EPA proposes scaling back amount of ethanol that must be blended into gasoline

Source: by Donnelle Eller, Des Moines Register • Posted: Saturday, November 16, 2013

The U.S. Environmental Protection Agency has proposed scaling back the amount of ethanol that is blended into gasoline.

The agency today proposed requiring that 15.2 billion gallons of renewable fuels be blended into the U.S. fuel supply in 2014. Congress initially wrote an 18.15 billion gallon mandate.

The proposal lowers the “corn ethanol” level from 13.8 billion gallons in 2013 to only 13 billion gallons in 2014. The proposal also freezes the biodiesel level at 1.28 billion gallons.

The initial reaction has been critical:

Gov. Terry Branstad:

“Why the Obama administration would side with the big oil companies over Iowa’s homegrown renewable fuels is baffling. The EPA has turned its back on rural America, and our economy and family farms will suffer as a result.

“Corn prices have already dropped to the cost of production, and this will likely further squeeze corn producers and negatively impact income growth in rural America. We have more than 50 ethanol and biodiesel plants in Iowa, and these EPA reductions would negatively impact thousands of Iowa jobs. This debate isn’t over. I will lock arms with our agricultural groups, our family farmers, leaders from both parties, and Iowans in fighting for Iowa’s homegrown, reliable, and safe renewable fuels. I encourage Iowans to officially comment to the EPA.”

Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, said:

“Today’s RFS announcement represents the biggest policy reversal of the entire Obama Administration. The EPA proposal turns the RFS on its head, runs counter to the law and is a complete capitulation to Big Oil.

“The Obama Administration needs to conduct a thorough soul-searching and decide whether they are serious about cleaner fuels, consumer choice, and cutting petroleum dependence, or whether they truly want to adopt the Big Oil status quo. There is still time to restore Congressional intent and common sense before the rule is finalized.”

Rep. Bruce Braley, an Iowa Democrat, said:

“The administration should be working every day to create jobs and strengthen the economy. Yet the EPA’s proposed rule does just the opposite.

“Renewable fuels are a vital component of domestic energy production and they reduce our dependence on foreign oil. In Iowa, investment and innovation in renewable energy continues to grow, and these investments have helped create over 60,000 jobs and contribute 4 percent of Iowa’s GDP every year.”

“Under the proposed reduction in the Renewable Fuels Standard, growth in Iowa’s renewable energy industry stands to suffer, putting job growth at risk and threatening damage to Iowa’s economy.”

U.S. Rep. Dave Loebsack, an Iowa Democrat, said:

“It is clear that this Administration has done a complete 180 on their support for biofuels. Today’s announcement is a devastating decision for Iowa’s farmers, rural communities and economy. It will also only increase our dependence on foreign oil at the expense of homegrown fuel. It is a slap in the face to our homegrown industry and Iowa’s economy that once again Big Oil has dictated our energy policy while stomping on rural America and hampering efforts to reduce CO2 emissions. I believe in making things in America and there is no reason our fuels shouldn’t be made here as well.

“The numbers for renewable fuel and biodiesel released by the EPA are completely unacceptable and I will fight to ensure that Iowa farmers are able to continue move our nation on a sustainable path forward.”

Sen. Tom Harkin, an Iowa Democrat, said:

“The RFS passed during the Bush administration calls for steadily increasing contributions from biofuels in our transportation fuels markets to enhance our nation’s energy security, protect the environment, and create jobs. Up until now, the RFS has supported development of a strong, domestic biorefinery industry. The 2014 targets released today, however, do just the opposite. They would cost thousands of current American jobs and undermine investments in advanced biofuels just as they are beginning to bear fruit.

“We are not at the end of this fight for homegrown renewable fuels. These numbers are only projections or proposals. As I have urged the White House, EPA should increase these targets because they ignore the clear intent of the law as well as our nation’s capacity both to produce and utilize renewable fuels. In the coming weeks, I will work with my colleagues to get these biofuels targets increased and thus reaffirm the purpose of this renewable fuel standard.”

Iowa Sen. Chuck Grassley, an Iowa Republican, said:

“The federal government made a commitment to homegrown, renewable energy when Congress passed the Renewable Fuel Standard. The proposed rules released by the Environmental Protection Agency undermine that commitment. These misguided rules could cost jobs and create dirtier air, while protecting the stranglehold Big Oil has on the country’s fuel supply. It’s disappointing that a President who claimed to be a supporter of renewable energy has allowed his administration to take us a step back in lessening our reliance on foreign sources of oil. It’s time for supporters of clean, homegrown, green energy and forward-thinking energy policy to rally and let the Obama administration know that its proposal is short-sighted and irresponsible.”

Here’s the release:

Proposal Seeks Input to Address “E10 Blend Wall,” Reaffirms Commitment to Biofuels

WASHINGTON – The U.S. Environmental Protection Agency (EPA) today proposed for public comment the levels of renewable fuels to be blended into gasoline and diesel as required by Congress under the Energy Independence and Security Act of 2007. Developed with input from the U.S. Department of Energy and U.S. Department of Agriculture, the proposal seeks public input on annual volume requirements for renewable fuels in all motor vehicle gasoline and diesel produced or imported by the United States in 2014. The proposal seeks to put the Renewable Fuel Standard (RFS) program on a steady path forward – ensuring the continued long-term growth of the renewable fuel industry – while seeking input on different approaches to address the “E10 blend wall.”

“Biofuels are a key part of the Obama Administration’s “all of the above” energy strategy, helping to reduce our dependence on foreign oil, cut carbon pollution and create jobs,” said EPA Administrator Gina McCarthy. “We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use. We look forward to working with all stakeholders to develop a final rule that maintains the strength and promise of the RFS program.”

The proposal discusses a variety of approaches for setting the 2014 standards, and includes a number of production and consumption ranges for key categories of biofuel covered by the RFS program. The proposal seeks comment on a range of total renewable fuel volumes for 2014 and proposes a level within that range of 15.21 billion gallons. Specifically, EPA is seeking comment on the following proposed volumes:

Category Proposed Volume a Range

Cellulosic biofuel 17 mill gal 8-30 million gallons

Biomass-based diesel 1.28 bill gal 1.28 billion gallons

Advanced biofuel 2.20 bill gal 2.0-2.51 billion gallons

Renewable fuel 15.21 bill gal 15.00-15.52 billion gallons

All volumes are ethanol-equivalent, except for biomass-based diesel which is actual

Nearly all gasoline sold in the U.S. is now “E10,” which is fuel with up to 10 percent ethanol. Production of renewable fuels has been growing rapidly in recent years. At the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the Renewable Fuel Standard in 2007. As a result, we are now at the “E10 blend wall,” the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.

The Obama Administration has taken a number of steps to allow or encourage the use of these higher ethanol blends. In 2010, EPA approved E15 for use in vehicles newer than model year 2001 and developed labeling rules to enable retailers to market E15. In addition, since 2011, USDA has made funding available through the Rural Energy for America Program to support deployment of “flex-fuel” pumps that can dispense a range of ethanol blends. The 2014 proposal seeks input on what additional actions could be taken by government and industry to help overcome current market challenges, and to minimize the need for adjustments in the statutory renewable fuel volume requirements in the future. Looking forward, the proposal clearly indicates that growth in capacity for ethanol consumption would continuously be reflected in the standards set beyond 2014. EPA looks forward to further engagement and additional information from stakeholders as the agency works in consultation with the Departments of Agriculture and Energy toward the development of a final rule.

The renewable fuels program was developed by Congress in an effort to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on foreign oil. The standards determine how much renewable fuel a refiner or importer is responsible for, and are the standards designed to achieve the national volumes for each type of renewable fuel.

Today, in a separate action, EPA is also seeking comment on petitions for a waiver of the renewable fuel standards that would apply in 2014. EPA expects that a determination on the substance of the petitions will be issued at the same time that EPA issues a final rule establishing the 2014 RFS.

Once the proposal is published in the Federal Register, it will be open to a 60-day public comment period.