Ethanol Industry Suffers Setback as EPA Proposes Lower 2014 Target

The Environmental Protection Agency's proposed decrease of the amount of ethanol in the national fuel supply has the industry on the defensive, but the oil industry suggests the proposal doesn't go far enough.

The Environmental Protection Agency’s proposal to decrease the required amount of ethanol in the nation’s fuel supply has producers on the defensive. But the oil industry suggests the proposal doesn’t go far enough.

The ethanol industry definitely wasn’t revving up for this.

Producers of the corn-based biofuel, which is becoming an increasingly common  additive in fuel sold at gas stations across the country, suffered a significant setback Friday with a move by the Environmental Protection Agency that could slow down the industry’s quick growth. More details below:

About the proposal: The EPA’s 2014 Renewable Fuel Standards (RFS) proposal released Friday would set the target total for renewable fuels in the U.S. fuel supply next year at 15.21 billion gallons, down from 16.55 billion in 2013 and well below the 18.15 billion that the 2007 Energy Independence and Security Act mandated for 2014. It would be the first drop in renewable fuel volume since 2005 Energy Policy Act created the RFS program. EPA said the reason for the reduction was an overall decline in fuel consumption, according to the National Journal. “While under the law volumes of renewable fuel are set to increase each year, this unanticipated reduction in fuel consumption brings us to a point where the realities of the fuel market must be addressed to properly implement the program,” an Obama administration official told the news outlet. The official also noted the “blend wall,” a point at which ethanol rises above 10 percent of the overall fuel supply, as another factor in the agency’s lower target. EPA’s announcement noted that surpassing the blend wall would require more use of fuels with ethanol content higher than the current E10 standard. However, the proposal is up for public comment before EPA makes its final determination.

A turning tide: The EPA’s release of the RFS proposal comes at a time when the ethanol industry is facing a barrage of negative press. An in-depth Associated Press report undercut some of the industry’s main arguments (ethanol’s sustainability and long-term cost savings), suggesting that the biofuel is in fact creating significant environmental damage that wasn’t anticipated when the RFS was first implemented. Both the Department of Agriculture and the ethanol industry have pushed back, challenging the AP report’s accuracy, but it nonetheless raised questions when the 2014 target was up for discussion. A Washington Post editorial also took a tough stance against the ethanol industry, calling the EPA’s proposal “a victory for common sense.”

Industry response: Although ethanol industry groups oppose a reduction, at least one expressed optimism that producers still have time to influence the outcome. “It’s important to note that all is not lost—the RFS is still being shaped, and there are legislators on the side of biofuels. Senator [Charles] Grassley [R-IA] has voiced his support for ethanol, as has Senator [Debbie] Stabenow [D-MI],” Growth Energy wrote in a press release. Others, such as the Missouri Corn Growers Association and the Renewable Fuels Association, came out strongly against the proposal. “By rewriting the statute and redefining the conditions upon which a waiver from the RFS can be granted, EPA is proposing to place the nation’s renewable energy policy in the hands of the oil companies,” RFA President and CEO Bob Dinneen argued in a statement. “That would be the death of innovation and evolution in our motor fuel markets, thus increasing consumer costs at the pump and the environmental cost of energy production. This proposal cannot stand.”

On the other side of the debate, the American Petroleum Institute argued that the EPA should do more to protect consumers from the weaknesses in the renewable fuel standard. “While the agency took a step in the right direction,” API President and CEO Jack Gerard said in a statement, “more must be done to ensure Americans have the choice of ethanol-free gasoline for boats and small engines, and to bring their mandates closer to reality on cellulosic biofuels, which do not exist in commercial quantities.”


Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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