EPA scales back ethanol mandate to avert ‘blendwall’

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Michael Bastasch DCNF Managing Editor
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The Environmental Protection Agency announced it is scaling back its ethanol blending requirement for 2014.

Refiners had voiced concerns about putting more biofuels into the already strained fuel supply.

The agency has lowered the amount of ethanol that must be blended into U.S. fuel supplies from 16.55 billion gallons in 2013 to 15.21 billion gallons in 2014. The refining industry warned the agency earlier this year that refiners were reaching the maximum amount of ethanol that could safely be blended into the fuel supply, known as the “blendwall.”

The industry welcomed the reduced blending requirements, but warned that this did not address long term problems.

“While we are pleased that EPA has taken steps to avoid the blendwall in 2014, we remain concerned that the proposed rule leaves open the possibility that the biofuel mandates will exceed the maximum amount of ethanol that can be safely added to our gasoline supply,” said Charles Drevna, president of the American Fuels & Petrochemical Manufacturers.

“Consumers should be shielded from the costs of an overly aggressive biofuel mandates and Congress should address this issue immediately before this unworkable law does further damage,” Drevna added.

The biofuels industry shot back at the refining industry and the EPA over the lowered blending requirements.

“While only a proposed rule at this point, this is the first time that the Obama Administration has shown any sign of wavering when it comes to implementing the RFS,” said Brooke Coleman, executive director of the Advanced Ethanol Council. “EPA is in the right ballpark for cellulosic biofuels, and we are confident that the final number will be the right one for the industry in 2014. But bigger picture issues must be resolved in the final rule because advanced biofuel investors also pay attention to the big picture.”

The industry has recently launched a campaign against lowering ethanol blending requirements, framing it as an effort by “Big Oil” to squeeze out competition.

“What we’re seeing is the oil industry taking one last run at trying to convince administrators of the [ethanol mandate] to relieve the legal obligation on them to blend more biofuel based on clever arguments meant to disguise the fact that oil companies just don’t want to blend more biofuel. The RFS is designed to bust the oil monopoly. It’s not going to be easy,” Coleman added.

The ethanol mandate has put the Obama administration in a tough spot. President Obama received huge political support in the Midwest because of his pro-ethanol stance, but a recent investigation by The Associated Press shed light on the environmental damage caused by ethanol production.

The AP reported that 5 million acres of conservation land has been put into service since President Obama took, and more than 1.2 million acres of “virgin land” in Nebraska and the Dakotas alone have been plowed into corn and soybean fields since 2006.

The boom in corn production has meant more nitrogen fertilizer must be used. The fertilizer is toxic and has been known to cause “blue baby” syndrome in children. Nitrogen fertilizer use shot up by one billion pounds between 2005 and 2010, and another billion pounds of fertilizer are estimated to have been used for corn production since then.

Furthermore, the ever increasing ethanol mandate has been blamed for driving up food and fuel prices, as about 40 percent of the country’s corn supply is diverted to ethanol production. Refiners are also seeing the price of ethanol credits skyrocket as the industry approaches the blendwall.

“It is progress for the EPA to finally recognize and attempt to address the ‘blendwall’ by slightly reducing next year’s mandates, but let’s not get ahead of ourselves: the [ethanol mandate] remains a fundamentally flawed program that limps along year after year, wreaking havoc on those required to participate, including the American consumer,” said Louisiana Republican Sen. David Vitter.

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