EPA Sticks to Same Ethanol Blend Standards, Industry Reacts

US: In a surprising move, the U.S. Environmental Protection Agency has decided against increasing the amount of Ethanol that must be blended into fuel with gasoline each year through 2025, despite previously considering such a measure. The agencies recently published Renewable Fuel Standard Program requirements for this year and the following two have maintained the existing 15-billion-gallon volume of Ethanol, which is the primary renewable fuel to be blended with gasoline. However, this decision has been met with criticism from Ethanol supporters.

The Environmental Protection Agency (EPA) made an error in 2016 by granting a waiver that allowed less Ethanol to be mixed with gasoline due to reduced demand. However, a U.S. Court of Appeals judge ruled that the EPA can only grant such waivers when there is a shortage of domestically produced Ethanol, not a decline in demand for the fuel. To make up for the waiver error, the EPA will increase the required Ethanol volume by 250 million gallons in 2023. This increase in volume was also implemented in 2022 because of the same mistake.

The EPA has released new requirements that raise doubts about the possibility of reaching 15 billion gallons in fuel Ethanol consumption soon. As per the agency's report, the hurdle is further amplified by the estimation that the demand for gasoline between 2023-2025 is unlikely to bounce back to the levels seen before the pandemic. In fact, it is projected to be even lower in 2025 compared to its 2022 figures.

The EPA anticipates that Ethanol fuel consumption will remain at approximately 14 billion gallons per year through 2025, and the final billion gallons will be covered with non-Ethanol renewable fuels.

According to a study conducted by the EPA late last year, the volume requirements for fuel Ethanol are deemed unnecessary to sustain demand. The study concluded that the expansion of corn Ethanol plants and the blend of corn Ethanol as E10, which contains 10% Ethanol, were driven by economic and market factors alone since the mid-2000s. The U.S. Department of Energy estimates that E10 is the most widely sold gasoline-based fuel in the United States, accounting for more than 98% of the country's gasoline. Ethanol proponents aim to increase the Ethanol blend to 15%, which would significantly boost Ethanol demand.

Iowa's governor, the state agriculture secretary, and Ethanol advocates, including the Iowa Renewable Fuels Association, criticized the recent decision made by the EPA to mandate 15 billion gallons of conventional renewable fuels in 2024 and 2025. The new requirement is lower than the previously proposed 15.25 billion gallons. Executive Director of the IRFA, Monte Shaw, expressed disappointment and shock towards the EPA's decision, stating that it represents a setback for Ethanol blending. Although the EPA increased volume requirements for biodiesel, which is commonly produced using soybean oil, Shaw believes that the increase is insufficient. He added that the 2025 biomass-based diesel number is projected to be less than what the market will consume this year.

On Wednesday, Senator Chuck Grassley of Iowa stated that the EPA has been granted excessive power over the federal mandates for Ethanol use, which he considers an offensive bait-and-switch to the biofuels sector. According to him, the rule will result in the loss of 43,000 jobs in Iowa and is completely incongruous with the current administration's climate agenda. The senator claimed that biodiesel and Ethanol are environmentally friendly, making the regulation's disregard for them illogical for an administration that is fixated on reducing carbon emissions. The Ethanol industry is unhappy with President Joe Biden's aggressive push towards electric vehicles.