The Environmental Protection Agency has announced that refiners must blend 16.55 billion gallons of renewable fuels into the U.S. fuel supply this year.
The agency also gave refiners some breathing room by adding four months for them to comply with certain aspects of the federal blending requirements for 2013, in response to complaints about the impending ethanol “blendwall” — the point at which refiners are hesitant to blend more ethanol into the fuel supply due to safety concerns.
“The premise and structure of the RFS were based on many assumptions that aren’t realistic with current market conditions,” said Louisiana Republican Sen. David Vitter. “The EPA has finally realized that there is a major problem with the RFS – the ethanol blend wall – but punted on fixing the problem this year.”
As part of the federal mandate, or Renewable Fuel Standard, refiners must also blend 1.28 billion gallons of biomass-based diesel into the fuel supply, along with 2.75 billion gallons of advanced biofuels and 6 million gallons of cellulosic biofuels.
The industry argues that cellulosic biofuels aren’t even commercially viable.
“It is clear that U.S. EPA has done its homework when it comes to setting the 2013 standard,” said Brooke Coleman, executive director of the Advanced Ethanol Council. “Our industry continues to transform the liquid fuel marketplace by making motor fuel cheaper, creating new jobs for Americans and reducing our dependence on foreign oil. U.S. EPA’s steady hand is a big part of the program’s success to date.”
The refining industry criticized the EPA’s announcement for not providing a permanent fix to the “blendwall.”
“We are disappointed that EPA failed to provide refiners and consumers immediate and necessary relief against the E10 blendwall and skyrocketing costs of our nation’s biofuel mandate,” said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers.
“While the administration acknowledges that higher ethanol mandates are unworkable by suggesting a new approach for the 2014 standards, EPA missed an opportunity to fix the problem this year,” said Jack Gerard, president of the American Petroleum Institute, who added that Congress should repeal the RFS before it “hurts consumers, damages vehicles, and harms our economy.”
For months, refiners have been worried about the industry hitting the ethanol “blendwall” as the price of renewable fuel credits skyrocketed.
The U.S. is expected to consume 133 billion gallons of gasoline this year, meaning that refiners are only willing to blend 13.3 billion gallons of ethanol to meet the EPA’s 10 percent blending requirement.
However, the RFS demanded that 13.8 billion gallons be blended in 2013 and then 14.4 billion be blended in 2014, meaning refiners must buy high-priced renewable fuel credits to make up for the shortfall in blending.
Skyrocketing fuel credit prices have been attacked by members of Congress for increasing the cost of food and fuel across the country.
“Instead of delivering meaningful environmental benefits, it’s driven up food and fuel costs for American families,” said Wyoming Republican Sen. John Barrasso. “This flawed program will also inevitably lead to widespread lawsuits against American manufacturers. When Congress enacts bad policy, the right response is to scrap it and start over.”
Barrasso introduced a bill that would repeal the renewable fuel mandate which has received support from some Democrats.
“Congress recognizes that the Renewable Fuel Standard isn’t working, and bipartisan concerns about this broken program continue to mount,” said Thomas Pyle, president of the Institute for Energy Research. “Remarkably, the EPA doesn’t understand what everyone else seems to see perfectly clear — the RFS is hurting American families, farmers and small businesses.”
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