EPA finally releases 2013 ethanol levels

Cellulosic ethanol requirements dialed back to a mere 6 million gallons per year.

The Environmental Protection Agency finalized the 2013 percentage standards for four fuel categories within the Renewable Fuels Standard (RFS) established by Congress in 2007. The final 2013 overall volumes and standards require 16.55 billion gallons of renewable fuels to be blended into the U.S. fuel supply (a 9.74% blend).

EPA did not reduce the overall requirement that petroleum refiners and importers blend, but will only require 6 million gallons of cellulosic ethanol be blended into the fuel supply this year, down from the 14 million gallons it had proposed in February.

A January 2013 ruling by the U.S. Court of Appeals required the agency to reevaluate projections for cellulosic biofuel to reflect market conditions; the final 2013 standard for cellulosic biofuel announced was developed in a manner consistent with the approach outlined in that ruling, EPA said.

The EPA rule completed Tuesday finalizes an earlier proposal requiring that 2.75 billion gallons of Advanced Biofuel (1.62%) be blended into the U.S. fuel supply this year. Under the RFS, Advanced Biofuels must reduce lifecycle greenhouse gas emissions by at least 50% compared with petroleum fuels.

Biodiesel is the first and only advanced biofuel under the program to reach commercial-scale production nationwide, and the first to break 1 billion gallons of annual volume. With nearly 1.1 billion gallons of production last year, the National Biodiesel Board said the biodiesel industry produced enough fuel to fill 87% of the total advanced requirement in 2012. "The industry is on pace to fill a majority of the requirement again this year," NBB said.

However, Brazil ethanol imports have also been used to help meet the advanced biofuels requirements. So while U.S. is importing its ethanol to Brazil, Brazil is importing its which flies in the face of trying to increase domestic energy independence.

The EPA in its statement recognized that the 2014 levels are nearing the so-called blend wall of 10% ethanol in the fuel supply. During this rulemaking, EPA received comments from a number of stakeholders concerning the “E10 blend wall.” Projected to occur in 2014, the “E10 blend wall” refers to the difficulty in incorporating ethanol into the fuel supply at volumes exceeding those achieved by the sale of nearly all gasoline as E10. Most gasoline sold in the U.S. today is E10.

In the rule issued Aug. 6, EPA announced that it will "propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal." What those flexibilities entail remains to be seen, and will be closely watched by the industry.

Although livestock and oil groups have repeatedly called for a full repeal of the RFS, four members of the House Energy Committee are looking to find middle ground on the issue. Five white papers have been released over the past year as the committee begins to evaluate the effectiveness of the program. The Senate is also taking a closer look at the RFS with a hearing planned for this fall on the matter.

As advanced and cellulosic biofuels continue to fall short on ramping up production levels to stay up-to-pace with the RFS, the Domestic Fuel Solutions Group is advocating expanding the definition of feedstocks allowed under the conventional biofuels definition to include natural gas and take a more "all of the above" energy approach.

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