EPA Shouldn’t Consider Blend Wall in Ethanol Decision, RFA Says

April 9, 2013 09:50 PM

April 8 (Bloomberg) -- The Environmental Protection Agency, which is preparing to set mandates for 2013 ethanol use, shouldn’t consider opposition to gasoline blends with more than 10 percent of ethanol when establishing the targets, the Renewable Fuels Association said.

The EPA doesn’t have the authority to adjust the mandates on the basis of falling gasoline demand, which refineries say is making it difficult to meet current requirements, the Washington-based trade group said in an e-mailed statement.

Ethanol and oil interests are arguing about the impact that the 2007 Renewable Fuels Standard, which requires refiners to use 13.8 billion gallons of ethanol this year and 15 billion by 2015, is having on retail gasoline prices. Ethanol is typically combined with gasoline in a formula of up to 10 percent, which is referred to as the blend wall.

The EPA in 2011 granted a request from ethanol producers to raise the allowable limit of ethanol in gasoline to 15 percent for vehicles made for the 2001 model year and later.

"Viable options exist for breaking through the E-10 blend wall and meeting RFS requirements with physical volumes," the Renewable Fuels Association said today. "E-15 and E-85 blends are legally approved and offer a workable pathway for meeting increased RFS volumetric requirements."

Refiners haven’t adopted the higher blends of the fuel, citing possible harm to engine components, the RFA said.

American Fuel & Petrochemical Manufacturers, which represents Exxon Mobil Corp. and Chevron Corp., said in separate comments to the EPA that the government should suspend the requirements for 2013 and next year and "at a minimum" reduce the mandate to a maximum of 10 percent of gasoline demand.


’Failed Policy’


"What is needed today is a rational and objective approach to deal with the consequences of the RFS, instead of the biased decisions that have marked this failed policy since its inception," Charles Drevna, president of the AFPM, said in a statement today.

Gasoline consumption will be about 133.5 billion gallons this year and next, the Energy Information Administration, the Energy Department’s statistical arm, said in its March 12 Short- Term Energy Outlook.

Compliance with the program is tracked by Renewable Identification Numbers, or RINs, certificates that are assigned to each gallon of biofuel and that are submitted to the EPA to show compliance.

Refiners can keep the RIN or trade it. Prices for the certificates reached records on March 8, data compiled by Bloomberg show, prompting congressional calls for inquiries into their volatility and the effects on gasoline prices.


--Editors: Charlotte Porter, Margot Habiby


To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net


To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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