EPA proposes smaller requirements for biofuel use

Staff Writer
Columbus CEO

(c) 2013, The Washington Post.

WASHINGTON — The Environmental Protection Agency on Friday proposed lowering requirements for biofuel use in 2014, trimming targets for corn-based ethanol use for the first time.

The proposal would set ethanol use at 15.21 billion gallons, just under 10 percent of motor fuel and 16 percent lower than targets established by Congress in 2007.

The proposal angered farm groups, corn ethanol producers and supporters of biodiesel, but it mollified oil companies, which have long argued that if the content of ethanol in motor fuel exceeded 10 percent — known as the blend wall — it might damage cars, motorcycles and lawn mowers. Groups representing ethanol makers say that mixing significantly higher levels of ethanol with gasoline would not harm vehicles.

"Facts are facts," said Stephen H. Brown, vice president for governmental affairs at the oil refiner Tesoro. "They're so stubborn even this administration has to accept them."

"They're capitulating to the oil companies," Bob Dinneen, president of the Renewable Fuels Association, said of the administration. He said the EPA's proposed targets would hurt farmers and violate the spirit of the renewable fuels standard Congress adopted. "The RFS was about forcing marketplace change," he said, "and EPA is giving the oil companies a get of jail free card."

The EPA proposal, which includes ranges for each of the different kinds of renewable fuels, will be subject to comment before becoming final sometime in the first quarter of 2014.

The EPA quotas for biofuels are part of the renewable fuel standards established under energy legislation passed by Congress in 2007. Congress, eager to replace a portion of U.S. oil imports with homegrown fuel and to reduce the greenhouse gas emissions from transportation fuels, set a schedule that would phase in corn-based ethanol and later ethanol made from things other than food, such as switchgrass, corn cobs and stalks, waste or wood chips.

Congress, aware that the ethanol industry might evolve differently, also gave the EPA authority to alter the production targets if they proved unrealistic.

The American Petroleum Institute has been lobbying to repeal the renewable fuel standard altogether, and the new proposed ranges did not entirely placate the group. API President Jack Gerard said that "more must be done" and "ultimately Congress must protect consumers from this outdated and unworkable program."

But some industry officials said that if the EPA sticks to the blend wall, they will be satisfied. Oil refiners need to mix nearly that much ethanol into motor fuel anyway to meet octane requirements.

The new proposal is in line with numbers included in a leaked version last month. The midpoint of every range is the same as those earlier figures.

The EPA on Friday set an overall ceiling of 15.21 billion gallons for renewable fuels in 2014, about 16 percent lower than the 18.15 billion gallons Congress had originally set and lower than the 16.55 billion gallon requirement for this year.

The biggest portion of that is corn-based ethanol, which will provide about 13.8 billion gallons this year but next year would be limited to 13 billion gallons under the proposal. In 2007, Congress had set a 15 billion gallon limit on corn-based ethanol because of concern about using food for fuel. With a record corn crop expected this year, ethanol is expected to use about 38 percent of the crop, while using leftover material to return 16 percent of the total crop to the feed industry, Dinneen said.

"Farmers planted 93 million acres to get that corn crop in anticipation of a growing fuel market," Dinneen said. "EPA just took 500 million bushels of demand away from the farmers. That's going to have a significant impact on corn prices, and corn prices were already falling."

Officials from the livestock and poultry industry, however, on a conference call organized by the API, said there wasn't any more need to set ethanol volume requirements than there was for setting requirements for turkey output.

The EPA also lowered the target production of so-called cellulosic ethanol, which is made from things other than corn, such as switch grass, corn cobs and stalks, and wood chips. The middle of the cellulosic ethanol target range — about 17 million gallons — is high enough to make room for several companies that say they will be able to start up commercial-scale distilleries early next year, but the amount produced will be a drop in the bucket of American motor fuel consumption.

The 2007 legislation mandated that the use of cellulosic ethanol grow gradually until it hit 16 billion gallons in 2022.

The administration Friday also set a target range for all advanced biofuels of 2 billion to 2.5 billion gallons. Producers of biodiesel, which falls under that category, say they can provide more. On Thursday, 32 senators sent a letter to EPA administrator Gina McCarthy, asking the administration to set a volume requirement of at least 1.7 billion gallons for biodiesel alone.

"Biodiesel has exceeded RFS targets in each year and is clearly poised to do so again in 2013," they wrote. "The industry has had impressive growth, going far beyond initial expectations just five years ago, and is supporting 62,160 jobs and nearly $17 billion in total economic impact."