EPA Delays Decision On Biofuel Blending Mandate

Star Tribune

Nov 21, 2014

By Dave Shaffer

U.S. ethanol makers won a temporary victory Friday in the long battle between the biofuel and oil industries over how much renewable fuel should be blended into the nation’s fuel supply. 

The Environmental Protection Agency said it would further delay and reconsider its proposal to scale back mandated levels of renewable motor fuels for 2014. The agency, which must set ethanol blend levels annually, said it would issue 2014 targets next year as it sets 2015 numbers. 

Ethanol companies working to produce cellulosic biofuel from corn cobs, stalks other nonfood plants have been particularly critical of EPA’s proposal to lower the blending mandate. They say it would stifle investment.

In a nod to that concern, Janet McCabe, an acting EPA assistant commissioner, said in the announcement Friday that the agency “has been evaluating these issues in light of the purpose of the statute and the administration’s commitment … to increase the use of renewable fuels, particularly cellulosic biofuels.”

“We are pleased the administration did not finalize the flawed proposed rule,” said Jeff Lautt, CEO of ethanol producer Poet Inc., which operates corn-ethanol plants in Minnesota and other states and recently opened a cellulosic ethanol plant in Iowa.

But Lautt said in a statement that it’s unclear what the EPA’s final policy will be.

The delay leaves fuel suppliers uncertain whether they complied with the law in 2014. American Fuel & Petrochemical Manufacturers President Charles Drevna said further delay is “a gross dereliction of responsibility that leaves fuel refiners and the biofuels industry alike to navigate a course of ambiguity.”

Unlike state ethanol-blending laws, like Minnesota’s 10 percent-at-the-pump requirement, the 2007 federal law sets annual national targets in gallons affecting every fuel blender, which typically are refiners and fuel marketers. The EPA was supposed to set 2014’s blend level last November. Instead, it proposed a lower target that the two industries have fought over for a year.

Ashwin Raman of the Minnesota Biofuels Association said a likely practical outcome is that 2014’s target will be declared satisfied at the level of biofuel sold this year. The EPA declined to answer questions about the matter.

The big question, Raman said, is what target gets set for 2015. The law envisioned blending 15 billion gallons of traditional ethanol next year. That would exceed the projected 13.9 billion gallons produced this year, based on data through September, he added.

The ambitious growth targets for biofuels were based partly on projections that overall fuel demand would increase faster than is happening. The law also envisioned expanded sales of higher-ethanol blends like E-15 and E-85, but that happens only if retailers invest in pumps to dispense the fuel. 

“The law is there as a guide and push for us to achieve this,” said Raman, the association’s director of communication and education.

The American Petroleum Institute, another oil industry trade group, called for repeal of the 2007 Energy Independence and Security Act. “The only real solution is for Congress to scrap the program and let consumers, not the federal government, choose the best fuel to put in their tanks,” CEO Jack Gerard said in a statement.

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