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Remarks on RFS 2014

Hydrocarbon Engineering,

Below are extracts from Patrick Kelly, API Senor Policy Advisor’s comments on the Environmental Protection Agency’s (EPA) proposal for the 2014 biofuel mandates.

The bad news
‘Our major concern is that ever increasing biofuel mandates under the RFS could harm consumers and damage their automobiles. They could also create supply shortages that severely harm our still fragile economy.

‘To that end, we shared research with EPA showing that cars currently on the road are not equipped to use fuel with more than 10% ethanol. This research by the auto and oil industries report that millions of America families’ cars could be damaged by higher ethanol blends. And the automobile companies have been clear that the use of an ethanol blend higher than 10% will void the warranties in sever economic harm.

‘And, livestock groups say the mandate, which now diverts more than 40% of the US corn crop from food and fuel, has been the leading driver of food price increases we’ve seen in recent years. In fact, rising food prices from the RFS have far outpaced the rate of inflation. Since 2005, the consumer price index for food rose nearly 25% compared with a 16% increase in core inflation during that same time, according to the Bureau of Labour Statistics. A recent study by food groups predicts the price of beef, chicken and eggs will rise each year unless we repeal the RFS.’

The good news
‘For the first time, the EPA has acknowledged that the E10 blendwall is a dangerous reality that must be addressed. EPA proposed to lower the 2014 mandates to below 10% of gasoline demand, which helps to address the most serious impacts of our fuel supply, and the potential harm to American consumers.

‘While the agency took a step in the right direction, we still have concerns that the proposal doesn’t go far enough to protect consumers.’

What’s been asked of the EPA
‘In our comments, we’ve asked EPA:

  • To further lower the 2014 ethanol mandate down to no more than 9.7% of projected gasoline demand. This will help to preserve the choice of ethanol free gasoline for owners of boats and small engines that demand it.
  • Also, EPA must bring their mandates closer to reality on cellulosic biofuels, which do not exist in commercial quantities. Despite rosy projections four years in a row, cellulosic ethanol producers are still not producing nearly as much as EPA mandates. And that means refiners could have to pay a stealth tax that adds to the cost of producing gasoline.
  • Finally, EPA must finalise these requirements as quickly as possible and get this annual rulemaking process back on track. Refiners are responsible for producing the billions of gallons of fuel America needs each year, and EPA can’t wait to set requirements for the year after it's halfway over. EPA must finalise the next year’s requirements by November 30th, as required in the statue.

‘We’ve had an overwhelming response from our grassroots supporters nationwide who are concerned about higher ethanol mandates. Over 100 000 people in our extensive grassroots network sent comments to EPA.

‘By making these adjustments, EPA can create a welcome stopgap for a disaster in the making. But ultimately, we need a long term solution for consumers. That’s why we’re still pressing Congress to repeal these ever increasing biofuels mandates to protect consumers in the long run.’

Adapted from briefing by Claira Lloyd

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