RFA to EPA: New gasoline volatility regulations needed

Source: By RFA, Ethanol Producer Magazine • Posted: Wednesday, December 9, 2015

In a letter submitted Dec. 8 to the U.S. EPA, the Renewable Fuels Association urged the agency to take immediate administrative action to eliminate an arcane regulatory barrier that is impeding growth in the use of E15 and other higher-level ethanol blends.

“Many gasoline retailers have rejected E15 because EPA’s current gasoline volatility regulations make it nearly impossible for them to sell E15 to EPA-approved conventional automobiles year-round,” said Bob Dinneen, RFA President and CEO. “Most gas stations are unwilling to dedicate storage tanks and dispensing equipment to a fuel that they can only sell for part of the year.”

EPA’s current regulations, which grant a volatility waiver to E10 (referred to as the “1-psi RVP waiver”) but not to any other ethanol blends, have created an uneven playing field for E15 and other higher-level blends. According to the RFA letter, “The 1-psi RVP waiver—originally provided to expand the production and use of fuel ethanol—is now having the perverse effect of discouraging greater ethanol use in today’s gasoline market, and it is obstructing the successful implementation of important fuel and carbon reduction policies enacted since then, including the renewable fuel standard.”

Rather than asking EPA to extend the 1-psi RVP waiver to E15, RFA’s letter encourages the agency to take action to eliminate the relevancy of the waiver for E10 by requiring refiners to slightly lower the volatility of summertime conventional gasoline blendstock. This would ensure that retailers can freely offer E15 to conventional automobiles year-round. It would also clear the way for higher-level ethanol blends like E20 or E25 to meet applicable gasoline RVP requirements.

Anticipating familiar claims from the oil industry that such an administrative action would “raise gasoline prices,” RFA also submitted third-party analysis to EPA showing that lowering the volatility of gasoline blendstock by 1.0 psi in the summertime might be expected to add just $0.006 per gallon in refining costs. However, this cost would not likely be translated to retail prices because it would be offset by blending more ethanol (which, historically, has been priced well below gasoline blendstock at wholesale).

Moreover, reducing the volatility of gasoline blendstock to facilitate greater ethanol blending would have positive implications for air quality. A separate third-party analysis provided by RFA showed that lowering gasoline volatility by 1.0 psi would reduce emissions of carbon monoxide, nitrogen oxides, and volatile organic compounds.

In closing, the letter notes that “This action would improve air quality, remove arcane barriers to innovation and consumer choice in the retail fuel marketplace, simplify engineering of emissions control systems, and help facilitate compliance with renewable fuel standard requirements. In addition, removing the waiver would not noticeably affect refining costs.”

Read the full letter here.