E.P.A. proposes lower target for ethanol in R.F.S.

WASHINGTON – The Environmental Protection Agency on Nov. 18 proposed 2014 renewable fuel standards that for the first time would reduce the volume of ethanol refiners must add to the fuel supply relative to targets established under the Renewable Fuel Standard in 2007. The E.P.A. proposed that 15 billion to 15.52 billion gallons of ethanol be added to the fuel supply in 2014 compared with 18.15 billion gallons as targeted by current law.

The E.P.A. in its announcement pointed to what it called an “E10 blend wall” as a reason for the lower target.

“Nearly all gasoline sold in the United States is now E10, which is fuel up to 10% ethanol,” the E.P.A. said. “Production of renewable fuels has been growing rapidly in recent years. At the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the R.F.S. in 2007. As a result, we are now at the ‘E10 blend wall,’ the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.”

The announcement elicited both ire and praise.

Senator Debbie Stabenow, chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, said, “The so-called ‘blend wall’ is a crisis manufactured by the oil industry, which is interested in eliminating the competition so they can continue reaping even greater windfall profits. The proposed rule could cost thousands of good paying clean energy jobs and mean less competition at the pump. I urge the administration to take a hard look at how this could seriously set back growth at a crucial time when tremendous progress is being made toward commercial-scale production of advanced biofuels.”

 Martin Barbre, president of the National Corn Growers Association, said, “This recommendation is ill-advised and should be condemned by all consumers because it is damaging to our tenuous economy and short-sighted regarding the nation’s energy future. Agriculture has been a bright spot in a failing U.S. economy, but current corn prices are below the cost of production. E.P.A.’s ruling would be devastating for family farmers and the entire rural economy.”

 Mr. Barbre noted the E.P.A. proposal would make investments in new biofuels plants very risky, stagnate investment in infrastructure by petroleum marketers and send the wrong signals to automakers who want more direction on where they should be spending millions of targeted investments on research and development.

Robb MacKie, president and chief executive officer of the American Bakers Association, said, “The baking industry recognizes the E.P.A.’s modest proposal to lower the corn-based ethanol mandate. However, A.B.A. strongly encourages E.P.A. to move to further alleviate the pressure corn-based ethanol puts on grain availability and costs. Corn-based ethanol is a factor that has led to decreased wheat acreage in the U.S. over the past 30 years and tighter food supplies around the world. According to most experts, corn-based ethanol accounts for more than 40% of acreage planted in the United States. With a finite number of acres available for food production that becomes problematic.” 

Rasma Zvaners, A.B.A.’s policy director, added, “Recently there has been scrutiny of the R.F.S. program by Congress, and this needs to continue. The House Energy & Commerce Committee began a productive dialogue earlier this year. Further, Congress has begun seeking solutions. In particular, the baking industry hopes the work of Representatives Peter Welch of Vermont, Bob Goodlatte of Virginia, Jim Costa of California and Steve Womack of Arkansas will continue to gain momentum in the House.”