In a regulation delayed for months by a lawsuit, the EPA gave biofuels a smaller, but growing, share of the U.S. gasoline market than envisioned when Congress created the Renewable Fuels Standard (RFS). EPA official Janet McCabe said the regulation meant “ambitious, achievable growth” for biofuels — but no one was happy with it.
Farm groups and biofuels makers said the EPA should have stuck to the schedule set in a 2007 law that called for 15 billion gallons annually of corn ethanol beginning with this year. The National Corn Growers Association said it was “evaluating our options … to protect the rights of farmers and consumers,” words that suggest a possible court challenge. The oil industry said the rule would force motorists to buy E15 and E85 blends that they don’t want. “Congress must step in to repeal or significantly reform the RFS,” said the trade group American Petroleum Institute (API).
The RFS for 2015 and 2016 was higher than the EPA proposed in May but still far below the schedule set by law. It calls for mixing 16.93 billion gallons of biofuels into gasoline for cars and light trucks this year, and 18.11 billion gallons in 2016. The original goals were 20.5 billion gallons this year and 22.25 billion gallons in 2016. The EPA set the targets for clean-burning “advanced” biofuels at roughly half the level envisioned in the 2007 law and reduced the corn ethanol targets by a combined 5 percent for the two years.
McCabe said the agency used its discretion to adjust the RFS to reflect the slower-than-expected growth in gasoline demand, the low production of second-generation biofuels made from feedstocks such as corn stover and grasses, and the small number of service stations with pumps that can sell fuel containing more than the traditional 10 percent blend of ethanol.
Analysts expected the EPA to boost the RFS from its May proposal in response to the first sustained upturn in gasoline demand since the 2008-09 recession. The higher targets were likely to provide marginal support for corn and ethanol prices. For corn ethanol, the change from the May proposal to the final RFS could amount to an additional 400 million bushels of corn used to make ethanol over two years. The USDA estimates more than 5 billion bushels of corn are used annually by the ethanol industry.
The 2016 RFS would put enough renewable fuel, including bodiesel, into the market so that biofuels would account for 10.1 percent of consumption, breaking the “blend wall” created by traditional blending rates. McCabe said the goal would be achieved by sales of higher ethanol blends, such as E15 and E85. API said there is “strong consumer demand for ethanol-free gasoline” so that biofuels cannot account for more than 9.7 percent of the market. The EPA “must do more to protect consumers,” said API.
With its hefty cuts in targets for cellulosic ethanol and for advanced biofuels overall, the EPA triggered the “re-set” provision in the 2007 energy law. That frees the agency to set the targets in coming years at levels it believes appropriate.
The 2007 law calls for 36 billion gallons of biofuels in 2022, with 22 billion gallons coming from advanced biofuels.
House Energy and Commerce chairman Fred Upton said, “It is time to finally consider updating this program” because the country is in a “dramatically different” setting than when the RFS was created.