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EPA considering reduction to ethanol production mandate

Hydrocarbon Engineering,

The US Environmental Protection Agency (EPA) is reported to be considering a reduction to the amount of ethanol required to be blended with gasoline in 2013, following a number of complaints from refiners and blenders.

The Energy Policy Act of 2007 mandates production and blending of 18.15 billion gal. of biofuels in the US motor fuel supply for 2014. 14.4 billion gal. of this sum must be corn based ethanol.

According to a draft proposal obtained by Bloomberg, the total amount of required renewable biofuels would be cut to 15.21 billion gal., of which 13 billion gal. would be corn based ethanol.

Under Energy Policy Act, the EPA has the authority to scale back the mandated volumes in certain situations, including inadequate supply or economic hardship.

When the 2007 was enacted, the Energy Information Administration (EIA) anticipated that demand for gasoline would reach 154 billion gal. in 2014. The most recent estimate sets demand at just 133 billion gal.

Refiners argue that the only motor fuel that consumers will buy contains a maximum of 10% ethanol, meaning that the mandated supply total of 15.21 billion gal. would exceed 10% of all the motor fuel expected to be sold in the US next year. Hence, refiners are forced to make the decision between making a fuel blend that is more than 10% or buying renewable fuel credits (RINs), to offset the amount of renewable fuel they did not mix with their gasoline.

The ethanol cannot be consumed, therefore it need not be produced, according to the EPA’s interpretation of the law. The EPA would use this same reasoning beyond 2014 as well.

If the proposal is adopted, it could forestall a lawsuit filed this week by the American Petroleum Institute (API) challenging the EPA’s Renewable Fuel Standard.

Adapted from a press release by Emma McAleavey.

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