WASHINGTON -- Fuel industry groups had mixed reactions to the U.S. Environmental Protection Agency (EPA) announcement on Nov. 30 of the final volume requirements under the Renewable Fuel Standard (RFS) program for 2014, 2015 and 2016. Fuel suppliers will be required to blend 16.93 billion gallons of ethanol and other renewable fuels into gasoline for 2015 and 18.11 billion gallons for 2016.
The EPA was under court order to finalize the multiple-year standards no later than the last day of November.
As reported in a 21st Century Smoke/CSP Daily News Flash, the final 2016 standard for cellulosic biofuel is nearly 200 million gallons, or seven times more than the market produced in 2014. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35% higher than the actual 2014 volumes; the total renewable standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, which is 11% higher than 2014 actual volumes.
Biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017.
The RFS, established by Congress, requires EPA to set annual volume requirements for four categories of biofuels. The final rule considered more than 670,000 public comments, and relied on the latest, most accurate data available. EPA finalized 2014 and 2015 standards at levels that reflect the actual amount of domestic biofuel used in those years, and standards for 2016 (and 2017 for biodiesel) that represent significant growth over historical levels.
“The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success—cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development,” said Janet McCabe, the acting assistant administrator for EPA’s Office of Air & Radiation. “With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.”
With final standards in place for the year ahead, biofuel producers and blenders are in a better position to plan and invest, said EPA.
For more information on the EPA’s announcement, click here.
Petroleum Marketers Association of America (PMAA)
The RFS is important to petroleum marketers because it determines whether E15 gasoline is required to meet annual refiner blending mandates. The existing RFS ethanol blending mandates have already pushed E10 blends into most gasoline markets. Any significant increase in the ethanol blending standard will force refiners to move to E15 blends unless gasoline demand rises to offset new blending mandates.
The new biofuels blending volumes for 2014, 2015 and 2016 are not expected to require the introduction of E15 gasoline.
PMAA is opposed to volumetric ethanol blending mandates for gasoline that would require the introduction of E15 until all practical and legal UST compatibility issues are settled for petroleum marketers.
Sixty percent of the gasoline stations are single-store owned and the average cost to retrofit a gas station with E15-compatible equipment is $200,000 which would increase pump prices and force many retailers, especially in rural areas, to close. Also, lucrative renewable identification number (RIN) values will not lure retailers into compatible infrastructure investments to sell higher-level ethanol blends. Most retailers do not have the ability to participate in the RINs market since nearly 95% of all gasoline that passes over the terminal rack is already pre-blended with ethanol and no longer generates RINS. This leaves retailers with few options to invest in upgraded infrastructure.
The agency has been under political pressure from both the refiners and renewable fuels industry over whether an E15 gasoline mandate is a viable remedy to overcome the RFS blend wall.
EPA’s acknowledgement that there are constraints in the motor fuels market to accommodate increasing volumes of ethanol including concerns related to retail infrastructure compatibility was justification to lower the ethanol mandate.
American Petroleum Institute (API)
The EPA must do more to ensure Americans have access to fuels they want and can safely use in their vehicles until Congress can repeal or significantly reform the outdated RFS, API president and CEO Jack Gerard said.
“EPA has taken a significant step in the right direction by using its waiver authority to lower ethanol mandates, acknowledging the market limitations of the ethanol blend wall,” he said. “However, the agency must do more to protect consumers. EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them. Motorists have largely rejected these fuels.”
He continued, “It’s confusing that the administration is pushing corn ethanol at the same time they pursue a climate agenda in Paris to lower greenhouse gas emissions. Data from EPA, Environmental Working Group, and numerous academics show corn ethanol emits more greenhouse gases than gasoline. Furthermore, the White House recently assigned the environmental benefits of the RFS at $0 but the economic costs as high as $595 million annually.”
American Coalition for Ethanol (ACE)
“When Congress enacted the [RFS], it voted to side with those of us who said ‘yes we can’ reduce greenhouse gas emissions from motor fuel, ‘yes we can’ allow consumer access to E15 and flex fuels and ‘yes we can’ spark innovative ways to produce cleaner fuels,” said Brian Jennings, executive vice president of the American Coalition for Ethanol (ACE).
“While we appreciate that the administration made incremental improvements compared to the proposed RFS rule, unfortunately, today they are choosing to side with those who say ‘no, we can’t.’ Regrettably, EPA’s final RFS rule protects the old way of doing business by obstructing consumer access to cleaner fuels, stifling competition in the marketplace, and undermining innovation. Given all the President hopes to accomplish at the international climate talks which begin in Paris today, it is inconsistent for the Administration to unravel the most effective policy at their disposal to support low carbon fuels.”
Despite the fact that the Clean Air Act calls for ethanol use to exceed 10% of gasoline consumption, EPA’s final rule sets blending targets for 2015 and 2016 that fall short of statutory requirements and instead draw on the “legally questionable E10 blend-wall methodology put forward by oil companies who don’t want ethanol to comprise more than 10% of fuel use in the U.S.”
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