US ethanol group pushes for higher blend rates

Source: By Christie Moffat, ICIS • Posted: Wednesday, June 29, 2016

HOUSTON (ICIS)–The US ethanol industry is seeking to increase the availability of higher biofuel blends in gasoline, ideally within a 7-10 year time frame, a senior industry leader said this week at the International Fuel Ethanol Workshop & Expo.

Geoff Cooper, senior vice president of the Renewable Fuels Association (RFA), told ICIS that the target time frame was based on discussions with auto makers, who need to know if higher ethanol blends will be available in order to design future vehicles.

Auto makers are under increasing government pressure to improve the fuel efficiency of vehicles. Octane-boosting ethanol blends would help achieve this goal, Cooper said.

Car companies are relying on turbo-charged engines to help meet these goals, and these require higher octane fuel.

The RFA intends to lay groundwork during this period, in order to get higher ethanol blends into the marketplace, such as E20 and E25 blends.

“That prize we have our eye on is that 10-year horizon, today,” Cooper said.

The Renewable Fuels Standard (RFS) requires refiners and fuel importers to blend in increasing volumes of biofuels each year for the US market. That includes cellulosic ethanol, biomass-based diesel, advanced biofuel and total renewable fuel.

In November last year, the EPA retroactively finalised the volume requirements that will apply under the RFS programme for the calendar years 2014, 2015 and 2016.

While the rule sets higher volumes of renewable fuel for 2016 than originally put forward in May last year, the volumes are still significantly lower than the volumes first proposed in 2007.

Last month, the EPA released its draft proposal for 2017 renewable fuel volume requirements under the RFS, which were also widely criticised by the ethanol industry for being too low.

Cooper said that EPA’s reluctance to adhere to the original volumes outlined in the 2007 bill was concerning to the RFA, as it raised questions about the agency’s long-term commitment to the programme.

“We continue to believe that there is every reason for EPA to implement the statutory levels for conventional biofuels. Obviously, the volumes of cellulosic and advanced biofuels that Congress envisioned, they’re not available. So EPA has the authority to reduce those volumes, and they should use that authority,” Cooper said.

“But in the case of conventional biofuels – corn ethanol – we’re producing at a rate that is well above 15bn gal on an annualised basis. We’ve demonstrated time and time again that we can produce the supply that would be required to beat that statutory level.”

Several ethanol industry leaders at the International Fuel Ethanol Workshop & Expo expressed concern over what they saw as diminished support from lawmakers, as in recent years the makeup of Congress has shifted rapidly, with roughly 40% now comprised of relatively new members.

During the 2000s, when the RFS was first proposed and adopted by Congress, the ethanol industry had established strong connections with politicians to help advocate for ethanol blending standards and requirements.

As various members have retired or moved on, the ethanol industry has found itself in a position where there are fewer ethanol advocates in Congress than there used to be – making it difficult to get support from lawmakers.

However, Cooper believes that the decrease in political support on Capitol Hill has been overstated.

“We still enjoy a good amount of strong support for the Renewable Fuel Standard, and certainly for the ethanol and biofuels industry. And it’s always been bipartisan. We have Democrats and Republicans, primarily in the centre of the country, who are very strong champions for the programme,” Cooper said.

“I think it’s a bit overstated, that we just don’t have the political street cred that we once had.”

Cooper noted that the upcoming US presidential election meant that industry groups were largely in a holding pattern until the next administration takes office.

“The folks at the White House, the folks at EPA, have told us that this year is going to be all about landing planes. We’re not going to be taking off on any new journeys this year,” Cooper said.

“They’re trying to tie up the loose ends on some of the programmes that were priorities for this administration, and getting ready for the next one.”

The current RFS programme is authorised through to 2022, and discussions have begun to pivot towards whether major changes will take place when the period ends.

Until then, management of the RFS is likely to remain similar to the way it has in the past, Cooper said.

Cooper noted that the RFS programme doesn’t expire – instead, the EPA will have greater discretion at that point to set annual volumes. But, the agency will not be able to retreat on advanced and cellulosic biofuels, or biodiesel.

Another challenge for the ethanol industry is managing an ongoing conflict with the oil industry, which has continued to oppose higher ethanol blends.

Cooper said that the two sectors have a common interest – namely, to ensure that auto makers meet fuel economy standards through the adoption of more efficient fuels, rather than turning to hybrid vehicles or fuel cells.

If automakers decided to go in the direction of alternative power sources, it would have unpleasant repercussions for the oil and ethanol industries.

“I do think there’s an opportunity to work with the petroleum guys, instead of against them, on developing the most optimal liquid fuel we can put together, moving forward,” Cooper said.

“There are some commonalities, some things that we can work together on to ensure that the future, or at least the mid-term 10-, 20-, 30-year future of our fuels is liquid fuels.”

A common desire to grow domestic production of fuels and reduce dependence on foreign imports also offered another rallying point for the two industries, Cooper said.