E.P.A. Proposes Changes to Fuel Standards

Source: By DIANE CARDWELL, New York Times • Posted: Monday, June 1, 2015

The Environmental Protection Agency on Friday released a much-delayed proposal for the amount of biofuel that must be blended into conventional vehicle fuel, seeking to reduce the levels now specified but still require modest increases over the next few years.

The proposal, which would become final by the end of November, would set levels for last year at what producers actually made but increase the total volume of renewable fuel required by 1.5 billion gallons, roughly 9 percent, by the end of 2016.

That would bring the volume to 17.4 billion gallons, which falls short of the 22.25-billion-gallon mandate set by Congress for that year, which has been criticized as unrealistic.

The announcement — which seemed to please few — is the latest turn in the agency’s beleaguered journey since it began requiring increasing levels of ethanol to be incorporated into vehicle fuel under energy laws passed in 2005 and 2007. At that time, American dependence on foreign oil was high, and so were prices.

But now gasoline prices and demand are lower. The market is already saturated with regular corn ethanol, and production of cellulosic, or so-called advanced, biofuel — made from nonfood parts of corn plants or other biomass like wood waste — is lower than what refiners are required to use.

While some viewed the agency’s new proposal as an important step toward fixing a flawed system, many others were critical of the move and called for an overhaul of the mandate, known as the Renewable Fuel Standard.

“Every year since the Renewable Fuel Standard was expanded, E.P.A. has missed implementation deadlines, waived entire portions of annual required volumes and has had to approve imported feedstocks for R.F.S. compliance,” Senator James M. Inhofe, Republican of Oklahoma and chairman of the Senate Environment and Public Works Committee, said in a prepared statement. “All of these actions by E.P.A. give a clear case for a mismanaged program in need of rigorous oversight.”

Others focused on efforts to handle a limit called the “blend wall,” which Ms. McCabe defined as “the amount of ethanol that could be used if all gasoline contains 10 percent ethanol.” Most gasoline now contains that percentage, and most vehicles are not designed to handle more. According to AAA, less than 15 percent of the country’s vehicles are approved by manufacturers to use gasoline containing 15 percent ethanol.

“Official recognition of the ‘blend wall’ may help protect consumers,” said Marshall L. Doney, the association’s president. “While ethanol can support jobs and promote energy independence, the E.P.A. must ensure that the fuel consumers use does not lead to costly repairs due to misfueling.”

“The frustrating fact is the agency continues to misunderstand the clear intent of the statute — to drive innovation in both ethanol production and ethanol marketing,” said Bob Dinneen, chief executive of the Renewable Fuels Association, a trade group. “The agency has eviscerated the program’s ability to incentivize investments.”

Still, the administration signaled its support for continuing to develop the industry with an announcement the same day from the Agriculture Department of $100 million in grants to help increase the number of gasoline pumps that blend in higher amounts of ethanol.

Though not large in the scope of government grants, the money “can be leveraged up to a lot of blender pumps,” said James H. Stock, a fellow at the Columbia Center on Global Energy Policy and a former member of the president’s Council of Economic Advisers. “It’s really an opportunity for the industry to embrace this program to try to show that consumers are willing to buy these higher blends.”