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, 41033-41040 [2015-17262]
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Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
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Kimberly D. Bose,
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[FR Doc. 2015–17305 Filed 7–10–15; 11:15 am]
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[FR Doc. 2015–17222 Filed 7–13–15; 8:45 am]
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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
Environmental Protection
Agency (EPA).
ACTION: Notice.
AGENCY:
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 transportrelated 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.
SUMMARY:
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:
• https://www.regulations.gov. Follow
the on-line instructions for submitting
comments.
• Email: a-and-r-docket@epa.gov,
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
DATES:
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Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
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
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Do not submit information that you
consider to be CBI or otherwise
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or email. The www.regulations.gov Web
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which means EPA will not know your
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you provide it in the body of your
comment. If you send an email
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through www.regulations.gov, your
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Docket: All documents in the docket
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EPA WJC West, Room 3334, 1301
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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: ramig.christopher@
epa.gov.
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
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1 See
75 FR 14670.
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evaluate a new fuel pathway in
accordance with 40 CFR 80.1416.
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-offeedstock 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.
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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
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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.
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
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
2 United States Department of Agriculture,
‘‘National Oil Crops Yearbook 2014’’, available at:
https://www.ers.usda.gov/data-products/oil-cropsyearbook.aspx (Last Accessed: January 14th, 2015).
United Nations Food and Agriculture Organization,
‘‘FAOSTAT’’, available at: https://faostat.fao.org/
(Last Accessed: January 29th, 2015).
3 Ibid.
4 Ibid.
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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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
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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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
11 United States Department of Agriculture,
‘‘National Oil Crops Yearbook 2014’’, available at:
https://www.ers.usda.gov/data-products/oil-cropsyearbook.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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approximately 7 cents per pound over
the last 15 years.
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.
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
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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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 nonester 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
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].
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harvested to over 800 pounds per acre
harvested.
15 Based on memo from NCPA [EPA–HQ–OAR–
2015–0092–0001; EPA–HQ–OAR–2015–0092–
0002].
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: https://
quickstats.nass.usda.gov/ [Last Accessed: January
14th, 2015]).
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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
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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.
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).
17 United States Department of Agriculture,
‘‘National Agricultural Statistical Service
Database’’, available at: https://
quickstats.nass.usda.gov/ (Last Accessed: January
14th, 2015).
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impact on U.S. biofuel production or
U.S. vegetable oil production,
consumption, and trade patterns.
Conversely, over that same period, the
U.S. average cotton lint yield has
increased from 630 pounds per acre
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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
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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.
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
18 United
States Department of Agriculture,
‘‘National Agricultural Statistical Service
Database’’, available at: https://
quickstats.nass.usda.gov/ (Last Accessed: June 2nd,
2015).
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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
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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
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Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
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.
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
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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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.
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
20 See EPA–HQ–OAR–2005–0161–3173.9 and
EPA–HQ–OAR–2005–0161–3173.10 for more
information.
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).
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41039
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.
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
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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Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
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 biomassbased 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.
III. Summary
asabaliauskas on DSK5VPTVN1PROD with NOTICES
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
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’’ (https://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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19:09 Jul 13, 2015
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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
ENVIRONMENTAL PROTECTION
AGENCY
[EPA–HQ–OPPT–2013–0677; FRL–9929–99]
Receipt of Test Data Under the Toxic
Substances Control Act
Environmental Protection
Agency (EPA).
ACTION: Notice.
AGENCY:
EPA is announcing its receipt
of test data submitted pursuant to a test
rule issued by EPA under the Toxic
Substances Control Act (TSCA). As
required by TSCA, this document
identifies each chemical substance and/
or mixture for which test data have been
received; the uses or intended uses of
such chemical substance and/or
mixture; and describes the nature of the
test data received. Each chemical
substance and/or mixture related to this
announcement is identified in Unit I.
under SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT:
For technical information contact:
Kathy Calvo, Chemical Control Division
(7405M), Office of Pollution Prevention
and Toxics, Environmental Protection
Agency, 1200 Pennsylvania Ave. NW.,
Washington, DC 20460–0001; telephone
number: (202) 564–8089; email address:
calvo.kathy@epa.gov.
For general information contact: The
TSCA-Hotline, ABVI-Goodwill, 422
South Clinton Ave., Rochester, NY
14620; telephone number: (202) 554–
1404; email address: TSCA-Hotline@
epa.gov.
SUMMARY:
SUPPLEMENTARY INFORMATION:
I. Chemical Substances and/or Mixtures
Information about the following
chemical substances and/or mixtures is
provided in Unit IV.:
D-gluco-heptonic acid, monosodium
salt, (2.xi.)—(CAS RN 31138–65–5).
II. Federal Register Publication
Requirement
Section 4(d) of TSCA (15 U.S.C.
2603(d)) requires EPA to publish a
notice in the Federal Register reporting
the receipt of test data submitted
pursuant to test rules promulgated
under TSCA section 4 (15 U.S.C. 2603).
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III. Docket Information
A docket, identified by the docket
identification (ID) number EPA–HQ–
OPPT–2013–0677, has been established
for this Federal Register document that
announces the receipt of data. Upon
EPA’s completion of its quality
assurance review, the test data received
will be added to the docket for the
TSCA section 4 test rule that required
the test data. Use the docket ID number
provided in Unit IV. to access the test
data in the docket for the related TSCA
section 4 test rule.
The docket for this Federal Register
document and the docket for each
related TSCA section 4 test rule is
available electronically at https://
www.regulations.gov or in person at the
Office of Pollution Prevention and
Toxics Docket (OPPT Docket),
Environmental Protection Agency
Docket Center (EPA/DC), West William
Jefferson Clinton Bldg., Rm. 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 OPPT
Docket is (202) 566–0280. Please review
the visitor instructions and additional
information about the docket available
at https://www.epa.gov/dockets.
IV. Test Data Received
This unit contains the information
required by TSCA section 4(d) for the
test data received by EPA.
D-gluco-heptonic acid, monosodium
salt, (2.xi.)—(CAS RN 31138–65–5).
1. Chemical Uses: Organic salt used as
a chelating agent in cosmetics, dairy
cleaners, bottle cleaners, food contact
paper and paperboard, manufacturing,
metal cleaning, kier boiling, caustic
boil-off, paint stripping, boiler water
additive for food processing, and as an
ingredient in aluminum etchant. This
chemical is also used as a sequestrant,
latex stabilizer, and in intravenous
pharmaceuticals.
2. Applicable Test Rule: Chemical
testing requirements for second group of
high production volume chemicals
(HPV2), 40 CFR 799.5087.
3. Test Data Received: The following
listing describes the nature of the test
data received. The test data will be
added to the docket for the applicable
TSCA section 4 test rule and can be
found by referencing the docket ID
number provided. EPA reviews of test
data will be added to the same docket
upon completion.
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[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]
=======================================================================
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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:
https://www.regulations.gov. Follow the on-line
instructions for submitting comments.
Email: a-and-r-docket@epa.gov, 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 https://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:
ramig.christopher@epa.gov.
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.
---------------------------------------------------------------------------
\1\ See 75 FR 14670.
---------------------------------------------------------------------------
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
[[Page 41035]]
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.
---------------------------------------------------------------------------
\2\ United States Department of Agriculture, ``National Oil
Crops Yearbook 2014'', available at: https://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx (Last Accessed: January 14th,
2015). United Nations Food and Agriculture Organization,
``FAOSTAT'', available at: https://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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\11\ United States Department of Agriculture, ``National Oil
Crops Yearbook 2014'', available at: https://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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\13\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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].
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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: https://quickstats.nass.usda.gov/ [Last Accessed:
January 14th, 2015]).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\17\ United States Department of Agriculture, ``National
Agricultural Statistical Service Database'', available at: https://quickstats.nass.usda.gov/ (Last Accessed: January 14th, 2015).
---------------------------------------------------------------------------
[[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.
---------------------------------------------------------------------------
\18\ United States Department of Agriculture, ``National
Agricultural Statistical Service Database'', available at: https://quickstats.nass.usda.gov/ (Last Accessed: June 2nd, 2015).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\19\ Based on conversations with Michael Dowd of the USDA
Agricultural Research Service on December 30th, 2014 and June 17th,
2015.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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'' (https://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
