WASHINGTON, July 13, 2016 - From some perspectives, they were so close. Yet for others, so far away.
When the Environmental Protection Agency proposed the 2017 Renewable Volume Obligations (RVOs) in May, EPA came agonizingly close to a statutory target set by Congress. The proposal called for 18.8 billion gallons of total renewable fuel to be blended with conventional fuels, including up to 14.8 billion gallons of corn ethanol. Under the law governing the Renewable Fuel Standard, 24 billion total gallons are supposed to be blended in 2017, with the potential for 15 billion gallons of corn ethanol to be included.
For the second straight year, the proposal angered both sides of the renewable fuels debate, as evidenced by the more than 42,000 comments the EPA had received in a comment period that closed Monday.
On one hand, proponents of ethanol and other renewable fuels say they are disappointed to see EPA cite a waiver provision – the existence of which is being challenged in court – to set corn ethanol volume targets just 200 million gallons below the level called for in the law that created the RFS. A number of stakeholders have sued the EPA for using an infrastructure waiver to set lowered RFS volumes, contending that RFS only allows for a supply waiver.
On the other hand, the EPA angered the oil companies, small engine manufacturers, and a host of other stakeholders either by setting the blending requirements at a level they felt was too high or by simply setting volumes that would allow the program to continue to exist.
In his comments, Bob Dinneen, president and CEO of the Renewable Fuels Association, targeted EPA’s use of the infrastructure concerns, arguing that the agency is outside the law in its interpretation.
“EPA seems to be burdened by a fundamental misunderstanding of the intent of the RFS,” Dinneen said. “The agency continues to justify reducing required volumes of conventional renewable fuel by suggesting that certain ‘marketplace realities’ preclude refiners from meeting the higher statutory volumes.”
The National Corn Growers Association said the EPA is off base in its production projections, and that could cause the ethanol industry to suffer.
“EPA’s proposal badly misjudges the domestic supply of ethanol, as well as the physical capacity of existing vehicles and infrastructure to consume ethanol,” the group said. “The ethanol industry has the capacity to supply substantially more renewable fuel than would be needed to meet the 2017 RVOs.”
But while RFA and NCGA may feel the proposal doesn’t go far enough, the American Petroleum Institute is trying to make a case that the rule goes way too far. API has publicly stated that it wants ethanol blending mandates capped at 9.7 percent of gasoline demand to stay below the so-called blend wall, a perceived cap on the amount of renewable fuels the marketplace could absorb at current blending levels. At present, the most common form of motor gasoline is sold blended with 10 percent ethanol.
“It’s really our responsibility to comment on it and give them our assessment of what the impacts of their proposal will be,” API’s Frank Macchiarola told reporters on Monday. “We are deeply concerned as an association that increased ethanol blends continue to drive us toward breaching the blend wall.”
Macchiarola said API would be submitting more than 513,000 consumer comments in opposition to the RFS, hoping to drive the point home that thousands of the people who will purchase the fuel don’t want to do so with higher blends of ethanol.
“The EPA needs to make sure that they don’t breach the blend wall for the sake of the American consumer,” he said.
Petroleum industry interests and their supporters in Congress are fighting to limit ethanol to 9.7 percent of gasoline demand. Demonstrating bipartisan support for this proposed hard cap on ethanol, seven Democrats have joined 65 Republicans as co-sponsors of the Food and Fuel Consumer Protection Act of 2016, HR 5180.
Introduced by Rep. Bill Flores, R-Texas, the bill would amend the RFS rules by mandating that the EPA “administrator shall not determine any renewable fuel obligation for a calendar year under this subsection that would result, directly or indirectly, in the introduction into commerce in the United States of a total volume of ethanol contained in transportation fuel that is greater than 9.70 percent of the total volume of gasoline projected to be sold or introduced into commerce in the United States for such calendar year.”
The Flores bill states that its purpose is “to alleviate the ethanol blend wall under the renewable fuel program, and for other purposes.”
The National Chicken Council, meanwhile, maintains that sending so much of the nation’s corn crop to ethanol plants is making livestock feed – and thus meat prices at the supermarket – more expensive.
“The compelled diversion of corn from feed to fuel continues to exact a heavy toll on U.S. chicken producers, and American consumers at the pump and the plant,” NCC said in a release.
“NCC believes the volumes proposed for 2017 are overly aggressive and based on faulty assumptions about the fuel market and thus should be further reduced to limit the disruptions to the corn market and nation's feed supply,” the council told EPA.
The total number of comments submitted to the EPA tends to go up even after the deadline closes as submissions are properly received and catalogued. Just over 42,000 comments have officially been recognized as submitted so far. The EPA is expected to announce final RVOs by the end of November.
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