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Ethanol mandate delays

Hydrocarbon Engineering,

API Downstream Group Director, Bob Greco, has said that the Obama Administration’s continued delays in setting ethanol requirements under the Renewable Fuel Standard (RFS) are unacceptable. He has also said consumers have rejected higher ethanol blends like E85. Below are some key points from a recent briefing by Greco on the matter.

‘First, almost half of 2014 is behind us, and yet EPA still hasn’t finalised the ethanol requirements for this year. This is not a recipe for predictability and reliability in the gasoline markets, and the administration’s inability to meet the congressionally mandated deadline of November 30 is a clear example of how unworkable the RFS is. And given the rule has yet to be submitted to the White House for interagency review, it most likely won’t be finalised for several more months…perhaps not until September.

‘The law requires EPA to finalise next year’s volume requirements by November 30th. Right now, EPA should be proposing the 2015 requirements, but we’re still waiting for them to finalise requirements for this year. Unfortunately, this has become the rule rather than the exception when it comes to implementation of the RFS under this administration. The administration hasn’t realised the requirements on time since 2011. In 2012, the rule was one month late. In 2013, it was nine months late. And this year, it could be 10 months late. Companies are left to guess how much ethanol they must blend into gasoline, making it harder to produce the fuels Americans need. Bottom line, we urge the EPA to finalise the 2014 rule now and start the process of finalising the 2015 rule to meet the November 30 deadline, as required by law. And as the process continues to grind along, w are concerned that EPA will raise ethanol requirements from its 2014 proposal, based on the specious reasoning that E85, a mixture of up to 85% ethanol with 15% gasoline, is a workable solution.

‘It is not.’

What E85 means for all

‘Only 6% of the current vehicle fleet can even use E85. But even those motorists have largely rejected the fuel because ethanol is less energy dense than gasoline. That means lower miles per gallon, a tank of E85 won’t get you as far. And it means more money out of your wallet.

‘According to Triple-A, E85 costs consumers more when accounting for lost fuel economy. And data from the Energy Information Administration shows no growth in consumer demand and for E85 between 2010 and 2013. Ethanol proponents will claim that more E85 would be sold if more gas stations offered it for sale. Such a claim ignores the fact that over 95% of gas stations are owned by independent businessmen and women, not by oil companies. These local businesses in some cases would have to invest hundreds of thousands of dollars so their stations could sell E85, and they have to weigh the limited market for E85 against such potentially cost prohibitive investments.

‘The fact is consumers have largely rejected E85, which severely limits its ability to act as a safety valve to forestall the looming 10% ethanol blendwall crisis. This lack of E85 demand stands in stark reality to the consumer demand for E0, non-ethanol gasoline, which currently stands at over 3% of gasoline demand. Consumers want E0 for their boats, for lawn equipment, and for recreational vehicles. We urge EPA to set the 2014 ethanol mandate no higher than 9.7% of gasoline demand to avert the blendwall and the potentially severe economic damage that goes along with it…while preserving consumer choice at the pump.’

Working against the administration

‘And finally, higher ethanol mandates would also work against the administration’s new climate rules. A recent Environmental Working Group report shows that EPA’s proposal to cut the amount of corn ethanol mandated in 2014 by 1.39 billion gal. would lower US greenhouse gas emissions by the equivalent of 3 million t of carbon dioxide…they say that’s like taking 580 000 cars off the road for a year. Broadly, given the increasingly long delays in finalising volume mandate each year, as well as the negative impacts on consumer property, market choice and the environment, it is clear that Congress must act to repeal the RFS outright.

‘In the meantime, we need EPA to provide a short term solution by rolling back ethanol mandates to protect consumers from damaged vehicles, to allow for non-ethanol gasoline for consumers who demand it, and to reduce carbon emissions.’

Adapted from briefing by Claira Lloyd

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