EPA Considers Reducing 2014 Ethanol Targets - PMAA Votes to take strong stance on RFS Changes
October 14, 2013
The Environmental Protection Agency (EPA) is considering reducing its 2014 ethanol volume targets amid complaints from refiners that the volume requirements exceed their ability to blend it into fuels without resorting to higher blends such as E15 that would put engines at risk, Bloomberg has reported.
Within hours of the article being published, however, EPA Administrator Gina McCarthy issued a statement saying that the EPA and the Obama Administration have not made a final decision on 2014 volumes and obligations. Many in our own industry, including WPMA states, feel McCarthy has no intention of making any real or significant changes to the RFS that will have lasting benefits to the marketers - at least not under the Obama Administration.
The EPA draft proposal reportedly would cut the mandate to 15.21 billion gallons for renewable fuels in 2014 instead of the 18.15 billion gallons established by a 2007 law, according to an internal proposal provided to Bloomberg. EPA would call for the use of 13 billion gallons of conventional corn-based ethanol down from 13.8 billion gallons. The agency also proposes requiring just 23 million gallons of cellulosic biofuel for next year, or 0.017 percent, which is well below the statutory mandate of 1.75 billion originally envisioned in the law, but still a little less than double the 2013 target, OPIS has reported. EPA reportedly plans to keep biodiesel targets the same for 2014 and 2015 at 1.28 billion gallons.
The volumes of cellulosic biofuel continue to be challenged by refiners. The American Petroleum Institute (API) filed a lawsuit with the D.C. Circuit Court challenging the volume requirements for 2013, arguing that EPA has mandated significantly more cellulosic ethanol than is available in the marketplace.
In our Fall Board Meeting in early October, the WPMA states agreed on a resolution to ask for a Congressional fix to the RSF mandate by capping the corn-based Ethanol gallons to the consumption of gasoline by American consumers and not to exceed E10. This resolution was intended to signal a message to other PMAA states that at least seven states in the West are ready to flex their voice and make matters heard louder in DC. Just last week, in a PMAA Board Meeting, Western Region PMAA Rep, Greg Benson, made the motion to the full board that PMAA take the position that seeks a Congressional fix based on WPMA's resolution. That motion passed, along with another motion that authorizes PMAA to make the RFS Standard a "high priority".
What makes our position differ from the movement by EPA is simple. It's based on gallons consumed of gasoline, not gallons blended of alternative fuels. It is a more realistic measurement of what America can offer, without incurring fines to refineries or pushing the RFS to blend to E15, which has serious equipment and infrastructure consequences to the entire distribution chain of the petroleum industry.
McCarthy said the Obama Administration remains "firmly committed to furthering the development of all biofuels, including corn-based ethanol, cellulosic and advanced biofuel." She added that EPA is only developing a draft proposal and has not made a final decision on the proposed renewable fuel standards for 2014.
All stakeholders will be given the opportunity to comment on the proposal, she said.
Oil refiner Valero Energy Corp. is one refiner that had asked the Obama Administration to waive U.S. ethanol mandates, citing the rapidly rising cost of RINs and the high cost of achieving volume targets. Valero is pushing for lawmakers to repeal the RFS and develop new legislation to meet the changing needs of the oil market.
In issuing its 2013 targets, EPA had said in early August that it planned to reduce both the advanced biofuel and total renewable volumes in its 2014 RFS volume requirement. EPA in September sent its 2014 biofuels proposal to the White House Office of Management and Budget for review. Next year's targets were due to be finalized by year's end, but could be delayed due to the government shutdown.
Pressure is mounting for lawmakers to either repeal or reform the RFS, amid concerns about the looming blend wall, the point at which adding the EPA-mandated volume of ethanol to gasoline supplies would result in ethanol blends that exceed 10 percent, and the rising price of renewable identification numbers (RINs).
Sources: NATSO, NACS and EPA