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EPA tries to thread the biofuel needle

Dec 1, 2015
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The Environmental Protection Agency laid out a rule Monday for how much biofuel must be mixed into the nation’s gas supply next year. 

At 18.11 billion gallons of renewable biofuel, it was an 11 percent increase over the amount of biofuel used in the U.S. in 2014. But it was significantly below the level that Congress had intended (22.25 billion gallons) when it set targets in 2007. 

The renewable fuel industry and the petroleum industry have both reacted with frustration, but for different reasons. The American Petroleum Institute argues that consumers have rejected higher ethanol fuels, the Renewable Fuels Association described it as crippling. 

“The EPA is doing a balancing act,” said Wally Tyner, professor of energy economics at Purdue University, “between the oil industry and the ethanol industry and the corn growers.”

It’s also a balancing act between the idea that there exists something called a “blend wall,” and the idea that it is a fabrication, said Tyner. “There’s truth to both sides.”

On the one hand, it is true that gas stations and refineries across the country can’t realistically simply dump more ethanol into their tanks. “All of the pumps, fittings, everything is configured for E10, and some car manufacturers do not warranty their cars for E15,” said Tyner. E15 is one type of gas blend with higher ethanol content.  

Tyner says in the long term, such upgrades in infrastructure are possible, though not without cost. It may even be desirable from the perspective of auto manufacturers because it could result in higher octane fuels and improved engine performance.  

While some auto manufacturers will not warranty cars to use higher E15 blends, many cars are warrantied to run on E10, and “EPA has determined that all of them can run on E15 without a problem,” said Bruce Babcock, professor of economics at Iowa State.

In the short term, the EPA is not relying on increased consumption of E15 among all cars to meet its new requirement. Rather, the agency is relying on increased consumption of very high ethanol fuels by certain specialized vehicles known as Flex Fuel Vehicles. 

These vehicles are capable of running on a wide range of fuel blends, from zero percent ethanol on up to a 75 percent ethanol blend known as E85. “There’s about 18 million Flex Fuel Vehicles on the highway and consumers will buy [E85] if it’s priced right,” said Babcock.

E85 is currently more expensive than other fuels and available in only 3,000 of the country’s 168,000 gas stations. However, said Babcock, “now that the petroleum industry has to meet a higher blend obligation they will find ways to make that fuel competitive and consumers will buy it. The important thing here is that EPA signaled they would not let the blend wall restrict consumption of ethanol.”

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