EPA hearing on ethanol set for Thursday - Trade Only Today

EPA hearing on ethanol set for Thursday

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The Environmental Protection Agency is holding a hearing Thursday to receive testimony on a proposal that would lower the required amount of ethanol in the fuel supply for the first time ever.

The required amount is now 13 billion gallons, which is the total saturation at E10, or fuel with 10 percent ethanol, which is standard at pumps today, John McKnight, environmental and safety compliance director for the National Marine Manufacturers Association, told Trade Only Today.

Raising the amount of ethanol required in the fuel supply for next year could force fuel to go up to E15, or 15 percent ethanol, and even higher beyond that. If refineries don’t increase the amount of ethanol in the supply, the price of gas will rise, McKnight says.

The Renewable Fuel Standard — the law passed by Congress in 2007 — requires the amount of biofuels used in the fuel supply to numerically increase each year despite the fact that U.S. fuel consumption is actually dropping. The target was to hit 36 billion gallons of ethanol and biofuels by 2022.

The NMMA and food, petroleum and environmental groups have warned that the goal is unrealistic, as well as dangerous for engines, and could cause safety problems down the road.

The EPA, though often scapegoated as having made the requirement, is actually required by Congress to adhere to the Renewable Fuel Standard, McKnight says.

But the agency was able to use waivers to temporarily postpone the elevation set for next year. One waiver was because there is an inadequate corn supply due to recent ongoing droughts, and the other is that there are not enough fueling stations that can offer E15, or gasoline with 15 percent ethanol. Additionally, fueling stations often don’t want to carry the higher-ethanol blend because of studies showing it can cause damage to engines. “There’s not a big market demand for it,” McKnight said.

When Congress passed the law in 2007, the United States was in two wars in the Middle East, McKnight pointed out. Additionally, the country had never had a drop in fuel consumption since the industrial era. So the law was written under the assumption that Americans would continue to drive bigger cars farther and consume more. But after the Great Recession and strides in technology, Americans have consumed less gas.

To help encourage the adaptation to biofuels, the law also says refineries that don’t meet the requirement have to purchase credits.

“They have to buy [Renewable Identification Numbers], which have a cost,” McKnight said. “It’s basically a tax. Some of the oil companies have just said, ‘We’ll just pay the fine and pass it on to the consumer.’ That’s where the Renewable Fuel Standard needs to be fixed.”

The NMMA’s McKnight will be among the groups — which include those concerned about world hunger, environmental groups and the petroleum industry — who will testify in support of the waiver at the EPA hearing on Thursday.

“The corn people will be out, and the renewable fuel people, so we need to get people from the industry side, too. I’ll represent marine manufacturers,” McKnight said. “There will be food groups, the ones who are concerned about the cost of food going up, and environmental groups that are against it for many reasons. The only groups that are really supporting the expansion of the RFS are the groups making money on it, like Monsanto and [Archer Daniels Midland Co.].”

“We’ve kind of hit the wall with corn ethanol. Consumers don’t want it. The EPA has recognized that,” McKnight said. “They’re lowering the requirement significantly by a billion gallons, but it’s still very broken legislation that Congress needs to go back and fix. The EPA has given relief here for the next year, but truly, if they don’t go back and fix this thing, and we still will need to meet this 36 billion-gallon requirement by 2022, the EPA’s hands are tied. This will be difficult in an election year.”

Thursday’s hearing will be held at 9 a.m. at the Hyatt Regency Crystal City in Arlington, Va.

Once the proposal is in the Federal Register, there will be a 60-day period for public comment.

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