The government's latest mandate for blending corn ethanol in gasoline would raise the cost of fuel and potentially damage millions of vehicle engines, the oil industry argues in comments it sent to the Environmental Protection Agency on Monday.
The American Petroleum Institute and refiners previewed their comments on a conference call with reporters, saying the EPA's latest Renewable Fuel Standard proposal would increase the amount of ethanol in gasoline to dangerous levels beginning in 2016.
EPA's fuel standard requires oil refiners to blend increasing amounts of corn ethanol and other renewable fuels into the nation's gasoline supply. EPA hit the reset button on the 2014 proposal late last year, after an outcry from renewable fuel producers forced it to scrap an earlier proposal.
The biofuel industry accused EPA of being overly accommodating to the oil industry in writing the proposal, which for the first time in the program's 10-year history reduced the blending targets for corn-based ethanol.
EPA's solution to the problem was issued in May, with a rule that sets the fuel blending goals for three years, instead of just one. The rule retroactively establishes the 2014 and 2015 targets, while setting the goals for 2016. The EPA will take the comments it receives by the Monday deadline in making adjustments to the final regulation. The rule is slated to be issued before the end of November.
One of the reasons EPA is having such a hard time setting the ethanol mandate is because of concerns raised by refiners that the standard is approaching a "blend wall" — or the limit at which ethanol can be safely blended in the gasoline supply. The petroleum institute warns that if the standard goes over the wall of 9.7 percent ethanol in gasoline, the fuel would damage vehicle engines. At the same time, the EPA is trying to balance those concerns with the ethanol industry's arguments that staying below that amount would erode the market for renewable fuels.
The 2014 and 2015 proposals appear to address the blend wall concerns, but EPA gets it wrong in 2016, said Bob Greco, the institute's director of downstream affairs. The group's joint comments with the American Fuels and Petrochemical Manufacturers urge the agency to re-examine fuel data, where they say the agency overestimates the amount of higher ethanol blends consumers will use next year.
Greco said high ethanol blends, including 85-percent and 15-percent ethanol fuels, would place most consumer vehicles at risk of engine damage. "High ethanol blends – such as E15 and E85 – that EPA is pushing are not compatible with most cars on the road today, and they could potentially put American consumers and their vehicles at risk," he said.
Furthermore, EPA's assumptions about consumer demand for renewable fuels is not accurate, the groups say. API and the refiners say they have not seen any significant demand for the fuels.
"Consumers have shown they have little to no interest in purchasing increasing amounts of high ethanol fuels," Greco said. "Consumers' interests should come ahead of ethanol interests." He also said the EPA doesn't account for growing demand in zero-ethanol fuels for lawn equipment and boats that are easily damaged from fuel containing the corn-based biofuel.
The higher blends of ethanol also reduce a vehicle's fuel economy because of their lower energy density, requiring consumers to double the amount of times they refuel their vehicles. Because of the higher refueling frequency, the oil groups say the RFS will act as an added "tax" on gasoline for consumers.
Greco said it would add at least $1,200 per year to consumers' gasoline bill. He says the cost disadvantage of higher ethanol fuels is something the Department of Energy has acknowledged, according to the groups. "According to data from the Department of Energy, E85 costs more money in the long term because of its lower fuel economy," the petroleum institute said
Greco said his group and others also are asking Congress to repeal or significantly reform the fuel standard, as many of the problems cannot be adequately fixed by EPA and must be addressed through legislation.
The ethanol industry and its supporters are not happy with the three-year proposal, either. They say the EPA illegally used its waiver authority to roll back the ethanol mandate, which may drag the agency into court, say ethanol proponents.
EPA's waiver authority is meant to be applied only when a supply disruption limits the amount of ethanol able to meet the mandate. But the agency is using the authority to address issues affecting the demand for renewable fuels, such as fueling infrastructure, according to the ethanol industry and farming groups.
Even though the oil industry argues that the ethanol mandate is too high, the EPA is scaling it back from what Congress required of it under the 2007 energy law. Greco said the agency is acting within its authority in lowering the standard, but needs to go further.
On the other side, the National Farmers Union says the "volume standards issued in EPA's proposed rule … are unacceptable and will further hurt investment in a renewable fuel sector that has already been damaged by significant delays in issuing the standards."
Roger Johnson, president of the farmers union, said his group is urging "the administration to comply with the RFS levels already provided in the popular, bipartisan" 2007 energy law, which doubled the mandate. The farmers want the agency to move forward with the highest targets required under the law.