In a first, EPA cuts ethanol standard

In a move likely to anger corn farmers and their congressional representatives, the Obama administration Friday proposed the first-ever cut in the amount of corn-based ethanol and other biofuels that must be mixed into the nation’s gasoline.

The Environmental Protection Agency concluded that the mandate set by Congress just six years ago is proving difficult and perhaps impossible for gas producers to meet.

The move could spark a fight from corn growers and those who have argued the ethanol mix was key to reducing the nation’s dependence on foreign oil suppliers.

The EPA proposal would require refiners to blend about 15.2 billion gallons of renewable fuels such as ethanol into the nation’s gasoline supply — a decline of nearly 17 percent from the level set in the 2007 law. That law gave regulators the flexibility to cut the standard if market or production conditions dictated a change.

With ethanol by far the leading biofuel, it will be hurt the most by the renewable fuels mandate reduction.

Ethanol producers and lawmakers from major corn-producing states have lobbied the EPA not to lower the mandate, but the agency was responding to growing pressure from oil companies and refiners who argued that the mandate levels were too high and increasingly uneconomic. Opponents also argued that the gasoline blended with the mandated 15 percent ethanol was being rejected by consumers because of potential damage to engines. Standard gasoline stocks contain around 10 percent or less ethanol.

Major shifts in the U.S. and global energy markets — including soaring U.S. energy production based partly on natural gas fracking, and falling demand overall for transportation fuel — also have made the ethanol mandate less attractive to producers.

EPA officials said they were still committed to alternative fuels as part of a comprehensive energy strategy. If the EPA stuck to the volumes mandated by law, the amount of biofuel required would generate more ethanol than many engines can safely handle, officials said.

“Biofuels are a key part of the Obama administration’s ‘all of the above’ energy strategy, helping to reduce our dependence on foreign oil, cut carbon pollution and create jobs,” said EPA Administrator Gina McCarthy.

The National Biodiesel Board, an industry trade group, immediately issued a statement slamming the EPA plan.

“This proposal, if it becomes final, would create a shrinking market, eliminate thousands of jobs and likely cause biodiesel plants to close across the country,” said Anne Steckel, NBB vice president of federal affairs said in a statement. “It also sends a terrible signal to investors and entrepreneurs that jeopardizes the future development of biodiesel and other advanced biofuels in the United States.”

The Obama administrationEPA is “putting the nation’s renewable energy policy in the hands of the oil companies,” added Bob Dinneen, head of the Renewable Fuels Association, another major ethanol industry group.

Sen. Chuck Grassley, Iowa Republican and a leading supporter of ethanol in Congress, angrily denounced the EPA proposal, signaling the administration move may face flak on Capitol Hill.

“It’s disappointing that a president who claimed to be a supporter of renewable energy has allowed his administration to take us a step back in lessening our reliance on foreign sources of oil,” Mr. Grassley said.

American Petroleum Institute President Jack Gerard, in a conference call with reporters Friday, praised the EPA move for heading off looming production problems in the coming year, but said the proposal did not go far enough.

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About the Author
David R. Sands

David R. Sands

Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.

At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...

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