EPA considers scaling back 2014 targets

Source: Amanda Peterka, E&E reporter • Posted: Thursday, October 10, 2013

U.S. EPA would roll back both corn ethanol and advanced biofuel targets for next year under draft proposals circulating among stakeholders in the oil and biofuels industries.

The agency is considering a proposal that would require refiners to blend 13 billion gallons of conventional corn ethanol and 2.21 billion ethanol-equivalent gallons of advanced biofuel into petroleum-based gasoline next year, industry sources said. Cellulosic biofuel, an advanced fuel made from plant-based materials like agricultural residues and switchgrass, would be pegged at 23 million gallons.

In all, the proposal would mandate 15.22 billion gallons of biofuel, well below the 18.15 billion gallons statutorily written into the renewable fuel standard for next year.

If true, the scaled-down numbers being passed around show the agency is taking into consideration concerns from critics of the renewable fuel standard’s yearly increasing targets. But the proposal is sure to leave plenty of room for push-back, according to stakeholders.

EPA, which has seen most of its employees furloughed during the government shutdown, did not respond to a request for comment. The agency’s 2014 proposal is currently at the White House Office of Management and Budget and will likely be unveiled after the shutdown ends and the office finishes its review.

If advanced by the agency, the proposal would represent the first time EPA has chosen to use its authority to scale back the overall yearly targets of the renewable fuel standard, which calls for 36 billion gallons of biofuel a year to be blended into motor fuel by 2022.

The agency’s move comes as the renewable fuel standard, and corn ethanol especially, is taking heat on Capitol Hill from a diverse group of stakeholders (E&E Daily, Oct. 8). Members of the House Energy and Commerce Committee are working on legislation to reform the standard that is expected to partly hinge on what EPA proposes for next year.

By statute, refiners are required to blend 13.8 billion gallons of corn ethanol into gasoline this year and 14.4 billion gallons next year. Refiners, though, have in recent months raised concerns that the levels mandated by the statute require them to breach the “blend wall,” or to blend more ethanol into gasoline than is technically feasible.

Requiring 13 billion gallons next year, or less than 10 percent of the total gasoline demand in the United States, would potentially help alleviate those concerns.

EPA appears also to be responding to criticism in recent months for not lowering its overall advanced biofuel target even as it has scaled back the amount of cellulosic biofuel that refiners must use. This year’s final target of 6 million gallons of cellulosic biofuel, for example, is far below the 1 billion target initially envisioned by lawmakers, but EPA retained the overall advanced biofuel mandate of 2.75 billion gallons.

The gap left by the lower cellulosic production has opened the door for imports of Brazilian sugar cane ethanol to partly fill refiners’ obligations. Biodiesel production above the renewable fuel standard’s targets has also contributed.

While the 2014 numbers that are circulating appear to respond to some of the concerns about the renewable fuel standard, the overall number would still be higher than what refiners have requested for next year (E&ENews PM, Aug. 13). The corn ethanol industry is also not likely to be happy with the proposal to lower its demand, having dismissed concerns of the so-called 10 percent blend wall because EPA has approved fuels for use containing higher amounts of ethanol.

“If these numbers are valid and if EPA’s goal was to put out a proposal that makes everyone less than happy, then mission accomplished,” said Stephen Brown, vice president and counsel at Tesoro Corp. “Directionally, though, Big Corn should view the upcoming pincer move — from the agency and from the Energy and Commerce Committee — as a pretty strong signal that the train is leaving the station and they might want to buy a ticket.”