Congress desperately needs to take legislative action to address the growing imbalance between the Renewable Fuel Standard’s (RFS) underlying statute and real-world consumer demand. Instead, it has repeatedly deferred to the Environmental Protection Agency (EPA), which has the authority to waive and amend the ethanol mandate. This has served as a short-term safety-valve, providing much-needed consumer relief from the burdensome RFS, but opportunities for Congress to pass the buck may be coming to an end.
Last week, Environmental Protection Agency (EPA) Administrator Gina McCarthy addressed Growth Energy’s annual D.C. “Advocacy Conference.” McCarthy told attendees of the ethanol industry group event THREE times her goal is to achieve the unrealistically high volumes the outdated law requires, repeatedly insisting that, “EPA is working hard to make sure the RFS program is working toward the levels Congress intended,” “…our goal is the Congressional targets…,” and finally “…we need to find common ground and focus on how to get to the levels set by Congress.”
There’s just one major problem with that: the levels set by Congress in the 2007 “Energy Independence and Security Act” are unrealistic, assuming ever-increasing gasoline consumption in tandem with the requirement to blend ever-increasing volumes of ethanol. Implementing those levels would have dire consequences for consumers. Ironically, gasoline sales have fallen off since 2007 due to better fuel economy, changing driving habits, and poor economic growth.
Even at the reduced amounts prescribed under the EPA’s latest proposed rule for Renewable Volume Obligations (RVO), the amount of ethanol required to be blended into the gasoline supply, refiners are expected to hit the dreaded “blend wall” as early as next year. The blend wall describes the maximum amount of ethanol the gasoline supply can absorb at current proportions, which are most commonly E10 (ten percent ethanol) or E0 (zero percent ethanol, which is particularly popular with boat-owners and available in limited markets). If forced to increase ethanol volume at the same time that gasoline consumption has flattened, refiners could resort to selling less E10, resulting in increased fuel prices due to supply constraint, or trying to increase sales of gasoline with higher ethanol content, such as E15, while dropping other lower blends consumers want.
The EPA would love to see more sales of E15, but the demand for more ethanol-rich fuel just isn’t there. According to AAA, “More than 85 percent of the vehicles on the road today are not approved by manufacturers to use E15, including nearly all 2001-20013 models,” despite EPA’s approval of the fuel for all 2001 or newer automobiles. Using higher blends can cause severe engine damage and void a vehicle’s warranty.
Moving toward the unworkable requirements set in the RFS statute will only exacerbate the myriad problems consumers are already experiencing such as low gas mileage, damage to motorcycles, boats, and lawn care equipment, increased food costs, and environmental damage. With the EPA doubling down on its commitment to “grow” the RFS, it’s imperative that Congress take action before we breach the blend wall