Notice of Supplemental Determination for Renewable Fuels Produced Under the Final RFS2 Program From Canola Oil

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice of Data Availability (NODA).

SUMMARY:

On March 26, 2010, the Environmental Protection Agency published changes to the Renewable Fuel Standard (RFS) program as required by the Energy Independence and Security Act (EISA) of 2007. EISA increased the volume of renewable fuel required to be blended into transportation fuel to 36 billion gallons by 2022. Furthermore, the Act established new eligibility requirements for four types of renewable fuel, each with their own annual volume mandates. The eligibility requirements include minimum lifecycle greenhouse gas (GHG) reduction thresholds for each type of renewable fuel. EPA conducted lifecycle GHG analyses for a number of biofuel feedstocks and production pathways as part of its March 26, 2010 final rule but, as indicated in the final rule, we did not have time to complete all the planned lifecycle GHG assessments for several specific renewable fuel pathways. Since the final rule, we have completed an assessment for an additional renewable fuel pathway, canola oil biodiesel. This Notice of Data Availability provides interested parties with information and an opportunity to comment on our proposed lifecycle analysis of canola oil biodiesel.

DATES:

Comments must be received on or before August 25, 2010.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2010-0133, by one of the following methods:

• http://www.regulations.gov: Follow the on-line instructions for submitting comments.
• E-mail: asdinfo@epa.gov.
• Mail: Air and Radiation Docket and Information Center, Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.
• Hand Delivery: Air and Radiation Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington DC 20004. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2010-0133. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at http://www.regulations.gov , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through http://www.regulations.gov or asdinfo@epa.gov. The http://www.regulations.gov Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through http://www.regulations.gov your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm .

• Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the Air and Radiation Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC 20004. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT:

Doris Wu, Office of Transportation and Air Quality, Transportation and Climate Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4923; fax number: 734-214-4958; e-mail address: wu.doris@epa.gov.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

Entities potentially affected by this action are those involved with the production, distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol and biodiesel. Regulated categories include:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by the RFS2 program. This table lists the types of entities that EPA is now aware of that could potentially be regulated under the program. To determine whether your activities would be regulated, you should carefully examine the applicability criteria in 40 CFR part 80, Subpart M. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding section.

B. What should I consider as I prepare my comments for EPA?

1. Submitting CBI. Do not submit this information to EPA through http://www.regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for Preparing Your Comments. When submitting comments, remember to:

• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).
• Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
• Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
• Describe any assumptions and provide any technical information and/or data that you used.
• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
• Provide specific examples to illustrate your concerns, and suggest alternatives.
• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
• Make sure to submit your comments by the comment period deadline identified.

II. Background on Lifecycle GHG Threshold Determinations

A. Methodology

1. Scope of Analysis

On March 26, 2010, the Environmental Protection Agency (EPA) published changes to the Renewable Fuel Standard program as required by the Energy Independence and Security Act (EISA) of 2007. This rulemaking is commonly referred to as the “RFS2” final rule. As part of the RFS2 final rule we analyzed various categories of biofuels to determine if the complete lifecycle emissions associated with the production, distribution, and use of those fuels met minimum lifecycle greenhouse gas reduction thresholds as specified by EISA (i.e., 60% for cellulosic biofuel, 50% for biomass-based diesel and advanced biofuel, and 20% for other renewable fuels). Our final rule had focused our lifecycle analyses on fuels that were anticipated to contribute relatively large volumes of renewable fuel by 2022, and thus did not cover all fuels that either are contributing or could potentially contribute to the program. In the final RFS2 rule we indicated that we did not have enough time to complete a lifecycle analysis for several specific pathways but would do so this year as a supplemental to the final rule. Since the final rule was issued, we have continued to examine several additional pathways not analyzed for the final rule released in March. This Notice of Data Availability (“NODA”) focuses on our recent modeling of the canola oil biodiesel pathway. The modeling approach EPA used in this effort is the same approach used in the final RFS2 rule for lifecycle analyses of other biofuels. Refer to the RFS2 final rule preamble and Regulatory Impact Analysis (RIA) for further discussion on our approach.

2. Models Used

The proposed analysis EPA has prepared for canola oil biodiesel uses the same set of models that was used for the final RFS2 rule: the Forestry and Agricultural Sector Optimization Model (FASOM) developed by Texas A&M University and others and the Food and Agricultural Policy and Research Institute international models as maintained by the Center for Agricultural and Rural Development (FAPRI-CARD) at Iowa State University. For details on the models used refer to the RFS2 final rule preamble or Regulatory Impact Analysis. These documents are available in the docket or online at http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm. The models require a number of inputs that are specific to the pathway being analyzed, including projected yield of feedstock per acre planted, projected fertilizer use, energy use in feedstock processing and energy use in fuel production. The docket includes detailed information on model inputs, assumptions, calculations, and the results of our proposed modeling for canola oil biodiesel.

3. Scenarios Modeled

To assess the impacts of an increase in renewable fuel volume from business-as-usual (what is likely to have occurred without EISA), we established reference and control cases for the RFS2 final rulemaking published in March 2010. The reference cases are projections of renewable fuel volumes without the enactment of EISA. The control cases are projections of the volumes of renewable fuel that might be used in the future to comply with the EISA volume mandates. The final rule reference case volumes were based on the Energy Information Administration's (EIA) Annual Energy Outlook (AEO) 2007 reference case projections. Our control case volumes were based on our projections of a feasible set of fuel types and feedstocks. Although actual volumes could be different, we believe the projections made for our control cases allow for a reasonable assessment of the potential GHG impacts per gallon of fuel for volumes of renewable fuel likely resulting from implementation of the RFS2 program.

For a number of fuel pathways such as ethanol from corn starch or biodiesel from soybean oil our reference case projected the business as usual volumes from EIA projections for that pathway which we were then able to compare to the control case volumes estimated to increase due to the EISA mandates. This incremental volume increase in renewable fuel volume was used to calculate lifecycle emissions per gallon or million British Thermal Units (mmBTU) of renewable fuel. Since our analysis normalizes the greenhouse gas emissions impacts on a per BTU basis, the effect of using different incremental volumes in our calculations is minimized.

We based our control case projection of 200 million gallons of biodiesel from canola per year in 2022 on a few factors, including historical volumes, potential feedstock availability and competitive uses (e.g., for food or export instead of for domestic fuel), potential increases in crop acreage, and potential increases in crop and conversion yields. Our assessment is described further in the inputs and assumptions document that is available through the docket. Based in part on consultation with experts at the United States Department of Agriculture (USDA) and industry representatives, we believe that these volumes are realistic for the purpose of evaluating the impacts of producing biodiesel from canola oil. For biodiesel from canola oil, we do not have reference case predictions of business as usual volumes from EIA like we did for other fuels. We modeled the impact of an increase of 200 million gallons of biodiesel from canola per year by 2022 compared to the final RFS2 control case (from the March 2010 analysis) which assumed no biodiesel from canola oil. While we recognize that some canola oil has historically been used to make biodiesel for domestic use, this range of production (zero to 200 million gallons) covers the range of production likely by 2022. We believe that this modeled change in canola oil production for biodiesel provides an assessment of lifecycle GHG emissions per gallon of canola biodiesel which reasonably represents the per gallon impact over the likely range of canola biodiesel volumes expected through 2022.

B. Results of Lifecycle Analysis for Biodiesel From Canola Oil

As with other EPA analyses of fuel pathways with a significant land use impact, the proposed analysis for canola oil biodiesel includes a best estimate as well as a range of possible lifecycle greenhouse gas emission results based on formal uncertainty analysis conducted by the Agency.

EPA believes that its analysis of canola oil biodiesel represents the most up to date information currently available on the GHG emissions associated with each element of the full fuel lifecycle. Notably the analysis includes an assessment of uncertainty for key parameters. The graph included in the discussion below depicts the results of our analysis (including the uncertainty in the modeling) for a typical pathway for canola oil biodiesel.

We analyzed the lifecycle GHG emission impacts of producing biodiesel using canola oil as a feedstock assuming the same biodiesel production facility designs and conversion efficiencies as modeled for biodiesel produced from soybean oil. Canola oil biodiesel is produced using the same methods as soybean oil biodiesel, therefore plant designs are assumed to not significantly differ between these two feedstocks. Refer to the docket for more details on our key model inputs and assumptions, e.g., crop yields, biofuel conversion yields, and agricultural energy use. These inputs and assumptions are based on our analysis of peer-reviewed literature and reflect our consideration of recommendations of experts within the canola and biodiesel industries and those from USDA as well as the experts at Texas A&M and Iowa State Universities who have designed the FASOM and FAPRI models.

As was the case for soybean oil biodiesel, production technology for canola oil biodiesel is mature and we have not projected in our assessment of canola oil biodiesel any significant improvements in plant technology; unanticipated energy saving improvements would further improve GHG performance of the fuel pathway. Additionally, similar to soybean oil biodiesel production, we assumed that the co-product glycerin would displace residual oil as a fuel source on an energy equivalent basis. This is based on the assumption that the glycerin market would be saturated in 2022 and that glycerin produced from biodiesel would not displace any additional petroleum glycerin production. However, the biodiesel glycerin would not be a waste and a low value use would be to use the glycerin as a fuel source. The fuel source assumed to be replaced by the glycerin is residual oil.

Figure II-1 shows the results of our proposed modeling. It shows the percent difference between lifecycle GHG emissions for the typical 2022 canola oil biodiesel as compared to the petroleum diesel fuel 2005 baseline. Lifecycle GHG emissions equivalent to the diesel fuel baseline are represented on the graph by the zero on the X-axis. The results for canola biodiesel are that the midpoint of the range of results is a 50% reduction in GHG emissions compared to the diesel fuel baseline. The 95% confidence interval around that midpoint results in range of a 20% reduction to a 75% reduction compared to the diesel fuel 2005 baseline. These results, if finalized, would justify authorizing the generation of biomass-based diesel RINs for fuel produced by the canola oil biodiesel pathway modeled, assuming that the fuel meets the other definitional criteria for renewable fuel (e.g., produced from renewable biomass, and used to reduce or replace transportation fuel) specified in EISA.

The material in the docket includes detailed information on the assumptions and modeling inputs used. As was the case for analyses of other crop-based biofuels, EPA projected increases in canola crop yield based on long term trends. Yield improvement rates recommended by industry were higher and were based on recent shorter term trends. While we have not modeled what specific impact a higher crop yield assumption would have on the resulting lifecycle GHG assessment, higher projected yields would tend to reduce land use impacts which could result in some improvement in projected GHG performance of canola biodiesel. EPA invites comment on all aspects of its proposed modeling of the canola oil biodiesel pathway, including all assumptions made and modeling inputs.

Table II-1 breaks down by stage the lifecycle GHG emissions for canola oil biodiesel and the 2005 diesel baseline. The biodiesel production process reflected in this table assumes that natural gas is used for process energy and accounts for co-product glycerin displacing residual oil. This table demonstrates the contribution of each stage and its relative significance. The docket also includes pathway analyses assuming coal or biomass is used instead of natural gas for process energy.

Refer to the docket for more detailed outputs from our proposed lifecycle modeling. The docket includes a useful memorandum which summarizes relevant materials used for the canola biodiesel pathways analysis. Described in the memorandum, for example, are the input and assumptions document and detailed results spreadsheets (e.g., foreign agricultural impacts, foreign agricultural energy use, FASOM and FAPRI model results) used to generate the results presented above. These additional materials are also available through the docket.