EPA Wising Up on Ethanol Use?
10-11-13, 11:01 PM
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EPA Wising Up on Ethanol Use?
WASHINGTON/NEW YORK (Reuters) - The Environmental Protection Agency on Friday sought to calm a furor over its apparent proposal to reduce ethanol use in gasoline next year, saying that no final decisions had been made about the contentious mandate.
On Thursday, Reuters and other news outlets reported on EPA documents that showed the agency proposing an unexpected drop in the amount of corn-based ethanol that would be required for blending next year, a historic retreat from the 2007 biofuel law and a major victory for the oil industry.
"At this point, EPA is only developing a draft proposal," EPA Administrator Gina McCarthy said in a statement in the agency's first public response to the reports.
She said the Obama administration remained "firmly committed" to developing biofuels as a part of the plan to reduce U.S. dependence on imported oil.
Coming after months of an intensifying lobbying and political battle between oil refiners and ethanol groups, the reports were met with immediate skepticism from many in the biofuel industry, some questioning the documents' authenticity.
Growth Energy, a leading ethanol group, called for U.S. agencies to investigate the leak of what it called "unverified 'draft' documents" that were still under review, a process stalled by the government shutdown.
The EPA statement made no specific mention of the draft documents, but acknowledged some of the challenges in increasing use of biofuel. Under the reported proposal, the EPA appears to back the oil industry argument that it is not feasible to inject more than 10 percent ethanol into gasoline at the moment due to concerns over engine damage and liability.
"No decisions will be made on the final standards without a full opportunity for all stakeholders to comment on the EPA's proposed 2014 renewable fuel standards and be heard on how to best foster a growing biofuels industry that takes into account infrastructure- and market-related factors," McCarthy said.
The EPA documents seen by Reuters could not be independently verified. They were dated August 26 and September 6, around the same time that the agency submitted its proposal to the White House Office of Management and Budget.
After the OMB reviews the proposal it will be sent back to the EPA, which will release it for public comment. Only after that does the EPA finalize the rule. The process has been slowed by the partial government shutdown.
The EPA proposal would reduce the overall renewable fuel requirements for 2014 to 15.21 billion gallons, far less than the 18.15 billion-gallon 2014 target established by law.
That would reduce the volume of corn-based ethanol to about 800 million gallons less than this year's 13.8 billion gallons, a much larger cut than many industry observers had been expecting. The law had required 14.4 billion gallons for 2014.
INVESTIGATION
"Because of the dramatic economic impact on commodity markets there should be an immediate investigation by the Justice Department, and the Commodity Futures Trading Commission to determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or RINS markets," Tom Buis, CEO of Growth Energy, said in a release.
The Department of Justice could not be reached for comment, and DOJ representatives are less available than usual because of the partial government shutdown. In general, the Department of Justice does not confirm investigations that have yet to be confirmed by the targets. The CFTC has said it is unlikely to be able to respond to media requests during the shutdown.
The ethanol group's strong response illustrates the highly charged nature of the debate between two industries fighting over the future of the U.S. fuel supply.
Ethanol groups fear any wavering on use of corn-based ethanol could undermine their future. Oil refiners say the law is forcing them to spend billions of dollars to buy ethanol credits, driving up gasoline prices.
"I believe we are competing head-to-head with Big Oil," Todd Becker, chief executive officer of No. 4 U.S. ethanol company Green Plains Renewable Energy Inc, told Reuters.
The oil industry argues that it cannot sell gasoline with more than 10 percent ethanol, and so is unable to blend more biofuel. Corn-ethanol producers argue that they should be able to sell gasoline that is 15 percent biofuel, the maximum allowed by the EPA for newer model cars.
"In our opinion, they are going to be very defensive to give up any gas tank share - they are going to defend their share at all costs," Becker said.
(Reporting by Chuck Abbott in Washington and Cezary Podkul in New York; writing by Jonathan Leff; editing by Theodore d'Afflisio and Matthew Lewis)
On Thursday, Reuters and other news outlets reported on EPA documents that showed the agency proposing an unexpected drop in the amount of corn-based ethanol that would be required for blending next year, a historic retreat from the 2007 biofuel law and a major victory for the oil industry.
"At this point, EPA is only developing a draft proposal," EPA Administrator Gina McCarthy said in a statement in the agency's first public response to the reports.
She said the Obama administration remained "firmly committed" to developing biofuels as a part of the plan to reduce U.S. dependence on imported oil.
Coming after months of an intensifying lobbying and political battle between oil refiners and ethanol groups, the reports were met with immediate skepticism from many in the biofuel industry, some questioning the documents' authenticity.
Growth Energy, a leading ethanol group, called for U.S. agencies to investigate the leak of what it called "unverified 'draft' documents" that were still under review, a process stalled by the government shutdown.
The EPA statement made no specific mention of the draft documents, but acknowledged some of the challenges in increasing use of biofuel. Under the reported proposal, the EPA appears to back the oil industry argument that it is not feasible to inject more than 10 percent ethanol into gasoline at the moment due to concerns over engine damage and liability.
"No decisions will be made on the final standards without a full opportunity for all stakeholders to comment on the EPA's proposed 2014 renewable fuel standards and be heard on how to best foster a growing biofuels industry that takes into account infrastructure- and market-related factors," McCarthy said.
The EPA documents seen by Reuters could not be independently verified. They were dated August 26 and September 6, around the same time that the agency submitted its proposal to the White House Office of Management and Budget.
After the OMB reviews the proposal it will be sent back to the EPA, which will release it for public comment. Only after that does the EPA finalize the rule. The process has been slowed by the partial government shutdown.
The EPA proposal would reduce the overall renewable fuel requirements for 2014 to 15.21 billion gallons, far less than the 18.15 billion-gallon 2014 target established by law.
That would reduce the volume of corn-based ethanol to about 800 million gallons less than this year's 13.8 billion gallons, a much larger cut than many industry observers had been expecting. The law had required 14.4 billion gallons for 2014.
INVESTIGATION
"Because of the dramatic economic impact on commodity markets there should be an immediate investigation by the Justice Department, and the Commodity Futures Trading Commission to determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or RINS markets," Tom Buis, CEO of Growth Energy, said in a release.
The Department of Justice could not be reached for comment, and DOJ representatives are less available than usual because of the partial government shutdown. In general, the Department of Justice does not confirm investigations that have yet to be confirmed by the targets. The CFTC has said it is unlikely to be able to respond to media requests during the shutdown.
The ethanol group's strong response illustrates the highly charged nature of the debate between two industries fighting over the future of the U.S. fuel supply.
Ethanol groups fear any wavering on use of corn-based ethanol could undermine their future. Oil refiners say the law is forcing them to spend billions of dollars to buy ethanol credits, driving up gasoline prices.
"I believe we are competing head-to-head with Big Oil," Todd Becker, chief executive officer of No. 4 U.S. ethanol company Green Plains Renewable Energy Inc, told Reuters.
The oil industry argues that it cannot sell gasoline with more than 10 percent ethanol, and so is unable to blend more biofuel. Corn-ethanol producers argue that they should be able to sell gasoline that is 15 percent biofuel, the maximum allowed by the EPA for newer model cars.
"In our opinion, they are going to be very defensive to give up any gas tank share - they are going to defend their share at all costs," Becker said.
(Reporting by Chuck Abbott in Washington and Cezary Podkul in New York; writing by Jonathan Leff; editing by Theodore d'Afflisio and Matthew Lewis)
10-11-13, 11:04 PM
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Although as yet unconfirmed, this appears to be a glimmer of hope from the EPA. Stabilization of the current blend percentage is the 1st step towards the long process of eliminating it entirely.
10-12-13, 08:30 AM
#3
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GM currently puts E85-capable engines/fuel-systems into a number of its models. Perhaps that may be at least part of the answer to the E10 vs. E15 controversy. Maybe other manufacturers should take notice.
10-12-13, 11:19 AM
#4
Or maybe the answer is to stop subsidizing ethanol for fuel usage so people can actually pay for FUEL and not corn alcohol additive. People would see a slight bump in fuel economy AND wouldn't have to visit the gas station as frequently. As well, their engines would thank them. This is a problem caused by government, not surprising, and if they rescind ethanol injection into our fuel, they'll come out and claim to be the saviors once again......fixing a problem you start doesn't make you a hero...
10-13-13, 03:49 AM
#6
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the requirement of ethanol in gasoline has been an unmitigated disaster, and cost this country trillions in increased food costs, lost fuel efficiency, and bureaucracy.
10-13-13, 07:04 PM
#7
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And, of course, ethanol can be distilled from a number of sources, not just corn........sugar cane, wood, even processed garbage. Problem is, we currently don't have much of an infrastructure for making it from anything other than low-grade corn.
Last edited by mmarshall; 10-14-13 at 07:03 PM.
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10-14-13, 12:14 PM
#8
The effect of ethanol in gas on food prices is often exaggerated. Most of the low-gradecorn used for ethanol production is not of the type or quality that you would want on the dinner table....or be typically sold for human consumption. It is barely adequate even as feed for farm animals. And each gallon of ethanol saves at least some imported oil...though a direct one-to-one comparison is difficult because a gallon of ethanol has much less BTU energy than gasoline, which affects mileage.
And, of course, ethanol can be distilled from a number of sources, not just corn........sugar cane, wood, even processed garbage. Problem is, we currently don't have much of an infrastructure for making it from anything other than low-grade corn.
And, of course, ethanol can be distilled from a number of sources, not just corn........sugar cane, wood, even processed garbage. Problem is, we currently don't have much of an infrastructure for making it from anything other than low-grade corn.
... But yeah, the ethanol we have now needs to go, as do those damn corn subsidies... Although it would be a little sad to see the cost of my Jack and Cokes go up, I guess.
10-14-13, 02:46 PM
#9
Under the reported proposal, the EPA appears to back the oil industry argument that it is not feasible to inject more than 10 percent ethanol into gasoline at the moment due to concerns over engine damage and liability.
Last edited by Infra; 10-14-13 at 02:52 PM.
10-14-13, 02:51 PM
#10
Or maybe the answer is to stop subsidizing ethanol for fuel usage so people can actually pay for FUEL and not corn alcohol additive. People would see a slight bump in fuel economy AND wouldn't have to visit the gas station as frequently. As well, their engines would thank them. This is a problem caused by government, not surprising, and if they rescind ethanol injection into our fuel, they'll come out and claim to be the saviors once again......fixing a problem you start doesn't make you a hero...
This is an approach favored by Elon Musk in regards to carbon emissions - a tax is the least intrusive means by which government can direct policy. In the end, value is not destroyed by propping up a industry that cannot stand on its own.
10-15-13, 09:15 AM
#12
The effect of ethanol in gas on food prices is often exaggerated. Most of the low-grade corn used for ethanol production is not of the type or quality that you would want on the dinner table....or be typically sold for human consumption. It is barely adequate even as feed for farm animals. And each gallon of ethanol saves at least some imported oil...though a direct one-to-one comparison is difficult because a gallon of ethanol has much less BTU energy than gasoline, which affects mileage.
And, of course, ethanol can be distilled from a number of sources, not just corn........sugar cane, wood, even processed garbage. Problem is, we currently don't have much of an infrastructure for making it from anything other than low-grade corn.
And, of course, ethanol can be distilled from a number of sources, not just corn........sugar cane, wood, even processed garbage. Problem is, we currently don't have much of an infrastructure for making it from anything other than low-grade corn.
10-15-13, 09:59 AM
#13
Lexus Fanatic
Perhaps, but even so, we are still arguably the world's #1 exporter of food. That shows how much we actually produce.
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