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EPA Raises Renewable Fuel Requirements, But Can It Survive Trump?

gas stationThe EPA has raised the amount of renewable fuel that must be blended into the nation’s gasoline supply, drawing an immediate attack from the oil industry.

The final Renewable Fuel Standards, announced last week, raise the levels from 18.11 billion gallons this year to 19.28 billion gallons in 2017. This is a 5 percent increase from the proposed 2017 levels — 18.8 billion gallons of renewable fuel — that the EPA announced in May. About 15 billion gallons of this will come from conventional corn-based ethanol.

“Renewable fuel volumes continue to increase across the board compared to 2016 levels,” said Janet McCabe, the agency’s acting assistant administrator for the Office of Air and Radiation. “These final standards will boost production, providing for ambitious yet achievable growth of biofuels in the transportation sector.”

rfs-volume-requirements

While the ethanol industry praised the increase, big oil immediately went into attack mode.

Renewable Fuels Association president and CEO Bob Dinneen called the move a “positive signal,” and said it will “stimulate new interest in cellulosic ethanol and other advanced biofuels, drive investment in infrastructure to accommodate E15 and higher ethanol blends, and make a further dent in reducing greenhouse gas emissions.”

The American Petroleum Institute, on the other hand, called the higher ethanol fuel blends “irresponsible” and warned it will harm cars, causing “unnecessary repairs bills.”

“We are disappointed that EPA has taken a step backwards with this final rule,” said API downstream group director Frank Macchiarola. “The RFS mandate is a bad deal for the American consumer. Today’s announcement only serves to reinforce the need for Congress to repeal or significantly reform the RFS. Democrats and Republicans agree this program is a failure.”

API has endorsed a bipartisan bill that would cap ethanol requirements in transportation fuel at 9.7 percent.

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.

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.

Big oil has been pressing Congress to repeal the biofuels mandate for years. A Trump administration along with a GOP-controlled House and Senate may give this effort legs.

At the beginning of this year president-elect Donald Trump told the Iowa Renewable Fuels Association that the US should increase ethanol mandates. In September, however, his campaign called for the removal of the biofuel blending credit system, Bloomberg reports.

But the political power of the ethanol and biodiesel industries should not be ignored, says Lux Research analyst Yuan-Sheng Yu.

“Despite Trump’s generally anti-renewables rhetoric, the US ethanol and biodiesel industry will play a role in Trump’s goal for US energy independence,” Yu said. “His statements on ramping up fossil fuels and shunning incentives for renewables may be cause for some concern, but the RFS will likely continue to grow at a steady pace through his presidency. At the end of the day, seven of the top 10 ethanol producing states — 85 percent of US ethanol capacity — and seven of the top 10 biodiesel producing states — 65 percent of US biodiesel capacity — both went to Trump in the election.

“What is of concern under the RFS might be advanced biofuels — such as cellulosic ethanol and renewable diesel — since the import of foreign produced renewable diesel and cellulosic waivers for D3 RINs would likely be the first bits of the RFS to be abandoned under Trump.”

Earlier this month US Agriculture secretary Tom Vilsack told Bloomberg that despite big oil and Trump’s opposition to the RFS, ethanol is too well-established in rural areas to be dismantled.

“There’s going to be a lot of saber-rattling, but it supports too many jobs and too much rural infrastructure is set up for it,” Vilsack said. “The Renewable Fuel Standard is solid.”

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