EPA Relents on Ethanol Mandate With Overdue Renewables Quota

29 May 2015 | Author: | No comments yet »

Biofuels mandate mess: New EPA ethanol sta….

Despite complaints from the oil industry, livestock producers, environmental groups and a whole host of others, the Environmental Protection Agency has increased the amount of biofuels refiners are required to blend into the fuel supply every year. The Obama administration’s proposed renewable fuel standard won’t have much of an impact on gas prices, but could become an issue in the 2016 presidential elections, especially in farm states that have profited over the years from higher corn prices linked to the use of corn-based ethanol.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 agency is issuing standards two years late, and mandating that 17.40 billion gallons of biofuels — cellulosic, biomass-based and advanced fuels — be blended into U.S. fuel supplies. The EPA and ethanol producers celebrated the announcement, but they seem to be the only ones as most other interest groups oppose the mandate in its current form.

The proposed standards also represent a blow to renewable fuel companies that have pushed to keep high volumes of their product flowing into drivers’ gas tanks. 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. 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. However, the shale boom has led to extensive growth in U.S. oil and gas production.” The EPA’s latest targets are more than a year behind schedule. Next-generation biofuels, made from agricultural waste such as wood chips and corncobs, have not taken off as quickly as Congress required and the administration expected.

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. Starting in 2013, fuel refiners warned they were hitting the limits to what they could safely blend into gas supplies without damaging car engines — the so-called “blend wall.” Currently, most car engines can only handle a 10 percent ethanol blend before being exposed to serious engine problems. 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. 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. 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.

In a bid to ethanol producers, the administration also announced Friday that the Agriculture Department will invest up to $100 million to help improve infrastructure for delivering ethanol to cars, such as fuel pumps capable of supplying higher blends of renewable fuel.

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