Categorized | Federal Legislation

Biofuels Provisions of the 2005 Energy Policy Act

The 2005 Energy Policy Act, P.L. 109-90, signed into law by President Bush on August 8, 2005, contained new incentives for biofuels production, distribution, and consumption, plus a first-ever federal mandate requiring refiners to blend “renewable fuels” (chiefly ethanol from corn) into the nation’s fuel supply, increasing from 4 billion gallons in 2006 to 7.5 billion gallons in 2012.

Among other biofuel-related provisions, the Act:

(Sec. 1341) Allows a tax credit for investment in alternative motor vehicles technology, including qualified fuel cell, advanced lean burn technology, hybrid, and alternative fuel motor vehicles. Bases the amount of such credit on criteria relating to vehicle weight and fuel efficiency. Terminates such credit after 2014 for qualified fuel cell motor vehicles and after 2010 for advanced lean burn, hybrid, and alternative fuel motor vehicles.

(Sec. 1342) Allows a tax credit for 30% of the cost of installing a commercial or residential refueling property for dispensing certain alternative fuels consisting of at least 85% by volume of ethanol, natural gas and petroleum gases, hydrogen, or biodiesel. Limits the dollar amount of such credit to $30,000 for commercial property and $1,000 for residential property. Terminates such credit after 2009 (after 2014 for property relating to hydrogen).

(Sec. 1344) Extends through 2008: (1) the tax credit for biodiesel used as fuel; and (2) excise tax credits and refunds for alcohol fuel and biodiesel mixtures.

(Sec. 1345) Expands the tax credit for biodiesel used as fuel to include a credit amount for the per gallon production of biodiesel by certain small agri-biodiesel producers with a productive capacity of not more than 60 million gallons.

(Sec. 1346) Treats renewable diesel fuel as biodiesel for purposes of the tax credit for biodiesel used as fuel. Defines “renewable diesel” as diesel fuel derived from biomass using a certain thermal depolymerization process.

(Sec. 1347) Revises the definition of eligible small ethanol producer for purposes of the tax credit for alcohol used as fuel to increase the limit on a producer’s alcohol production capacity from 30,000 to 60,000 gallons.

(Sec. 1501) Amends the Clean Air Act to establish a renewable fuel program consisting of cellulosic biomass and waste-derived ethanol, and biodiesel. Directs the EPA Administrator to promulgate regulations to implement a renewable fuel program to ensure that gasoline introduced into commerce in the United States contains the applicable volume of specified renewable fuel (except in noncontiguous states or territories). Provides for the generation of credits: (1) by any person that refines, blends, or imports gasoline that contains renewable fuel exceeding the statutory requirement; (2) for biodiesel; and (3) by small refineries.

Cites conditions under which the Administrator may waive requirements for the renewable fuel program, based in part upon an assessment by the Secretary of Energy whether the renewable fuel requirement will likely result in significant adverse impacts on consumers on a national, regional, or state basis in 2006.

Grants small refineries a temporary exemption from the requirements of the renewable fuel program until calendar year 2011.

Permits a small refinery to petition the Administrator for an extension of the exemption based upon disproportionate economic hardship.

Requires the Federal Trade Commission (FTC) to report annually to Congress and the Administrator on a market concentration analysis to determine whether there is sufficient competition among ethanol production industry participants to avoid price-setting and other anticompetitive behavior.

Requires the Administrator, upon notification from a state Governor that the statutory Reid vapor pressure limitation (RVPL) will increase emissions that contribute to air pollution in the state, to apply a substitute RVPL to fuel blends containing gasoline and 10% denatured anhydrous ethanol that are introduced into commerce during the high ozone season.

Directs the Administrator to survey and report annually to Congress on the market shares of conventional and reformulated gasoline containing ethanol and renewable fuel.

(Sec. 1504) Amends the Clean Air Act to repeal general requirements governing the oxygen content of both gasoline and of reformulated gasoline.

(Sec. 1505) Requires the EPA Administrator to study and report to certain congressional committees on the effects upon public health, air quality, and water resources of: (1) increased use of, and the feasibility of using specified substitutes for MTBE in gasoline; and (2) the adjustment for ethanol-blended reformulated gasoline to volatile organic compounds performance requirements.

(Sec. 1506) Directs the Administrator to: (1) publish for public comment an analysis of the changes in emissions of air pollutants and air quality due to the use of motor vehicle fuel and fuel additives resulting from implementation of the Energy Policy Act of 2005; and (2) develop and finalize an emissions model that reflects the effects of gasoline characteristics or components on emissions from vehicles in the motor vehicle fleet during calendar year 2007.

Directs the Administrator to study and report to Congress on the effects of ethanol content in gasoline on permeation, the process by which fuel molecules migrate through the elastomeric materials (rubber and plastic parts) that make up the fuel and fuel vapor systems of a motor vehicle.

Requires such study to include estimates of the increase in total evaporative emissions likely to result from the use of gasoline with ethanol content in a motor vehicle, and the fleet of motor vehicles, due to permeation.

(Sec. 1508) Amends the Department of Energy Organization Act to instruct the Administrator of the Energy Information Administration to survey and publish monthly the renewable fuels demand in the motor vehicle fuels market.

(Sec. 1509) Instructs the EPA Administrator and the Secretary to study and report jointly to Congress on federal, state, and local requirements concerning motor vehicle fuels.

(Sec. 1510) Directs the Secretary to establish a program to provide guarantees of loans by private institutions for the construction of facilities for the processing and conversion of municipal solid waste and cellulosic biomass into fuel ethanol and other commercial byproducts.

(Sec. 1511) Amends the Clean Air Act to: (1) authorize funds for certain loan guarantees to implement commercial demonstration projects for cellulosic biomass and sucrose-derived ethanol; and (2) direct the Secretary to issue loan guarantees for up to four projects to commercially demonstrate the feasibility and viability of producing cellulosic biomass ethanol or sucrose-derived ethanol (including use of cereal straw and municipal solid waste as a feedstock).

Authorizes the Secretary to issue additional loan guarantees for a project to cover up to 80% of the excess of actual over estimated project cost but not to exceed 15% of the amount of the original guarantee.

Authorizes appropriations for FY2005-FY2007 for a resource center to develop bioconversion technology using low-cost biomass for the production of ethanol at the Center for Biomass-Based Energy at the Mississippi State University and the Oklahoma State University.

Directs the EPA Administrator to provide grants for research, development, and implementation of renewable fuel production technologies in specified states with low rates of ethanol production, including low rates of production of cellulosic biomass ethanol.

Authorizes the Secretary to provide grants to merchant producers of cellulosic biomass ethanol to build eligible production facilities for the product.

(Sec. 1512) Authorizes the Secretary to provide grants to merchant producers of cellulosic biomass ethanol, waste-derived ethanol, and approved renewable fuels in the United States to assist them in building eligible production facilities for the production of ethanol or approved renewable fuels. Authorizes appropriations for FY2006-FY2008.

(Sec. 1513) Amends the Clean Air Act to cite circumstances under which it shall not be a violation of the Act for a gasoline retailer to blend, at a retail location, batches of ethanol-blended and non-ethanol-blended reformulated gasoline.

(Sec. 1514) Directs the EPA Administrator to: (1) establish an Advanced Biofuel Technologies Program to demonstrate advanced technologies for the production of alternative transportation fuels; (2) give priority to projects that enhance the geographical diversity of alternative fuels production and utilize feedstocks that represent 10% or less of domestic ethanol or biodiesel fuel production during the previous fiscal year; and (3) fund demonstration projects to develop conversion technologies for producing cellulosic biomass ethanol, and for coproducing value-added bioproducts (such as fertilizers, herbicides, and pesticides) resulting from biodiesel fuel production. Authorizes appropriations for FY2005-FY2009.

(Sec. 1515) Amends the Energy Policy Act of 1992 to redefine biodiesel to include biodiesel derived from: (1) animal wastes, including poultry fats and poultry wastes, and other waste materials; or (2) municipal solid waste and sludges and oils derived from wastewater and the treatment of wastewater.

(Sec. 1516) Authorizes funds for, and authorizes the Secretary to issue, loan guarantees to projects to demonstrate commercially the feasibility and viability of producing ethanol using sugarcane, sugarcane bagasse, and other sugarcane byproducts as a feedstock.

The full text of EPAct 2005 is available here. The Congressional Research Service’s summary of the Act, from which the foregoing summary is drawn, is available here.



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  1. Dave

    Interesting topic… I’m working in this industry myself and I don’t agree about this in 100%, but I added your page to my bookmarks and hope to see more interesting articles in the future

  2. Dave

    Interesting topic… I’m working in this industry myself and I don’t agree about this in 100%, but I added your page to my bookmarks and hope to see more interesting articles in the future

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