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EPA sets higher RVOs for ethanol, biodiesel

“What we’ve seen today is a break in the blend wall by EPA and the administration that should move renewable fuels forward,” said Jeff Broin, co-chairman of Growth Energy, which represents ethanol producers in Washington.

EPA gave corn and other biofuel feedstock producers an early Christmas present, raising the final renewal volume obligations or RVOs in the Renewable Fuel Standard higher than it had initially indicated it would do in June.

The agency set the RVO for renewable fuel at 18.11 billion gallons in 2016, which was about 700 million gallons higher than it proposed in its preliminary announcement for the RVOs last spring. Farm organizations called the increase a “positive step” but wanted the government to do more.

“What we’ve seen today is a break in the blend wall by EPA and the administration that should move renewable fuels forward,” said Jeff Broin, co-chairman of Growth Energy, which represents ethanol producers in Washington. “Today’s numbers will basically make certain we will continue to improve the environment and move renewables forward.”

The blend wall was a reference to attempts by the renewable fuels industry to allow retailers to sell and motorists to buy gasoline containing more than a 10 percent blend of ethanol. Groups like Growth Energy have claimed the 10 percent ceiling has limited consumption of ethanol.

Currently, retailers can sell blends containing up to 15 percent ethanol, but few outlets have been willing to invest in separate pumps for the 15 percent blend or for E-85, which is a blend of 85 percent ethanol and 15 percent gasoline.

Other groups such as the Renewable Fuels Association and the American Farm Bureau Federation said EPA did not go far enough in moving the RVO for renewable fuel closer to the 22.25-billion-gallon target in the Energy Independence and Security Act of 2007.

'Cripple incentives for renewable fuel'

“Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels,” said Bob Dineen, president and CEO of the RFA.

“We need more biofuels, not less, and Farm Bureau called on EPA earlier this year to protect the RFS,’ said Bob Stallman, president of the AFBF. “We are disappointed to see the agency move forward with a decision that will stall growth and progress in renewable fuels as well as the broader agricultural economy.”

EPA officials, for their part, noted the rule finalizes higher volumes of renewable fuel than the levels proposed in June, thus boosting renewable production and providing support for robust, achievable growth of the biofuels industry.

“The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success—cutting carbon pollution, reducing our dependence on foreign oil and sparking rural economic development,” said Janet McCabe, the acting assistant administrator for EPA’s Office of Air and Radiation.

“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.”

The final RFS, she said, is an important part of the Obama Administration’s strategy to take action on climate change by propelling the U.S. toward a clean energy future. With final standards in place for the year ahead, biofuel producers and blenders are in a better position to plan and invest – putting the market on stable ground and supporting further growth and innovation in the renewable fuels industry.

Petroleum industry critical of announcement

The announcement drew blanket criticism from conventional fuel industry groups, such as the American Petroleum Institute, which said demand for ethanol has been declining.

“EPA is pushing fuels the consumer doesn’t want,” said an official with API. “We shouldn’t have the government attempting regulatory overreach and forcing fuels on the market the consumer doesn’t want.”

Livestock groups also criticized the decision, saying it would push feed costs higher at a time when margins for beef, pork and chicken have been falling.

Some of the criticism of ethanol revolves around oil industry complaints the alcohol-based fuels damage internal combustion engines, a charge hotly disputed by renewable fuel advocates in newspaper and TV ads that have sought to counter what they call misinformation.

“In Brazil, they don’t have a blend wall,” said Tom Buis, the other co-chairman of Growth Energy. “They have 27 percent ethanol and 100 percent ethanol, and you don’t hear all these complaints about damage to automobile engines and weed eaters and chain saws.”

The RFS, established by Congress, requires EPA to set annual volume requirements for four categories of biofuels. The final rule considered more than 670,000 public comments, and relied on the latest, most accurate data available, the agency said. EPA finalized 2014 and 2015 standards at levels that reflect the actual amount of domestic biofuel used in those years.

The final 2016 standard for cellulosic biofuel — the fuel with the lowest carbon emissions —is nearly 200 million gallons, or 7 times more, than the market produced in 2014. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35 percent, higher than the actual 2014 volumes; the total renewable standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, which is 11 percent higher than 2014 actual volumes. Biodiesel standards grow steadily over the next several years, increasing every year to reach 2 billion gallons by 2017.

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