The Environmental Protection Agency on Friday issued long overdue rules requiring refiners to use more renewable fuels in the nation’s fuel supply, a move aimed at reducing dependence on foreign oil and lowering emissions to combat climate change.
The new Renewable Fuel Standard, or RFS, sets annual blending requirements for 2014, 2015 and 2016, outlining a substantial uptick in the amount of low-carbon biofuels refiners must purchase.
EPA’s new proposal retroactively sets the total renewable fuel requirement at 15.93 billion gallons in 2014, and drives up the standard to 16.30 billion gallons in 2015, and 17.40 billion gallons in 2016. EPA is prepared to finalize the rules by November 30.
Oil companies fear the amount of renewable fuel required in 2015 and 2016 could exceed the current E10 blend level, which means 10 percent of gasoline must be comprised of ethanol. The industry wants the E10 standard reduced further, and has warned that going beyond the current “blend wall” would lead to engine damage in cars.
The EPA rule gave a nod to these concerns, but did not go into how the E10 “blend wall” might be affected by the new RFS standard. However, EPA assistant administrator Janet McCabe said on a call with reporters that the new proposals examine a variety of scenarios regarding the blend wall.
McCabe emphasized that stakeholders will have an opportunity to comment on the proposals until July 27 to vet any issues they have with any of the proposals. “We do think this is a reasonable and responsible approach to the numbers,” she said.
Biofuel groups do not seem to agree with her optimism. Brent Erickson, a senior official with the Biotechnology Industry Organization, said in a statement that the delays in the release of these rules have already done irreparable damage to the renewable fuel industry.
“Today’s overdue re-proposal doesn’t do enough to get the RFS program back on track. The RFS was designed to provide a market floor for biofuels,” Erickson said. “Instead, EPA has once again proposed to help the oil industry build a regulatory wall to keep advanced biofuels out of the U.S. market.”
The oil industry also expressed concerns. American Petroleum Institute President and CEO Jack Gerard said even though EPA recognizes the blend wall, it does not do enough to resolve the issue, and raises new concerns. The corn ethanol mandate is still too high, Gerard said on a call with reporters.
“We do acknowledge the need to exercise their waiver authority,” but it is looking at higher blends of ethanol in the fuel supply through 85-percent blends and 15-percent blends “that place consumers at risk.” He said EPA also does not recognize the problem that arises from gasoline demand remaining flat.
Gerard also used the EPA release to call on Congress to repeal the program, or significantly reform it, as the best solution. He said both Democrats and Republicans oppose the RFS program.
The 2014 rule was delayed for nearly two years from the date it was first proposed back in 2013. Friday’s announcement was a re-proposal of that rule after substantial outrage from the ethanol industry over the cuts it made.
The original proposed rule for RFS 2014 marked an unprecedented change in policy by the EPA, where it lowered the requirements for blending corn-based ethanol in gasoline. The move stoked the ire of the ethanol industry and its Democratic and Republican supporters in Congress.
The ethanol industry had accused EPA of buying into an oil industry argument that increasing the corn-ethanol mandate would harm vehicle engines, while driving up the cost of compliance and forcing refiners to ship refined product overseas.
EPA responded to those arguments by slashing the corn-ethanol part of the RFS and other requirements for biodiesel and other low-carbon fuels.
The cuts caused a number of plants that produce these fuels to close operations because the lower requirements forced the market to shrink, closing off investment and access to capital needed for production.
The oil industry was also affected by the long delays because they could not adequately plan, or know how much ethanol and other fuels to purchase in order to comply.
The American Petroleum Institute and refiners sued EPA in federal appeals court to force the agency to issue the RFS requirements on the schedule outlined by Congress. The lawsuit led to a settlement whereby EPA agreed to issue the rules on June 1.
