According to Purdue University energy policy specialist Wally Tyner, the U.S. can likely produce federally mandated levels of biofuels under the Renewable Fuel Standard (RFS) in 2014 if the Environmental Protection Agency (EPA) reduces its requirements by 2.3 billion gallons. The RFS requires a minimum amount of biofuels to be blended into transportation fuels such as gasoline and diesel. For 2013, that level is 16.55 billion gallons. As it stands now, the volume requirement continues to rise each year until 2022.
Tyner projects that refiners could reasonably expect to produce 15.85 billion gallons of biofuels, less than the 18.15 billion that the EPA requires in its RFS for 2014. The EPA said on Aug. 6 that it will “propose adjustments” to next year’s volume requirements in the next few weeks. One element that has caused the EPA to change required volumes is the lack of commercially available “advanced” and “cellulosic” biofuels. However, despite the lowering of these category volumes, the EPA has maintained the overall biofuels production requirement.
“The devil is in the details. However, it is clear that if the EPA does what is implied … the RFS moves from being unworkable to quite manageable,” Tyner says in his article, “The Biofuels Renewable Fuel Standard – EPA to the Rescue.”
The RFS has been a topic of debate for several years in part because of the corn ethanol “blend wall,” the point at which the market cannot consume as much ethanol as the EPA requires to be produced. One reason, and one that was not factored in during the development of the RFS, is the decreased consumption of gasoline nationwide - from 141 billion gallons in 2007, when the RFS mandates were last updated, to a rate of 133 billion now.
Tyner calculates in the report that 15.85 billion gallons of biofuels can be produced in 2014 if the EPA reduces its volume targets for corn ethanol to better align with the blend wall, and by lowering its requirements for production of cellulosic biofuels such as from corn stover, straw and Miscanthus grass to what the EPA might deem to be available.
He said blend requirements could be met in 2015 and 2016 with similar reductions. With no changes in the RFS, the energy industry would have to blend 20.5 billion gallons of biofuels into gasoline in 2015 and 22.25 billion gallons in 2016. His calculations would reduce those totals to 16.58 billion in 2015 and 17.3 billion the following year.
The EPA has shown willingness to reconsider the blend mandates and using information it has at hand, along with analyses done by the Energy Information Administration (EIA), plans to announce final 2014 volumes sometime this fall.