EPA Proposes To Scale Back Renewable Fuel Quota

EPA, in a move encouraged by many in animal agriculture, lowered its proposed targets for the volume of renewable fuels required to be produced under the Renewable Fuel Standard. Cattlemen herald the move as long overdue.

Burt Rutherford, Senior Editor

November 15, 2013

6 Min Read
EPA Proposes To Scale Back Renewable Fuel Quota

The Environmental Protection Agency (EPA) in a Nov. 15 news release announced its targets for renewable fuel volumes in 2014. According to EPA, it will seek comments on the following proposed volumes:

  • Renewable fuel—15.21 billion gallons proposed volume for 2014, with a range of 15.0 to 15.562 billion gallons.

  • Cellulosic biofuel—17 million gallons with a range of 8 to 30 million gallons

  • Biomass-based diesel—1.28 billion galloons

  • Advanced biofuel—2.2 billion gallons with a range of 2.0 to 2.51 billion gallons.

The proposed volumes are less than the targets set out in the legislation that established the Renewable Fuel Standard. For example, the target of 15.21 billion gallons for renewable fuel, which is ethanol distilled from corn and biodiesel from soybeans, is less than the original target of 18.15 billion gallons established in the legislation.

According to EPA, the reason for the reduction is that the U.S. has hit the E-10 blend wall. “Nearly all gasoline in the U.S. is now E-10, which is fuel with up to 10% ethanol,” EPA says. Ethanol production has been increasing while advances in vehicle fuel economy and other factors have pushed gasoline consumption lower than what was expected when Congress passed the Renewable Fuel Standard in 2007.

“As a result, we are now at the E-10 blend wall, the point at which the E-10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E-15 and E-85,” EPA says.

The American Farm Bureau expressed disappointment with the announcement. “The American Farm Bureau Federation is disappointed in the Environmental Protection Agency’s proposed reduction in the amount of ethanol that must be blended into the nation’s gasoline supply,” says AFBF President Bob Stallman. “This decision strikes a blow to conventional ethanol production as well as dampens the prospects for advanced biofuels.

“The intent of the Renewable Fuels Standard revised in 2007 (RFS2) was to get more renewable fuels into our nation’s pipeline and move beyond the E-10 fuel blend. Today’s announcement from EPA moves us in the opposite direction. This decision has the potential to pull the plug on new technologies and investments that are currently in place and needed to produce advanced biofuels.”

Likewise, the Illinois Farm Bureau expressed disappointment. “The U.S. EPA’s decision to reduce the level of total renewable fuels for 2014 is both unwarranted and disappointing. Illinois Farm Bureau policy supports both the Renewable Fuel Standard (RFS) and higher blend levels of ethanol in our nation’s motor fuel supply to achieve reductions in greenhouse gas emissions and to push the United States farther down the path toward complete energy independence.  

 “In the coming weeks, Illinois Farm Bureau will submit comments and work with elected officials and other groups supportive of the RFS in the hopes of convincing EPA and the Administration to take a second look at a proposal that has the potential to drive up gasoline prices for consumers, increase greenhouse gas (GHG) emissions, and drop corn prices below the cost of production,” the group said.

Others, however, heralded the news.  A coalition of 21 groups, including the National Cattlemen’s Beef Association, said, “We appreciate this action as it acknowledges a problem exists with the current policy. The inflexible RFS mandate continues to have a detrimental impact on the economy and makes feeding animals risky because our industries are not competing on a level playing field.  Today is a step in the right direction, however, it is the responsibility of the Congress to find a lasting solution to this rigid, inflexible program and put livestock and poultry producers back on equal standing in the marketplace.”

American Meat Institute (AMI) Vice President of Regulatory Affairs and General Counsel Mark Dopp adds, “EPA’s decision to reduce the ethanol mandate is long overdue. While this is a positive step, the fact remains the RFS is a flawed policy that requires Congressional action. Even with a record corn crop expected this year, the damaging ripple effect of this defective policy has moved through the meat and poultry complex for the past several years. The time for Congressional action is now.”

The EPA decision to reduce the corn ethanol mandate of the Renewable Fuel Standard (RFS) is appreciated, Dopp said, as it acknowledges a problem exists with the current policy, but more needs to be done to fix the RFS, which continues to have a detrimental impact on food prices.

Recently-released USDA data show food costs have outpaced other staple items during the past year, climbing 1.4%, according to the Consumer Price Index released October 30. However, meat prices --which include beef, pork, poultry, and eggs – rose 2.9% since September 2012. According to USDA’s September Livestock Outlook, monthly retail beef prices set successive new records in July and August with Choice beef prices reaching $5.39/lb., while all-fresh beef reached $4.97/lb., according to AMI.

These price increases have occurred over the same time frame that ethanol use has skyrocketed. Ethanol use accounted for approximately 14% of total corn use in 2005-2006 and in 2012-2013 that percentage is projected to be more than 43% of U.S. production, AMI says.

According to Josh Winegarner, government relations director for the Texas Cattle Feeders Association (TCFA), "While TCFA continues to support full repeal of the RFS, we are pleased that EPA has proposed to use its waiver authority and reduce the 2014 statutory RFS requirement for grain-based ethanol production by 1.3 billion gallons. Interestingly, the proposed mandate for grain-based ethanol production is approximately the amount needed to fulfill the requirement for 10 percent inclusion in gasoline in order to serve as an oxygenate," he says.

"Unfortunately, it seems that they haven’t completely abandoned the idea of creating markets where they don’t exist, since they are soliciting comments on how to increase usage of E-15 and E-85. The fact that they are having trouble selling enough of those products to meet the current RFS mandate should tell them something."

In a separate action, EPA also will seek comments on petitions for a waiver of the Renewable Fuel Standards that would apply in 2014. “EPA expects that a determination on the substance of the petitions will be issued at the same time that EPA issues a final rule establishing the 2014 RFS,” the agency said in its news release.

The clock will begin ticking once EPA publishes both proposals in the Federal Register. Upon publication, a 60-day comment period will open.



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About the Author(s)

Burt Rutherford

Senior Editor, BEEF Magazine

Burt Rutherford is director of content and senior editor of BEEF. He has nearly 40 years’ experience communicating about the beef industry. A Colorado native and graduate of Colorado State University with a degree in agricultural journalism, he now works from his home base in Colorado. He worked as communications director for the North American Limousin Foundation and editor of the Western Livestock Journal before spending 21 years as communications director for the Texas Cattle Feeders Association. He works to keep BEEF readers informed of trends and production practices to bolster the bottom line.

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