EPA Could Reduce Ethanol Requirement Any Day

By Allison Floyd

Friday, November 15th, 2013

The federal Environmental Protection Agency seems poised over the next few days to lower the Renewable Fuels Standard requirement for 2014 – over the objections of some biofuels advocates – by nearly 3 million gallons.

The Energy Independence and Security Act passed by Congress in 2007 requires more and more ethanol and other biofuels in the market each year. But as cars become more efficient and Americans use less gas, experts warn that it’s not possible to funnel enough ethanol into the market next year to meet the requirement.

Current law would force the fuel industry to soak up 18.15 million gallons of ethanol in 2014, but EPA is considering lowering that mandate to 15.21 million gallons, according to a report leaked to the media last month. At that level, only about 13 billion gallons of corn-based ethanol would be blended into the nation's gasoline supply, according to Reuters, down from 13.8 billion this year and 14.4 billion required by law for 2014.

"The devil is in the details. However, it is clear that if the EPA does what is implied … the RFS moves from being unworkable to quite manageable," Purdue University energy policy specialist Wally Tyner wrote in a report "The Biofuels Renewable Fuel Standard – EPA to the Rescue."

Federal officials have been open to reducing the requirement for biofuels in the past. In August, EPA slashed the 2013 requirement for cellulosic biofuel use to just 6 million gallons, far below the 14 million proposed earlier that year and the 1 billion gallons a year required in the 2007 law.

And even federal officials who testified before a Congressional subcommittee about the biofuels standard in late June said consumers won’t absorb the amount of ethanol the law mandates in coming years.

“The RFS program is not projected to come close to achievement of the legislated target that calls for 36 billion gallons of renewable motor fuels use by 2022,” said Adam Sieminski, the administrator for the Energy Information Administration of the energy department.

Both biofuels producers and gasoline refiners are waiting anxiously for EPA’s decision, which could come any day. If EPA lowers the standard for 2014, the decision likely will be challenged.

“Groups within the biofuel industry are fully committed to challenging the rule in court if the EPA changes how it implements the standard,” Paul Winters of the Biotechnology Industry Organization told Reuters. “We want to see the targets continue to be set at the highest-achievable level.”

Several agricultural economists have predicted that farmers and ethanol manufacturers can meet the need in 2014 if the RFS is dropped to the 15-million-gallon range. This year’s corn crop is a near record in lots of states after tough years of drought.

But petroleum sellers argue that fuel with more than 15 percent ethanol can damage an engine. That limits the amount of biofuel that can be sold.

Under the current RFS, the energy industry would have to blend 20.5 billion gallons of biofuels into gasoline in 2015 and 22.25 billion gallons in 2016. His calculations would reduce those totals to 16.58 billion in 2015 and 17.3 billion the following year.