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September 21, 2012
2013 volume set for biodiesel

In a final rule issued as part of the federal renewable fuel standard (RFS) program, the EPA has set the volume requirement for biomass-based diesel at 1.28 billion gallons for 2013.  The requirement exceeds the statutory minimum of 1.0 billion gallons.  According to the Agency, the 2.8 billion gallon increase over the minimum creates greater certainty for both producers of biomass-based diesel and obligated parties and also increases certainty that the intended GHG emissions reductions and energy security benefits associated with the use of advanced biofuels will be realized.
The Energy Independence and Security Act of 2007 (EISA) directs the EPA to establish and implement regulations to ensure that the nation’s transportation fuel supply contains mandated volumes of renewable fuel.  The total renewable fuel requirement is divided into four separate, but nested categories—total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic ethanol—each with its own volume requirement.  The mandated volumes must also be ramped up at least until 2022. 
Production capacity
Questions about the capacity of producers of biomass-based diesel caused the EPA to delay final action on the 2013 volume requirement until 3 months before industry must begin meeting the requirement.  EISA directs the EPA to set RFS volume requirements based on factors that include impact of production on the environment and security of the United States,                                                                                      cost to consumers, job creation, and production capacity.  The primary feedstock for biomass-based diesel is soybean oil followed by grease and rendered fats and corn oil. 
“Producers of biodiesel, the largest contributor to biomass-based diesel, have significantly greater production capacity than will be required by today's final rule, and in general it only requires a few months to bring an idled biodiesel facility back into production,” states the EPA. “Moreover, many facilities that are producing volume currently are underutilizing their capacity, and can ramp up production relatively quickly.  Finally, the biodiesel industry is already producing at a rate consistent with an annual volume of about 1.3 billion gallons.”
Benefits and disbenefits
The Agency estimates that the action will result in $41 million in energy security benefits and $19 million to $52 million in air quality disbenefits associated with decrements in ambient air quality.  Other benefits include reductions in GHG emissions and indirect employment benefits in rural areas due to increased biodiesel production.  Impacts on water quality, water use, wetlands, ecosystems, and wildlife habitats are expected to be negative but modest, says the EPA, due to both the small impact on crop acres planted necessary to supply sufficient soy oil feedstock and the relatively small impact of these measures on soybean production compared to other potential crops.
In terms of cost, the EPA estimates that the price of soybeans could increase by up to 3 cents per pound in 2013 if the full 280 million gallon increment is met through increased demand for soy oil.  Using this assumption, the Agency estimates the cost of producing the additional biomass-based diesel would range from $253 million to $381 million in 2013.  This suggests a diesel fuel cost increase of less than 1 percent per gallon, according to the EPA.
Read EPA’s final rule setting the 2013 biomass-based diesel renewable fuel volume.


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