Ethanol Producers Nervously Await EPA Ruling on 2014 Target

FREEPORT, IL - OCTOBER 4: Signs mark the location of various corn hybrids grown for use in ethanol production on a plot of land farmed by Kevin Otte October 4, 2004 near Freeport, Illinois. Certain varieties of corn grown specifically for ethanol production have been determined to produce about 4 percent more ethanol than other varieties. A bushel of corn produces 2.7 gallons of ethanol. Currently the United States produces 3.3 billion gallons a year, by 2012 it is estimated it will exceed 5 billion gallons a year. 
National Journal
Nov. 11, 2013, 4:26 p.m.

As the En­vir­on­ment­al Pro­tec­tion Agency read­ies next year’s re­new­able-fuel stand­ard, both bio­fuels pro­du­cers and gas­ol­ine re­finers are poised to pounce. No mat­ter where EPA sets the volume re­quire­ments for eth­an­ol and oth­er bio­fuel blends in 2014, the stand­ard is go­ing to face push-back.

“Groups with­in the bio­fuel in­dustry are fully com­mit­ted to chal­len­ging the rule in court if the EPA changes how it im­ple­ments the stand­ard,” said Paul Win­ters, com­mu­nic­a­tions dir­ect­or for the Bi­o­tech­no­logy In­dustry Or­gan­iz­a­tion. “We want to see the tar­gets con­tin­ue to be set at the highest-achiev­able level.”

The bio­fuels in­dustry is con­cerned about the 2014 stand­ard be­cause a leaked draft of the pro­pos­al showed the agency might re­duce the tar­get for re­new­able fuels from the stat­utory re­quire­ment of 18.15 bil­lion gal­lons to 15.21 bil­lion gal­lons next year.

EPA Ad­min­is­trat­or Gina Mc­Carthy em­phas­ized in a state­ment last month that no de­cisions would be made un­til all stake­hold­ers had an op­por­tun­ity to provide in­put, but the leaked draft made many eth­an­ol pro­du­cers nervous.

“Hav­ing seen the leaked draft, we’ve be­gun to fo­cus on how it would send a chilling sig­nal about fu­ture in­vest­ment in the in­dustry,” Mi­chael McAdams, pres­id­ent of the Ad­vanced Bio­fuels As­so­ci­ation, told Na­tion­al Journ­al Daily. As­so­ci­ation mem­bers took their con­cerns to the White House Of­fice of Man­age­ment and Budget, which must sign off on EPA’s pro­pos­al be­fore it is re­leased, pos­sibly as early as Tues­day.

If the fi­nal pro­pos­al mim­ics the draft, bio­fuels pro­du­cers are threat­en­ing swift re­tali­ation. “We will con­sider every pos­sible av­en­ue avail­able to change the rule,” McAdams said. “We plan to take our mes­sage wherever we need to so that we can try and com­pel a dif­fer­ent set of num­bers than the ones we’ve already seen.”

The oil in­dustry also is ready to re­spond if it con­siders the tar­get too high.

“If the draft is ac­cur­ate and the pro­pos­al mir­rors that, we think that EPA would be on the right track, but we think that they should go fur­ther to lower the eth­an­ol re­quire­ments,” said Bob Greco, the Amer­ic­an Pet­ro­leum In­sti­tute’s down­stream group dir­ect­or.

The num­bers in the leaked draft would set eth­an­ol re­quire­ments at some­where between 9.8 per­cent and 10 per­cent of the total fuel sup­ply for 2014, Greco said. This could mean that the blend wall — the point at which the amount of eth­an­ol mixed with gas­ol­ine ex­ceeds 10 per­cent — is reached. API con­tends that this could cause a host of prob­lems, in­clud­ing dam­age to car en­gines, al­though bio­fuels pro­du­cers say the claim is ex­ag­ger­ated.

“Once we see the pro­pos­al we’ll sub­mit com­ments, testi­fy at hear­ings, and con­tin­ue to talk to EPA about why the re­quire­ments should be lowered,” Greco said.

Oil- and gas-in­dustry stake­hold­ers also note that while a lower re­new­able-fuel stand­ard would be a minor vic­tory, the real prize for them would be re­peal of the man­date. For that, they have their sights set on Con­gress.

“This is still just a Band-Aid cure for a longer-term prob­lem,” said Charles Dre­vna, pres­id­ent of the Amer­ic­an Fuel and Pet­ro­chem­ic­al Man­u­fac­tur­ers. “What EPA is do­ing is triage, and this pa­tient needs to be de­livered to Con­gress.”

A bill to elim­in­ate the stand­ard’s corn-based eth­an­ol re­quire­ments — sponsored by Reps. Bob Good­latte, R-Va., Jim Costa, D-Cal­if., Peter Welch, D-Vt., and Steve Womack, R-Ark. — is pending in the House En­ergy and Com­merce Com­mit­tee.

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