EPA Proposes 2014 Renewable Fuel Standards

In what will be viewed as a significant yet temporary victory for the agricultural, petroleum, marine and powersports industries, the U.S. Environmental Protection Agency (EPA) announced that it would cut the amount of ethanol that is federally required to be blended in American gasoline and diesel as required by the Energy Independence and Security Act of 2007.

Many industry and interest groups, including powersports and marine manufacturers, have spent significant effort vehemently opposing the standards while concurrently arguing the high-ethanol fuels will damage small engines, voiding warranties and confusing consumers along the way.

In a media conference call ahead of the EPA’s standard release, John McKnight, vice president of Government Relations with the National Marine Manufacturers Association (NMMA), commended the EPA for its temporary action, while reiterating that the “unattainable mandate” still requires permanent legislative action.

“We appreciate the clear step the EPA has taken to not only acknowledge the unattainable mandate included in the standard, but also to leave room for consumers, manufacturers and industries, including the recreational boating community that rely on a continued availability of low ethanol fuel blends,” McKnight said. “Understanding the need to explore energy sources, the National Marine Manufacturers Association and our boating industry partners have remained committed to exploring alternative biofuels.”

He added that the marine industry has been researching alternative biofuels, including isobutanol that many marine experts feel could be a breakthrough in the American alternative fuels debate.

“Marine manufacturers have actually invested in extensive evaluations of isobutanol a biofuel that can be derived from corn and, while today’s announcement marks an important step, there is a lot more to be done,” he said. “We have serious well-documented data driven concerns with safety of high ethanol fuel blends, which have been proven to cause damage in marine engines. This damage puts consumers at risk and it hurts manufacturers during this important time of economic recovery.”

Former U.S. Sen. Wayne Allard, vice president of government relations for the American Motorcyclist Association (AMA) said his organization remains concerned about the future implications of E15, and suggested that future legislation may be introduced in early 2014.

“We view dropping this number down will help stall the introduction of E15 into the marketplace,” Allard said. “We’re concerned about E15 in the marketplace because of accidental fueling into motorcycles, the resulting consequences on the warranty on that particular engine and without the pressure of the higher figures that we’re dealing with today, then the pressure’s off as far as introducing the E15.”

From the release:

WASHINGTON – The U.S. Environmental Protection Agency (EPA) today proposed for public comment 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 United States in 2014. The proposal seeks to put the Renewable Fuel Standard (RFS) program on a steady path forward – ensuring the continued long-term growth of the renewable fuel industry – while seeking input on different approaches to address 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.”

The proposal discusses a variety of approaches for setting the 2014 standards, and includes a number of production and consumption ranges for key categories of biofuel covered by the RFS program. The proposal seeks comment on a range of total renewable fuel volumes for 2014 and proposes a level within that range of 15.21 billion gallons. Specifically, EPA is seeking comment on the following proposed volumes:

Nearly all gasoline sold in the U.S. is now “E10,” which is fuel with up to 10 percent ethanol. Production of renewable fuels has been growing rapidly in recent years. 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, 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 Obama Administration has taken a number of steps to allow or encourage the use of these higher ethanol blends. In 2010, EPA approved E15 for use in vehicles newer than model year 2001 and developed labeling rules to enable retailers to market E15. In addition, since 2011, USDA has made funding available through the Rural Energy for America Program to support deployment of “flex-fuel” pumps that can dispense a range of ethanol blends. The 2014 proposal seeks input on what additional actions could be taken by government and industry to help overcome current market challenges, and to minimize the need for adjustments in the statutory renewable fuel volume requirements in the future. Looking forward, the proposal clearly indicates that growth in capacity for ethanol consumption would continuously be reflected in the standards set beyond 2014. EPA looks forward to further engagement and additional information from stakeholders as the agency works in consultation 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.

Today, in a separate action, EPA is also seeking comment on petitions for a waiver of the renewable fuel standards that would apply in 2014. EPA expects that a determination on the substance of the petitions will be issued at the same time that EPA issues a final rule establishing the 2014 RFS.

Once the proposal is published in the Federal Register, it will be open to a 60-day public comment period.

More information on the standards and regulations: http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm

More information on renewable fuels: http://www.epa.gov/otaq/fuels/renewablefuels/index.htm