U.S. renewable fuels standard takes effect

The U.S. Federal Renewable Fuels Standard went into effect this month, requiring 4.2 percent of the fuel sold or dispensed in the States in 2007 to come from renewable resources.

Authorized by the Energy Policy Act of 2005, the U.S.'s first renewable fuels standard sets new reporting, registration, and compliance requirements for major refiners, fuel blenders, and fuel importers.

The program was designed to promote the use of fuels largely produced from American-grown crops.

That 4.2 percent minimum volume, equivalent to 4.7 billion gallons of alternative fuels, will increase each year until it reaches 7.5 billion gallons of renewable fuel in 2012.

While corn-ethanol accounts for a majority of the alternative fuel in the States, the fuel standard calls for a minimum of 250 million gallons per year of cellulosic ethanol beginning in 2013.

There are some exemptions to the new rules, with small refineries, defined as facilities where the average daily crude oil throughput does not exceed 75,000 barrels per day, allowed to hold off on joining the program until 2011.

But those small refineries can choose to opt in early to generate credits.

RFS credits have a lifespan of 12 months, with every gallon of cellulosic ethanol equal to 2.5 gallons of renewable fuel.

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