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April 18, 2013
Ethanol program nears 'blend wall'

Parties in Congress may be forced to come together to amend the federal renewable fuel standard (RFS) to ensure the economic viability of companies that manufacture ethanol.  Currently, the major impediment to the industry’s health is called the blend wall.  Simply defined, the blend wall is the maximum amount of ethanol that can be blended into gasoline. 

The blend wall is currently set at 10 percent–i.e., 10 percent of a gallon of gasoline may contain ethanol (E-10)–a gasoline/ethanol blend that has been approved for virtually all gasoline engines.  But the nation is fast approaching the point where there will be 10 percent ethanol in every gallon of gas that may contain ethanol. 

The next logical step would seem to be to increase the blend wall beyond 10 percent to ensure the growth of renewable fuels.  However, there are multiple obstacles to this transition, which the House Energy and Commerce Committee recently addressed in Blend Wall/Fuel Compatibility Issues, the first of a series of RFS assessment white papers.

Gasoline use down

One objective of the white paper series is to address issues that had not been considered when the RFS was last amended 5 years ago.  The committee notes that in 2007, America was using 142 billion gallons of gasoline annually.  At that point, the Energy Information Administration (EIA) projected continued increases of about 1 percent annually.  In fact, 2007 turned out to be a peak year for gasoline consumption, which has declined ever since.  According to the EIA, 134 billion gallons were used in 2012, well below the approximately 150 billion gallons that had been projected.

In other words, the mandated amounts of ethanol under the RFS must be mixed into a considerably smaller-than-expected pool of gasoline.  The ethanol portions of the RFS are no more than 13.8 billion gallons in 2013, 14.4 billion in 2014, and 15 billion in 2015 and thereafter.  Depending on overall gasoline usage and other factors, the 10 percent blend wall may be reached as soon as late 2013 or 2014.

E-15 option

The EPA may grant a waiver to allow new fuels to be introduced into commerce, and the Agency has done exactly that by authorizing the use of E-15 in model year 2001 and newer cars and light-duty trucks.  But getting E-15 into vehicles has proved to be a daunting task.  Concerns have been raised that using E-15 in the hundreds of millions of vehicles and equipment not tested as safe for E-15 could cause engine damage.  What’s more, major automakers have argued that using E-15 will void most warranties, including those of post-2001 vehicles. 

Currently, EPA’s major solution to increasing the use of E-15 is producing mixed results at best.  Specifically, the EPA is requiring that fuel retailers submit a misfueling mitigation plan (MMP) that the Agency must approve before E-15 is offered for sale.  However, confidence in the effectiveness of MMPs in preventing misfueling is not high.  MMPs provide little liability protection for fuel producers and retailers should consumer misfueling occur.  Moreover, the RFS does not require any particular gas station to sell E-15 or any consumer to use it.

“The potential mismatch between what the RFS will soon require and what the nation is ready to handle is one of the key reasons why we are undertaking this assessment,” says the Committee. 

The Committee requested that stakeholders provide answers to questions about the blend wall and says it will continue to request feedback on subsequent white papers assessing the current effectiveness of the RFS and avenues for possible improvement.

Click here for the blend wall white paper.