Low-carbon fuel program

(a)

In general

Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by striking subsection (o) and inserting the following:

(o)

Low-carbon fuel program

(1)

Definitions

In this subsection: (A)

Baseline lifecycle greenhouse gas emissions

The term baseline lifecycle greenhouse gas emissions means the average lifecycle greenhouse gas emissions, as determined by the Administrator, after notice and opportunity for comment, for transportation fuel sold or distributed as transportation fuel in 2005. (B)

Lifecycle greenhouse gas emissions

The term 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), as determined by the Administrator, related to the full fuel lifecycle, including 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, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential. (C)

Low-carbon fuel

The term low-carbon fuel means transportation fuel (including renewable fuel, electricity, hydrogen, and other forms of energy) that has lifecycle greenhouse gas emissions, as determined by the Administrator, after notice and opportunity for comment, that on annual average basis are equal to at least the following percentage less than baseline lifecycle greenhouse gas emissions determined in accordance with the following table: Calendar year:Applicable percentage less than baseline lifecycle greenhouse gas emissions: 201520.0 201621.5 201723.0 201824.5 201926.0 202027.5 202129.0 202230.5 202332.0 202433.5 202535.0 202636.5 202738.0 202839.5 202941.0 203042.5 2031 and thereafterPercentage determined under paragraph (2)(B)(ii).

(D)

Renewable biomass

The term renewable biomass means each of the following: (i)Planted crops and crop residue harvested from agricultural land cleared or cultivated at any time prior to December 19, 2007, that is either actively managed or fallow, and nonforested. (ii)Planted trees, bioenergy crops, and tree residue from actively managed tree plantations on non-Federal land cleared at any time prior to December 19, 2007, including land belonging to an Indian tribe or an Indian individual, that is held in trust by the United States or subject to a restriction against alienation imposed by the United States. (iii)Slash, brush, and those trees that are byproducts of ecological restoration, disease or insect infestation control, or hazardous fuels reduction treatments and do not exceed the minimum size standards for sawtimber, harvested— (I)in ecologically sustainable quantities, as determined by the appropriate Federal land manager; and (II)from National Forest System land or public land (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)), other than— (aa)components of the National Wilderness Preservation System; (bb)wilderness study areas; (cc)inventoried roadless areas; (dd)old growth or late successional forest stands unless biomass from the stand is harvested as a byproduct of an ecological restoration treatment that fully maintains, or contributes toward the restoration of, the structure and composition of an old growth forest stand taking into account the contribution of the stand to landscape fire adaptation and watershed health, and retaining large trees contributing to old-growth structure; (ee)components of the National Landscape Conservation System; and (ff)National Monuments. (iv)Animal waste material and animal byproducts. (v)Slash and pre-commercial thinnings that are from non-Federal forestland, including forestland belonging to an Indian tribe or an Indian individual, that are held in trust by the United States or subject to a restriction against alienation imposed by the United States, but not forests or forestland that are ecological communities with a global or State ranking of critically imperiled, imperiled, or rare pursuant to a State Natural Heritage Program, old growth forest, or late successional forest. (vi)Biomass from land in any ownership obtained from the immediate vicinity of buildings and other areas regularly occupied by people, or of public infrastructure, at risk from wildfire. (vii)Algae. (viii)Municipal solid waste, including separated yard waste or food waste, including recycled cooking and trap grease. (E)

Renewable fuel

The term renewable fuel means fuel that is— (i)produced from renewable biomass; and (ii)used to replace or reduce the quantity of fossil fuel present in a transportation fuel. (F)

Transportation fuel

The term transportation fuel means fuel for use in motor vehicles, motor vehicle engines, or nonroad vehicles (except for ocean-going vessels). (2)

Program

(A)

Regulations

(i)

In general

Not later than January 31, 2015, the Administrator shall promulgate regulations to ensure that the applicable percentage determined under subparagraph (B) of the transportation fuel sold or introduced into commerce in the United States, on an annual average basis, is low-carbon fuel. (ii)

Provisions of regulations

Regardless of the date of promulgation, the regulations promulgated under clause (i)— (I)shall contain compliance provisions applicable to producers, refiners, blenders, distributors, and importers, as appropriate, to ensure that the requirements of this paragraph are met; but (II)shall not— (aa)restrict geographic areas in which low-carbon fuel may be used; or (bb)impose any per-gallon obligation for the use of low-carbon fuel. (B)

Applicable volumes

(i)

Calendar years 2015 through 2030

For the purpose of subparagraph (A), the applicable percentage of the transportation fuel sold or introduced into commerce in the United States, on an annual average basis, that is low-carbon fuel for each of calendar years 2015 through 2030 shall be determined by the Administrator, in consultation with the Secretary of Energy, in accordance with the following table: Calendar year:Applicable percentage of transportation fuel sold that is low-carbon fuel: 201510.0 201611.5 201713.0 201814.5 201916.0 202017.5 202119.0 202220.5 202322.0 202423.5 202525.0 202626.5 202728.0 202829.5 202931.0 203032.5.

(ii)

Subsequent calendar years

(I)

In general

For the purposes of subparagraph (A), the applicable percentage of the transportation fuel sold or introduced into commerce in the United States (except in noncontiguous States or territories), on an annual average basis, that is low-carbon fuel for calendar year 2031 and each subsequent calendar year shall be determined by the Administrator, in consultation with the Secretary of Energy, based on a review of the implementation of the program during calendar years specified in the tables established under this subsection, and an analysis of— (aa)the impact of the production and use of low-carbon fuel on the environment, including on air quality, climate change, conversion of wetland, ecosystems, wildlife habitat, water quality, and water supply; (bb)the impact of low-carbon fuel on the energy security of the United States; (cc)the expected annual rate of future commercial production of low-carbon fuel; (dd)the impact of low-carbon fuel on the infrastructure of the United States, including deliverability of materials, goods, and products other than low-carbon fuel, and the sufficiency of infrastructure to deliver and use low-carbon fuel; (ee)the impact of the use of low-carbon fuel on the cost to consumers of transportation fuel and on the cost to transport goods; and (ff)the impact of the use of low-carbon fuel on other factors, including job creation, the price and supply of agricultural commodities, rural economic development, and food prices. (II)

Deadline

The Administrator shall promulgate rules establishing the applicable volumes under this clause not later than 14 months before the first year for which the applicable percentage will apply. (3)

Applicable percentages

(A)

Provision of estimate of volumes of gasoline sales

Not later than October 31 of each of calendar years 2005 through 2021, the Administrator of the Energy Information Administration shall provide to the Administrator of the Environmental Protection Agency an estimate, with respect to the following calendar year, of the volumes of transportation fuel and low-carbon fuel projected to be sold or introduced into commerce in the United States. (B)

Determination of applicable percentages

(i)

In general

Not later than November 30 of each of calendar years 2015 through 2029, based on the estimate provided under subparagraph (A), the Administrator of the Environmental Protection Agency shall determine and publish in the Federal Register, with respect to the following calendar year, the low-carbon fuel obligation that ensures that the requirements of paragraph (2) are met. (ii)

Required elements

The low-carbon fuel obligation determined for a calendar year under clause (i) shall— (I)be applicable to refineries, blenders, and importers, as appropriate; (II)be expressed in terms of a volume percentage of transportation fuel sold or introduced into commerce in the United States; and (III)subject to subparagraph (C), consist of a single applicable percentage that applies to all categories of persons specified in subclause (I). (C)

Adjustments

In determining the applicable percentage for a calendar year, the Administrator shall make adjustments to prevent the imposition of redundant obligations on any person specified in subparagraph (B)(ii)(I). (4)

Modification of greenhouse gas reduction percentages

(A)

In general

In the regulations promulgated under paragraph (2)(A)(i), the Administrator may adjust the required percentage reductions in lifecycle greenhouse gas emissions for low-carbon fuel to a lower percentage if the Administrator determines that generally the reduction is not commercially feasible for low-carbon fuel made using a variety of feedstocks, technologies, and processes to meet the applicable reduction. (B)

Amount of adjustment

In promulgating regulations under this paragraph, the specified percent reduction in greenhouse gas emissions from low-carbon fuel may not be reduced more than 10 percentage points below the percentage otherwise required under this subsection. (C)

Adjusted reduction levels

(i)

In general

An adjustment in the percentage reduction in greenhouse gas levels shall be the minimum practicable adjustment for low-carbon fuel. (ii)

Maximum achievable level

The adjusted greenhouse gas reduction shall be established at the maximum achievable level, taking cost in consideration, allowing for the use of a variety of feedstocks, technologies, and processes. (D)

Subsequent adjustments

(i)

In general

After the Administrator has promulgated a final rule under paragraph (2)(A)(i) with respect to the method of determining lifecycle greenhouse gas emissions, the Administrator may not adjust the percent greenhouse gas reduction levels unless the Administrator determines that there has been a significant change in the analytical basis used for determining the lifecycle greenhouse gas emissions. (ii)

Criteria and standards

If the Administrator makes the determination that an adjustment is required, the Administrator may adjust the percent reduction levels through rulemaking using the criteria and standards established under this paragraph. (iii)

5-Year review

If the Administrator makes any adjustment under this paragraph, not later than 5 years thereafter, the Administrator shall review and revise (based on the same criteria and standards as required for the initial adjustment) the level as adjusted by the regulations. (5)

Credit program

(A)

In general

The regulations promulgated under paragraph (2)(A) shall provide for the generation of an appropriate quantity of credits by any person that refines, blends, imports, or distributes transportation fuel that contains a quantity of low-carbon fuel that is greater than the quantity required under paragraph (2). (B)

Use of credits

A person that generates credits under subparagraph (A) may use the credits, or transfer all or a portion of the credits to another person, for the purpose of complying with paragraph (2). (C)

Duration of credits

A credit generated under this paragraph shall be valid to demonstrate compliance for the 12-month period beginning on the date of generation. (D)

Inability to generate or purchase sufficient credits

The regulations promulgated under paragraph (2)(A) shall include provisions allowing any person that is unable to generate or purchase sufficient credits to meet the requirements of paragraph (2) to carry forward a low-carbon fuel deficit on condition that the person, in the calendar year following the year in which the low-carbon fuel deficit is created— (i)achieves compliance with the low-carbon fuel requirement under paragraph (2); and (ii)generates or purchases additional low-carbon fuel credits to offset the low-carbon fuel deficit of the previous year. (E)

Credits for additional low-carbon fuel

The Administrator may promulgate regulations providing— (i)for the generation of an appropriate quantity of credits by any person that refines, blends, imports, or distributes additional low-carbon fuel specified by the Administrator; and (ii)for the use of the credits by the generator, or the transfer of all or a portion of the credits to another person, for the purpose of complying with paragraph (2). (6)

Waivers

(A)

In general

The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the requirements of this subsection in whole or in part on petition by 1 or more States, by any person subject to the requirements of this subsection, or by the Administrator on the Administrator's own motion, by reducing the national percentage of low-carbon fuel required under paragraph (2)— (i)based on a determination by the Administrator, after public notice and opportunity for comment, that implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States; or (ii)based on a determination by the Administrator, after public notice and opportunity for comment, that there is an inadequate domestic supply of low-carbon fuel. (B)

Petitions for waivers

The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, shall approve or disapprove a petition for a waiver of the requirements of paragraph (2) not later than 90 days after the date on which the petition is received by the Administrator. (C)

Termination of waivers

A waiver granted under subparagraph (A) shall terminate after 1 year, but may be renewed by the Administrator after consultation with the Secretary of Agriculture and the Secretary of Energy and after public notice and opportunity for comment. (D)

Modification of applicable percentages

(i)

In general

In the case of any table established under this subsection, if the Administrator waives at least 20 percent of the applicable percentage requirement specified in the table for 2 consecutive years, or at least 50 percent of the percentage requirement for a single year, the Administrator shall promulgate regulations (not later than 1 year after issuing the waiver) that modify the applicable volumes specified in the table concerned for all years following the final year to which the waiver applies, except that no such modification in applicable percentages shall be made for any year before calendar year 2016. (ii)

Administration

In promulgating the regulations, the Administrator shall comply with the processes, criteria, and standards established under paragraph (2)(B)(ii). (7)

Low-carbon market concentration analysis

(A)

Analysis

(i)

In general

Not later than January 1, 2015, and annually thereafter, the Federal Trade Commission shall perform a market concentration analysis of the low-carbon fuel production, import, and distribution industries using the Herfindahl-Hirschman Index to determine whether there is sufficient competition among industry participants to avoid price-setting and other anticompetitive behavior. (ii)

Scoring

For the purpose of scoring under clause (i) using the Herfindahl-Hirschman Index, all marketing arrangements among industry participants shall be considered. (B)

Report

Not later than December 1, 2015, and annually thereafter, the Federal Trade Commission shall submit to Congress and the Administrator a report on the results of the market concentration analysis performed under subparagraph (A)(i). (8)

Periodic reviews

To allow for the appropriate adjustment of the requirements described in paragraph (2)(B), the Administrator shall conduct periodic reviews of— (A)existing technologies; (B)the feasibility of achieving compliance with the requirements; and (C)the impacts of the requirements of this subsection on each individual and entity described in paragraph (2). (9)

Effect on other provisions

(A)

In general

Subject to subparagraph (B), nothing in this subsection, or regulations promulgated under this subsection, affects the regulatory status of carbon dioxide or any other greenhouse gas, or expands or limits regulatory authority regarding carbon dioxide or any other greenhouse gas, for purposes of other provisions (including section 165) of this Act. (B)

Administration

Subparagraph (A) shall not affect implementation and enforcement of this subsection.

(b)

Effective date

The amendment made by subsection (a) takes effect on January 1, 2015.