Fuel industry divided as EPA weighs 2017 RFS levels

Source: Marc Heller, E&E reporter • Posted: Wednesday, July 13, 2016

Comments sent to U.S. EPA on proposed 2017 alternative fuel levels show the fuel industry is as divided as ever.

Thousands of comments submitted by Monday’s deadline warn EPA that it’s either stifling grain farmers or helping them too much, either destroying engines or not pushing them to their true limits as the agency decides how much corn-based ethanol and advanced biofuel should be mixed into the U.S. fuel supply.

Biofuel supporters say EPA should boost the renewable fuel standard (RFS) beyond the agency recommendation of 18.8 billion gallons. But oil and gas companies say EPA is dangerously pushing for fuel mixes with more than 10 percent ethanol, risking damage to boat engines.

“EPA has broken the promise of the RFS on which biofuels producers and other market participants relied when making investment decisions,” Brent Erickson, executive vice president of the Biotechnology Innovation Organization’s industrial and environmental section, told the agency, reflecting his group’s complaint that EPA fell 200 million gallons short of the level mandated in the 2005 RFS law.

An opposing view came from the Republican speaker of the Pennsylvania House of Representatives, Mike Turzai, who wrote, “Unfortunately, the EPA is attempting to force high-ethanol fuel blends into the market and potentially putting American consumers, their vehicles and our economy at risk.”

At issue: EPA’s decision to boost the amount of renewables — largely corn-based ethanol — going into the supply of fuel next year. But the increase falls shy of the 19 billion gallons Congress set in the law, due to a waiver authority that lets EPA set a lower number (E&ENews PM, May 18).

The agency proposed the rule in May and is due to make a final determination later this year.

Agricultural groups and companies such as Archer Daniels Midland Co. say EPA sold farmers short, with as much as $271 million in revenue lost from 425,000 fewer acres of corn going to ethanol, according to the Maryland Grain Producers Association, which submitted comments.

But the sharpest disagreements remain over the effect of ethanol on engines and on competing interests among fuel companies.

The American Petroleum Institute, which opposes the mandate, teamed up with the National Marine Manufacturers Association and American Motorcyclist Association to warn that higher ethanol blends could damage engines on boats and small machinery and cause manufacturers to void warrantees.

The public is “woefully uninformed” about ethanol’s potential risks, despite marine manufacturers’ publicity on that issue, said the Marine Manufacturers Association senior manager for government relations, Michael Lewan, in a conference call with reporters. He said the group’s engineers have studied E-15 fuel, which is a 15 percent ethanol blend, and concluded it’s bad for engines.

The groups don’t oppose ethanol but do oppose government mandates for its use, Lewan said.

The Renewable Fuels Association, in its submission, called EPA’s proposal to stop short of the RFS law’s mandated level “imprudent” and suggested the agency is taking oil companies’ side.

“By adopting the oil industry’s narrative regarding how much ethanol can be blended into gasoline, EPA has incomprehensibly and illegally curtailed the continued evolution of the transportation fuels market that is delivering technology innovation, carbon reduction and consumer savings,” the group said through its president and chief executive officer, Bob Dinneen.

EPA has found a more supportive voice at the Advanced Biofuels Association, representing makers of ethanol that comes from sources other than corn, including both domestic and foreign producers. Although advanced biofuel companies believe the level for those fuels could be set higher, the group’s members are generally supportive of EPA’s moves, said ABA President Michael McAdams.