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Carbon Tales: Information Infrastructures for Sustainable Biofuels Governance Adam Reed, J.D. Research Fellow, CEES William Boyd, J.D., Ph.D. Professor of Law, CU Law John Field, NSF IGERT Scholar Colorado State University MAS BioEnergy Program Keith Paustian, Ph.D. Professor of Soil Science Colorado State University CENTER FOR ENERGY & ENVIRONMENTAL SECURITY UNIVERSITY OF COLORADO LAW SCHOOL WOLF LAW BUILDING, 401 UCB BOULDER, COLORADO Overview Biofuels Behaving Badly? • Countries that make up much of the demand for biofuels are now imposing a variety of sustainability regimes to ensure that biofuels production does not destroy rainforest or result in excess GHG and pollutant emissions. © Center for Energy and Environmental Security, 2009 A Brief and Selective Overview of Current Biofuels Policies March 2010: EPA publishes RFS2 final rule in Federal Register May 2009: EPA releases RFS2 draft rule May 2009: DOE announces $786M in stimulus funding for “next-wave” biofuels April 2009: California promulgates low carbon transportation fuel rule April 2009: UK increases Renewable Transport Fuels Obligation from 2.5% to 3.3% April 2009: EU Parliament and Council Directive 2009/28/EC Art. 17 establishes sustainability criteria for biofuels. March 2009: Europeans move to impose provisional tariffs on U.S. biodiesel producers: 261 407 Euros (~$328 - $511) per ton of U.S. biodiesel. February 2008: Searchinger and Fargione articles published in Science © Center for Energy and Environmental Security, 2009 The Challenge of Sustainability Regimes • How do we ensure that a gallon of “sustainable” biofuel is what it says it is? •How do fuel producers and refiners comply with multiple regimes at the US, EU, and State levels? • How can we drive the agricultural industry toward better practices ahead of regulatory schedule, through sustainable product differentiation? • How can we ensure that negative environmental practices eliminated from biofuel production don’t simply shift to the less-regulated food production supply chain? © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard Major Changes of RFS2 and EPA’s DRAFT Implementing Rules • New Volumes of renewable fuel that must be blended into domestic fuel mixtures • New Renewable Fuel Definitions, including the “renewable biomass” limitation • New Lifecycle GHG Emission Reduction Requirements and Analysis • Expanded Coverage of Fuel Use • Changes to Renewable Identification Numbers (RIN) System • Expanded Registration Process for Domestic/Foreign Renewable Fuel Producers © Center for Energy and Environmental Security, 2009 United States Renewable Fuel Standard Volumes The United States renewable fuel standard (RFS) – 42 U.S.C. § 7545(o): Renewable fuel volumes (a brief overview): 42 U.S.C. § 7545(o)(2)(B)(i)(I), (II), (III). (fuel amounts Renewable Fuel in bgal.) Advanced Biofuel Cellulosic Biofuel (subset of Advanced Biofuel) Biomass-based Diesel (subset of Advanced Biofuel 2012 15.2 2.0 0.5 1.0 2015 20.5 5.5 3.0 TBD (at least 1.0) 2022 36.0 21.0 16.0 TBD (at least 1.0) • Existing U.S. ethanol plant capacity when the 2007 RFS was passed was approximately 8.2 bgal./year. (Renewable Fuels Assn., 2009). Any additional domestic supply beyond that must come from new facilities, which are subject to higher standards. • BUT any ethanol plant that commenced construction in 2008 or 2009 that is/would be fired with natural gas or biomass is also exempted from the new standards, so the numbers may change around the margins (EPA says between 9 and 15 bgal. total may be grandfathered). © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard Volumes (Detailed) Source: EPA, “Regulation of Fuels and Fuel Additives: Changes to the Renewable Fuel Standard Program,” EPA-HQ-OAR-2005-0161. © Center for Energy and Environmental Security, 2009 Required Fuel Quantities of RFS2 by Fuel Type (Lifecycle GHG Reductions Assumed) The Renewable Fuel Standard (36 Billion Gallons 2009-2022) Advanced Biofuels (21 Billion Gallons 2009-2022, 5.5 Billion Gallons by 2015) Biomass Diesel Cellulosic Biofuels (2009-2012, 1 Billion Gallons by 2012) (16 Billion Gallons 2010-2022, 3 Billion Gallons by 2015) © Center for Energy and Environmental Security, 2009 United States Renewable Fuel Standard Requirements for Fuels Produced at New Facilities 42 U.S.C. 7545(o)(2)(A)(i): “Not later than 1 year after December 19, 2007, the Administrator shall revise the regulations under this paragraph to ensure that transportation fuel sold or introduced into commerce . . . contains at least the applicable volume of renewable fuel, advanced biofuel, cellulosic biofuel, and biomass-based diesel . . . and, in the case of any such renewable fuel produced from new facilities that commence construction after the date of enactment of this sentence, achieves at least a 20 percent reduction in lifecycle greenhouse gas emissions compared to baseline greenhouse gas emissions.” What about “advanced biofuel,” “cellulosic biofuel,” and “biomass-based diesel?” • “‘Advanced biofuel’ means renewable fuel, other than ethanol derived from corn starch, that has lifecycle greenhouse gas emissions, as determined by the Administrator, after notice and opportunity for comment, that are at least 50 percent less than baseline lifecycle greenhouse gas emissions.” 42 U.S.C. 7545(o)(1)(B)(i). The same standard applies for biomass-based diesel. 42 U.S.C. 7545(o)(1)(D). • Cellulosic biofuel, “derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass,” must achieve a 60 percent reduction in lifecycle GHG emissions compared to baseline. 42 U.S.C. 7545(o)(1)(E). © Center for Energy and Environmental Security, 2009 United States Renewable Fuel Standard Definition of “Lifecycle Greenhouse Gas Emissions” 42 U.S.C. 7545(o)(2)(A)(i): “The term ‘lifecycle greenhouse gas emissions’ means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes), as determined by the Administrator, related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential.” © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard: Definition of “Renewable Fuel” and “Renewable Biomass” • Separate definition of “Renewable Biomass,” which refers to feedstocks that may be used to make any renewable fuel. • Planted crops, crop residue from land cleared or cultivated prior to 12/19/07 • Planted trees, tree residue from non-federal land cleared prior to 12/19/07 • Animal waste materials, byproducts • Slash, pre-commercial thinnings from non-federal forestland, provided they are not old-growth, late-successional forest, or classified as critically imperiled, imperiled, or rare pursuant to a State Natural Heritage Program • Biomass cleared from around buildings or public infrastructure to reduce risk of wildfire • Algae • Separated yard or food waste © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard: Other RFS2 Changes Renewable Identification Numbers (RINs) • RINs ensure that volume mandates of the RFS are met by fuel refiners. • Every time a gallon of renewable fuel is produced, a RIN is generated by the producer. When the refiner purchases the fuel, they get the RIN with it. • At the end of the year, every refiner must have a sufficient number of RINs to ensure that they have blended the proper amount of renewable fuel into their product. Refiners may trade RINs. • An expanded “D-code” covers the four new categories of renewable fuel. RIN: KYYYYCCCCFFFFFBBBBBRRDSSSSSSSSE EEEEEEE K = Code distinguishing assigned RINs from separated RINs YYYY = Calendar year of production or import CCCC = Company ID FFFFF = Facility ID BBBBB = Batch number RR = Code identifying the Equivalence Value D = Code identifying the renewable fuel category SSSSSSSS = Start of RIN block EEEEEEEE = End of RIN block Source: EPA, “Regulation of Fuels and Fuel Additives: Changes to the Renewable Fuel Standard Program,” EPAHQ-OAR-2005-0161. © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard: Other RFS2 Changes Renewable Identification Numbers (RINs) • EPA has not proposed use of the RIN system to track GHG emissions related to specific gallons of fuel. Instead, the final rule prescribes abstracted fuelpathway calculations (fuel, feedstock, process) to provide the basis for compliance with GHG emission reductions. • No mechanism exists to ensure that farmers do not switch non-feedstock crops to new lands so as to skirt the requirement, and EPA claims such action would be beyond its statutory authority. © Center for Energy and Environmental Security, 2009 U.S. Renewable Fuel Standard: Other RFS2 Changes Compliance with “Renewable Biomass” Limitations • For domestic and foreign non-agricultural feedstocks (trees, slash, animal waste), fuel producers must comply with record-keeping and reporting requirements for individual facilities. Each facility must collect and maintain records from feedstock producers to ensure that the “renewable biomass” limitations are followed. • For domestic agricultural feedstocks, EPA will perform an “aggregate compliance determination.” Individual record-keeping and reporting not required, as long as baseline level of approved agricultural land doesn’t increase. • For foreign agricultural feedstocks, an aggregate determination might be used if the source region can provide sufficient monitoring data to support it. Otherwise, foreign producers must verify using individual record-keeping and reporting, as for non-agricultural feedstocks. © Center for Energy and Environmental Security, 2009 E.U. Renewable Fuel Goal Broader in Scope of Energy Use Percentage Goal Not Limited to Fuels Alone “Each Member State shall ensure that the share of energy from renewable sources in all forms of transport in 2020 is at least 10% of final consumption of energy in transport in that Member State.” Eur. Parl. Doc. (COM(2008)0019 -- C6-0046/2008 – 2008/0016(COD)), Art. 3(4). Unlike the U.S. RFS, electricity produced from renewable sources that is then used for transport may be used to meet the goal. © Center for Energy and Environmental Security, 2009 E.U. Renewable Fuel Goal “Biofuels and other bioliquids that do not fulfill the sustainability criteria set out in Article 17(2) to (6) shall not be taken into account.” Eur. Parl. Doc. (COM(2008)0019 - C6-0046/2008 – 2008/0016(COD)), Art. 5(1). • Article 17’s detailed sustainability criteria apply to biofuels produced from raw materials cultivated both inside or outside the territory of the Community. Id. at Art. 17(1). For all such biofuels, GHG emissions savings must be 35 percent. The number ratchets up to 50% in 2017, and to 60% for biofuels produced from new facilities after 2017. Id. at Art. 17(2). • The criteria allow only temporary “grandfathering” of existing facilities. While U.S. facilities existing in 2008 – nearly 9 billion gallons of capacity – are permanently exempted from the U.S. RFS’s GHG-reduction requirements, existing facilities in the EU become subject to the sustainability criteria in 2013. Id. © Center for Energy and Environmental Security, 2009 E.U. Renewable Fuel Goal Sustainability Criteria • Absolute prohibition on the qualification of biofuels produced from raw materials grown on land with high biodiversity value, high carbon-stock, and peat-land. Eur. Parl. Doc. (COM(2008)0019 -C6-0046/2008 – 2008/0016(COD)), Art. 17(3) to (5). • However, these prohibitions only refer to the land on which the raw material actually consumed as fuel in the Community was cultivated. Indirect land-use changes due to rising global agricultural commodity prices, themselves possibly a result of increased biofuel demand, are not considered. © Center for Energy and Environmental Security, 2009 Future Voluntary Criteria A Market Yet Untapped? • Some consumers will want further assurances that their fuel was produced using the most rigorous GHG reduction and land-protection practices. • If this voluntary demand is large enough, renewable fuel producers going above-andbeyond sustainability regime requirements could charge a premium for their product. • Of course, such a premium would have to come with credible third-party reporting to verify what the producer claims. No such information system currently exists. © Center for Energy and Environmental Security, 2009 A Developing Project Concept Bridging the gap between biofuels sustainability regimes and information infrastructures to ensure compliance • CEES and CSU’s Natural Resource Ecology Laboratory (CSU-NREL) are developing a project concept to: • Construct a decision-support system for producers and biofuels emissions analysts that allows estimations of batch-specific emissions (and emissions savings) that occur “behind the factory gate;” in the production, transportation, and refining of the feedstock. (CSU-NREL developing the BLUEGRAS model) • Perform a series of assessments and case studies using the decision support system to provide policy guidance in the further development of biofuels sustainability regimes; • Analyze the ways in which the decision-support system may integrate with different sustainability regimes and information pathways in the US, EU, California, and elsewhere; and • Produce a report for policymakers detailing the capabilities of the system and its implications for compliance systems vis a vis sustainability criteria © Center for Energy and Environmental Security, 2009 Discussion and Questions Thank you for your attention! Interested in working with us on the proposal? Contact [email protected] © Center for Energy and Environmental Security, 2009