2014 is nearly over, but we won't know how much ethanol the U.S. EPA will require to be blended into gasoline for 2014, until 2015. The EPA announced last week it will delay issuing the standard.
The ethanol industry and refining industry are on opposite sides of the Renewable Fuels Standard debate. The RFS requires increasing amounts of ethanol in gasoline every year, unless there are compelling economic reasons to depart from the practice.
Earlier this year, the EPA indicated it was planning to lower the Renewable Fuels Standard for the first time since 2007 – because it appeared the amount of ethanol in gasoline would have to exceed 10% – and the effect of higher ethanol blends on older engines is unclear.
The delay on issuing that standard has generated relief among corn ethanol lobbyists.
Bob Dineen is President of the Renewable Fuels Association.
"Their proposed rule would have been a train wreck for the industry. It would have set the renewable fuels effort back by a lot," says Dineen. "So by backing away from the rule and deciding we're not ready to finalize that yet, is a good thing. "
The American Petroleum Industry sees it differently.
"We have an administration that has now said, we cannot finalize the standard until the year is over," says Bob Greco of API. "After all the gasoline has been blended, then we'll tell you what you should have complied with for the year. This shows how broken and mismanaged this whole renewable fuels standard is. The RFS ought to be scrapped and started over at this point."
Dineen says although he hopes the EPA reverses course and requires refineries to increase ethanol blending, he would still prefer the agency meet its deadlines.
"I did not send them a calendar last year," he jokes, "and I clearly should have, so I am not going to make that same mistake again."
Many environmentalists have backed off from their early enthusiasm for ethanol. A majority of environmental studies show that ethanol, when made from corn, causes more damage to the environment, and more carbon emissions, than gasoline.
Ethanol has less energy than gasoline, so it lowers fuel efficiency.
And, the U.S. is now on a home oil boom, thanks to fracking, and is on track to produce more oil than it imports for the first time. So energy independence doesn't have the same urgency it had in 2007, when the Renewable Fuels Standard was passed.
The standard is also in conflict with the nation's fuel economy regulations, which require increasingly greater fuel efficiency through the year 2025.
Ethanol, however, has less energy than gasoline, so it lowers fuel efficiency.
Renewable fuel advocates say ethanol eventually could be produced in a more environmentally sound way, using materials such as corn husks or grasses. But it has proved more difficult than first envisioned to produce ethanol with those materials compared to corn, which is loaded with natural sugars.
The petroleum lobby and the corn growers lobby are both highly influential in Washington, which means the fate of the Renewable Fuels Standard could be in limbo for some time.
