EPA Sets Biofuel Supply Requirements to Decrease Fossil Fuel Reliance

Oil and gas industry say the agency is trying to make a ‘broken’ system work

August 6, 2013

The Environmental Protection Agency will require oil refiners to blend 16.55 billion gallons of renewable fuels into the nation’s gasoline supply this year as part of its efforts to spur new fuel technology and decrease fossil fuel dependence.

Nearly eight months past the legal due date, the EPA announced its yearly blending targets under the Renewable Fuel Standard (RFS) on Tuesday. Renewable fuel associations applauded the announcement, but the oil and gas industry criticized the agency for continuing to push a "broken" system.

The EPA’s blending requirements include 6 million gallons of the cellulosic biofuel, which is made from woodchips. That number is down from the 14 million gallons called for in January.

The cellulosic biofuel requirement has angered the oil industry for years because, until this year, there was no commercial production of the advanced fuel in the country.

The EPA targets will require a total of 36 billion gallons of biofuel to be blended by 2022.

Republican lawmakers in Congress have also targeted the RFS system, saying it artificially inflates prices for corn and increases costs for livestock facilities.

"RFS announcement fails to provide immediate relief for livestock/food producers, small biz & consumers," Rep. Bob Goodlatte (R., Va.) tweeted Tuesday. "It's time to repeal the RFS."

The industry has also warned that the requirements are forcing refiners close to a "blend wall," the point where cars cannot handle the level of ethanol or it is undesirable for consumers.

The EPA signaled it would take steps to make sure its 2014 targets, to be announced later this year, will address "blend wall" concerns.

"We expect that in preparing the 2014 proposed rule, we will estimate the available supply of cellulosic and advanced biofuel, assess the (10 percent ethanol) blend wall and current infrastructure and market-based limitations to the consumption of ethanol in gasoline-ethanol blends above E10, and then propose to establish volume requirements that are reasonably attainable in light of these considerations and others as appropriate," the EPA said in its final rule.

Biofuel trade associations have been supporters of the RFS and have opposed efforts to loosen RFS requirements, saying they are already flexible.

Renewable Fuels Association president Bob Dinneen said in a statement that the announcement "has totally obliterated Big Oil’s myth that the RFS is inflexible and unworkable.

"As in years past, the finalized annual requirements are a testament to the inherent flexibility that is the backbone of the RFS," Dinneen said.

However, the oil industry was not assuaged by the news.

"We are disappointed that EPA failed to provide refiners and consumers immediate and necessary relief against the E10 blend wall and skyrocketing costs of our nation's biofuel mandate," American Fuel & Petrochemical Manufacturers president Charles Drevna said in a statement.

"In acknowledging the blend wall, EPA joins a growing list of organizations that understand the fundamental flaws associated with our nation's ill-crafted biofuel mandate," Drevna said. "Congress now needs to start working on repealing this poorly-devised mandate as soon as possible to stop what will become a growing drain on the U.S. economy."