Study finds EISA 2007 law’s renewable fuel mandates won’t work in 2015

It will not be feasible for the US to reach renewable fuel volumes that the Energy Independence and Security Act of 2007 (EISA 2007) mandates in 2015 and beyond, a study commissioned by the American Petroleum Institute concluded.

“The current level of gasoline demand, the blend wall limiting the share of ethanol that can be blended into the gasoline pool, and the lack of non-ethanol biofuels limit the market potential for total renewable biofuels,” the study by National Economic Research Associates (NERA) said.

“Similarly, the current market potential for higher ethanol content gasoline like E85 and E15 is too small to have an immediate impact on the amount of ethanol that the gasoline market can absorb,” it continued.

The US Environmental Protection Agency would need to use two different waiver authorities to reduce required volumes for cellulosic ethanol and for total renewable biofuels and advanced biofuels, as well as a general waiver for both advanced biofuels and total renewable fuels, to keep renewable fuels requirements under EISA 2007 feasible, NERA’s study said.

“When the required biofuel volume standards are too severe,…the market becomes disrupted because there are an insufficient number of [renewable fuel credits] to allow compliance,” it warned. “‘Forcing’ additional volumes of biofuels into the market beyond those that would be ‘absorbed’ by the market based on economics…will result in severe economic harm.”

Significant expansion

The 2005 Energy Policy Act established a federal Renewable Fuels Standard (RFS) to help reduce US dependence on oil imports from politically unstable overseas suppliers, and encourage development of a US renewable fuels industry. EISA 2007 significantly expanded the RFS’s required renewable fuel volumes.

“Current mandates try to force more ethanol into gasoline than is safe for the majority of cars on the road,” API Downstream Group Director Bob Greco said on Sept. 9 as the trade association released the study. “Rather than risk damage to vehicles, NERA predicts that refiners will instead be forced to reduce the nation’s supply of gasoline and diesel by as much as 30%.”

Calling the RFS “a dangerous piece of backward-looking energy policy that threatens consumers and our fuel supplies,” Greco said API would continue to push for its full repeal, but is urging EPA to reduce the law’s ethanol volume requirements in the meantime.

“The ethanol industry is advocating the statutory limits,” he told reporters during a teleconference. “They’re actively in play. We applaud EPA’s efforts to recognize the blend wall, and want to educate policymakers how dangerous the statutory limits are and why it is so unproductive for EPA to have to consider them every year.”

Greco said API sent a copy of the study to EPA because it felt the findings were important, and did not want to risk having them buried within broader comments. The federal regulator faces a Nov. 30 deadline for issuing a final rule.

“While API continues to press for full repeal or significant reform of the RFS, we understand that will take time,” Greco said. “In the meantime, as the NERA study concludes, the consumer could feel the pinch in the form of higher energy costs. That’s why we urge EPA to reduce the total renewable fuels volume requirement and waive the cellulosic ethanol requirement for 2014, 2015, and 2016.”

Contact Nick Snow at nicks@pennwell.com.

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