Gasoline refineries seek relief from federal ethanol mandate

Posted Aug. 14, 2013, at 6:13 p.m.
Jeff Timberlake
Courtesy of maine.gov
Jeff Timberlake

AUGUSTA, Maine — Refinery officials say a federal mandate on blending ethanol into gasoline is impossible to meet, and they want the Environmental Protection Agency to relax the rules for 2014.

The mandate requiring gasoline sold in the United States to include 10 percent ethanol will cost refiners more than $700 million — which will more than likely be pushed down to consumers at the pump.

That federal mandate also requires steadily increasing the amount of biofuels, including ethanol.

Charles Drevna, the president of the American Fuels and Petrochemical Manufacturers, said a decrease in gasoline consumption partly due to a slowed-down economy and partly due to increased fuel efficiency has left refiners unable to meet the ethanol mandate. To satisfy the law, they must purchase credits equivalent to the mandate and those credits cost as much as $1 per gallon.

The AFPM and the American Petroleum Institute have petitioned the EPA to use its authority to waive the requirement for 2014. If the EPA agrees, that would relieve the industry from blending an additional 3.5 billion gallons of ethanol into gas.

That doesn’t mean gas sold in Maine or New England would be ethanol free, but it would likely mean retailers in the Northeast would not be required to sell gas with a 15 percent ethanol blend or higher to achieve the RFS benchmark.

Ethanol in fuel became common beginning in 2007 with passage of the federal Renewable Fuel Standard, which required fuel producers to increase the amount of renewable fuels in gasoline. The law required the use of 9 billion gallons of renewable fuel in 2008 but that number will rise to 36 billion gallons by 2022.

“Refiners and other obligated parties, the importers of gasoline and gasoline blendstock are facing a significant dilemma, ” Drevna said. “The bottom line — the law says that every year we have to blend more and more biofuels into the gasoline and diesel supply.”

But the bulk of American automobiles along with virtually all off-road gas-powered small engines could be damaged by using gasoline with a 15 percent ethanol content, Drevna said.

According to the American Automobile Association, approximately 95 percent of vehicles on the road could have their warranties voided because auto manufacturers have said E15 doesn’t comply with their vehicles’ fuel requirements.

The Renewable Fuels Association, representing the ethanol industry, disputes that and claims that about 62 percent of light-duty vehicles can use E15.

But there’s also some concern that ethanol industry may not be able to produce enough of the additive to meet the ever increasing mandate.

Earlier in August, Brooke Coleman, the executive director of the Advanced Ethanol Council, an industry association, released a statement praising the EPA for sticking to the RFS increases for 2013 and noted the industry was able to keep up this year.

“We are at a critical juncture in the implementation of the RFS, with advanced biofuels just beginning to come on line,” Coleman said. She also noted EPA’s ability to annually adjust the standard is an important part of the federal law and shows it was designed to be responsive to the marketplace and economy.

“Amidst all the smoke and mirrors coming from those who do not want to see competition in the motor fuel marketplace, people need to remember that the renewable fuels industry produced enough conventional and advanced renewable fuel to meet the original legislated standard through 2012, and expect to again in 2013,” Coleman said. “This is a tremendous accomplishment in a challenging fiscal environment.”

Earlier this year, the Legislature debated a series of bills regarding ethanol including one that would have prohibited the sale of ethanol gasoline in Maine if five states also passed similar bills.

While the bill was rejected by the Legislature’s Environment and Natural Resources Committee on a 7-6 vote, the full House approved the bill 109-31.

The Legislature later passed an amended version of the bill, signed by Gov. Paul LePage, that would ban the sale of ethanol blended gasoline if at least 10 other states passed similar laws.

It remains unclear how that legislation, authored by Rep. Jeff Timberlake, R-Turner, would ultimately be viewed by the federal government.

The bill enjoyed the support of the Maine Snowmobile Association, Maine Pilots Association, Maine Rental Association, Antique Auto Clubs, Maine Small Engine Dealers, Maine Boat Dealers and the Maine Auto Dealers Association.

Those who voted against the bill said Maine should be careful in passing legislation that bucks federal regulations.

“The federal government requires significant use of renewable fuel, and currently ethanol is the only viable option,” said Rep. Joan Welsh, D-Rockport, chairwoman of the Legislature’s Environment and Natural Resources Committee. “There’s no cost-effective source of non-ethanol fuel currently available.”

Timberlake agrees with Drevna that the federal law mandating ever-increasing amounts of ethanol should be repealed and not managed on an annual basis by the EPA.

But he also said the fuel industry in the United States is tied to ethanol and has too much at stake financially to push for its elimination in gasoline.

“The industry doesn’t want to do that because they’ve invested billions of dollars in this ethanol industry,” Timberlake said. “The fact of the matter is that Shell and Gulf and BP and all these companies own the ethanol plants and they are making money selling ethanol.”

He said keeping gasoline at 10 percent ethanol will keep people worried about engine damage from complaining but it doesn’t resolve many of the other issues around the additive that even some environmental groups are starting to point out.

“You can’t continue to burn your food in your fuel tank,” Timberlake said. He said the original intent behind ethanol as an alternative to gasoline derived from the fact that imported oil was no longer valid as the United States continues to develop and produce new sources of domestic oil.

“The fuel industry still has great interest in the ethanol industry because they own the plants and are really pushing to make sure that ethanol stays in the gas,” Timberlake said, “instead of finding a solution to the ethanol problem, because ethanol is still ruining our engines.”

The EPA has 90 days to rule on the industry’s waiver request.

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