U.S. Is Said to Favor 15 Billion-Gallon Biofuels Requirement

July 5, 2017 12:27 PM
 
AP Ethanol Plant

The Trump administration will propose requiring refiners to use 15 billion gallons of conventional renewable fuels in 2018, a modest win for Midwest corn farmers and U.S. ethanol producers.

The proposed biofuel target was described by people familiar with the decision who asked not to be identified before it was formally announced. That mandate would reflect a 15 billion-gallon ceiling in federal law for conventional renewable fuel and would mirror the current 2017 requirement for that category, mostly fulfilled by corn-starch-based ethanol.

Donald Trump promised to support ethanol while campaigning for president and he reiterated that position in a speech in Iowa last month. The ethanol industry is "under siege," but the Trump administration is saving it, the president told a crowd in Cedar Rapids.

The decision sets up a clash with oil refiners, which had argued the ethanol requirement exceeds a 10 percent “blend wall,” or the amount that can be easily blended into the fuel supply.

According to a May forecast from the U.S. Energy Information Administration, motor fuel demand is set to climb to about 143.5 billion gallons in 2018 from about 143 billion in 2017. Given that forecast, if the conventional renewable fuel quota were fulfilled entirely by ethanol, the fuel would represent 10.5 percent of total projected gasoline consumption. Most gasoline sold in the U.S. is E10, or 10 percent ethanol. Refiners can turn to other fuels, including renewable biodiesel, to help meet the target.

The American Petroleum Institute, which represents oil producers and refiners, had asked the EPA to set lower quotas that would reflect about 9.7 percent of projected gasoline demand; some refiners had pushed a lower 9.5 percent.

The ethanol industry counters that the government explicitly allowed vehicles built after 2001 to use 15 percent ethanol, and many vehicles can run on an 85 percent blend. Gasoline containing 15 percent ethanol is available in about 800 filling stations nationwide, according to Growth Energy, a coalition of biofuel producers.

Top EPA officials have been mulling changes to an earlier, internal proposal out of concerns that refiners will import ethanol from Brazil and biodiesel from Argentina to fulfill the quotas.

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