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Renewable Fuel Volume Requirements

EPA’s 2017 Biofuels Proposal Draws Ire from Big Oil, Big Ag, Biofuels Industry

Renewable Fuel Volume RequirementsThe EPA wants to increase the amount of ethanol and other biofuels that must be blended into US gasoline — and no one is happy with the proposal. This includes big oil, big agriculture and the biofuels industry.

The 2017 proposed Renewable Fuel Standard volume requirements, announced yesterday, would require refineries to blend 18.8 billion gallons of biofuels into the nation’s gasoline supply next year. Of this amount, 14.8 billion gallons would come from conventional corn-based ethanol. While the 18.8 billion gallons is almost 700 million gallons more than the 2016 requirement, it is still way below the targeted volumes set by a 2007 law.

The Energy Independence and Security Act of 2007 established annual renewable fuel volume targets, which steadily increase to 36 billion gallons by 2022. The 2017 target is 24 billion gallons.

The EPA has said the lack of infrastructure to blend ethanol into gasoline has led to the lower biofuels mandates. The biofuels industry and corn farmers, however, have accused the agency of caving to big oil.

“EPA has moved in a better direction, but we are disappointed that they set the ethanol number below statute,” said Chip Bowling, president of the National Corn Growers Association, in a statement about the proposed renewable volume obligations.

“In the past, the EPA has cited a lack of fuel infrastructure as one reason for failing to follow statute. Our corn farmers and the ethanol industry have responded,” Bowling continued. “Over the past year, we’ve invested millions of dollars along with the US Department of Agriculture’s Biofuel Infrastructure Partnership to accelerate public and private investment in new ethanol pumps and fuel infrastructure. America’s corn farmers and the ethanol industry have done their job. We call on the EPA to follow the law, and raise the ethanol volume to statute.”

The 2017 proposal is not aggressive enough, said Advanced Biofuels Business Council executive director Brooke Coleman.

“The Administration has pledged to do everything in its power to drive the commercialization and use of advanced, low carbon biofuels,” Coleman said in a statement. “The 2017 proposal does not do that. We cannot let the oil industry slow the implementation of this program. It’s that simple. If the Administration wants our industry to be aggressive when it comes to financing and commercializing low carbon fuels in the United States, as they have asked us to do, they need to hold up their end of the bargain and make some critical adjustments to the RFS final rule.”

The oil industry, on the other hand, said the proposed biofuel volumes aren’t safe for cars on the road and will raise gas prices at the pump, which are on the low end of there they have been in recent years.

“The administration is potentially putting the safety of American consumers, their vehicles and our economy at risk,” said American Petroleum Institute downstream group director Frank Macchiarola in an email, repeating his call for Congress to repeal the biofuels mandate. “Higher ethanol blends, such as E15, can damage engines and fuel systems — potentially forcing drivers to pay for costly repairs, according to extensive testing by the auto and oil industries. API is urging EPA to set the final ethanol mandate at no more than 9.7 percent of gasoline demand.”

The oil industry has repeatedly urged the EPA to set the final ethanol mandate at this level to help avoid the 10 percent ethanol “blend wall,” which refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding 10 percent.

Beyond 10 percent, the ethanol renders the blended fuel “incompatible with today’s engines, vehicles and the multi-billion dollar infrastructure” in the US, according to the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers.

In February, the two industry groups filed lawsuits challenging the Renewable Fuel Standard.

The biofuels industry, on the other hand, counters that the blend wall is a myth. An analysis of 2016 model year warranty statements and owner’s manuals conducted by the Renewable Fuels Association shows that auto manufacturers approve E15 — 15 percent ethanol 85 percent gasoline — use in more than 70 percent of new vehicles. This is up from 2015, when just over 60 percent of MY 2015 automobiles were clearly approved for E15.

It’s big oil versus big ag. As to which one is bigger, well, we’ll have to wait and see.

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