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Linn Energy, LLC (LINE) Message Board

  • rlp2451 rlp2451 Oct 10, 2013 7:04 PM Flag

    OT: EPA Considers U.S. Ethanol Mandate Cut Amid Refiner Concerns

    October 10, 5:00 PM Business Week

    The U.S. Environmental Protection Agency is considering scaling back legal requirements on the use of ethanol next year amid complaints from refiners that statutory mandates would exceed their ability to blend it into fuels without putting engines at risk.

    A proposal from the agency would cut the mandate to 15.21 billion gallons for renewable fuels in 2014 instead of the 18.15 billion gallons established by a 2007 law, according to an internal proposal provided to Bloomberg. The agency would call for the use of 13 billion gallons of conventional corn-based ethanol and 2.21 billion gallons of advanced biofuels such as biodiesel, down from 13.8 billion gallons and 2.75 billion gallons respectively this year, it said.

    The EPA proposal is “addressing both availability of qualifying renewable fuels and constraints on their consumption,” the agency said in the draft, which is dated Aug. 26, just days before a plan was officially submitted to the White House for review. The EPA document was provided to Bloomberg by an industry representative.

    The EPA is also considering dropping the requirement for cellulosic fuels to just 23 million gallons from 1.75 billion gallons as required in the law, as production of fuels made from scrap wood or corn husks has failed to grow as expected, according to the proposal.

    Corn prices dropped when news of the EPA action broke in early afternoon.

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    • The oil industry has argued that the existing vehicle fleet and current refueling infrastructure are incapable of absorbing significant volumes of ethanol above the E10 “blend wall.” This contention is completely false.

      EIA projects 2014 gasoline consumption will total 132.9 billion gallons, meaning 13.29 billion gallons of ethanol can be consumed via E10 blends. This leaves a need for 1.1 billion gallons of ethanol consumption above the E10 “blend wall” in order to fulfill the 14.4-billion-gallon difference between total renewable fuel and advanced biofuel.

      The light-duty vehicle fleet has the capacity to consume significantly larger volumes of ethanol: By 2014, roughly 9% of the light-duty vehicle fleet will be comprised of flex-fuel vehicles (FFVs) that are capable of operating on gasoline blends containing up to 85% ethanol (E85). These vehicles alone would have the annual capacity to consume 8-9 billion gallons of ethanol above the E10 “blend wall.” In addition, 80% of the fleet will be comprised of vehicles that were built in 2001 or later, meaning they are legally approved to
      consume E15.

      Further, roughly 45% of new vehicles sold in 2014 will be explicitly approved and warranted by the automakers to use up to E15. Overall, when FFVs and E15-approved vehicles are properly considered, the light-duty vehicle fleet will have the capacity to consume some 26-28 billion gallons of ethanol in 2014. Clearly, vehicles are not a limiting factor in meeting 2014 RFS requirements.

      • 1 Reply to rlp2451
      • I wonder if the absolute values they set had something to do with projected growth from 2007 numbers, which would include the increased use of fossil fuels, and new vehicle sales. Since the growth has been a "tad bit" off the projections *cough* perhaps the projected usage mandated also requires some adjustment. I mean really, vehicle sales dropped from around 8 million to around 4 million in 2009. We are just now getting back up to the 2007/2008 new vehicle sales. If the projections were based on 8 million new cars a year many of which would be FFV, I can see where a 2007 projection will need some adjustment. It actually looks like the right thing to do to me...

        If that actually is the case, I would have to condone what the EPA is doing here, regardless of the narrow view facts you are presenting. Realize something here, if the current administration is scaling back on renewable energy, the situation would be catastrophic and embarrassing if driven forward "on schedule". It does not fit their motive to scale it back unless there is something that will severely damage the message going forward.

        Is it going to hit farmers, you betcha it is. That is going to suck. However the forward movement of an obvious bubble over driving demand would suck more for a lot more people. If they deflate it now, the effects will be smaller, and projections can take into effect the financial situation of the day looking forward. Hopefully they can balance the production and reduction to minimize the impact to the farmers.

    • the farm states aren't going to like this

 
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