U.S. gas station constraints complicate 2014 biofuel mandate

Source: By Ayesha Rascoe, Reuters • Posted: Friday, October 17, 2014

(Reuters) – The Obama administration is trying to balance its support for renewable fuels with awareness of infrastructure constraints at gas stations as it finalizes targets for 2014 biofuel use, agency officials said on Tuesday.

But with only 11 weeks left in the year, the administration also needs to weigh oil refiners’ ability to comply with the long-delayed requirements, one official told the Reuters Global Climate Change Summit.

Refiners on Tuesday wrote to the White House, arguing against raising the proposed requirements for using ethanol and biodiesel in U.S. fuel supplies so close to year-end.

Janet McCabe, head of the Environmental Protection Agency division that oversees the biofuel program, acknowledged that delays in setting the targets, formally called the Renewable Fuel Standard (RFS), should be taken into account.

“We need to be mindful of where we are in the year,” McCabe said at the summit, held at the Reuters office in Washington.

More than 10 months overdue, the final 2014 biofuel targets have been under review at White House’s Office of Management and Budget since August. Timing of the official release of the rule is still unclear.

McCabe tied delays in finishing the targets to the program’s complexity, further complicated by fuel demand that has not kept pace with the levels expected when Congress expanded the mandate in 2007. That directed increasing amounts of renewable fuels to be blended into U.S. gasoline and diesel supplies every year until 2022.

The EPA has said it was forced to propose cuts to the fueling mandate for 2014 because the nation was on course to collide with the so-called blend wall.

The blend wall refers to the point when the Renewable Fuel Standard will require ethanol to be blended into gasoline at levels higher than the 10 percent level that dominates pumps at U.S. gas stations. A small minority of stations can sell fuel with higher ethanol content.

EPA’s proposal to cut 2014 targets roiled biofuel products. The industry has been lobbying for the EPA to change course, arguing that the agency’s proposal would encourage oil refiners to limit the use of renewable fuels simply by not investing in new fuel pumps.

McCabe said EPA is trying to figure out how best to achieve the biofuels goals in light of lower gasoline use.

Because gasoline use is less than anticipated when Congress passed the law government the biofuels requirements, “those numbers just don’t quite fit any more,” she said.

Administration officials have said the final targets will likely be higher than the initial proposal, but industry analysts do not expect EPA to restore the requirements fully to the levels set by federal law.

Shaun Donovan, head of OMB, said at the summit that his office was “carefully” weighing the final targets to ensure they produce the “intended results.”

“It’s one thing to set the standard. It’s another thing whether we can actually deliver on that standard because the infrastructure is in place,” Donovan said.