Petroleum group says EPA may flip-flop on ethanol mandate

A top petroleum group is worried the Environmental Protection Agency will flip on the proposed levels it released late last year for the amount of ethanol and other biofuels refiners must blend into the nation's fuel supply.

The EPA proposed its draft 2014 blending volumes under the federal Renewable Fuel Standard in November to cheers from oil companies, which called it a move in the right direction.


But the agency could go back on that proposal, said President of the American Fuel and Petrochemical Manufacturers (AFPM) Charles Drevna, which wouldn't bode well for the oil industry.

"Recently Gina McCarthy has been remarking that the volumetric requirements for the finalized [Renewable Fuel Standard] may be different than the proposed rule," Drevna said to reporters on Tuesday. 

He added that the administrator has made such comments to agricultural organizations, such as corn ethanol groups, which would benefit from an increase in blending volumes. McCarthy and other EPA officials have visited states like North Dakota and Iowa since the new proposal came out to take comments before finalizing the rule.

Drevna said the EPA is thinking about increasing the volumes because the Energy Department's stat shop estimates there will be an increase in gasoline demand in the next year.

The AFPM, along with the oil industry, wants the proposal to stay as is. Opponents of the rule want to see the renewable fuel mandate repealed all together, but that's not likely to happen during an election year, let alone with a divided Congress.

"Administrator McCarthy keeps talking about the administration's goal and her commitment to incentivize innovation," Drevna said. "What the hell does that mean? Does that mean continually picking winners and losers? Does that mean listening to the advanced biofuels producers people to just be patient with us?"

The EPA's current proposal requires 15.21 billion gallons be blended in 2014, down from 16.55 billion gallons in 2013. The proposal cut the amount of blending volumes for refiners for the first time since 2007, when the standards were expanded.

If the EPA decides to return to 2013 levels or set a higher marker, it will anger petroleum and oil companies but once again be on the good side of biofuel producers.

Ethanol and other biofuel producers argued that the 2014 proposal put the nation's renewable energy policy in the hands of oil companies, killing innovation and evolution in motor vehicles.

Drevna said the AFPM recognizes the agency is under a good deal of political pressure, but is troubled by recent comments.

"One of the things that's the most disconcerting is I heard an EPA official say that the comments they were getting in favor of adjusting the proposal upward so outweighed the comments to keep the proposal at the lower levels," Drevna said, adding that the quantity of comments shouldn't be a factor.