Wednesday, August 14, 2013
Oil Industry Wants Relief From Renewable Fuel Standard
Created in 2005 by the Energy Policy Act and expanded two years later, the rule calls for blending 36 billion gallons of biofuel into traditional transportation fuel by 2022.
The “blend wall” refers to the point at which the oil industry says refiners would need to produce gasoline with higher ethanol concentrations than the market-standard 10 percent mix. In their formal waiver request, the groups asked the EPA to lower the Renewable Fuel Standard’s blending requirements to below 10 percent of gasoline to avoid the blend wall.
A waiver would eliminate 3.35 billion of the 18.15 billion gallons of corn-based ethanol called for in 2014, providing “short-term relief” according to API.
Last week, the Environmental Protection Agency issued its annual renewable-fuels mandate, telling refineries how much ethanol they must blend into the nation's gas supply. This quota, which grows each year, is becoming a financial burden on the industry, forcing many refineries to buy federal ethanol "credits" to satisfy the rules. The skyrocketing price of those credits is adding hundreds of millions of dollars to refineries' annual costs.
In addition, the petroleum industry and automakers have warned fuel blends with a 15 percent ethanol concentration, known as E15, could damage car engines. They also say tankers and gas stations don’t have the infrastructure to support the fuel.
The biofuel industry has rejected those claims. It contends that E15 is safe, noting that the EPA has approved E15 for use in cars made in 2001 or later.
Biofuel groups oppose the waiver request, saying that it was designed to protect the profits of oil producers and refiners.
The EPA has so far rejected all previous Renewable Fuel Standard waiver requests, which have centered on the corn-based ethanol that dominates the biofuel market.
Last year, poultry and meat producers failed to secure a waiver when they argued the mandate was pushing corn prices upward and harming their businesses. And several state governors also unsuccessfully lobbied the EPA for relief on those grounds.
The waiver requests are just one example of how the mandate has come under fire in Washington, D.C.
Many lawmakers also say the intent of the law — to wean the U.S. off foreign fuels and drive down greenhouse gas emissions — can be accomplished with domestically produced natural gas and oil discovered since the rule was last updated. But biofuel groups contend next-generation biofuels are just starting to come online in commercial quantities. They say changing the mandate would threaten economic development in rural communities that have come to depend on the biofuel industry. (The Hill, 8/13/2013)