Obama set to issue ethanol fuel mandate

Obama set to issue ethanol fuel mandate

The Obama administration is poised to update a controversial standard for ethanol levels in gasoline after months of sparring over the future of the fuel between pro-ethanol groups and the oil industry.

The White House has until Nov. 30 to finalize a rule that sets the amount of ethanol that oil refiners are required to blend into their fuel.

Groups on both sides of the issue were unhappy when the Environmental Protection Agency proposed the updated Renewable Fuel Standard (RFS) in May, and they've fought over it openly since then.

Broadly, ethanol backers want the agency to require more ethanol in gasoline, noting that the EPA's proposed targets are below those passed by Congress. But the oil industry says it's already blending as much ethanol as possible into the fuel supply without risking harm to vehicles.

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Competing business groups have peppered television viewers in Washington and around the country with millions of dollars' worth of advertising over the last month.

In their ads, Fuels America, a pro-ethanol group, asks whether the Obama administration would rather side with polluting oil companies over the industry’s promise of clean energy. The American Petroleum Institute (API), a top oil industry lobbying group, countered that the RFS amounts to “Washington red tape” and has called for Congress to overhaul or repeal it.

Neither option is going to happen any time soon, making Monday’s’ deadline for new RFS levels the current flashpoint in the debate.

In May, the EPA proposed requiring fuel refiners blend 16.3 billion gallons of ethanol into their gasoline this year and 17.4 billion gallons in 2016, well below the 22.25 billion gallons Congress intended when rewriting the law in 2007.

The levels would mean normal gasoline blends would contain just more than 10 percent ethanol next year. Refiners say many vehicles on the road can’t support gasoline with that much ethanol, and they warn of potential damage to engines and higher prices for consumers.

“EPA needs to immediately waive down the 2016 total ethanol mandate to no more than 9.7 percent of total gasoline demand,” Bob Greco, the API’s downstream group director, said last week. 

“This would provide a stopgap solution and temporarily protect consumers by avoiding the 10 percent ethanol blend wall while allowing some non-ethanol gasoline to meet consumer demand.”

Pro-ethanol forces say concern over the “blend wall” is overblown and that cars manufactured today are certified to run on higher-blend fuels. In their ads — in Washington and around the country — they say the oil industry is exaggerating the negative impact more ethanol fuel will bring.

“If you go along the direction that EPA was going earlier, they’re allowing the obligated parties, the oil industry, to escape living up to their obligation of blending higher blends,” Tom Buis, co-chairman of pro-ethanol group Growth Energy, said on Monday.

“When the RFS was passed in 2007, everyone at the time knew — even with more robust consumption levels at the time — everyone at the time knew that the day would come when we have to have higher blends in the marketplace.”

Lawmakers on both sides of the fight have jumped into the debate, hoping to influence the final standard.

Pro-ethanol senators — Republicans and Democrats from corn-producing Midwestern states — met with President Obama’s chief of staff last month to plug the fuel and call for more reliance on it. House Democratic leaders including Reps. Nancy Pelosi (Calif.), Steny Hoyer (Md.) and Collin Peterson (Minn.), the ranking member on the Agriculture Committee, sent a letter to Obama’s top climate adviser last week asking for a stronger standard ahead of an international global warming conference in Paris.

Lawmakers on the other side — a coalition of Republicans who support the oil industry and Democrats who question the environmental impacts of ethanol fuel — have called for the EPA to delay increasing its blending requirements.

The dueling campaigns over the standard are not constrained to Washington. Pro-ethanol forces released an ad accusing Rep. Peter WelchPeter Francis WelchBooker takes early lead in 2020 endorsements Divisions emerge over House drug price bills Trump CFO Weisselberg emerges as key person of interest for Dems MORE, a Vermont Democrat who opposes the RFS, of siding with “oil companies and climate deniers” for his push against ethanol, a claim he called a “Washington-sized load of manure.”

Corn-producing states, as well, have seen a slew of ads, both for and against the fuel. The American Council for Capital Formation, a D.C.-based free-market group, put out ads in the Midwest and New England slamming the environmental impact of ethanol fuel. Growth Energy shot back with an ad of its own featuring a former “Bachelor” star and Iowa farmer praise the RFS’s economic and environmental record.

The ads aren’t designed to influence regulators grappling with the current standards, Buis said, but rather lay the groundwork for congressional fights over the standard that will extend beyond the Obama administration.

“Last time I looked, there are a lot of members of Congress in the Midwest as well as the East Coast and elsewhere,” he said. “Part of that message is to Congress.”