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Letter to Administrator McCarthy on 2014 RFS volumes

Hydrocarbon Engineering,

The API’s Group Director for Downstream, Bob Greco has written to the US EPA Administrator with regards to recent discussions surrounding the finalised ethanol mandate. Below are some extracts.

‘As the US EPA finalises the 2014 RFS, API urges the agency to recognise the ethanol blend wall and apply its general waiver authority, consistent with the proposed rule published last November, and promulgate standards that limit the amount of ethanol in the gasoline pool to not exceed 9.7% by volume. Given the uncertainties in gasoline demand projections, continued consumer demand for gasoline with no ethanol (E0), and very limited demand for E85 fuel, a 9.7% limit represents the minimum buffer warranted to safeguard against the negative economic consequences for consumers from hitting the ethanol blend wall.’

‘As we explained in comments in the 2014 proposal, the overwhelming majority of vehicles and refuelling infrastructure have not been certified or warranted for ethanol blends above 10%. Coordinating Research Council testing showed that ethanol concentrations in gasoline that exceed 10% can lead to engine and fuel system damage. An analysis from NERA Economic Consulting shows that the failure to implement a waiver on the RFS could result in economic harm. EPA’s 2014 proposed rule assumed that ethanol would be supplied to the market either as a 10% blend (E10) or as an E85 fuel. In the proposal, the Agency also requested information to determine the volume E0 demand, and the appropriateness of incorporating the latter into the final standards. Our industry provided the requested data in comments on the proposal, and we noted that, according to EIA data, about 97% of gasoline currently supplied is E10. EPA should recognise that the inherent uncertainty of EIA demand data necessitates building in an additional buffer below 9.7% ethanol. A final ethanol standard below 9.7% reflects the need to allow consumers who demand E0 for boats, small engines etc. to continue having access to this product, and the need to protect our economy from the negative impacts of the ethanol blend wall.

‘EPA’s use of the waiver in 2014 is appropriate and necessary to acknowledge the ethanol blend wall and its potential to cause domestic product supply disruptions that result in negative economic consequences, and it provides a clear signal to the market for 2014 and beyond. The 2014 Final Rule is being issues very late and will be applied retroactively. We urge the agency to take these considerations into account and expeditiously finalise standards that limit ethanol to no more than 9.7% of EIA’s October estimates of US motor gasoline supply.

Edited by Claira Lloyd

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