US energy sector again calls on Congress to kill ethanol mandate

18 June 2014 19:19 Source:ICIS News

WASHINGTON (ICIS)--The US energy sector on Wednesday called on Congress to end its mandate for bio-ethanol fuel consumption, arguing that the federal government’s nine-year effort to boost biofuels is unworkable and is contrary to both market realities and consumer demand.

In a letter to the Environmental Protection Agency (EPA), the American Petroleum Institute (API) noted that the agency has again failed to meet the congressionally required deadline of 30 November 2013 to set ethanol consumption requirements for 2014.

Established by the Energy Policy Act of 2005, the renewable fuel standard (RFS) requires refiners and importers of gasoline to blend a 10% mix of bio-ethanol in retail gasolines, known as E-10. The EPA administers the programme and sets ethanol consumption levels for each year.

However, the API pointed out that the agency routinely has missed the 30 November RFS consumption level deadline since 2011, and that the 2014 mandate level has yet to be announced even though the year is half gone.

“This is not a recipe for predictability and reliability in the gasoline markets,” said Bob Greco, API’s director for downstream issues.

“The administration’s inability to meet the congressionally mandated deadline of 30 November is a clear example of how unworkable the RFS is,” Greco said.

In early 2013, the API won a federal lawsuit against the EPA’s mandate for consumption of cellulosic ethanol, successfully arguing that the federal government cannot rightly demand use of a fuel that is not available in commercial quantities.

Greco said that as the ability of the US gasoline market to absorb mandated ethanol fuel continues to decline - US gasoline consumption has fallen from a peak of 142bn gal (537bn litres) in 2007 to 134bn gal in 2013 - the API is concerned that EPA may require use of a higher ethanol blend, even to E-85.  E-85 is a fuel comprised of 85% ethanol and 15% gasoline.

He said that as EPA’s delay in setting the 2014 RFS mandate level continues, “we are concerned that EPA will raise ethanol requirements from its 2014 proposal, based on the specious reasoning that E-85 … is a workable solution”. 

“It is not,” he added.

Broadly speaking, Greco said, considering the repeated delays in setting the annual ethanol volume mandates, the potential negative impact of higher ethanol blends on the US vehicle fleet and the fuels market, “it is clear that Congress must act to repeal the RFS outright”.

There have been several attempts in Congress to repeal the RFS, including a recent bill introduced earlier this month, but the efforts have failed to win complete backing, in part because of opposition from legislators from corn-belt states where corn ethanol production has become a key economic factor.

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