Ethanol producers and Nebraska's congressional delegation criticized the U.S. Environmental Protection Agency's proposal to lower below targets set by Congress the amount of renewable fuels that must be mixed into the nation’s fuel supply.
The agency on Friday released its Renewable Fuel Standard proposal extending through 2016, as well as volume requirements for bio-diesel in 2017. The standard sets how much biofuel, including ethanol, must be used in the U.S.
Nebraska Ethanol Board Administrator Todd Sneller said the proposed rates undermine a program that was designed to stimulate the agricultural economy and U.S. energy production.
“It comes at a time when we have a demonstrated ability to produce more grain-based -- particularly corn -- ethanol, and takes away one of the mechanisms that was a real driver for agriculture," he said.
Nebraska is second only to Iowa in ethanol production, with 25 plants that employed 1,300 people last year. The biofuel had a nearly $5 billion impact on Nebraska’s economy last year, according to a University of Nebraska-Lincoln report released in April.
The EPA’s proposal requires 16.3 billion gallons of total renewable fuel in 2015 and 17.4 billion gallons in 2016. The EPA said 15.93 billion gallons were used last year.
While the standards for 2015 and 2016 represent an increase -- the 2016 volume is about 9 percent higher than the amount used in 2014 -- they fall short of meeting 2007 Congressional targets that included 20.5 billion gallons in 2015 and 22.25 billion gallons for 2016.
Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation, said Congress foresaw that the bar might need to be lowered and gave EPA authority to do so.
“We know that opportunities lie ahead for the biofuels sector as we work through the challenges we face in transforming the nation’s fuel supply. These proposals reflect the Administration’s confidence that renewable fuels can continue to steadily advance and grow,” she said in an online post.
McCabe said the targets reflect two realities: Congress intended that renewable fuel production grow over time; and there are limits to the amount of biofuel the market will bear.
She said the new standards would allow for responsible growth of higher blends of ethanol, such as E15 and E85.
Americans are driving less and their vehicles are getting better gas mileage than when the standards were last set in 2007.
Fuel consumption peaked in 2007. The nation consumed 136.8 billion gallons of gasoline in 2014, about 4 percent less than the record high.
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Nearly every gallon of gas sold now contains 10 percent ethanol.
The oil industry has long called for Congress to scrap renewable fuel standards saying it has hit a blend wall, meaning the nation’s fuel system has maxed out the amount of ethanol it can handle at 10 percent of the fuel consumed.
American Petroleum Institute President Jack Gerard praised the EPA’s decision and said ethanol mandates should be even lower.
“EPA must set the final ethanol mandate to no more than 9.7 percent of gasoline demand,” he said during a Friday conference call. “This will help ensure drivers are not forced to put high-ethanol fuel blends into cars and equipment that aren’t approved to use them.”
Sneller, Nebraska’s top ethanol spokesman, called the institute’s statements “devious and misleading.”
Nebraska typically uses 5 to 7 percent more ethanol than the 10 percent the oil industry has touted as the blend wall, and that can be increased through sales of 15 percent and 85 percent ethanol blends, he said.
All categories of renewable fuel would see growth under the EPA proposal, with the biggest increase in cellulosic ethanol made from wood, grasses or inedible parts of plants, which will go up more than 6 times from 33 million gallons in 2014 to 206 million in 2016.
The targets for 2014 released Friday are more than a year behind schedule, which created great uncertainty in the renewable fuel market. Federal regulations call for the standards to be finalized in the November before the year they target. The EPA finally agreed to set the standards as part of a settlement to a lawsuit by the oil industry.
"The EPA must be more timely in its rulemakings and follow the law," said Nebraska Sen. Deb Fischer.
Rep. Adrian Smith, R-3rd District, expressed disappointment in the numbers released by the EPA.
“Record harvests show the supply exists, but excessive government regulation continues to prevent this clean, efficient and affordable fuel source from reaching consumers. Ironically, the EPA is blaming ‘constraints in the fuel market’ for its decision,” he said.
Sen. Ben Sasse, Nebraska’s junior Republican senator, also criticized the EPA.
“Nobody at the EPA was elected by Nebraskans, but that hasn’t stopped them from making work harder for our state’s farmers and ranchers this week,” he said. “It’s clear that the administration is out of touch with rural America.”
The National Corn Growers Association called the move a gift to the oil industry.
The EPA will take public comment on the renewable fuels proposal through July 27 and hold a public hearing June 25 in Kansas City. The agency plans to finalize volume standards by Nov. 30.