Josh Belcher

September 14, 2006

Recently Proposed Renewable Fuels Program (RFP) Promises Reduced Reliance on Foreign Oil

Pursuant to the Energy Policy Act of 2005, the EPA recently proposed a rulemaking requiring 3.71 percent of all U.S. gasoline sold or dispensed in 2007 be renewable fuel. This would be an increase from the current required blend of 2.78 percent.

Under the Renewable Fuels Standard Program, refiners are required to blend renewable fuels such as ethanol with gasoline. The program includes a credit and trading system, which allows refiners using more than the required percentage to accrue credits that may be sold to others failing to meet national standards. This also facilitates participation by producers of biodiesel and biogas which are not blended into gasoline.

Expected benefits of the program include displacing 7.5 billion gallons of gasoline, resulting in a reduction of petroleum use by 3.9 billion gallons a year by 2012. An annual reduction of 14 million tons of greenhouse gas emissions is also anticipated. Demand for biodiesel already exceeds production and as the supply for ethanol increases, prices have begun to drop. The renewable fuels industry has seen a surge in investment as venture capitalists and major food processors alike line up to get in on the ground floor.

Comments on the proposed rulemaking will be taken until November 11, 2006. The rule and related documents can be found at http://www.epa.gov/otaq/renewablefuels/.

For more information, please see the following sources:

Press Release, U.S. Envtl. Prot. Agency, EPA Proposes Strategy To Reduce Foreign Oil Dependency (Sept. 7, 2006), http://yosemite.epa.gov/opa/admpress.nsf/68b5f2d54f3eefd28525701500517fbf/852b069b559027ca852571e2004cb354 .

U.S. Envtl. Prot. Agency, EPA Proposes Regulations for a Renewable Fuel Standard (RFS) Program for 2007 and Beyond, http://www.epa.gov/otaq/renewablefuels/420f06060.htm (last updated September 7, 2006).

Bloomberg News Service, Growing Supplies Reducing Ethanol Prices, Chi. Trib., Aug. 26, 2006, at 3, available at 2006 WLNR 14802596.

Susan Moran, Biofuels Come of Age as the Demand Rises, NY Times Online (Sept. 12, 2006), available at http://www.nytimes.com/2006/09/12/business/smallbusiness/12bio.html.