Friday, January 31, 2014

"Obama's Few Words About Natural Gas Vehicles Spoke Volumes"

An opinion piece by Michael Bates. "We need to step back from who we are - stakeholders in the clean-transportation space who live and breathe this stuff every day - to appreciate the significance of what the president said."

California Incentives For Natural Gas Coming

"The California Energy Commission has opened up a new funding opportunity that will offer natural gas vehicle incentives at the point of sale through OEMs and their dealers and distributors." Here is a link to the California Energy Commission's site with complete information. The incentives cover these ranges:
  • Up to 8,500 lbs. GVW, $1,000 per vehicle
  • 8,501 - 16,000 lbs. GVW, $6,000
  • 16,001 - 26,000 lbs. GVW, $11,000
  • 26,001 - 33,000 lbs. GVW, $20,000
  • 33,001 lbs. GVW and higher: $25,000

But, of course, there are conditions. The vehicles must be new, on-road natural gas vehicles that meet the 2010 California emission requirements. They have to be registered in California and operated for at least 3 years. They have to have a full warranty.

"A plan without action isn't a plan. It's a speech."

From T. Boone Pickens:
President Barack Obama talked about energy in his State of the Union address as every President since Richard Nixon has done. In his State of the Union address, President Obama came out strongly for the continued development of natural gas as a major American resource.

That is great news and music to my ears. I have championed a comprehensive national energy strategy - the Pickens Plan - since 2008, with natural gas as a cornerstone. The goal has been to get off OPEC oil by using natural gas for heavy duty trucking.

While I'm obviously heartened by the President's endorsement of that, I'm also a realist. A plan without action isn't a plan, it's a speech. The OPEC oil threat is real. Our national security is threatened by it as is our economic future. After 40 years we just take OPEC for granted, and that's a big mistake.

As far back as his first State of the Union, President Obama talked about creating and moving energy in new ways. He said "We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across the country."

Few, if any, miles of new power lines have been proposed, much less sited, engineered or installed. Great plan. No action.

In January 2009 our national energy mix was as it had been for decades: Diminishing domestic oil production, falling levels of natural gas reserves, solar and wind were interesting but difficult to bring to market. Then the Potential Gas Committee released its biennial report that, for the first time, counted what was then known as "unconventional" gas - now known as shale gas - as economically recoverable using modern drilling techniques and the nation's energy profile was turned on its head.

Credit goes to private individuals and companies taking a chance, risking their money, and using the best minds in the nation to develop new production techniques. They were not the result of a plan - not a Republican plan nor a Democratic plan.

On Tuesday night, the President endorsed a principal element of the Pickens Plan when he called for new incentives for medium- and heavy-duty trucks to run on natural gas and other fuels. I'm for unleashing every American resource to back out OPEC oil, be it ethanol, batteries or anything American. But ethanol and batteries won't move America's 18-wheelers.

We need to be watchful that the President follows through on this by incenting the move from imported diesel to domestic natural gas, by working with major interstate truckers, express delivery companies, and truck manufacturers, as well as state and local governments.

Oil is not a player in the production of electricity in America. It accounts for only about one percent of power generation. The rapid move from coal to natural gas (as well as to wind) to produce electricity has led the U.S. Energy Information Administration (EIA) to claim that greenhouse gasses from fossil fuels were the lowest in 2012 than any time since 1994.

The real advantage these new reserves of natural gas and oil bring to us, is that we move farther and farther away from the next energy crisis. That is a mixed blessing because our national leaders - for over 40 years - have only acted when a crisis has loomed over their collective heads.

We have over eight million heavy trucks on our roads. Everything from refuse and recycling trucks that go back to "the barn" every night, to over-the-road trucks that run coast-to-coast over the same routes on a regular schedule. Simple arithmetic tells us where to put natural gas refueling stations on the most heavily traveled Interstate highways.

In last year's State of the Union speech, President Obama said, "The natural gas boom has led to cleaner power and to greater energy independence. We need to encourage that." That is still a good policy. With so much natural gas we should be looking for ways to utilize our vast supplies - especially where we can use it to replace imported oil.

The President's focus on natural gas in the 2014 State of the Union speech is important because it helps us keep our eye on the ball. Now, we have to work with leaders at the federal, state, and local levels as well as the companies that will build, fill, and drive the trucks across America to make certain we keep moving toward an economy that is not dependent on OPEC oil.

If the president is serious on natural gas and trucking in America, here's an idea: Lead by example. Sign an executive order mandating government vehicles use natural gas, and that those who contract with the federal government for goods and services do, too. Because natural gas is so much cheaper than diesel, you can make the case that such an order is fiscally responsible as well as environmentally beneficial.

President Obama was right on one other point on Tuesday night: Let's make this the year of action. There is a domestic energy renaissance in America, with natural gas production leading the way. Let's act and take advantage of it.

Wednesday, January 29, 2014

"America is closer to energy independence than we’ve been in decades"

"[President] Obama credited natural gas as one of the top factors in bringing the U.S. closer to energy independence for the first time in decades." He called for the creation of "sustainable shale gas growth zones." He also promised to work with Congress to build natural gas and alternative fuel stations and to provide incentives for medium and heavy-duty trucks to run on natural gas.

"While applauding Obama's comments on climate change, the Sierra Club and 350.org blasted the president for promoting [natural gas]."

Friday, January 24, 2014

Key Terms For Propane Vehicles

Question of the Month: What are the key terms to know when discussing propane vehicles and their fueling infrastructure?

Answer: It is important to know how to "talk the talk" when it comes to propane vehicles and infrastructure. Becoming familiar with the terms below will help you better understand these vehicles and the associated fueling infrastructure so you can ask the right questions and make informed decisions.

Fuel
Propane is a clean-burning, domestically produced alternative fuel that can power light-, medium-, and heavy-duty vehicles. The fuel is a colorless, odorless liquid that is stored under pressure. An odorant, ethyl mercaptan, is added to the fuel for leak detection. Propane is also known as liquefied petroleum gas or liquefied propane gas (LPG), or propane autogas. In the United States, these terms are used interchangeably.

Vehicle Types
Propane vehicles work much like spark-ignited gasoline vehicles. The fuel is stored as a liquid in a relatively low-pressure tank (about 150 pounds per square inch). There are two types of propane fuel systems:

  • Vapor-Injected Systems: Liquid propane travels along a fuel line into the engine compartment. The supply of propane to the engine is controlled by a regulator or vaporizer, which converts the liquid propane to a vapor. The vapor is then fed to a mixer located near the intake manifold where it is metered and mixed with filtered air before being drawn into the combustion chamber and burned to produce power, similar to gasoline. An example is the Alliance AutoGas Prins bi-fuel system.
  • Liquid Propane Injection Systems: Propane is not vaporized. Instead, it is injected into the combustion chamber in liquid form. Examples are the CleanFUEL USA and Roush CleanTech technologies.

Propane vehicles are available in the following configurations:

  • Dedicated Vehicle: These vehicles are designed to run on only propane and are used in light-, medium-, and heavy-duty applications.
  • Bi-Fuel Vehicle: These vehicles are able to run on either propane or gasoline because they have two separate fueling systems. Bi-fuel vehicles include light-duty models and, more recently, medium- and heavy-duty vehicles.
    • Please note that some agencies may use the term dual-fuel to describe bi-fuel vehicles. However, Clean Cities uses dual-fuel to describe vehicles that have fuel systems that run on alternative fuel and use diesel fuel for ignition assistance. By this definition, there are not currently any dual-fuel propane systems available.

The power, acceleration, and cruising speed of propane vehicles, whether they are dedicated or bi-fuel, are comparable to those of gasoline vehicles.

Fueling Infrastructure Components
Propane fueling infrastructure is very similar to gasoline equipment, including:

  • Storage Tank: Propane is brought to the station via a transport truck and put into on-site storage—traditionally an aboveground storage tank on a concrete pad.
  • Pump and Fuel Dispenser: The main difference between a propane fueling dispenser and a gasoline dispenser is that propane is delivered to the vehicle under pressure so it remains a liquid. When the vehicle tank is full, the dispenser stops automatically just like a gasoline dispenser.
  • Credit Card Reader: A card reader is necessary for a public station accepting payment. Note that federal regulations require a "competent attendant" to fuel propane vehicles, so drivers may need to be trained before they can use an unmanned pump (Title 29 of the Code of Federal Regulations, section 1910.110; National Fire Protection Association (NFPA) 58 and 54).

Fueling stations may fall into one of the following categories:

  • Skid-Mounted: The storage tank, dispenser, pump, and any additional piping or controls are mounted to a portable concrete or steel frame that can be installed easily, removed, or relocated. Skid-mounted systems tend to be more affordable than stationary equipment.
  • Stationary: In a stationary system, the storage tank may be underground, and the station may include additional features not available on a skid-mounted system, including spill-proof pumps and additional metering capabilities.

More information on propane vehicles and infrastructure can be found on the Alternative Fuels Data Center (AFDC) Propane website and the Propane Education & Research Council website.

Propane is great for Country Clubs because there are lots of maintenance vehicles available.



Federal Tax Credit Update

On December 31, 2013, a number of federal tax incentives expired, including:

  • Alternative Fuel Infrastructure Tax Credit
  • Alternative Fuel Excise Tax Credit
  • Alternative Fuel Mixture Excise Tax Credit
  • Biodiesel Income Tax Credit
  • Biodiesel Mixture Excise Tax Credit
  • Second Generation Biofuel Producer Tax Credits
  • Second Generation Plant Depreciation Deduction Allowance

While tax incentives have been extended retroactively after their expiration date in the past, Congress has not passed legislation to do so.

Full descriptions of these incentives can be found on the AFDC Federal Laws and Incentives page. The descriptions will remain posted there until the federal tax filing deadline.

Sunday, January 19, 2014

State Alternative Fuel & Advanced Vehicle Laws & Incentives - 2013 Year in Review

Here is the 2013 "year in review" memorandum [PDF] from ICF International summarizing state legislative actions related to Clean Cities portfolio items. The memorandum is designed to provide Clean Cities coordinators with information and trends related to state incentives, laws, and regulations promulgated or otherwise enacted in 2013. It also provides examples of noteworthy actions at the state level.

A Guide To Light Bulbs In A Post-Indandescent Economy

Time magazine presents this helpful, brief guide to the restrictions on incandescent bulbs that also explains the well-known alternatives.

Wednesday, January 15, 2014

Is It Time To Update Our Energy Policies?

A message from T. Boone Pickens.
Forty years ago, the Arab Oil Embargo changed the way America thinks about energy. After finding ourselves at the mercy of a bunch of oil states, we panicked. The government put price controls in place, the Strategic Petroleum Reserve was launched, and all oil exports were banned.

Thanks to recent breakthroughs in technology, however, our country's energy picture has taken a dramatic turn for the better. The U.S. now imports about half the oil it consumes - some 8 to 9 million barrels a day - and we export more than 3 million barrels of oil products, such as gasoline and diesel, every day.

Does it make sense for us to ban oil exports at the same time we're shipping millions of barrels of oil products overseas? It might be time to revisit that policy.

Comments here.

Saturday, January 11, 2014

Cummins' 12-Liter Nat Gas Engine Will Power Clean Energy Fuels 20% Higher In 2014

Jan. 6, 2014 2:25 PM ET by Michael Fitzsimmons

Discounting a couple spikes above $20, Clean Energy Fuels' (CLNE) stock has been dead money for years now. CLNE has struggled in solving the chicken-and-egg problem of refueling stations and the number of natural gas vehicles deployed to use them. Not helping, the struggle has been played out during a slow-growth economy due to the financial crisis and a reining in of capital expenditures. However, there is a big catalyst for why 2014 will be an inflection point for CLNE: a new natural gas engine from Cummins Inc (CMI). The acceptance of this engine in the long-haul trucking sector will have a significant effect on the gas gallon equivalents ("GGEs") delivered by CLNE in 2014. Meantime, the historical catalysts behind the move to natural gas engines (high diesel prices and emissions regulations) are still with us and provide additional tailwinds for NGV adoption. As the growth rate in GGEs delivered accelerates, CLNE will approach profitability. As investors begin to sense a change in sentiment about the stock's profitability and growth potential, CLNE's valuation could easily climb 20-25% in 2014.
CLNE

The introduction of the new Westport-Cummins ISX12-G engine in the second half of 2013 was truly a game changer. The 12-liter natural gas engine delivers 400 horsepower and 1450 ft-lb of torque. And of course more natural gas engines means more GGEs delivered for Clean Energy Fuels.
US Retail Diesel Price
US Retail Diesel Price data by YCharts

Meanwhile, the current average national price for CNG is $2.08. For a typical long-haul trucker putting 100,000 a year on his rig at an average of 6 mpg, this is a cost savings of $1.82/gallon on ~16,000 gallons, or $29,000/year. If the incremental cost of an NGV is in the neighborhood of $20-30,000 (depending on state and federal government incentives), it's easy to see that payback on the investment is now as little as 1.5 years.

Global Emissions Regulations: The Environment Matters

Upcoming global emissions regulations are a tailwind for market acceptance of the ISX12-G engine. Around the world, carbon and sulfur emissions regulations are significantly tightening through 2018. The ISX12-G engine currently meets all U.S. Environmental Protection Agency ("EPA") and California Air Resource Board emission standards. So the need for greater engine efficiency bodes well for market-share gains by this engine, which emits from 20-30% less CO2 than do diesel engines, and 100% less toxic particulates like sulfur dioxide.

As we all know, China is suffering from severe pollution problems as the combination of coal and diesel consumption is causing many city dwellers to wear masks whenever they venture outside. As a result, China is set to implement new "NS4" emissions regulations. In the Seeking Alpha Q3 conference call transcript, Cummins' CEO Thomas Linebarger commented on the NS4 effect:
In the medium and heavy duty truck market (in China) industry demand increased by 26% in the third quarter driven largely by pre-buy ahead of the anticipated implementation of NS4 emission regulations. Year-to-date industry sales are up 14% and we now expect full year demand to increase by 15% over 2012 compared to our previous forecast that the market will increase 5% year-over-year.

Engine Sales Estimates

A recent article in Barrons quoted Buckingham Research analyst Jeffrey Kauffman's estimate that by 2018, one in five trucks sold will run on natural gas. That number will increase to one in three by 2020. Clean Energy reported their customers ordered 70% more NGVs in the first 9 months of 2013 compared to 2012. And the new 12-L engine was in limited supply even in the 2nd half of the year. Obviously the growth rate of NGVs deployed is entering a new and higher growth phase.

In the Seeking Alpha Q3 transcript, CLNE CEO Andew Littlefair commented on the effect of the new Cummins engine:
Since its August launch, demand for the 12-liter 400 horsepower has surged with sales already exceeding the internal projections of Cummins, which we believe will reach 2,400 units in 2013. These engine sales are expected to grow fourfold next year surpassing 10,000 units. Today, 46 of our trucking fleet customers have ordered 549 trucks representing up to approximately 10 million gallons annually. 60% are for CNG and 40% of those are orders for LNG.

GGEs Delivered: A 2014 Growth Estimate

CLNE also reported they are in the final stages of negotiations with 107 other fleets, who have plans to deploy over 1,250 additional LNG and CNG trucks. CLNE estimates these new trucks represent a potential of up to ~20 million GGEs. The company also recently entered into a multiyear LNG fuel supply agreement with UPS to provide a minimum of 5 million GGEs for UPS's LNG trucks.

So there are about 15 million GGEs/year CLNE has either already booked or anticipates will be booked soon. But let's take a look at the 20 million GGE potential and give CLNE's estimate a sanity check.

Of the estimated 10,000 12-L engine sales in 2014, let's say half will be sold in the US (admittedly a swag). Let's also say that we'll reduce that number by the 549 trucks previoulsy discussed by CLNE and round down to 4,000 trucks. Now, lets say that half those are sold and deployed in the first half, and half in the second half. For those sold in the first half, we'll take the annual 100,000 miles/year long-haul trucking mileage estimate and reduce it to 50,000 miles. And we'll reduce that by half again for those sold in the 2nd half of 2014. Given those assumptions, here are the GGEs delivered potential:

2,000 trucks * 50,000 miles * 1 gallon/6 mpg = ~16.6 million gallons

2,000 trucks * 25,000 miles * 1 gallon/6 mpg = ~8.3 million gallons

If we total it all up, the approximately 10 million GGEs in contracts pending, plus the 5 million UPS GGEs, plus the ~20 million GGEs from the "other fleets" CLNE mentions, and which I have just verified (and reduced to ~20 from the ~24.9 million GGEs estimate) as rational given certain assumptions, GGEs delivered in 2014 could jump by 30-35 million.

Now, for the nine months ended September 30, 2013, gallons delivered totaled 158.9 million gallons, up from 143.2 million gallons for the nine months period in 2012, or up only 11%. But if we add the 30 million GGE estimate above, it is conceivable (and likely) that CLNE could deliver an additional 22.5 million GGEs in the first 9 months of 2014, which would bring the total to 181 million GGEs, for a growth rate of 14%. And remember, the additional GGE estimate shown here was based primarily off the 12-L engine sales alone. If we add in this year's GGE YTD "pre-engine" growth rate (11%) on top of it, it is not out of the question total GGE's could have a growth rate ~20-25% by year-end 2014.

Further, CLNE's non-GAAP loss for the first 9 months of 2013 was -$0.19/share compared to a loss of -$0.52 for the same period of 2012. If the company's non-GAAP loss contracted by close to 60% while GGEs only grew by only 11%, the company should be able to come close to profitability toward the end of 2014 when GGEs delivered could come close to a growth rate of twice that (20-25%).

Risks

Some point to Shell's (RDS.A) natural gas refueling initiative as a threat to CLNE. I don't see it that way. I look at Shell's activity in building out a natural gas refueling infrastructure as helping to accelerate the adoption and sales of NGVs. That can only help the market leader. And the natural gas refueling market leader - whether it's at the port of Long Beach, or across America's Natural Gas Highway, or at Pilot Truckstops - is Clean Energy Fuels.

Summary & Conclusion

CLNE has always been a story of volume and scale. Over the last few years, the company has been building out America's Natural Gas Highway even though the number of NGVs deployed didn't really grow volumes (i.e. GGEs) at a fast enough clip for the company to be profitable. But the new Westport-Cummins 12-L natural gas engine is a market game changer. As a result, the growth rate of CLNE's important GGE's delivered metric will accelerate from ~10% to ~20-25% in 2014. Clean Energy Fuels stock (and that of CMI) should follow. Clean Energy is a BUY and should hit $15.50 in 2014. Potentially large contract announcements could see the stop pop even higher. This is likely why insiders Boone Pickens and CEO Littlefair significantly increased their holdings in the company's stock during 2013.

2014 will be an inflection point for CLNE on its road (America's Natural Gas Highway) to long-term profitability.

2012-2013 Corridor Plan
America's Natural Gas Highway

Fuels Fix, Winter 2014 Issue

View the magazine here. Subjects include:
  • First Responders Receive Training for Alt Fuel Vehicles
  • Maine Goes Electric
  • Kentucky Clean Fuels Turns 20

Monday, January 6, 2014

Another Use For Your Hybrid Vehicle

From UPI: "A Canadian man said he used his Toyota Prius as a generator to power his furnace, lights, refrigerator and TV during the recent ice storm." "He used the car to power his house for nine hours, and the car's battery went down by less than one bar--equivalent to a gallon of gas."

Sunday, January 5, 2014

Ford F-150 With Westport WiNG™ Power System

From Westport:
Think Green for your 2014 New Year’s Resolution with a Ford F-150 with the dedicated Westport™ CNG System

Westport is now offering a dedicated CNG system on 2014 Ford F-150 Pickup Trucks. The dedicated CNG 3.7L V6 Ford F-150 with the Westport WiNG™ Power System offers a 17 GGE fuel tank providing approximately 250 miles of driving range. EPA certified, the vehicles undergo the same testing required for all Ford OEM products and are available on a Super Cab short-bed with the choice of a 4x2 or 4x4 powertrain configuration.

The Ford F-150 Pickup Trucks with the dedicated Westport CNG system are available for order at over 200 Westport authorized Ford Dealer / Distributors.

Westport continues to work closely with Ford to make a wide range of CARB and EPA certified bi-fuel and dedicated vehicles available to our customers. Sign-up here to be the first to know future Westport vehicle programs as soon as it becomes available. Possible future vehicles may include the 2015 F-150, Transit, Transit Connect.

Westport has the largest light duty natural gas vehicle market presence and product portfolio in North America. For more information regarding our vast product offerings, including the new dedicated F-150, please visit us at www.westport.com or call 855-WPT-9464.

Here's the Dedicated F-150 Product Sheet (PDF). The price of $8,700 on the Westport WiNG™ Power System site is for the CNG fueling system only. You've still got to buy that Ford F-150 less any available Federal, State or local incentives. You can check the Clean Cities Website to see what incentives are available for your area.

Technical Response Service Question of the Month: Renewable Fuel Standard Status and Updates

Question of the Month: What is the current status of the Renewable Fuel Standard (RFS) and how do the new 2014 proposed requirements differ from previous years'?

Answer: The national RFS program was developed to increase the volume of renewable fuel blended into transportation fuels. As required by the Energy Policy Act of 2005, the U.S. Environmental Protection Agency (EPA) finalized RFS1 program regulations, which became effective on Sept. 1, 2007. The Energy Independence and Security Act (EISA) of 2007 increased and expanded this standard through RFS2, mandating that by 2022, 36 billion gallons of renewable fuel be blended into transportation fuels. Though EISA set final volume requirements, EPA must determine renewable fuel percentage values annually to meet the requirements. Fuels are broken down as follows:

Total renewable fuel: The total amount of renewable fuel required to be blended into the fuel supply each year, which includes conventional and advanced biofuels (defined below). Conventional biofuel volume requirements are simply the total renewable fuel volume requirements minus the advanced biofuel volume requirements. While EISA specified volume requirements for most categories through 2022, the statute allows EPA to reduce these volumes under certain conditions (see below for further discussion). Each renewable fuel category is described below.

  • Conventional biofuel: Any fuel derived from approved sources of renewable biomass that reduces greenhouse gas (GHG) emissions by at least 20% from baseline petroleum GHG emissions. Conventional biofuels are generally produced from starch-based feedstocks (e.g., corn, sorghum, wheat).
  • Advanced biofuel: Any fuel derived from approved renewable biomass, excluding corn starch-based ethanol. Biomass-based diesel and cellulosic biofuel volume requirements fall under this overarching advanced biofuel category. Note that remaining advanced biofuel volume requirements not met by cellulosic and biomass-based diesel can be met with other advanced biofuels, and cellulosic biofuel and biomass-based diesel volumes that exceed their volume requirements also may be used to meet the advanced biofuel quota. Other advanced biofuels may include sugarcane-based fuels, renewable diesel co-processed with petroleum, and other biofuels that may exist in the future. Advanced biofuels must reduce GHG emissions by at least 50% from baseline petroleum GHG emissions.
    • Cellulosic biofuel: Any fuel derived from cellulose, hemicellulose, or lignin. These fuels must reduce GHG emissions by at least 60% from baseline petroleum GHG emissions.
    • Biomass-based diesel: A diesel fuel substitute made from renewable feedstocks, including biodiesel and nonester renewable diesel (diesel produced from animal- and plant-based fats, oils, and greases). It cannot be co-processed with petroleum; however, those fuels fall under the general advanced biofuels category. Biomass-based diesel must reduce GHG emissions by at least 50% from baseline petroleum GHG emissions.

For a list of fuel pathways that qualify under each renewable fuel category, see Title 40 of the Code of Federal Regulations, section 80.1100-80.1167.

Obligated Parties
Any party that produces gasoline or petroleum diesel for use as transportation fuel in the United States, including refiners, importers, and blenders (other than oxygenate blenders), is considered an obligated party under the RFS program. Each year, EPA determines the Renewable Volume Obligation (RVO) for obligated parties. The RVO is calculated as a percentage, by dividing the amount of renewable fuel (gallons) required by the RFS2 for a given year by the amount of transportation fuel expected to be used during that year.

Volume Requirements and Percentage Standards
While EISA specified most volume requirements through 2022, the law did not address the biomass-based diesel requirement beyond 2012 and left some flexibility on the cellulosic biofuel requirement. The statute also allows EPA to change requirements under certain conditions, including when (1) the projected production of cellulosic biofuel in any year is less than the volume specified in EISA or (2) conditions are met under the general waiver authority provided by the Clean Air Act.

In 2013, EPA requires obligated parties to meet the following volume requirements collectively. Also included are the associated RVO percentages.

Final Volume Requirements for 2013
CategoryVolumePercentage
Cellulosic biofuel14 million gallons0.008%
Biomass-based diesel1.28 billion gallons1.12%
Advanced biofuel2.75 billion gallons1.60%
Total renewable fuel16.55 billion gallons9.63%

On November 15, 2013, EPA published a proposed rule to establish new volume requirements and associated percentage standards for 2014. For the first time, EPA is requesting comments on a range of volumes for each renewable fuel category to determine a final requirement (see table below). Also for the first time, the proposed total renewable fuel volume requirement is lower than statutory levels mandated in EISA to resolve compliance concerns related to the ethanol consumption "blend wall" (discussed below) and renewable fuel production constraints. The table below outlines the proposed new volume requirements and the associated RVO percentages.

Proposed Volume Requirements for 2014
CategoryVolumePercentageRange
Cellulosic biofuel17 million gallons0.010%8–30 million gallons
Biomass-based diesel1.28 billion gallons1.16%1.28 billion gallons
Advanced biofuel2.20 billion gallons1.33%2–2.51 billion gallons
Total renewable fuel15.21 billion gallons9.20%15–15.52 billion gallons

Ethanol Blend Wall
The ethanol "blend wall" refers to the difficulty of incorporating an increasing amount of ethanol into the transportation fuel supply at percentages exceeding 10%. Almost all gasoline sold in the United States is E10 (10% ethanol, 90% gasoline). While blends as high as E15 (15% ethanol, 85% gasoline) can be used in some conventional vehicles, these blends are difficult to market on a widespread basis because they can be used only in flexible fuel vehicles (FFVs) and model year 2001 and newer vehicles due to equipment compatibility issues. Additionally, "E85" (51%–83% ethanol blended with gasoline) and other mid-level ethanol blends can be used only in FFVs. EPA has proposed the lower advanced biofuel and total renewable fuel volume requirements above for 2014 due to the anticipated inability of the market to supply the Congressionally mandated volume of renewable fuels to consumers in 2014.

In conjunction with the 2014 volume requirements and percentage standards, EPA is also considering a joint petition from the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers, as well as individual petitions from several refining companies, requesting a partial waiver of the 2014 applicable volumes under RFS2. EPA is collecting comments on both issues through January 28, 2014.

The proposed rule and EPA fact sheet can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2013-11-29/pdf/2013-28155.pdf and http://www.epa.gov/otaq/fuels/renewablefuels/documents/420f13048.pdf, respectively.

Additional information can be found on the EPA RFS2 and Alternative Fuels Data Center RFS Program websites.