US Renewable Fuel Standard (RFS) debuts September 1st

The US renewable fuels standard, or RFS, debuts on Saturday, September 1. The program will mandates an increasing percentage of renewable fuels in motor vehicle fuels, with credits granted to ease the transition.

The program exempts small refineries through 2010, plus the states of Alaska and Hawaii, although Hawaii has imposed a separate E10 mandate.  RFS program mandates blending of 7.5 billion gallons of renewable fuel into US-sold fuel by 2012.

The RFS is an outcome of the Executive Order on greenhouse gas emissions issued by President Bush this past May.

The EPA has stated that it expects with this standard to reduce petroleum-based fuel consumption by up to 3.9 billion gallons through by 2012. The excess petroleum would have been typically purchased  through the export markets, and RFS thereby has the potential to reduce the trade deficit by as much as $6.7 billion.

THe EPA estimates a reduction of up to 2.5% in carbon monoxide (CO) emissions,  up to 4% reduction in benzene emissions, and an overall redcution in greenhouse gas emission by up to 13 million tons. Under the Kyoto system, a credit of 1 ton of CO2-equivalent gas emission reduction reduction trades at $14, which translates the projected US gas emission reduction into an equivalent of $182 million in additional benefit. The EPA warns that emissions of certain compounds, such as nitrous oxides (NOx) may increase as much as 83,000 tons.

The cost increase in cost associated with implementing ethanol blended fuel (0.5 to 1.1 cents per gallon) will be offset through tax credit, resulting in an average decrease of 0.4 to 0.7 cents per gallon at the pump.

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