Price and market trends: US trade groups seek waiver for renewable fuels mandate

23 August 2013 09:38  [Source: ICB]

Trade bodies AFPM and the API have filed for a reduction in US renewable fuel requirements for 2014

The American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) have filed a petition for a partial waiver in the 2014 volume mandates required by the US Renewable Fuels Standard (RFS), the oil industry groups said on 13 August.

The Environmental Protection Agency (EPA) finalised the 2013 annual percentage standards for a fuel volume mandate that aims to boost renewable resources. The EPA added that it may use flexibilities in the statute to reduce both the advanced biofuel and total renewable volumes for the 2014 requirement.

The AFPM is asking the EPA to waive 3.35 gal from the 18.15bn gal of renewable fuel required to be blended into the 2014 fuel supply in the US, saying the action is necessary to avoid "potentially disastrous implications of the blend wall".

The blend wall refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10, a blend of 10% ethanol.

Citing a study by NERA Economic Consulting, the AFPM said that large increases in transportation fuel costs will ripple through the economy if the renewable requirements are not adjusted.

"The negative impacts of the RFS will be extreme and will undoubtedly hurt consumers," said AFPM president Charles Drevna. "If EPA does not act, the inability to blend the statutory-mandated amount of ethanol could lead to domestic fuel supply shortages and ultimately cause severe economic harm to consumers and the economy."

The AFPM said that the EPA can curtail the harmful efforts of the policy next year by waiving the 2014 volumes.

"EPA missed a golden opportunity to address the ethanol blend wall in 2013; however, we're encouraged the agency recognised there is a problem in its rule setting this year's biofuel requirement," Drevna said. "This petition will provide a roadmap for the agency to follow as it promulgates its 2014 waiver."

Ethanol industry group the Renewable Fuels Association (RFA) said the AFPM and the API have "absolutely no standing and no cause" to file a waiver request.

"The RFS is working. It is diversifying fuel supplies, lowering consumer gasoline costs, driving investment in new technologies and revitalising rural communities," said president and CEO Bob Dinneen. "This is just Big Oil's desperate attempt to maintain a stranglehold over the US fuel supply. It will fail."

The EPA has 90 days to review the waiver request before responding, which it has said it will do.

By: Tracy Dang
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