Visually, the nested nature of the various mandates appears as follows (with values for 2022 and the "B" standing for billions of gallons):
Does the EISA include a mandate for ethanol only?
The EISA does not include an explicit mandate for only ethanol. Of the total 36 billion gallons mandated, 21 billion come from the advanced biofuel category, which leaves a 15 billion gallon "soft cap" on corn ethanol.
Can biofuel be used for multiple categories?
Certain types of biofuel can be used for various parts of the requirement. For example, a gallon of cellulosic ethanol provides obligated parties with credit for the cellulosic category, the advanced category, AND the total renewable fuel requirement.
Who is responsible for administering the RFS standard?
While the EISA mandates overall, annual biofuel volumes for the entire fuel supply, it is the Environmental Protection Agency's (EPA) responsibility to determine annually how that standard should be applied to individual obligated parties in a manner that meets the requirements of the law.
Who is an obligated party?
An obligated party under the RFS is a producer (refiner) or importer of gasoline or diesel that is consumed in the continental United States (Hawaii also has opted into the RFS). Note that marketers that blend ethanol into gasoline for others and biofuel producers are not obligated parties. Thus, the EISA mandates currently apply to parties that may have little to do with actual biofuel production. Gasoline and diesel fuels produced in the U.S. and exported do not incur an RFS obligation.
How does EPA determine blending obligations?
EPA developed a mathematical formula to determine how obligated parties meet the standards. EPA uses this formula to determine blending obligations of each individual obligated party for the following calendar year, referred to as the renewable volume obligations ("RVO"), which must be finalized by November 30th. The RVO represents a percentage for each sub-mandate of each obligated party's production volumeof gasoline and diesel for the U.S. market.
For example, if the RVO for the entire mandate is 10 percent, then a refinery producing 100,000 barrels per day of gasoline and diesel would have to show that 10,000 barrels per day of biofuel were blended into the fuel supply. In addition to refiners, importers are also obligated parties. In line with the previous example, if a company imports 10,000 barrels per day of gasoline and the RVO is 10 percent, that importer will need to show 1,000 barrels per day of biofuel were blended into the fuel supply.
Note that all obligated parties have obligations or RVOs for all of the mandated biofuel, regardless of what fuels they typically produce or blend. Thus, a gasoline importer not only has an obligation to make sure some volume of ethanol is blended into its gasoline, but the company also has an obligation for biomass-based diesel, cellulosic fuel, other advanced fuels, and total renewable fuels.