FEW 2016: Industry heavyweights urge EPA to stick to 2017 statutory biofuels requirement

US biofuel heavyweights have urged the Environmental Protection Agency (EPA) to ensure that biofuel blend volume requirements match the statutory levels set by Congress under the Renewable Fuel Standard (RFS).

The US RFS was created in 2005 by Congress in an effort to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil. It was a bipartisan policy signed into law by President George W. Bush.

In 2007, Congress set benchmarks for where the biofuel industry should be each year in terms of volume, but Congress gave the EPA power to amend the amount of ethanol that blenders must add to fuel each year. This initiative is called the Renewable Volume Obligations (RVO), which is part of the RFS programme.

On 31 May, 2016, the US Environmental Protection Agency (EPA) proposed a 14.8 billion (bn) gallons of conventional biofuel RVO 2017 target. This falls short of the statutory target of 15bn gallons for 2017, which Congress originally set in 2007.

‘Extra mile’

Speaking to Biofuels International at the Fuel Ethanol Workshop (FEW) conference in Milwaukee, US, which took place from 20 to 23 June, 2016, Renewable Fuels Association senior vice president, Geoff Cooper, said his organisation could not understand why the “EPA can’t go the extra mile to reach 15bn gallons”.

He added: “We keep going back to the law that Congress passed in 2007. If there is 15bn gallons of ethanol available in the marketplace in 2016/17 obligated parties or oil companies are required to distribute that volume. We go back to the law and we wonder why the EPA is trying to relegislate this programme. The EPA has promised 14.8bn gallons for 2017, not 15bn gallons. We could easily do more than 14.8bn gallons if the rule called for it.

“Just last week, we produced a record amount of ethanol on a weekly basis. If we kept up with that base for an entire year it would be 15.4bn gallons. So, what frustrates us is the law says ‘if the supply is there you have to use it’. Well the supply is there and unfortunately the EPA is not urging the oil companies to use those required volumes. We are close. 14.8bn gallons is not far from 15bn gallons.”

Jeff Broin, CEO and chairman of Poet, a US-based ethanol giant, was also present at the show. Speaking to Biofuels International, he said: “We like to see the EPA stand behind its commitments from the RFS so that the cellulosic plants get built here (US). It needs to stand behind its laws and enforce them.”

Comments are being accepted on the RFS proposal until 11 July and a final ruling is expected by the end of the year.

The news of the warning to the EPA comes as the US ethanol industry launches a push to increase the amount of higher ethanol blends delivered to consumers at the pump.

Ethanol blends

Cooper said: “The law basically caps the amount of ethanol at 15bn. So, we are not going to get much growth from the RFS after we hit 15bn. Therefore, we are focused on increasing the amount of higher ethanol blends in the long term. 

“E25 is made up of 25% and ethanol 75% gasoline. This will be the optimal use in ethanol because ethanol is really high in octane. All the carmakers have said that we need higher octane fuels in the future to facilitate more fuel efficient engines and vehicles. So, they want high octane fuels. It so happens that ethanol is a high octane fuel. Therefore, we see an opportunity for our ethanol blends to increase to meet those high octane fuel demands.”

‘Prime the Pump’

Broin explained that the ethanol industry was trying to build a larger market within the US. He said: “The E10 market is full and we are looking to build up the E15 market.

“We are expanding the ‘Prime the Pump’ programme. Prime the Pump was set up to put E15 in flex pumps (dispensers that draw and blend fuel from two tanks) throughout the nation. This is mostly being done through the highest volume markets in the country.”

He said $61m worth of funds were pumped into help the programme and the US Department of Agriculture (USDA) credited the industry with another $100m to help incentivise retailers to install flex pumps at their petrol stations.

Broin added: “E15 is our main aim today but you can get E30 and E85 in those pumps. We are incentivising retailers to do this. With E10 we went to the smallest volume markets, with E15 we are doing the reverse and going to the biggest volume markets first and putting the pumps in.

“We hope to install 5,000 pumps and 700 stations by the end of this year. We are talking to the big retailers like Sheetz, Kum & Go and Thorntons.

“Our goal is to get E15 out there. We have plenty of ethanol out there and we have plenty of commodities as well. Corn prices are back to the cost of production and, in some cases, are sometimes below the cost of production.”

Lobby group Growth Energy has led the E15 drive. Speaking to Biofuels International, its new CEO, Emily Skor, said the biofuels industry looked forward to expanding the retailer infrastructure and that retailers were responding favourably to the E15 scheme.

This story was written by Liz Gyekye, editor of Biofuels International.