Several major US trade groups
representing the energy industry are at odds this week as the
EPA prepares to finalize the nation's renewable fuels
mandates for 2014.
The US Environmental Protection Agency (EPA) should roll back
rising ethanol mandates until Congress can permanently repeal
the program, Patrick Kelly of the American Petroleum
Institute (API) trade group told reporters.
Kelly is the senior fuels policy advisor for the API.
Our major concern is that ever-increasing biofuel
mandates could harm consumers, damage their automobiles, and
create supply shortages that severely harm our still fragile
economy," said Kelly
"A study by NERA Economic Consulting shows higher
ethanol mandates could lead to fuel rationing and supply
shortages that, by 2015, could drive up the cost of gasoline
by 30% and the cost of diesel by 300%," he continued.
"And, livestock groups say the mandate -- which now diverts
more than 40% of the US corn crop from food to fuel -- has
been the leading driver of food price increases weve
seen in recent years."
Kelly added that the EPA should lower the 2014 ethanol
mandate to no more than 9.7% of project
ed gasoline demand, thereby
reserving the choice of ethanol-free gasoline for consumers
who want it.
"EPA must also bring their mandates closer to reality on
cellulosic biofuels, which do not exist in commercial
quantities," said Kelly. "Finally, EPA must finalize these
requirements as quickly as possible to get the annual
rulemaking process back on track. By making these
adjustments, EPA can create a welcome stopgap."
The API submitted official comments to the EPA in a joint release
with the American Fuel
The API and AFPM comments, as expected, are in sharp
contrast with those from the Renewable Fuels Association
(RFA), an ethanol trade group, and from the National Biodiesel
(NBB). Earlier this week, the NBB called on
the Obama administration to increase the biodiesel and
advanced Renewable Fuel Standard (RFS) proposals to reflect
current production rates.
The NBB noted that the US biodiesel industry set a new record
in 2013 by producing nearly 1.8 billion gallons,
significantly exceeding the 2013 biodiesel requirement under
the RFS and enough to fill the majority of the advanced
"Yet the Obama administration has proposed holding the 2014
RFS volume for biodiesel at 1.28 billion gallons while also
sharply cutting the overall Advanced Biofuel requirement -- a
proposal that, if finalized, would significantly reduce
production," the NBB said.
The success of the biodiesel industry in 2013 proves
that the RFS is working today and stimulating the
commercial-scale production of advanced biofuel, said
Joe Jobe, CEO of the NBB.
It also makes it incredibly frustrating that the
Obama administration is backing away from this progress
with its recent RFS proposal. If our industry produced 1.8
billion gallons of Advanced Biofuel in 2013, why is the
administration retreating to 1.28 billion gallons for 2014?
Were proving it can be done. What we need is
consistent policy, and that is sorely lacking in Washington
Jobe said the proposed figures threaten biodiesel businesses
across the country and thousands of jobs, in addition to
undercutting the administration's stated priority of reducing
greenhouse-gas (GHG) emissions
It is incomprehensible that an administration that
has unequivocally supported renewable fuels since Day One
has suddenly decided to retreat on the first advanced
biofuel to reach commercial-scale production
nationwide, Jobe said.
Perhaps more importantly, it jeopardizes the future
of all renewable energy by sending a terrible signal to
entrepreneurs and investors that these policies are not
stable, even under a President who professes to support
them, he added.
The NBB also criticized the US Congress for allowing a key
biodiesel tax incentive to lapse on December 31.
Many biodiesel producers have been running at full
capacity in recent months, Jobe said.
Thats driving down costs and creating
tremendous economic activity. Yet instead of embracing this
success, Washington is walking away from it.
Meanwhile, according to the RFA, the EPA has proposed to
lower the RFS from the statutory volume of 18.15
billion gallons to 15.21 billion gallons, including a
reduction in the requirement for renewable fuel from 14.4
billion gallons to 13.01 billion gallons. The RFA is asking
the EPA to reconsider its proposal and finalize the 2014
requirement at the original 14.4 billion gallons.
In the end, the RFS program was designed to force the
oil industry to change the status quonot to
perpetuate it," said RFA president Bob Dinneen. "The
entire purpose of this program would be subverted if the
oil industry is rewarded for its failure to take the steps
necessary to ensure that it was capable of distributing,
blending, and dispensing the renewable fuel volumes
required under the statute.
Image courtesy of the Heartland Institute