September 8, 2006

U.S. EPA proposes renewable fuel standards for 2007

Washington, D.C. – The Bush Administration has proposed a Renewable Fuel Standard (RFS) Program designed to reduce the U.S. dependence on foreign oil by doubling the use of renewable fuels such as ethanol and biodiesel. The projected annual reduction is up to 3.9 billion gallons in petroleum use, and 14 million tons in greenhouse gas emissions. The program, authorized by the Energy Policy Act of 2005, will promote the use of fuels largely produced using American crops.

The new regulation proposes that 3.71 per cent of all gasoline sold or dispensed to U.S. motorists in 2007 be renewable fuel. In December 2005, the EPA issued a rule implementing the Energy Policy Act’s default standard of 2.78 per cent for 2006, which will continue to apply through this year.

The rule contains compliance tools and a credit and trading system integral to the overall program; the system allows renewable fuels to be used where they are most economical, while providing a flexible means for industry to comply with the standard. Various renewable fuels can be used to meet the program’s requirement, including ethanol and biodiesel; while the program provides for the certainty of a minimum amount of renewable fuel, more can be used if fuel producers and blenders choose to do so. In 2006, there will be about 4.5 billion gallons of renewable fuel consumed as a motor vehicle fuel in the U.S.; under the RFS program, the volume would increase to at least 7.5 billion gallons by 2012.

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