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November 20, 2013
EPA would reduce 2014 ethanol volumes

In a proposal, the EPA is seeking to cut the total volumetric requirement for renewable fuel for 2014 from the Clean Air Act’s (CAA) specified level of 18.15 billion gallons (gal) to 15.21 billion gal. 

The proposed action caused consternation in the renewable fuels industry and among the nation’s corn growers, who claim that EPA’s proposal is outside the authority provided to the Agency under CAA’s provisions for a national renewable fuel standard (RFS). On the other hand, the petroleum industry looked favorably on EPA’s recognition of the “blend wall,” but added that the Agency needs to do more to ensure that Americans do not face dramatic hikes in fuel costs because of the RFS.

Four categories

Under the RFS program, the EPA is required to determine and publish annual percentage standards for four categories of renewable fuel for each compliance year by November 30 of the previous year.  The percentage standards are calculated to ensure use in transportation fuel of the national “applicable volumes” of:

  • Cellulosic biofuel,
  • Biomass-based diesel,
  • Advanced biofuel, and
  • Total renewable fuel

The volumes are either set forth in the CAA or established by the EPA according to provisions in the Act.  The cellulosic biofuel and biomass-based diesel categories are nested within advanced biofuel, which itself is nested within the total renewable fuel category.

Within the 15.21-billion-gal total, the proposed rule caps corn-based (or conventional) ethanol at 13 billion gal, a 1.4 billion gal reduction from CAA’s specified level.  The proposed 2014 volume of 17 million gal for cellulosic biofuel is far below the statutory target of 1.75 billion gal and is based on EPA’s assessment of the projected commercial availability of this fuel.

Waiver authority

The EPA states that the CAA provides it with waiver authority to reduce the annual statutory volumes of both advanced biofuel and total renewable fuel to address two constraints:

  • Limitations in the volume of ethanol that can be consumed in gasoline given practical constraints on the supply of higher ethanol blends to the vehicles that can use them and other limits on ethanol blend levels in gasoline—a set of factors commonly referred to as the ethanol blend wall; and
  • Limitations on the ability of the industry to produce sufficient volumes of qualifying renewable fuel.

But the Renewable Fuels Association (RFA) states that the EPA may exercise its waiver authority only if meeting the statutory volume would cause severe economic harm or if the domestic supply of renewable fuel is not adequate.  Neither of those conditions is present for conventional renewable fuel, argues the RFA.  The organization adds that the blend wall does not qualify under the CAA as justification for a waiver.  

Family farms

Also, the National Corn Growers Association (NCGA) said an EPA final rule that carries out the proposed actions “would be devastating for family farmers and the entire rural economy.”  NCGA president Martin Barbre adds that EPA’s action will make investment 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.

 ‘Dangerous’ blend wall

Meanwhile, the American Petroleum Association (APA) sees the proposal as EPA’s acknowledgement that the blend wall is a “dangerous reality” that must be addressed to avoid serious impact on America’s fuel supply.

“While the Agency took a step in the right direction, more must be done to ensure Americans have the choice of ethanol-free gasoline for boats and small engines,” adds the APA, “and to bring their mandates closer to reality on cellulosic biofuels, which do not exist in commercial quantities.”  The APA urges Congress to repeal “this outdated and unworkable program once and for all.”

EPA’s proposed RFS requirements for 2014

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