On August 8, 2005, President Bush signed the Energy Policy Act of 2005 (H.R. 6) into law. The comprehensive energy legislation includes a nationwide renewable fuels standard (RFS) that will double the use of ethanol and biodiesel by 2012.
Under the RFS, a small percentage of our nation's fuel supply will be provided by renewable, domestic fuels including ethanol and biodiesel, providing a positive roadmap for reduced consumer fuel prices, increased energy security, and growth in rural America. The RFS is the result of several years of negotiations between the ethanol industry, oil industry, Federal government, state interests, environmentalists, agriculture and consumers over the best way to encourage a greater contribution from the renewable fuel industry to our nation's energy needs.
The increased use of renewable fuels will expand U.S. fuel supplies while easing an overburdened refining industry. While no new oil refineries have been built in the U.S. since 1976, nearly 100 ethanol production facilities have been built during this time, adding critical volume to the gasoline market. As ethanol and biodiesel are blended with gasoline and diesel after the refining process, they directly increase domestic fuel capacity.
The RFS provisions are as follows:
- Establishes an RFS that starts at 4 billion gallons in 2006 and increases to 7.5 billion gallons in 2012.
| 2006 |
4.0 |
| 2007 |
4.7 |
| 2008 |
5.4 |
| 2009 |
6.1 |
| 2010 |
6.8 |
| 2011 |
7.4 |
| 2012 |
7.5 |
- Provides for 2.78% by volume renewable fuel use in 2006 if federal regulations have not yet been promulgated by the U.S. Environmental Protection Agency.
- Provides that beginning in 2013, a minimum of 250 million gallons a year of cellulosic derived ethanol be included in the RFS.
- Provides refiners flexibility by creating a credit trading program that allows refiners to use renewable fuels where and when it is most efficient and cost-effective for them to do so. The credit trading program will result in lower costs to refiners and thus, consumers. RFS credits have a lifespan of 12 months. Every gallon of cellulose-derived ethanol is equal to 2.5 gallons of renewable fuel.
- The law exempts small refineries (defined as facilities where the average daily crude oil throughput does not exceed 75,000 barrels per day) from the RFS program until January 1, 2011. Small refineries are able to opt in to the program and generate credits as do other refineries.
- Requires annual studies on seasonal variations in renewable fuel use. Requires regulations to ensure that at least 25% of the annual renewable fuel obligation be met in each season should seasonal variations exist. California is exempted, but refiners in the state must still use the requisite amount of renewable fuels in any given year.
- Protects consumers with a waiver provision in the event the economy or environment would be severely harmed because of the RFS.
- The reformulated gasoline (RFG) 2.0 wt.% oxygenate standard under the Clean Air Act is eliminated 270 days after enactment. (Requirement was lifted by U.S. EPA May 8, 2006).
- Enhances the air quality performance standards established in the RFG program.
- Creates grant and loan guarantee programs for cellulose ethanol.
- Creates grant and loan programs for ethanol production from sugar.
The legislation does not ban MTBE nor provide liability protection or a remediation fund.
- Summary of Final Energy Bill
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- Renewable Energy Tax Provisions
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- Title II - Renewable Energy Biobased Provisions
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- The Domenici - Barton Energy Policy Act of 2005 (HR 6)
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