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Groups Duel Over RFS

One day ahead of a Senate hearing on the Renewable Fuel Standard (RFS), biofuels and petroleum interests held dueling press conferences over the EPA’s proposed blending levels for 2014, 2015, and 2016.

If the American Petroleum Institute and the Renewable Fuels Association have anything in common, it’s dissatisfaction over the EPA’s long-delayed announcement on May 29 of proposed blending levels, which will become final at the end of November. 

The EPA’s Renewable Volume Obligation under the RFS requires ethanol blending into gasoline at about the level actually used last year, at 13.25 billion gallons for 2014. It would require 13.4 billion gallons of ethanol to be blended this year, which some analysts say is less than the market is likely to use. It sets ethanol blending at 14.00 billion gallons for 2016.

The 2007 energy law that set up the RFS envisioned 15 billion gallons of corn ethanol usage this year. The 14 billion gallons required by the EPA next year would be slightly over the so-called blend wall of 10% of the nation’s gasoline supply, Janet McCabe, the acting assistant administrator for EPA’s Office of Air told when EPA rolled out its latest RFS proposal last month. She estimated that the 14 billion gallons of ethanol blended next year would make up between 10.05% and 10.28% of the U.S. gasoline market. 

According to Jack Gerard, president and CEO of the American Petroleum Institute, even the 14 billion-gallon mandate for next year is too much.

“EPA must use its waiver authority to set the final ethanol mandate to no more than 9.7% of gasoline demand to protect consumers who want to purchase ethanol-free gasoline,” Gerard said during a press conference Wednesday.

The EPA has approved the use of 15% ethanol blends, E15, which has the potential to increase ethanol blending beyond 10% of the nation’s gasoline supply, but Gerard said testing by auto and oil industries showed higher blends can damage engines, “potentially leaving drivers stranded.” And, he said, consumers have largely rejected E85, the 85% ethanol blends that can be used by some vehicles.

In contrast, he said, demand for gasoline without any ethanol, E0, has gone from 3.4% to 7% of the gasoline market.  

“Consumers’ interests should come ahead of ethanol interests,” Gerard said.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a separate press conference that the increase in demand for E0 reflects more exports of U.S. gasoline without ethanol, not less domestic demand. “Ethanol blending had continued to increase,” Dinneen said.

The latest EPA proposal will only “scratch the blend wall rather than break it,” said Dinneen. 

“If EPA allows the program to work, the market will break the blend wall,” Dinneen said. 

Dinneen said that trading between oil industry blenders of credits known as RINs (renewable identification numbers) would drive investment in pumps for E15 and E85. Dinneen cited a recent EPA study that shows the price of trading RINs has no effect on the price of gasoline for consumers and will spur investment in more blending of ethanol.

“The EPA has become timid in the face of an unrelenting campaign by big oil,” Dinneen said.

If the press conferences are any indication, the EPA’s McCabe will face tough questions Thursday when she appears before the Senate’s Subcommittee on Regulatory Affairs and Federal Management. The hearing, “Reexamining EPA’s Management of the Renewable Fuel Standard Program,” begins at 9 a.m. EDT, 8 a.m. Central. 


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