This summarizes the provisions of Subtitles A and B of Title II of the Energy Independence and Security Act of 2007 ("EISA"), relating to the increased production of biofuels under the Renewable Fuel Standard ("RFS") and funding available to encourage production of cellulosic and advanced biofuels. The EISA was signed into law December 19, 2007 and takes effect January 1, 2009.

Under the EISA, the RFS will be expanded from the original mandate of 7.5 billion gallons by 2012 to a mandate of 36 billion gallons by 2022. Minimum portions of the mandate must be satisfied by advanced biofuel, cellulosic biofuel and biodiesel. The following table summarizes the new RFS mandate:

  (In billions of gallons)

Year

Conventional Biofuel

Advanced Biofuel

Cellulosic Biofuel

Biomass-based Diesel

Total RFS

2008

9.0

9.000

2009

10.5

0.600

0.500

11.100

2010

12

0.950

0.100

0.650

12.950

2011

12.6

1.350

0.250

0.800

13.950

2012

13.2

2.000

0.500

1.000

15.200

2013

13.8

2.750

1.000

*

16.550

2014

14.4

3.750

1.750

*

18.150

2015

15

5.500

3.000

*

20.500

2016

15

7.250

4.250

*

22.250

2017

15

9.000

5.500

*

24.000

2018

15

11.000

7.000

*

26.000

2019

15

13.000

8.500

*

28.000

2020

15

15.000

10.500

*

30.000

2021

15

18.000

13.500

*

33.000

2022

15

21.000

16.000

*

36.000

*At least 1.000 (specific amount to be determined by the Administrator)

The schedule for calendar years after 2012 will be established by the Administrator of the U.S. Environmental Protection Agency ("EPA") in coordination with the Secretaries of Energy and Agriculture.

The EPA is charged with promulgating and implementing rules that will determine whether a biofuel plant achieves the requirements under the EISA. These rules must go through public notice and comment before they will become effective. By way of example, the RFS program currently in effect was outlined in the Energy Policy Act of 2005, enacted on August 8, 2005, and the EPA rules implementing that RFS program became effective September 1, 2007. The EPA has stated that it is reviewing the terms of the EISA and that it will promulgate draft rules to implement the EISA as required, but has not provided a timeframe in which it will publish the draft rules.

New Definitions Under EISA

The EISA introduces several new definitions applicable to the production of biofuels:

Conventional biofuel means ethanol derived from corn starch. Those facilities that commence construction after the date of enactment must achieve at least a 20 percent reduction in lifecycle greenhouse gas emissions compared to baseline lifecycle greenhouse gas emissions.

Advanced biofuel means renewable fuel, other than ethanol derived from corn starch, that has lifecycle greenhouse gas emissions that achieve at least a 50 percent reduction over baseline lifecycle greenhouse gas emissions. The types of fuels eligible for consideration as “advanced biofuel” may include: ethanol derived from cellulose or lignin, sugar or starch (other than corn starch), or waste material, including crop residue, other vegetative waste material, animal waste, and food waste and yard waste; biomass-based diesel; biogas produced through the conversion of organic matter from renewable biomass; butanol or other alcohols produced through the conversion of organic matter from renewable biomass; and other fuel derived from cellulosic biomass.

Cellulosic biofuel means renewable fuel derived from any cellulose or lignin that is derived from renewable biomass and that has lifecycle greenhouse gas emissions that achieve at least a 60 percent reduction over baseline lifecycle greenhouse gas emissions.

Biomass-based diesel means renewable fuel that is biodiesel as defined in section 312(f) of the Energy Policy Act of 1992 and that has lifecycle greenhouse gas emissions that achieve at least a 50 percent reduction over baseline lifecycle greenhouse gas emissions. Biomass-based diesel is included as a component of Advanced Biofuels.

Baseline lifecycle greenhouse gas emissions means the average lifecycle greenhouse gas emissions for gasoline or diesel (whichever is being replaced by the renewable fuel) sold or distributed as transportation fuel in 2005.

Lifecycle greenhouse gas emissions means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes) related to the full fuel lifecycle. This lifecycle takes into consideration all stages of fuel and feedstock production and distribution, from feedstock generation or extraction, through the distribution and delivery and use of the finished fuel, to the ultimate consumer. Mass values for all greenhouse gases will be adjusted to account for their relative global warming potential.

EPA May Waive Targets

The EISA provides that the Administrator of the EPA, by his own motion, or through ruling on a petition by one or more States, a refiner or blender, may waive the RFS mandate for each type of biofuel. This waiver must go through public notice and comment, and must be based on a finding that implementing the mandate would severely harm the environment, or that there is inadequate domestic supply to meet the requirement. The EPA may also waive the required percent reduction in greenhouse gas emissions for new plants constructed after the EISA effective date, down to a prescribed threshold for each biofuel, if it is determined that achievement of that requirement is not feasible.

Grants

Under the EISA, the Secretary of Energy will establish a grant program to encourage the production of advanced biofuel. The award of grants will be based on proposals with the greatest reduction in lifecycle greenhouse gas emissions compared to the comparable motor vehicle fuel lifecycle emissions during 2005, and will be available only to those projects that achieve at least a 80 percent reduction in such lifecycle greenhouse gas emissions. The available funding will be $500 million for fiscal years 2008 through 2015.

The EISA also provides for grants to encourage the development of ethanol in states with low rates of ethanol production. Eligible entities include institutions of higher education, Indian tribal agencies, and local government agencies. The grant amount is $25 million annually for fiscal years 2008 through 2010.

Grants are also available for cellulosic ethanol and biofuels research. Eligible entities include colleges and universities. A total funding of $50 million for fiscal year 2008 will be allocated among 10 selected entities.