EPA calls for more ethanol in the nation’s fuel supply

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Updated Dec 3, 2015

More ethanol is expected to be added to the nation’s fuel supply following the Environmental Protection Agency’s recent finalization of the Renewable Fuel Standard program.

Regardless of the increase, ethanol proponents are fuming since the elevation in renewable fuel still falls short of the original 2007 RFS goal. Ethanol opponents say the EPA’s decision to increase renewable fuels, mostly ethanol, will impact food supplies, harm engines and the environment.

In June, the EPA had originally proposed raising the 2016 renewable fuel amount to 17.4 billion gallons. On Nov. 30, the agency announced that it was raising the level to 18.1 billion gallons.

The EPA had been under increasing pressure by pro-ethanol groups that wanted the agency to adhere to the original 2007 RFS goal requiring that 22.2 billion gallons of renewable fuel be added to the country’s fuel supply in 2016.

“With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth,” said Janet McCabe, the acting assistant administrator for EPA’s Office of Air and Radiation.

Other RFS increases include cellulosic biofuel, 230 million gallons; biomass-based diesel, 1.9 billion gallons; and advanced biofuel, 3.61 billion gallons. Cellulosic biofuel refers to fuel made from non-edible plant sources. Biomass-based diesel is also known as biodiesel. An example of an advanced biofuel is renewable, or synthetic diesel.

Even though the Nov. 30 increase raised the requirement of renewable fuels by 11 percent from 2014, pro-ethanol groups were not pleased.

“Regrettably, EPA’s final RFS rule protects the old way of doing business by obstructing consumer access to cleaner fuels, stifling competition in the marketplace, and undermining innovation,” said American Coalition for Ethanol Executive Vice President Brian Jennings.

Regarding the EPA’s decision on Monday, anti-ethanol group Smarter Fuel Future had this to say on their website:

“While the EPA is slowing the momentum toward crisis by not meeting the biofuel levels initially mandated by the RFS, it is clear a true course reversal is what’s needed. And that requires Congress.

“Without significant alterations to the RFS legislation itself, harmful greenhouse gas emissions will continue to rise, food prices will continue to climb and families around the world will continue to feel the economic strain caused by increased ethanol production.”

The EPA said it lowered the 2016 renewable fuel requirement by 4.1 billion gallons because the current fuel demand in the U.S. is not as high as predicted when the RFS was created in 2007. Increased fuel economy is credited with lowering fuel demand.

The Truck and Engine Manufacturers Association, whose members include some of the largest engine manufacturers in the world, reported that ethanol performance varies widely, with small engine manufacturers being among the most concerned.

Roger Gault, EMA’s vice-president of regulatory activities, said ethanol’s hygroscopic characteristic poses the greatest challenge.

“If you have too much water introduced into the fuel where it gets saturated and you create a phase separation layer that’s where the real problem comes in,” Gault said.

“The real crux of the problem is that nobody has a real handle on water control in the fuel distribution system. Those kinds of things can exist, but it’s unclear how often they do exist.”

The EPA’s announcement on Monday actually fired up ethanol stocks. Pacific Ethanol Inc. stock prices rose 21.1 percent, while stock valuation for ethanol company Aemetis Inc. rose 17.8 percent, according to bidnessetc.com.

These increases, however, do little to pacify ethanol proponents who have watched ethanol investors running scared since the EPA’s proposed cuts in June.

For example, on Monday thestreet.com said of Pacific Ethanol, “Despite any intermediate fluctuations, we have only bad news to report on this stock’s performance over the last year: it has tumbled by 69.07%, worse than the S&P 500’s performance.”