Obama dials back ethanol fuel standard

Obama dials back ethanol fuel standard
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The Obama administration set new standards Monday for ethanol levels in fuel, enraging competing industries that had battled for months to influence the contentious regulations.

The final renewable fuel standard (RFS) unveiled by the Environmental Protection Agency (EPA) is more stringent than an earlier version of the rule proposed in May but falls short of the threshold set forth in a 2007 law.

Acting Assistant EPA Administrator Janet McCabe defended the standard, which requires oil refiners to mix more biofuel into their gasoline supply, as striking a balance between the ambitious goals of Congress and what is achievable.

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“With today’s final rule, and as Congress intended, EPA is establishing volumes that grow the amount of biofuel in the market over time, and that go beyond historic levels and those in our proposal,” she said. “Our standards provide for ambitious, achievable growth — especially in advanced fuels that maximize carbon pollution reductions compared to gasoline.

The standard, announced on the same day President Obama made an impassioned appeal for action to counter climate change at a global summit in Paris, spurred swift criticism back at home.

The agency earlier this year proposed requiring oil refiners blend to 16.3 billion gallons of ethanol into their fuel in 2015 and 17.4 billion gallons next year, which means gasoline would have contained about 10 percent ethanol. Those figures jumped to 16.93 billion gallons this year and 18.11 billion next year.

Oil interests argue that increasing the amount of biofuel in gasoline will raise prices at the pump and do further damage to vehicle engines.

“EPA’s final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them,” Bob Greco, downstream manager at the American Petroleum Institute (API), told reporters. “Motorists have largely rejected these fuels.”

The API has long pushed the EPA to recognize the “blend wall,” saying that since most cars cannot handle more than 10 percent ethanol in gasoline, the agency ought to mandate slightly less than that in the fuel supply. But Monday’s announcement broke that wall, the group said.

The American Fuel and Petrochemical Manufacturers, which represents refiners, said Monday’s announcement is another stark reminder of the essential problems with the renewable fuel standard.

“Today’s rule is further proof that the RFS program is irreparably broken and that the only solution is for Congress to repeal it outright,” Chet Thompson, the group’s president, said in a statement.

Pro-ethanol groups have dismissed the oil industry concerns as overblown, contending modern cars are certified to run on higher ethanol blends. 

Bob Dinneen, president of the Renewable Fuels Association, said the EPA gave in to Big Oil’s demands.

“EPA’s decision today turns our nation’s most successful energy policy on its head,” he said in a statement.

“Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”

Biodiesel producers, however, broke with their ethanol counterparts, saying that the volume increase the EPA is mandating for biodiesel is acceptable.

“This decision means we will displace billions of gallons of petroleum diesel in the coming years with clean-burning biodiesel,” Joe Jobe, head of the National Biodiesel Board, said in a statement. “That means less pollution, more American jobs, and more competition that is sorely lacking in the fuels market.”

The debate crosses party lines in Washington, where lawmakers from corn-producing states support a higher ethanol standard. Many Republicans oppose the mandate because of its impact on the oil industry, and some Democrats, who question its environmental impact, are against it as well.

The deadline for the EPA to update the RFS was Monday.

Devin Henry and Timothy Cama contributed to this story.