Efficient Producer Pathway Petition lessons learned

EcoEngineers has successfully completed a number of EP3 petition processes for ethanol producers and can share lessons learned, writes James M. Ramm. This column is titled "EP3 Lessons Learned" in the September issue of EPM.
By James M. Ramm | August 12, 2015

Since the U.S. EPA released the Efficient Producer Pathway Petition (EP3) process last fall, a number of grain ethanol producers have submitted their applications to participate in the program. EcoEngineers successfully completed a number of these projects and can share some of the lessons learned from the process.  

Under the renewable fuel standard (RFS) program, the life-cycle greenhouse gas (GHG) emissions from renewable fuels must be at least 20 percent less than the 2005 baseline GHG emissions from fossil fuels. The only exception is renewable fuel produced from facilities that are grandfathered under the rules. The grandfathered facilities are almost all ethanol plants that were either producing fuel or under construction when the rules were promulgated in 2007.

For these exempt ethanol plants, the EPA took the position that it is not the facility that is grandfathered, but the baseline volume of fuel produced at the facility at the time it was grandfathered, or specifically, the permitted capacity of the facility as of December 2007. Most ethanol facilities in the country have been hamstrung by their inability to generate renewable identification numbers (RINs) for fuel beyond their 2007 permitted capacity due to this restriction. In some cases, it can affect up to 15 percent of their fuel production.

EP3 producers must demonstrate that their fuel attains a 20 percent reduction in life-cycle GHG from the 98.2 kgCO2e per MMBtu baseline (the average life-cycle GHG emissions for gasoline sold as transportation fuel in 2005).  Thus, the life-cycle GHG emissions for the ethanol cannot exceed 78.56 kgCO2e per MMBtu.  The lower life-cycle carbon intensity for the fuel is achieved through process efficiencies at the plant. The producer is required to maintain records to prove that the process efficiency requirements are being met on a rolling 365-day average in order to maintain EP3 status.
Improved efficiency measures can be derived from reduced on-site energy consumption, increased fuel output, and, or, use of biomass or biogas from certain sources to reduce process energy GHG emissions.  All efficiency improvements including motors, clean power, LED lighting, grind technologies and more are accounted for by evaluating net inputs vs. outputs.  Regional utilities can play an important factor depending on the amount of wind or solar energy available.

Carbon modeling programs provide significant variations in results.  Different program models, such as the California GREET model and the EPA EP3 tool, produce different results. It is important to understand the cause of these variations to best position a facility under different compliance programs. This is especially important for producers selling into multiple markets, each with its own carbon intensity requirements, such as California or the European Union.

The first step in the two-step process is completion and submission of the EPA EP3 Tool.  The EPA typically reviews the submittal in about four weeks and sends back a conditional EP3 approval letter setting requirements to complete the registration process. The second step is registration.  The EPA will typically complete its review of this phase in about six weeks and, if approved, will activate the EP3 pathway on the EPA Moderated Transaction System.

A Compliance Monitoring Plan is required in order to utilize the EP3 pathway. It is the recordkeeping requirement specified in the signed pathway determination document that applies to the facility. When a fuel producer wishes to generate RINs for a batch of fuel using an approved EP3 pathway, the producer must calculate the average life-cycle GHG emissions for the renewable fuel produced at the facility over the previous 365-days or the number of days since EPA activated the EP3 pathway, whichever is less, and demonstrate that the fuel meets the applicable life-cycle GHG reduction threshold. It is presently unclear whether activation means the date of the EPA conditional approval or the date of the EMTS activation of the EP3 pathway.  The EPA has not yet responded to our request for clarification.

The next step for EP3 approved producers close to the 78.56 kgCO2e per MMBtu is to create a greater buffer against the EP3 ceiling by installing efficient technologies. A comprehensive evaluation of these technologies should not only look at their impact on the producer’s EP3 status and the value of additional RINs generated, but should also consider any additional cost savings that can be achieved through the displacement of fossil energy consumption. The impact of installed process efficiencies on participation in other incentive programs, such as the fuel’s carbon intensity number under California’s Low Carbon Fuel Standards, should also be considered at the same time.

Author: James M. Ramm
Senior Engineer and Founding Partner