The good, the bad and the ugly

For the first time since the Renewable Fuel Standard (RFS) was mandated in 2007, the U.S. EPA has proposed scaling back total renewable fuel targets for 2014.

The RFS program began as part of the Energy Policy Act of 2005, which added a renewable fuel program to the Clean Air Act. The statutory provisions for the RFS program were later modified through the Energy Independence and Security Act of 2007, which was established to move the United States toward greater energy independence and security. At the time, the U.S. Energy Information Administration predicted declining domestic production of crude oil and greater crude imports. The shale revolution has dramatically altered these predictions producing an economic and security perspective much different from that of 2005.

Under the RFS, four separate standards must be satisfied: Advanced biofuels made without using corn starch as an input; cellulosic biofuel made from other plant-based materials; biodiesel made from soybean oil, animal fats and used cooking grease; and conventional corn-based ethanol.

For 2013, EPA mandated the use of approximately 13.8 billion gallons of corn-based ethanol. That figure was set to increase under the RFS statutory requirements to 14.4 billion gallons in 2014. Likewise, the overall renewable fuel volume was going to increase to 18.15 billion gallons including 3.75 billion for advanced biofuels. But, on November 13, 2013, EPA announced the total volume would be set at 15.21 billion gallons for 2014—a reduction of almost 3 billion gallons from the statutory requirement.

“This proposal seeks to put the RFS program on a steady path forward—ensuring continued growth of renewable fuels while recognizing the practical limits on ethanol blending,” EPA said in a statement.

Opponents of the RFS were quick to respond to EPA’s proposed 2014 targets.

“Despite the Agency’s best efforts to ignore the problems associated with the RFS, with this action the EPA admits that the program is irretrievably broken,” said Sen. David Vitter (R-LA), lead Republican on the Environment and Public Works Committee. “The RFS remains a fundamentally flawed program that limps along year after year, wreaking havoc on those required to participate, including the American consumer. The Administration needs to quit slapping unrealistic mandates on everything and start doing what’s right for our slumping economy.”

The proposal also drew criticism from biofuel producers.

“The proposed rule released today turns the logic of the RFS on its head and could significantly chill investments in advanced biofuel projects,” said Brent Erickson, executive vice president of the Biotechnology Industry Organization’s industrial and environmental section. This advocacy group for biofuel producers went on to say, “This proposal will leave us increasingly dependent on oil, which increasingly comes from volatile regions of the world or is extracted in environmentally detrimental ways such as Canadian oil sands or deepwater drilling. Setting the 2014 RFS obligations lower than 2013 levels would mean that America will use 100 million additional barrels of oil next year alone.”

Lawmakers from Iowa, the nation’s top ethanol-producing state, also expressed opposition to the renewable fuel standard proposal. The state’s entire congressional delegation as well as state leaders including Republican Governor Terry Branstad, called on the Obama Administration to hold a field hearing in the Midwest on the recent proposal.

The issue of blending corn-based ethanol into gasoline as required by the RFS is also a hot topic. To comply with the standard, biofuel producers must blend increasing amounts of biofuels into gasoline and diesel. In 2012, the U.S. produced 13.3 billion gallons of ethanol that was then blended into approximately 134 billion gallons of gasoline. At this level, it is feared that the country will hit the socalled “blend wall” when the supply of gasoline available to be blended with ethanol runs out.

The E15 debate


The Energy Independence and Security Act of 2007 (EISA) set yearly RFS volume requirements for each renewable fuel category. EPA updates volume requirements each year based on fuel availability.

Many are also at odds regarding the percentage of ethanol in gasoline. Several years ago, the EPA pushed through approval of an up to 15 percent ethanol blend (E15) that detractors claim did not receive adequate testing. The American Petroleum Institute (API) has repeatedly stated that the ethanol gasoline blend E15 may endanger fuel systems in millions of cars. Citing research compiled for API by the Coordinating Research Council, API Group Director of Downstream and Industry Operations Bob Greco argued, “The additional E15 testing has identified an elevated incidence of fuel pump failure, fuel system component swelling, and impairment of fuel measurement systems in some of the vehicles tested. E15 could cause erratic and misleading fuel gauge readings or cause faulty check engine light illuminations. It could also cause critical components to break and stop fuel flow to the engine. Failure of these components could result in breakdowns that leave consumers stranded on busy roads and highways.”

API contends that in 2010 and 2011, EPA gave the green light to use E15, the 15 percent ethanol gasoline blend, in 2001 model cars and newer without proper testing being complete. Leaders at API believe in order to meet the volumes required by the RFS, the Agency raised the permissible concentration level. It is widely speculated that the rising RFS requirements cannot be met without moving to higher blends. The trade group is urging Congress to repeal the RFS.

In 2011, Wisconsin Congressman Jim Sensenbrenner, then the vice chairman of the House Committee on Science, Space, and Technology, contacted 14 U.S. automakers regarding the consequences of E15 on any and all vehicles. The response was fast and furious. The manufacturers all agree that E15 will damage engines, void warranties and reduce fuel efficiency. Some of the responses from car makers included:

Chrysler: “We are not confident that our vehicles will not be damaged from the use of E15… The warranty information provided to our customers specifically notes that use of the blends beyond E10 will void the warranty.”

Ford: “Ford does not support the introduction of E15 into the marketplace for the legacy fleet… Fuel not approved in the owner’s manual is considered misfueling and any damage resulting from misfueling is not covered by the warranty.”

Honda: “Vehicle engines were not designed or built to accommodate the higher concentrations of ethanol…There appears to be the potential for engine failure.”

Sensenbrenner followed up his correspondence with automakers with a letter to then-EPA Administrator Lisa Jackson in which he accused EPA of being “out of touch with American consumers.”

Cause and effect
On December 5, 2013, the EPA held a public hearing for the 2014 proposal for the Renewable Fuel Standard program. More than 150 people showed up to voice their opinions regarding the proposed changes. Those opposed to rolling back the RFS standards including the Renewable Fuels Association touted the benefits of grain-based fuels including the nearly 90,000 jobs the industry supports as well as the $43 billion these jobs add to the nation’s gross domestic product. However, those concerned about the mandate including the API commented that the RFS, if left as is, could cause severe fuel rationing, driving up the cost of gasoline by 30 percent. Representatives from several animal groups cautioned that the rising cost of feed for cows and chickens due to the use of corn in ethanol will eventually affect Americans shopping at their local grocery stores.

On December 11, the Senate Committee on Environment and Public Works held an oversight hearing on domestic renewable fuels. At that time, Committee Chairman Sen. Barbara Boxer explained that the purpose of the hearing was to help members of the committee better understand the current status of the RFS program. She also stated her support of the program.

On the same day, a group of 10 Senators including bill sponsors Sen. Dianne Feinstein (D-CA) and Sen. Tom Coburn (R-OK) introduced a bipartisan bill that would eliminate the federal mandate requiring that corn-based ethanol be included as one of the four standards that must be met in order to comply with the RFS. In a letter to the President, Feinstein expressed concern that 44 percent of the country’s corn crops have been diverted from the food chain to the fuel chain and that continued use of this crop for fuel purposes would cause harm to the environment.

A repeal of the RFS could be an uphill climb as long as President Obama is in the White House. In 2013, he stated, “Biofuels have an important role to play in increasing our energy security, fostering rural economic development, and reducing greenhouse gas emissions from the transportation sector. That is why the Administration supports the Renewable Fuels Standard and is investing in research and development to help bring next-generation biofuels on line.”

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