Grants for Mid-level Blends of Ethanol

Section 244 of The Energy Independence and Security Act of 2007 (P.L. 110-140) authorizes the Secretary of Energy to establish a new program for making grants and providing assistance to retail and wholesale fuel dealers for the installation, replacement, or conversion of fuel storage and dispensing equipment for renewable fuel blends greater than E10 but less than E85.  Funding assistance is subject to appropriations from Congress.

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Special Depreciation Allowance for Cellulosic Biomass Ethanol Plant Property

Section 209 of the Tax Relief and Health Care Act of 2006 (P.L. 109-432) is administered by the Internal Revenue Service (IRS).  It allows a taxpayer to take a depreciation deduction of 50% of the adjusted basis of a new cellulosic ethanol plant in the year it is put in service.  The accelerated depreciation applies only to cellulosic ethanol plants that break down cellulose through enzymatic processes (as opposed to gasification).  Any portion of the cost financed through tax-exempt bonds is exempted from the depreciation allowance.  Any enzymatic cellulosic plant acquired after December 20, 2006 and placed in service before January 1, 2013 qualifies.  Plants that had binding contracts for acquisition before December 20, 2006 do not qualify.  The provision is effective through December 31, 2012.

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