[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Notices]
[Pages 41033-41040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17262]
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ENVIRONMENTAL PROTECTION AGENCY
[EPA-HQ-OAR-2015-0092; FRL-9930-50-OAR]
Notice of Opportunity To Comment on an Analysis of the Greenhouse
Gas Emissions Attributable to Production and Transport of Cotton
(Gossypium spp.) Seed Oil for Use in Biofuel Production
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
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SUMMARY: The Environmental Protection Agency (EPA) is inviting comment
on its analysis of the greenhouse gas (GHG) emissions attributable to
the production and transport of Gossypium spp. seed oil (``cottonseed
oil'') feedstock for use in making biofuels such as biodiesel,
renewable diesel, and jet fuel. This document explains EPA's analysis
of the feedstock production and transport-related components of the
lifecycle GHG emissions of biofuel made from cottonseed oil, including
both direct and indirect agricultural and forestry sector emissions.
This notice also describes how EPA may apply this analysis in the
future to determine whether biofuels produced from cottonseed oil meet
the necessary GHG reductions required for qualification as renewable
fuel under the Renewable Fuel Standard program. Based on this analysis,
we anticipate that biofuels produced from cottonseed oil could qualify
as biomass-based diesel or advanced biofuel if typical fuel production
process technologies are used.
DATES: Comments must be received on or before August 13, 2015.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2015-0092, by one of the following methods:
http://www.regulations.gov. Follow the on-line
instructions for submitting comments.
Email: [email protected], Attention Air and Radiation
Docket ID No. EPA-HQ-OAR-2015-0092.
Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2015-0092, Environmental Protection Agency, Mail
[[Page 41034]]
code: 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.
Hand Delivery: EPA Docket Center, EPA/DC, EPA WJC West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460, Attention
Air and Radiation Docket, ID No. EPA-HQ-OAR-2015-0092. Such deliveries
are only accepted during the Docket's normal hours of operation, and
special arrangements should be made for deliveries of boxed
information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2015-0092. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or email. The
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an email comment
directly to EPA without going through www.regulations.gov, your email
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA's public docket visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm.
Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
for which disclosure is restricted by statute. Certain other material,
such as copyrighted material, will be publicly available only in hard
copy. Publicly available docket materials are available either
electronically in www.regulations.gov or in hard copy at the Air and
Radiation Docket, EPA/DC, EPA WJC West, Room 3334, 1301 Constitution
Ave. NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is (202) 566-1744, and the
telephone number for the Air and Radiation Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT: Christopher Ramig, Office of
Transportation and Air Quality, Mail Code: 6401A, U.S. Environmental
Protection Agency, 1200 Pennsylvania Avenue NW., 20460; telephone
number: (202) 564-1372; fax number: (202) 564-1177; email address:
[email protected].
SUPPLEMENTARY INFORMATION:
This document is organized as follows:
I. Introduction
II. Analysis of GHG Emissions Associated With Use of Cottonseed Oil
as a Biofuel Feedstock
A. Feedstock Description, Production, and Distribution
1. Production of Cottonseed Oil-Based Biofuels
2. Cottonseed Oil Production Economics
3. Replacement of Cottonseed Oil in Vegetable Oil Markets
4. Upstream GHG Implications of Cottonseed Oil Use as a Biofuel
Feedstock
B. Summary of Agricultural Sector GHG Emissions
C. Fuel Production and Distribution
III. Summary
I. Introduction
As part of changes to the Renewable Fuel Standard (RFS) program
regulations published on March 26, 2010 \1\ (the ``March 2010 rule''),
EPA specified the types of renewable fuels eligible to participate in
the RFS program through approved fuel pathways. Table 1 to 40 CFR
80.1426 of the RFS regulations lists three critical components of an
approved fuel pathway: (1) Fuel type; (2) feedstock; and (3) production
process. Fuel produced pursuant to each specific combination of the
three components, or fuel pathway, is designated in Table 1 to 40 CFR
80.1426 as eligible for purposes of the Clean Air Act's (CAA)
requirements for greenhouse gas (GHG) reductions to qualify as
renewable fuel or one of three subsets of renewable fuel (biomass-based
diesel, cellulosic biofuel, or advanced biofuel). EPA may also
independently approve additional fuel pathways not currently listed in
Table 1 to 40 CFR 80.1426 for participation in the RFS program, or a
third-party may petition for EPA to evaluate a new fuel pathway in
accordance with 40 CFR 80.1416.
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\1\ See 75 FR 14670.
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Pursuant to 40 CFR 80.1416, EPA received a petition from the
National Cottonseed Products Association (NCPA), requesting that EPA
evaluate the lifecycle GHG emissions for biofuels produced using
Gossypium spp. seed oil (``cottonseed oil''), and that EPA provide a
determination of the renewable fuel categories, if any, for which such
biofuels may be eligible. EPA's lifecycle analyses are used to assess
the overall GHG impacts of a fuel throughout each stage of its
production and use. The results of these analyses, considering
uncertainty and the weight of available evidence, are used to determine
whether a fuel meets the necessary GHG reductions required under the
CAA for it to be considered renewable fuel or one of the subsets of
renewable fuel. Lifecycle analysis includes an assessment of emissions
related to the full fuel lifecycle, including feedstock production,
feedstock transportation, fuel production, fuel transportation, fuel
distribution, and tailpipe emissions. Per the CAA definition of
lifecycle GHG emissions, EPA's lifecycle analyses also include an
assessment of significant indirect emissions, such as indirect
emissions from land use changes, agricultural sector impacts, and
production of co-products from biofuel production.
In this document, we are describing EPA's evaluation of the GHG
emissions associated with the feedstock production and feedstock
transport stages of the lifecycle analysis of cottonseed oil when it is
used to produce a biofuel, including the indirect agricultural and
forestry sector impacts. We are seeking public comment on the
methodology and results of this evaluation. For reasons described in
Section II below, we believe that, as a conservative estimate, it is
reasonable to apply the GHG emissions estimates we established in the
March 2010 rule for the production and transport of soybean oil to
cottonseed oil.
If appropriate, EPA will update its evaluation of the feedstock
production and transport phases of the lifecycle analysis for
cottonseed oil based on comments received in response to this action.
EPA will then use this feedstock production and transport information
to evaluate facility-specific petitions, received pursuant to 40 CFR
80.1416, that propose to use cottonseed oil as a feedstock for the
production of biofuel. In evaluating such petitions, EPA will consider
the GHG emissions associated with the production and transport of
cottonseed oil feedstock as described in this document, including the
potential
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indirect impacts. In addition, EPA will determine--based on information
in the petition and other relevant information, including the
petitioner's energy and mass balance data--the GHG emissions associated
with petitioners' biofuel production processes, as well as emissions
associated with the transport and use of the finished biofuel. We will
then combine our assessments into a full lifecycle GHG analysis and
determine whether the fuel produced at an individual facility satisfies
CAA renewable fuel GHG reduction requirements.
II. Analysis of GHG Emissions Associated With Use of Cottonseed Oil as
a Biofuel Feedstock
EPA has evaluated the production and transport portion of the
lifecycle GHG impacts of using cottonseed oil as a biofuel feedstock,
based on information provided in the petition and other data gathered
by EPA. Based on this evaluation, EPA believes that new agricultural
sector modeling is not needed to evaluate this portion of the lifecycle
GHG impacts of using cottonseed oil as a biofuel feedstock. As
explained below, our analysis makes the conservative assumption that
cottonseed oil diverted from the vegetable oil markets for food and
industrial use to biofuel production will be replaced with soybean oil
rather than result in additional production of cottonseed oil or any
other vegetable oil. Therefore, in this analysis, we are applying the
same agricultural sector impacts for soybean oil to cottonseed oil on a
per-pound-of-feedstock basis. Based on this analysis (described below),
we propose to evaluate the agricultural sector GHG emissions impacts of
using cottonseed oil in responding to petitions received pursuant to 40
CFR 80.1416 by assuming that GHG emissions are similar to those
associated with the use of soybean oil for biofuel production. We
invite comment on this proposed approach.
A. Feedstock Description, Production, and Distribution
1. Production of Cottonseed Oil-Based Biofuels
Cottonseed oil is the fourth most produced vegetable oil in the
U.S., after soybean oil, corn oil, and canola oil respectively. It is
the seventh most consumed vegetable oil in the U.S., behind soybean
oil, canola oil, palm oil, corn oil, coconut oil, and olive oil
respectively. It accounts for about 2.5-4 percent of U.S. production
and about 1.5-2.5 percent of U.S. consumption of vegetable oil.\2\
Internationally, cottonseed oil is the sixth most produced and consumed
vegetable oil, representing about 3-3.5 percent of global production
and consumption.\3\ Over the last decade, annual U.S. cottonseed oil
production has averaged just under 800 million pounds.\4\ If this
entire supply were used for biodiesel and/or renewable diesel
production, which is highly unlikely for reasons discussed below, it
would generate approximately 100 million gallons of fuel. Since U.S.
biodiesel and renewable diesel production was approximately 1.5 billion
gallons in 2014, the potential contribution of cottonseed oil is
relatively small in comparison to the overall biodiesel and renewable
diesel market.
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\2\ United States Department of Agriculture, ``National Oil
Crops Yearbook 2014'', available at: http://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx (Last Accessed: January 14th,
2015). United Nations Food and Agriculture Organization,
``FAOSTAT'', available at: http://faostat.fao.org/ (Last Accessed:
January 29th, 2015).
\3\ Ibid.
\4\ Ibid.
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Cottonseed oil is preferred for a number of specialty uses by
certain producers, including the frying of potato chips and the
preservation of smoked shellfish. According to industry experts in
government and the private sector consulted by EPA, many producers
strongly prefer cottonseed oil over its alternatives, believing that
the type of oil used for these products has a very significant impact
on the quality of the product itself. Market experts also noted to EPA
that these producers have historically been willing to pay a
significant premium to maintain their supply of cottonseed oil when
supplies become limited.\5\
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\5\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015.
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This behavior is supported by available historical data. Figure
II.A.1-1 below illustrates one of multiple examples from recent
history. In the 2012/13 crop year, cottonseed oil production was near
the ten-year average.\6\ However, in the 2013/14 crop year, cottonseed
oil production was down significantly, about 20 percent below the ten-
year average.\7\ Conversely, these two crop years were both good for
soybean oil, with production levels just above the ten-year average.\8\
In 2012/13, when both oilseeds produced around their recent averages,
the peak monthly price spread between soybean oil and cottonseed oil
was about 3 cents per pound.\9\ However, in 2013/14 when cottonseed oil
supply was heavily constrained, the monthly average price spread grew
to as much as 43.5 cents per pound.\10\
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\6\ In the USDA data considered here, crop years begin in
October of the first year listed and end in September of the second
year listed.
\7\ U.S. cottonseed oil production has averaged about 800
million pounds since the 2003/04 crop year. According to the USDA
Oil Crops Yearbook 2014, production in 2012/13 was also about 800
million pounds and production in 2013/14 was approximately 630
million pounds.
\8\ U.S. soybean oil production has averaged about 19.5 billion
pounds since the 2003/04 crop year. According to the USDA Oil Crops
Yearbook 2014, production in 2012/13 was about 19.8 billion pounds
and production in 2013/14 was approximately 19.7 billion pounds.
\9\ This occurred in December 2012, when, according to USDA
data, soybean oil averaged 47.16 cents per pound and cottonseed oil
averaged 49.05 cents per pound.
\10\ This occurred in May of 2014, when, according to USDA data,
soybean oil averaged 40.68 cents per pound and cottonseed oil
averaged 84.25 cents per pound.
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[[Page 41036]]
[GRAPHIC] [TIFF OMITTED] TN14JY15.011
As Figure II.A.1-1 illustrates, cottonseed oil can approach price
parity with soybean oil at times of average or above-average supply of
cottonseed oil. However, the price trend shown above for 2013 should
not be taken as representative of the full historical record.
Cottonseed oil does not often achieve actual price parity with soybean
oil. According to historical monthly price data from the U.S.
Department of Agriculture (USDA), the national average monthly price
for cottonseed oil was approximately equal to or below that of soybean
oil in only 23 of the last 180 months (15 years).\12\ Even in the
middle months of 2013, when soybean oil and cottonseed oil prices
appear to converge in Figure II.A.1-1, cottonseed oil actually
maintained a small premium over soybean oil, though in a few months of
2013 this premium was less than a cent per pound. In only one month out
of the last fifteen years, September 2004, was the monthly average
price of cottonseed oil more than one cent per pound cheaper than that
of soybean oil. For the majority of the recent historical record,
cottonseed oil has maintained a significant price premium over soybean
oil, averaging approximately 7 cents per pound over the last 15 years.
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\11\ United States Department of Agriculture, ``National Oil
Crops Yearbook 2014'', available at: http://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx (Last Accessed: January 14th,
2015).
\12\ USDA Agricultural Marketing Service, ``Monthly Feedstuff
Prices and Milling and Baking News'', multiple editions. In this
example, by ``approximately equal'' we mean that there was less than
a 1 cent difference between the prices of cottonseed oil and soybean
oil.
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Based on information from USDA vegetable oil market experts, demand
for cottonseed oil for specialty uses like those cited above is
extremely inelastic, meaning that demand for this volume of cottonseed
oil would not be significantly impacted by an increase in the price of
cottonseed oil.\13\ It is therefore highly unlikely that biofuel
producers could bid cottonseed oil away from such specialty uses. This
inelasticity of demand dramatically shrinks the potential amount of
cottonseed oil that might be utilized for biofuel production and the
potential impact that approving a pathway for cottonseed oil might have
on vegetable oil markets. The data suggest that, in most years,
cottonseed oil would not be price competitive with soybean oil for
biofuel feedstock use in most locations. This suggests that cottonseed
oil is unlikely to be used for biofuel production except in years where
cottonseed oil prices are significantly lower than normal relative to
soybean oil. Even then, as discussed below, cottonseed oil is likely to
be used as a feedstock predominantly by biofuel production facilities
located near cottonseed crushing facilities.
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\13\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015.
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Conversely, the data also suggest that in some circumstances,
cottonseed oil may achieve approximate price parity with soybean oil.
This trend in pricing indicates cottonseed oil could compete on price
with soybean oil as biofuel feedstock in times of abundant supply, or
possibly in a year with low soybean oil production but normal
cottonseed oil production, both of which might be expected to narrow
the normal price gap. This trend also indicates that, when cottonseed
oil prices are relatively low, the U.S. market values cottonseed oil at
about the same price as soybean oil, rather than cheaper alternatives
like palm oil or waste oils and greases or more expensive alternatives
like sunflower seed oil. In other words, the historical pricing data
available indicates that the primary competitor of cottonseed oil under
these circumstances is soybean oil, since the prices converge, or at
least nearly converge, under such circumstances.
Based on consultation with USDA and private sector vegetable oil
industry experts and given the historical data presented above, we
believe that the actual potential for biodiesel and non-ester renewable
diesel production from cottonseed oil is considerably smaller than the
100 million gallons noted above.\14\ Based on a conversation with NCPA
we believe that the actual potential is more likely in the range of 20
million gallons of biodiesel per year (representing roughly 150-160
million pounds of cottonseed oil), and could be considerably smaller
than that
[[Page 41037]]
depending on market conditions.\15\ As noted above, this is largely due
to the inelastic nature of cottonseed oil demand for specialty uses,
which have demonstrated their willingness to pay prices for cottonseed
oil that would be prohibitive to biofuel producers when forced to
compete for limited supplies of cottonseed oil. Except in years with
high levels of cottonseed oil production or uncharacteristically low
demand from specialty users (for example, if potato chip production
were to be unusually low in a particular year), we do not expect that
there will be significant quantities of cottonseed oil available at
prices that biodiesel producers would consider competitive. As a
result, were EPA to approve pathways for cottonseed oil-based fuels and
begin registering producers, we would not expect it to have a
significant impact on U.S. biofuel production or U.S. vegetable oil
production, consumption, and trade patterns.
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\14\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015; based also on memo from NCPA [EPA-HQ-OAR-2015-0092-0001; EPA-
HQ-OAR-2015-0092-0002].
\15\ Based on memo from NCPA [EPA-HQ-OAR-2015-0092-0001; EPA-HQ-
OAR-2015-0092-0002].
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2. Cottonseed Oil Production Economics
The methods of producing cottonseed oil are nearly identical to
those of other vegetable seed oils. The seeds are crushed, oil and meal
are separated, and the two products are sold separately into the
vegetable oil and animal feed markets respectively. However, the
production of the cotton oilseed is unique among major oilseeds because
the seed itself is not a primary crop product. Rather, it is generally
considered a byproduct of the production of cotton lint for fiber.
Fiber production is the primary purpose of cotton farming, representing
approximately 85 percent of the value of the average U.S. acre of
cotton, and it drives the decisions of farmers regarding whether to
plant cotton and what types of farming practices to utilize.\16\ The
cotton seed and its products represent the remaining approximately 15
percent of average value per acre. Conversely, for soybeans and other
major oilseeds, the seed itself comprises nearly 100 percent of the
value per acre.
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\16\ According to the USDA NASS database, cotton lint has
represented about 85 percent of revenue per acre fairly consistently
since at least the year 1980. (Source: United States Department of
Agriculture, ``National Agricultural Statistical Service Database'',
available at: http://quickstats.nass.usda.gov/ [Last Accessed:
January 14th, 2015]).
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While cottonseed does have value and provides farmers with a
secondary revenue stream, most cotton farmers consider it to be a
byproduct of producing cotton lint. The efforts of cotton breeders over
a long time period to maximize lint yields relative to seed yields,
demonstrated by yield trends in cottonseed and cotton lint, support
this hypothesis. Since 1985, the U.S. average cottonseed yield per bale
of cotton lint produced has declined from nearly 800 pounds per bale to
less than 700 pounds per bale (See Figure II.A.2-1 below).
[GRAPHIC] [TIFF OMITTED] TN14JY15.012
Conversely, over that same period, the U.S. average cotton lint
yield has increased from 630 pounds per acre harvested to over 800
pounds per acre harvested.
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\17\ United States Department of Agriculture, ``National
Agricultural Statistical Service Database'', available at: http://quickstats.nass.usda.gov/ (Last Accessed: January 14th, 2015).
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[[Page 41038]]
[GRAPHIC] [TIFF OMITTED] TN14JY15.013
The secondary nature of cottonseed production for cotton farmers
has significant implications for our study of the impacts of cottonseed
oil production for use in making biofuels. In a given year, weather
conditions may reduce lint yields and force farmers to rely more on
seed revenue. But when making decisions about what to plant, when to
plant, and what types and quantities of crop inputs to utilize, lint
yields are the first priority of cotton farmers. Further, the fact that
cottonseed oil will only be competitive as a biofuel feedstock under
certain relatively uncommon and unpredictable circumstances makes it
even more unlikely that establishing pathways for cottonseed oil-based
fuels under the RFS would have any impact on planting decisions. While
farmers will seek to maximize the price they receive for cottonseed, it
is highly unlikely that an increase in cottonseed value would have any
significant impact on the behavior of cotton farmers.
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\18\ United States Department of Agriculture, ``National
Agricultural Statistical Service Database'', available at: http://quickstats.nass.usda.gov/ (Last Accessed: June 2nd, 2015).
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Because changes in cottonseed oil prices are unlikely to affect
overall cotton production decisions, it is highly unlikely that the use
of cottonseed oil as a biofuel feedstock will significantly affect
cottonseed production or the supply of cottonseed oil in the U.S.
vegetable oil markets. Imports of cottonseed oil are approximately
zero. We do not expect demand for cottonseed oil as biofuel feedstock
to change this, since the costs of creating and operating new trade
routes would make cottonseed oil uncompetitive with alternative oil
feedstocks, especially soybean oil. Instead, we expect that, in the
rare instances when cottonseed oil prices approach parity with soybean
oil prices, biofuel producers might utilize some quantity of cottonseed
oil. Since, in most previous historical instances of this near price
parity, cottonseed oil is still somewhat more expensive than soybean
oil, we would expect to only see this behavior amongst biofuel
producers with renewable fuel production facilities near cottonseed
crushing locations, since this oil could be sourced with minimal
transport costs. If some quantity of cottonseed oil is diverted from
the vegetable oil markets to the biofuel market, any unfilled demand
for vegetable oil will most likely be met with increased consumption of
other vegetable oils, for the reasons outlined in the next section.
3. Replacement of Cottonseed Oil in Vegetable Oil Markets
As noted in Section II.A.1 above, cottonseed oil demand in the U.S.
tends to be inelastic until the needs of specialty consumers are fully
met, and the amount of cottonseed oil that could be bid away from such
users for biofuel production is likely small until that threshold is
reached. Whether or not any of this remaining cottonseed oil will
actually be used for biofuel production will depend on the price of
cottonseed oil relative to soybean oil at that time.
In the event that cottonseed oil is used as a biofuel feedstock,
the small volume likely to be available in any given region makes it
highly unlikely that cottonseed oil could meet the total feedstock
needs of a biofuel production facility. Rather, we expect that U.S.
biofuel producers who are already utilizing vegetable oil feedstocks
and are located near cottonseed crushing facilities will have the
option to include some amount of cottonseed oil in their mix of
feedstocks when the price is right.
There are two likely ways that biofuel producers may include some
amount of cottonseed oil in their feedstock mix. First, biofuel
producers may at times substitute cottonseed oil for some amount of
soybean oil and produce the same volume of fuel as before. Second, they
may at times use low-priced cottonseed oil to increase their total
volume of fuel production. While the market response is likely to be
some combination of both scenarios, for this analysis we have assumed
the more conservative scenario from a lifecycle
[[Page 41039]]
GHG perspective. This second scenario is more conservative because in
the first scenario the displaced soybean oil could backfill in other
vegetable oil markets for the cottonseed oil consumed for biofuel
production and total vegetable oil production is unlikely to change. In
the second scenario, where total biofuel production increases,
cottonseed oil is being diverted away from some other use, creating a
shortfall in vegetable oil supplies for some portion of the market.
Either prices for vegetable oil will rise (in which case it is less
likely that biofuel producers would still consume the cottonseed oil,
since they were only purchasing it because of the low price) or
additional vegetable oil will need to be supplied. In either case, the
GHG emissions will be greater in the second scenario, where there is an
incentive to expand crop production. If the results of analyzing the
conservative scenario associated with greater GHG emissions indicates
that biofuels produced from cottonseed oil satisfy the 50 percent
lifecycle GHG emissions reduction requirement for biomass-based diesel
and advanced biofuels, we can conclude that the threshold determination
would be the same under the less conservative but more likely scenario.
If the use of cottonseed oil for biofuel does create an increase in
total demand for vegetable oil, we believe the direct result will be a
corresponding increase in soybean oil consumption in the United States.
As we established above, cotton farmers are unlikely to respond to
increased demand for cottonseed oil. Instead, we are likely to see an
increase in production of the vegetable oil most competitive with the
cottonseed oil being diverted to biofuel feedstock use. Based on
consultation with oilseed market experts at USDA and recent historical
data (see Section II.A.1), which shows cottonseed oil prices tracking
soybean oil prices, the marginal users of cottonseed oil are largely
indifferent between cottonseed and soybean oil when they approach price
parity.\19\ Therefore, it follows that if vegetable oil is needed to
backfill for cottonseed oil used as biofuel, soybean oil would be the
most likely vegetable oil to meet this demand in the United States.
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\19\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015.
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To the extent that soybean oil is used to satisfy U.S. domestic
demand for vegetable oil that would have otherwise been met with
cottonseed oil, there would likely be secondary impacts on the
production and consumption of other vegetable oils internationally and
the agricultural sector more broadly. In the modeling we conducted for
the March 2010 rule, we projected that the use of soybean oil for
biofuel feedstock would cause a global increase in vegetable oil
production. In that analysis, we projected that the majority of this
increase would come in the form of additional soybean oil production,
but that additional canola, palm, peanut, and sunflower oil production
would also occur in some parts of the world, with secondary impacts on
other parts of the agricultural sector.\20\ Therefore, by assuming that
cottonseed oil would have similar indirect impacts on other vegetable
oils, our analysis takes into account the ripple effects in the
vegetable oil and other agricultural markets resulting from an increase
in biofuel demand in the U.S. We invite comment on this approach.
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\20\ See EPA-HQ-OAR-2005-0161-3173.9 and EPA-HQ-OAR-2005-0161-
3173.10 for more information.
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4. Upstream GHG Implications of Cottonseed Oil Use as a Biofuel
Feedstock
Our analysis indicates that the most likely market impact of the
use of cottonseed oil as biofuel feedstock is some feedstock swapping
between cottonseed oil and soybean oil and some increase in total
biofuel production from vegetable oil, as explained in the previous
section. However, as a conservative assumption, we assume in our
analysis that any use of cottonseed oil as biofuel feedstock will
result in an increase in total biofuel production and that there would
be a corresponding increase in U.S. demand for vegetable oil. In such a
hypothetical situation, the alternative product used by marginal U.S.
consumers of vegetable oil is likely to be soybean oil. We do not
expect any shift in the supply of cotton or cottonseed oil. The GHG
emissions associated with cottonseed oil at the feedstock production
and transport stages of the lifecycle are likely to be similar to or
less than those we have previously estimated for soybean oil on a
normalized basis.\21\ Therefore, we are proposing to use the upstream
GHG emissions associated with an increase in soybean oil in our
lifecycle analysis for cottonseed oil. In the March 2010 rule, we
determined that the GHG emissions associated with soybean oil at the
feedstock production and transport stages of the lifecycle were
approximately 646 grams of carbon dioxide equivalent (gCO2e)
per pound of soybean oil.\22\ Based on our evaluation, we believe that
it is reasonable, as a conservative estimate, to apply the same value
for the emissions associated with cottonseed oil at the feedstock
production and transport stages of the lifecycle. We invite comment on
this approach.
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\21\ EPA's lifecycle analysis of soybean oil biodiesel for the
March 2010 RFS rule evaluated the GHG impacts for a scenario with
increased soybean oil biodiesel production compared to a control
case. To calculate the results on a normalized basis for the
scenario evaluated, we divide the increase in GHG emissions by the
increase in the amount of soybean oil used for biodiesel production,
which gives the normalized results in units of gCO2e per
pound of soybean oil. The lifecycle GHG analysis that EPA conducted
for the March 2010 RFS rule for biofuel derived from soybean oil
feedstock is described in section 2.6.1.3 (Biodiesel Results) of the
Regulatory Impact Analysis for the March 2010 RFS rule (EPA-420-R-
10-006).
\22\ EPA's soybean oil biodiesel assessment uses a biodiesel
conversion efficiency of 7.76 pounds of soybean oil per gallon of
biodiesel, and biodiesel lower heating value of 118,000 British
Thermal Units (Btu) per gallon. Therefore, GHG emissions of 646
gCO2e/lb soybean oil converts to 41,247 gCO2e per million
Btu of soybean oil biodiesel. This value includes the emissions
associated with soybean oil delivered to a biodiesel production
facility, including the emissions from growing and harvesting the
soybeans, transporting the soybeans to a crushing facility,
extracting the soybean oil, transporting the soybean oil to a
biodiesel facility, and all of the significant indirect emissions
such as from land use change.
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B. Summary of Agricultural Sector GHG Emissions
Based on our comparison of cottonseed oil to soybean oil, EPA
proposes to apply the estimate of upstream soybean oil feedstock
production and transport emissions, including indirect agricultural and
forestry sector impacts, to future evaluations of petitions proposing
to use cottonseed oil as a feedstock for biofuel production. We believe
this approach will provide a conservative estimate of potential
emissions associated with the production and transport of cottonseed
oil. EPA solicits comment on this proposed approach.
C. Fuel Production and Distribution
Cottonseed oil has physical properties that are similar to soybean
oil, and is suitable for the same conversion processes as soybean oil
feedstock. In addition, the fuel yield per pound of oil is expected to
be the same for each of these feedstocks. After reviewing comments
received in response to this action, we will combine our evaluation of
agricultural sector GHG emissions associated with the use of cottonseed
oil feedstock with our evaluation of the GHG emissions associated with
individual producers' production processes and finished fuels to
determine whether any proposed pathway satisfies CAA lifecycle GHG
emissions reduction requirements for RFS-qualifying renewable fuels.
Each
[[Page 41040]]
biofuel producer seeking to generate RINs for non-grandfathered volumes
of biofuel produced from cottonseed oil will first need to submit a
petition requesting EPA's evaluation of their new renewable fuel
pathway pursuant to 40 CFR 80.1416 of the RFS regulations, and include
all of the information specified at 40 CFR 80.1416(b)(1). Because EPA
is evaluating the greenhouse gas emissions associated with the
production and transport of cottonseed oil feedstock through this
action and comment process, petitions requesting EPA's evaluation of
biofuel pathways involving cottonseed oil feedstock will not have to
include the information for new feedstocks specified at 40 CFR
80.1416(b)(2).\23\ Based on our evaluation of the lifecycle GHG
emissions attributable to the production and transport of cottonseed
oil feedstock, EPA anticipates that fuel produced from cottonseed oil
feedstock through the same transesterification or hydrotreating process
technologies that EPA evaluated for the March 2010 RFS rule for biofuel
derived from soybean oil and the March 2013 RFS rule for biofuel
derived from camelina oil would qualify for biomass-based diesel (D-
code 4) renewable identification numbers (RINs) or advanced biofuel (D-
code 5) RINs.\24\ However, EPA will evaluate petitions for fuel
produced from cottonseed oil feedstock on a case-by-case basis.
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\23\ For information on how to submit a petition for biofuel
produced from cottonseed oil see EPA's Web page titled ``How to
Submit a Complete Petition'' (http://www.epa.gov/otaq/fuels/renewablefuels/new-pathways/how-to-submit.htm) including the
document on that Web page titled ``How to Prepare a Complete
Petition.'' Petitions for biofuel produced from cottonseed oil
should include all of the applicable information outlined in Section
3 of the ``How to Prepare a Complete Petition'' document, but they
do not need to provide the information outlined in section 3(F)(2)
(Information for New Feedstocks).
\24\ The transesterification process that EPA evaluated for the
March 2010 RFS rule for biofuel derived from soybean oil feedstock
is described in section 2.4.7.3 (Biodiesel) of the Regulatory Impact
Analysis for the March 2010 RFS rule (EPA-420-R-10-006). The
hydrotreating process that EPA evaluated for the March 2013 rule for
biofuel derived from camelina oil feedstock is described in section
II.A.3.b of the March 2013 rule (78 FR 14190).
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III. Summary
EPA invites public comment on our analysis of GHG emissions
associated with the production and transport of cottonseed oil as a
feedstock for biofuel production. EPA will consider public comments
received when evaluating the lifecycle GHG emissions of biofuel
production pathways described in petitions received pursuant to 40 CFR
80.1416 which use cottonseed oil as a feedstock.
Dated: June 30, 2015.
Christopher Grundler,
Director, Office of Transportation and Air Quality, Office of Air and
Radiation.
[FR Doc. 2015-17262 Filed 7-13-15; 8:45 am]
BILLING CODE 6560-50-P