Why the EPA Should Stop Trying to Change the Renewable Fuel Standard
Feb 18, 2015
The Environmental Protection Agency is improperly interpreting the provisions of the Energy Independence and Security Act of 2007 in seeking to reduce the amount of ethanol consumption required under the Renewable Fuel Standard. In fact, the current situation does not reflect an inadequate supply generated by market forces, which is the situation that can legally trigger a waiver, but is rather is the result of the U.S. petroleum sector acting as an obstacle to market forces. Since the initial introduction of biofuels in the U.S. in the early 1980's, Big Oil has always viewed biofuels as an interloper in 'their' market for liquid fuels used to power automobiles and trucks. The companies which dominate the sector have long sought to limit biofuels to niche markets in the Midwest.
When Congress mandated that regions with severe air pollution problems utilize oxygenates in fuel to reduce smog in the early 1990's under amendments to the Clean Air Act, the petroleum industry insisted on using a petroleum derivative, methyl tertiary butyl ether (MTBE), to serve that purpose in most parts of the country. This industry decision succeeded in limiting the utilization of ethanol as an oxygenate outside of the Midwest for more than a decade, and dampened the growth in demand for ethanol. Annual U.S. consumption of ethanol grew at a modest rate of less than 10 percent between 1992 and 2002.
Beginning in the late 1990's, complaints about contamination of groundwater by MTBE leaking from underground fuel storage tanks began to emerge. The leaked MTBE rendered the local water supply unfit for human use at fairly low concentrations. Despite widespread concerns, the petroleum industry continued to utilize MTBE in its reformulated gasoline supply in most of the country until California, the largest state market for motor vehicle fuels in the country, passed a law requiring a phase out of its use in 2003. The petroleum industry fought to maintain use of this additive until Congress declined to provide immunity from lawsuits for the contamination problem it had caused. This effort was undertaken as part of Congressional consideration of the Energy Policy Act of 2005, and only after the legislative push for legal immunity failed was MTBE finally withdrawn from use.
The Energy Policy Act established a renewable fuel standard (RFS) for use of biofuels for the first time. However, the bill set modest limits far below anticipated growth in biofuels production, especially given the need to replace MTBE with ethanol in the reformulated gasoline supply. Use of ethanol increased at an annual rate of more than 30 percent between 2005 and 2007. In 2007, Congress adopted a new, more aggressive RFS as part of the Energy Independence and Security Act , with required consumption of biofuels scheduled to increase until it reaches 36 million gallons annually by 2022. Although the RFS annual schedule was developed in part based on an assumption of increasing overall U.S. motor fuel consumption at the time, the legislation provided no leeway for modifying that schedule if that assumption was not realized.
The so-called blend wall cited in the proposed rule for the 2104 RFS is based on the notion that the U.S. motor vehicle fuel supply is unable to accommodate gasoline-ethanol blends with more than 10 percent ethanol (E10), a share that has now been reached earlier than anticipated since the rate of growth of overall U.S. motor vehicle fuel consumption has slowed in recent years. However, this notion fails to take into account that there are at least 15 million flexible fuel vehicles (FFV) in the U.S. motor vehicle fleet, which can utilize fuel which contains as much as 85 percent ethanol (E85). It also ignores the 2012 EPA determination, based on the Department of Energy's exhaustive testing of cars for to determine any impacts from higher ethanol content, that conventional automobiles sold in 2001 and later can utilize fuel with 15 percent ethanol content (E15) without any ill effects. According to the market research firm Polk, the average vehicle in the U.S. fleet was 11.4 years as of August 2013, which if one assumes a normal age distribution of cars, suggests that at least half of U.S. drivers could use E15 as their fuel without any problems.
If the motor vehicle fuel supply matched the actual current capacity of the U.S. fleet to utilize biofuels, it could accommodate total biofuel consumption of more than 20 billion gallons out of total annual usage of 134 billion gallons, not the 13.4 billion gallon ‘blend wall’ contemplated by the 2014 proposed rule. EPA should drop its efforts to reduce the RFS, and instead find ways to encourage the gasoline distribution system to do a better job of providing a broader selection of fuel blends so that consumers can buy fuel that reflects what their cars can use, rather than what Big Oil deigns to supply.