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EPA Relaxes Renewable Fuel Standard While Reaffirming Commitment to Biofuels

The U.S. EPA on Friday backed away from its previously mandated targets for U.S. biofuel production by relaxing the proposed levels of ethanol use outlined in its Renewable Fuel Standard, to address the “E10 blend wall.” The proposal would set ethanol use at 15.21 billion gallons — just under 10 percent of motor-fuel consumption and 16 percent lower than targets established by Congress in 2007 — and also called for public input on the levels of renewable fuels to be blended into gasoline and diesel as required by Congress under the Energy Independence and Security Act of 2007.

The U.S. EPA on Friday backed away from its previously mandated targets for U.S. biofuel production by relaxing the proposed levels of ethanol use outlined in its Renewable Fuel Standard, to address the “E10 blend wall.” The proposal would set ethanol use at 15.21 billion gallons — just under 10 percent of motor-fuel consumption and 16 percent lower than targets established by Congress in 2007 — and also called for public input on the levels of renewable fuels to be blended into gasoline and diesel as required by Congress under the Energy Independence and Security Act of 2007.

Developed with input from the U.S. Department of Energy and U.S. Department of Agriculture, the proposal seeks public input on annual volume requirements for renewable fuels in all motor vehicle gasoline and diesel produced or imported by the U.S. by 2014, in response to what it’s calling the “E10 blend wall.”

“Biofuels are a key part of the Obama Administration’s “all of the above” energy strategy, helping to reduce our dependence on foreign oil, cut carbon pollution and create jobs,” said EPA Administrator Gina McCarthy. “We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use. We look forward to working with all stakeholders to develop a final rule that maintains the strength and promise of the RFS program.”

Production of renewable fuels has been growing rapidly in recent years; nearly all gasoline sold in the U.S. is now “E10,” which is fuel with up to 10 percent ethanol. At the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the Renewable Fuel Standard in 2007. As a result, the EPA says we are now at the “E10 blend wall,” the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.

The new 2014 proposal seeks input on additional actions that could be taken by government and industry to help overcome current market challenges, and to minimize the need for adjustments in the RFS in the future. The EPA says it looks forward to further engagement and additional information from stakeholders as it consults with the Departments of Agriculture and Energy toward the development of a final rule.
The renewable fuels program was developed by Congress in an effort to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on foreign oil. The standards determine how much renewable fuel a refiner or importer is responsible for, and are the standards designed to achieve the national volumes for each type of renewable fuel.

Big business has been divided with respect to the RFS. This summer, fast-food chains Wendy’s and White Castle lobbied against the Standard as part of a campaign called Feed Food Fairness: Take RFS Off the Menu, which argues that under the RFS, fuel produced from soy, corn and other agricultural crops drives up food and grain prices. Meanwhile, in a surprising turn on the other side of the argument, energy companies BP and Shell diverged from the oil and gas industry’s main trade groups, which are calling for Congress to remove the RFS, to instead express their support for a modified version of the Standard. Both companies asserted a repeal of the RFS would undermine their investments in biofuels.

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