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EPA Increases The Federal Ethanol Mandate

The Obama administration raised the amount of biofuels refiners are mandated to blend into the U.S. fuel supply to more than 19 billion gallons, most of which will come from corn-based ethanol.

Environmental Protection Agency officials announced final biofuel blending requirements for 2017 Wednesday, the day before Thanksgiving. EPA increased blending mandates for cellulosic biofuel, advanced biofuel and conventional ethanol. The agency also increased biomass-based diesel levels for 2018.

“Renewable fuel volumes continue to increase across the board compared to 2016 levels,” said Janet McCabe, the head of EPA’s ir and radiation office, said in a statement.

“These final standards will boost production, providing for ambitious yet achievable growth of biofuels in the transportation sector,” she said. “By implementing the program enacted by Congress, we are expanding the nation’s renewable fuels sector while reducing our reliance on imported oil.”

While the ethanol industry celebrated the announcement, refiners, environmentalists and other businesses were less than enthused.

“Refiners should not have the responsibility to force consumers to use products they either don’t want or that are incompatible with their cars, boats, and motor equipment,” Chet Thompson, president of the American Fuel and Petrochemical Manufacturers, said in a statement.

Refiners have pushed for EPA’s Renewable Fuel Standard, or RFS, to be repealed or reformed in a way that takes the onus of compliance of the industry. Right now, refiners spend millions of dollars buying regulatory credits, called RINs, to comply with the RFS.

Environmentalists have opposed the RFS on the grounds it’s not as eco-friendly as advertised by the Obama administration. The 2005 law has come under fire in recent years for reportedly causing environmental degradation and emitting more greenhouse gases than initially thought.

For many, the biggest problem with the RFS revolves around the use of corn-based ethanol. EPA now mandates 15 billion gallons of “conventional” ethanol be blended into the fuel supply. Most of this will come from corn.

Critics say the RFS created artificial market for corn that’s harmed conservation lands and driven up corn prices. That, in turn, has drive up food prices across the board, making it harder for small businesses to plan ahead.

“From food retailers and environmental activists to anti-hunger organizations and government-waste watchdog groups, the consensus is clear that the ethanol mandate is broken,” National Council of Chain Restaurants Executive Director Rob Green said in a statement.

The ethanol industry, on the other hand, was pleased EPA forced companies to do even more business with biofuel makers.

“We can all be thankful EPA has raised the conventional biofuel requirement to the 15 billion gallon level required by the statute,” Bob Dinneen, president of the Renewable Fuels Association, said in a statement.

“The move will send a positive signal to investors, rippling throughout our economy and environment,” he said.

Ethanol’s reign may continue into the Trump administration. President-Elect Donald Trump said he favors increasing the federal ethanol mandate while on the campaign trail.

But some analysts see Trump as a “wildcard” for biofuels.

“I don’t think it’s as crystal clear,” Aakash Doshi, an analyst at Citigroup, recently told Bloomberg. “We see Trump as a bigger wild card” because of his support of oil and natural gas.

Republican lawmakers have been trying to push legislation reforming the RFS for years, but so far the issue has proven too contentious to handle. Some lawmakers, however, are hopeful they can work with the Trump administration to address the ethanol problem.

“Regular Americans will pay the price with increased costs on everything from the gas they put in their cars to their Thanksgiving turkey,” Texas Republican Rep. Lamar Smith said in a statement.

“The next administration must work with Congress to reform this mandate,” said Smith, who chairs the House Committee on Science, Space and Technology.

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