By Julian Hattem - 08/06/13 04:52 PM EDT
The Obama administration is calling for 16.55 billion of gallons of renewable fuel to be blended in with conventional gasoline this year as part of a federal program designed to wean the country off foreign oil and explore new energy sources.
The Environmental Protection Agency (EPA) on Tuesday announced its yearly requirement under the Renewable Fuel Standard (RFS), nearly eight months past the legal due date of last November.
Ethanol and biofuel groups applauded the new standard, but the oil-and-gas industry complained that the new requirement was stricter than necessary.
The oil-and-gas industry has warned that calling for ever-higher levels is leading to a “blend wall” in which they are forced to make a blend level of gasoline that consumers don’t want and cars cannot handle.
As part of its rule on Tuesday, the EPA promised “to use flexibilities” in the law to reduce the amount of biofuel needed next year, when the “wall” is projected to be hit.
Those promised steps did not satisfy the oil-and-gas industry, however.
“While the administration acknowledges that higher ethanol mandates are unworkable by suggesting a new approach for the 2014 standards, EPA missed an opportunity to fix the problem this year,” Jack Gerard, president and chief executive of the American Petroleum Institute, said in a statement.
Sen. David Vitter (R-La.) chided the agency for having "punted" on the problem.
Industry trade groups and Republicans in Congress have repeatedly criticized the agency for being too zealous in running the program.
They have urged the EPA to waive the standard, which it has the authority to do under certain conditions, and lawmakers have tried to repeal the standard legislatively.
“A combination of the recession and the 2011 fuel economy standards has lowered the demand for gasoline in the U.S.,” explained Vitter, the top Republican on the Senate Environment and Public Works Committee, in a statement. “The combination of rising ethanol mandates and declining gasoline consumption has exacerbated the point at which the gasoline supply is saturated with the maximum amount of ethanol that current vehicles, engines, and infrastructure can safely accommodate. This is exactly why the Administration needs to use its authority to waive the 2014 volumes."
"Congress now needs to start working on repealing this poorly-devised mandate as soon as possible to stop what will become a growing drain on the U.S. economy,” American Fuel & Petrochemical Manufacturers President Charles Drevna said in a statement on Tuesday.
Supporters say that the RFS is an essential tool for building a bridge to alternative sources of energy as well as ending America’s reliance on foreign oil.
In a statement, Sen. Tom Carper (D-Del.) said, “I have long supported the goals of Renewable Fuel Standard – incentivizing environmentally-friendly options that move our country away from foreign fossil fuels, while safeguarding our energy security.”
Carper has previously asked the EPA to be more flexible, and worried that the program is increasing the cost of corn, used to make ethanol, which farmers say has affected their ability to feed chickens and other animals.
He added that he was “happy to see” that the EPA was “finally” taking steps to reduce the unintended consequences on the broader economy.
In addition to its overall standard, the new rule has lower requirements for biofuels made from plant materials like sugarcane than was originally proposed in January.
This year, the standard calls for 6 million gallons of the cellulosic biofuel, down from the 14 million gallons called for in January.
That change adheres to a January appeals court ruling that required the EPA to reflect market rates in its standard.
The biofuel industry, which has supported the Renewable Fuel Standard, pointed to the revised requirements for cellulosic biofuel as a sign that the oil-and-gas industry should back down.
In a statement, Renewable Fuels Association President Bob Dinneen said that the revision “has totally obliterated Big Oil’s myth that the RFS is inflexible and unworkable. As in years past, the finalized annual requirements are a testament to the inherent flexibility that is the backbone of the RFS.”
The EPA is also extending the deadline for the industry to comply with the new requirements by four months.
--This report was updated at 3:28 p.m.