Obama Administration announces proposal to lower Ethanol blending

Obama Administration announces proposal to lower Ethanol blending

In an announcement made on Friday, the Obama Administration has put forth a proposal for lowering the amount of renewable fuel, Ethanol, to be blended into the US gasoline supply from 2016 onwards. The proposal comes at the back of a court order which has stipulated a June 1 deadline for lower Ethanol blending.

The Environmental Protection Agency called the proposal as being ‘ambitious, but responsible’, one that very well balanced the fact that congressional forecasts were no longer realistic, with the Obama administration's commitment to grow renewable fuel use.

The present proposal by the EPA requires refineries to blend 16.3 billion gallons for the current year, less than the 20.5 billion set by Congress. For 2016, 17.4 billion gallons of renewable fuel is to be blended, much of it from corn, but 3.4 billion gallons would come from advanced biofuels such as cellulosic ethanol made from grasses and wood chips. Even this figure is below the 22.3 billion target set by Congress.

The Law regulating the Renewable Fuel Standard that came in 2007, required increasing amounts of alternative fuels to be blended into cars, trucks and other vehicles. Now, any change in this existing legislation might not have an impact on the ultimate users, but would surely influence the livelihood of the farmers in Iowa, wherein ethanol formed 27 percent of the country’s production in 2014. Thus, the ethanol groups have argued that such a move by EPA would stifle progress of renewable fuels and have accused the agency of aligning with the oil industry.

However, the EPA maintained that it had the legal authority to adjust the numbers to below what Congress intended. It attributed the lower blending to slower than expected growth in cellulosic ethanol that still has an growing market, gasoline consumption that has not kept pace with forecasts and higher ethanol blends such as E15 and E85 that have not been widely accepted, as the demand has been for E10.

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