EPA Proposes Three-Year Ethanol Rule | Business News

EPA Proposes Three-Year Ethanol Rule

29 May 2015 | Author: | No comments yet »

Biofuels mandate mess: New EPA ethanol sta….

The U.S. energy boom and low gas prices have wreaked havoc with the federal government’s mandate to blend more ethanol and other biofuels into fuel supplies, leaving the Obama administration under fire and struggling to meet the mandates set by Congress nearly a decade ago. The move is unlikely to mean much for consumers or prices at the pump, but the ethanol policy has been popular in farm states that have profited over the years from higher corn prices linked to the use of corn-based ethanol. The new standards call for increases in blending over the next several years, but those increases fall far short of what lawmakers called for in 2007 legislation. With delays in issuing quotas for 2014 and 2015, the EPA, which administers the mandate, proposed an unprecedented set of three years’ worth of ethanol quotas, all of which were far lower than what the law requires. After delaying rules for using ethanol, biodiesel and cellulosic fuels for more than a year, the EPA said corn ethanol levels should be set at 13.4 billion gallons this year and 14 billion gallons for 2016.

Lawmakers and other EPA critics say the latest standards reflect how the RFS, written years before U.S. oil and gas production exploded, must be scrapped or, at the very least, dramatically overhauled. “EPA’s announcement adds to the building evidence of how poorly the agency has managed the renewable fuel standard, and how the mandate is in need of significant reform and oversight. The agency says that two primary obstacles—the constraints on the gasoline market being able to absorb more biofuels, and the lower-than-anticipated development of biofuels made from non-corn products like plant waste—restrict its ability to set quotas at the levels Congress envisioned.

Jim Inhofe, Oklahoma Republican and chairman of the Senate Environment and Public Works Committee, said in a statement. “Congress wrote the RFS with the assumption that gasoline demand would continue to increase significantly due to concerns about domestic sources of energy. The agency said the standards set by the law cannot be achieved, partly due to limitations on the amount of non-ethanol renewable fuels that can be produced.

The value of ethanol RINs for 2015 plunged 19 percent to 48 cents Friday, according to StarFuels Inc., a Jupiter, Florida-based alternative energy broker. As a result, the agency released a 2014 standard that reflects “the actual amount of domestic biofuel use in that year.” The EPA also released targets for 2015 and 2016.

Ethanol and oil industry advocates have battled over whether targets in the 2007 Energy Independence and Security Act are obsolete because gasoline demand has grown more slowly than forecast. EPA has the legal authority to adjust those totals, and set the overall levels for renewable fuels at 16.3 billion gallons and 17.4 billion gallons respectively.

EPA officials said the new requirements would drive growth at an “ambitious but responsible” rate. “We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels,” said EPA’s Janet McCabe. Opponents of the RFS say the administration must scrap the standard and acknowledge that more biofuel blending into gasoline supplies is not only unnecessary but economically dangerous. “EPA is saddled with the impossible task of trying to fit a square peg into a round hole,” said the RFS Off the Menu coalition, a campaign focused on killing the RFS standard. “It is time for Congress to recognize the RFS is a failed policy and either repeal it altogether or engage in a wholesale overhaul.

Oil companies say they would prefer that the market determine how much ethanol is blended into their gas. “It is unfortunate that EPA chose to side with the obligated parties who have deliberately refused to live up to their obligation to provide consumers with a choice of fossil fuels or lower cost, higher performing, homegrown renewable energy at the pump,” Buis said. For 2015, the agency is calling for those figures to increase to 106 million gallons of cellulosic biofuel; 1.7 billion gallons of biomass-based diesel; and 2.9 billion gallons of advanced biofuel.

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