Tyner: EPA went for compromise in revising RFS levels

Source: By Keith Robinson, Purdue University, AG communications • Posted: Tuesday, June 2, 2015

WEST LAFAYETTE, Ind. РThe U.S. Environmental Protection Agency tried to strike a balance between proponents and opponents of the Renewable Fuel Standards in setting levels for production of biofuels through 2016, said Purdue University energy policy specialist Wally Tyner.

“Biodiesel appears to be a big winner with its mandate steadily growing over time and far exceeding the congressionally mandated level,” said Tyner, the James and Lois Ackerman Professor of Agricultural Economics.

For corn ethanol, Tyner said the EPA accepted arguments that the “blend wall” is a legitimate barrier to significantly increased production and did not accept arguments that E85 fuel would grow if the EPA mandated higher ethanol levels. But its 2016 mandate of 14 billion gallons requires some growth of E85 and E15 without reaching the original legislated level of 15 billion gallons.

“Thus, it is a compromise position,” Tyner said.

The EPA on Friday (May 29) proposed total renewable fuels production at 15.93 billion gallons for 2014 – the actual production for that year – 16.30 billion for 2015 and 17.40 billon for 2016.

The RFS has been a topic of debate for several years in part because of the corn ethanol blend wall, which is a bit less than 10 percent of national gasoline consumption, currently at 135 billion gallons per year. Most gasoline in the U.S. is consumed as a 10 percent ethanol blend.

The proposal now goes through a public comment period, which ends July 27. The EPA then will make its final decision in the fall.

Tyner explained the EPA’s balancing approach, with gallon figures for each biofuel for 2014, ’15 and ’16:

* Cellulosic (33 million, 106 million, 206 million): ¬†EPA essentially used data on existing and projected future plants and set the RFS mandate to match the projected production levels. It other words, it is a “build it and we will come” approach. The original legislated level for 2016 was 4.25 billion gallons.

* Biodiesel (1.63 billion, 1.70 billion, 1.80 billion): The original congressional mandate was for at least 1 billion gallons, and the 2016 level reaches 1.8 billion gallons. “EPA believes that the market can provide and absorb significant increases for biodiesel.”

* Conventional (13.25 billion, 13.40 billion, 14.00 billion): EPA allows small growth in the implied corn ethanol mandate. Essentially, the EPA believes the blend wall is a strong barrier, with little possibility for increasing E85 or E15 fuel. EPA set the 2015 level essentially at the 10 percent blending level. Ethanol producers believe that the market could absorb higher levels. EPA’s 2016 level assumes some consumption beyond the E10 blend wall.

* Other advanced biofuels (202 million, 244 million, 494 million): EPA set these levels fairly low with some growth over the period. Ethanol from sugarcane can be used in this category. Also, biodiesel and cellulosic biofuel can be used here. “So, in fact, even more biodiesel could be used to meet the ‘other advanced’ mandate.”