EPA acknowledges blend wall as it proposes 2014 biofuel quotas

The US Environmental Protection Agency acknowledged that a “blend wall” has been reached for motor fuels with 10% ethanol as it released its proposed 2014 biofuel quotas under the federal Renewable Fuels Standard.

“Production of renewable fuels has been growing rapidly in recent years,” it said in its Nov. 15 announcement. “At the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the [RFS] in 2007.

“As a result, we are now at the ‘E10 blend wall’, the point at which the E10 fuel pool is saturated with ethanol,” it continued. “If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.”

The Obama administration has taken steps to encourage use of these higher ethanol fuel blends, EPA said. The agency approved fuels with a 15% ethanol blend for use in vehicles newer than the 2001 model year in 2011 and developed rules to enable retailers to sell E15, it said.

The US Department of Agriculture made funds available through the Renewable Energy Assistance Program to support deployment of flex-fuel pumps capable of dispensing a range of ethanol blends, EPA added.

“The 2014 proposal seeks input on what additional actions could be taken by government and industry to help overcome current market challenges, and to minimize the need for adjustments in the statutory renewable fuel volume requirements in the future,” it said. “Looking forward, the proposal clearly indicates that growth in capacity for ethanol consumption would continuously be reflected in the standards set beyond 2014.”

Proposed quotas

EPA proposed a 15.21 billion gal ethanol equivalent level total renewable fuel volume for 2014, which is within its 15-15.21 billion gal range. Other proposed quotas for next year are 2.2 billion gal for advanced biofuels, 1.28 billion gal for biomass-based diesel fuel, and 17 million gal for cellulosic biofuel.

“We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use,” EPA Administrator Gina McCarthy said. “We look forward to working with all stakeholders to develop a final rule that maintains the strength and promise of the RFS program.” EPA said it would consult with the Departments of Agriculture and Energy in developing a final rule.

Comments will be accepted for 60 days following the proposal’s publication in the Federal Register. EPA separately announced that it also is seeking comments to petitions for waivers of the 2014 standards and said it expects to determine the substance of such petitions when it issues a final rule establishing the 2014 RFS.

Top officials from the American Petroleum Institute and American Fuel & Petrochemical Manufacturers, along with leaders from other industries’ trade associations, welcomed EPA’s recognition of the blend wall and its potential adverse impacts on consumers, but added that more needs to be done.

“For the first time, EPA has acknowledged the blend wall is a dangerous reality and must be addressed,” API Pres. Jack N. Gerard said in a Nov. 15 teleconference with reporters. “While the agency took a step in the right direction, more must be done. Ultimately, Congress must protect consumers from this outdated and unworkable problem once and for all.”

Still a problem

“While we are pleased that EPA has taken steps to avoid the blend wall in 2014, we remain concerned that the proposed rule leaves open the possibility that the biofuel mandates will exceed the maximum amount of ethanol that can be safely added to our gasoline supply,” AFPM Pres. Charles T. Drevna said.

“We also remain concerned that the agency continues to set cellulosic biofuel mandates at aspirational levels that are divorced from reality,” his statement continued. “Consumers should be shielded from the costs of an overly aggressive biofuel mandates and Congress should address this issue immediately before this unworkable law does further damage.”

National Turkey Federation Pres. Joel Brandenberger, who also participated in the telecomference, said, “This is long overdue. The first RFS legislation was passed in 2005, and it has affected the price of feed ever since. We agree today’s announcement provides only a short-term breather.

“We expect the ethanol industry to say this year’s abundant corn harvest solves the problem, but our members are feeding their stocks from last year’s high-price, drought-stricken harvest,” Brandenberger said, adding, “That’s why 1-year solutions don’t work.”

John McKnight, president of the National Marine Manufacturers Association and another teleconference participant, said the recreational boating industry recognizes the need to develop alternative motor fuels and has invested in preliminary tests on isobutanol, a biofuel that is also derived from corn.

Safety concerns

“While today’s announcement marks an important step, there is more to be done,” McKnight said. “We have serious, well-documented and data-driven concerns with the safety of high ethanol fuel blends which have been proven to cause damage to marine engines.”

The fuel ethanol lobby also weighed in on EPA’s proposed 2014 biofuel quotas and recognition of the E10 blend wall. “It reflects an ‘all of the above, except biofuels’ energy strategy,” Fuels America said in a Nov. 15 posting at its blog. “If implemented, [it] would cost American drivers more than $7 billion in higher gas prices, and hand the oil companies a windfall of $10.3 billion.

“The impact of this proposal on the renewable fuel industry—both first and second generation—cannot be overstated,” it continued. “It caps the amount of renewable fuel used in our gasoline far below what the industry is already making, and could make next year, using an approach that is inconsistent with the RFS.”

Brooke Coleman, the Advanced Ethanol Council’s executive director, noted: “While only a proposed rule at this point, this is the first time that the Obama administration has shown any sign of wavering when it comes to implementing the RFS. What we’re seeing is the oil industry taking one last run at trying to convince administrators of the RFS to relieve the legal obligation on them to blend more biofuel based on clever arguments meant to disguise the fact that oil companies just don’t want to blend more biofuel. The RFS is designed to bust the oil monopoly. It’s not going to be easy.”

Contact Nick Snow at nicks@pennwell.com.

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