EPA Addresses E10 Blend Wall in 2013 Renewable Fuel Standards

Adds volume flexibility, extends compliance deadline; more action needed, says AAA

Bob Darbelnet

WASHINGTON -- The U.S. Environmental Protection Agency (EPA) has finalized the 2013 percentage standards for four fuel categories that are part of the Renewable Fuel Standard (RFS), added volume flexibility and extended the compliance deadline.

The Energy Independence & Security Act (EISA) established the RFS program and the annual renewable fuel volume targets, which steadily increase to an overall level of 36 billion gallons in 2022. To achieve these volumes, the EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner and importer determines the minimum volume of renewable fuel that it must ensure is used in its transportation fuel.

During the rulemaking process, the EPA received comments from a number of stakeholders concerning the "E10 blend wall." Projected to occur in 2014, the blend wall refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10. Most gasoline sold in the United States today is E10 (containing 10% ethanol).

In the rule issued Tuesday, the EPA announced that it will propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal. The EPA is also providing greater lead time and flexibility in complying with the 2013 volume requirements by extending the deadline to comply with the 2013 standards by four months, to June 30, 2014.

The final 2013 overall volumes and standards require 16.55 billion gallons of renewable fuels to be blended into the U.S. fuel supply (a 9.74% blend). This standard specifically requires:

  • Biomass-based diesel (1.28 billion gallons; 1.13%).
  • Advanced biofuels (2.75 billion gallons; 1.62%).
  • Cellulosic biofuels (6 million gallons; 0.004%).

A Jan. 2013 ruling by the U.S. Court of Appeals required the agency to re-evaluate projections for cellulosic biofuel to reflect market conditions; the just-announced final 2013 standard for cellulosic biofuel was developed in a manner consistent with the approach outlined in that ruling.

The EPA's decision to address concerns with the RFS may provide a temporary solution to prevent increased use of potentially damaging E15 gasoline or a possible surge in gasoline prices, but a sustained plan for future action is still needed, said AAA. It is urging Congress to provide the EPA with the authority and direction to reduce RFS requirements for conventional biofuels.

The EPA's Final 2013 RFS maintains target volumes for ethanol and extends blender compliance for 2013 by four months.

"AAA praises today's decision by the EPA and its acknowledgement that there are constraints to the market's ability to consume renewable fuels as directed by the RFS," said Bob Darbelnet, president and CEO of AAA. "However, it is clear that congressional action is still needed to provide the EPA with the authority and direction needed to adjust unachievable fuel targets in the future."

He continued, "Congress and the EPA must work together to protect consumers from unachievable fuel mandates and potentially volatile gas prices. While ethanol can support jobs and promote energy independence, the RFS requirements must be implemented in a responsible manner without harming consumers."

Without a reduction in the RFS requirements, fuel blenders would be unable to achieve federal requirements without increasing the usage of potentially damaging E15 gasoline, which contains up to 15% ethanol.

"E15 gasoline is simply not compatible with existing infrastructure or for use in the vast majority of vehicles on the roads today," said Darbelnet. "E15 can put motorists at risk of vehicle damage and voided warranties, which means it is not a viable option for meeting current RFS requirements."

Blenders unable to meet RFS requirements would be subject to significant fines. This could affect gasoline prices by burdening blenders with unsustainable costs and by incentivizing expanded gasoline exports given that RFS requirements only apply to domestic fuel sales. These consequences could restrict gasoline supplies and result in significant increases in gasoline prices paid by motorists if the EPA does not have a sustainable plan in place to adjust the RFS as required.