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EPA Orders Higher Ethanol Blend for 2016

(CN) - The Environmental Protection Agency said Monday that more ethanol must be blended into the nation's fuel supply next year, but the increase remains below target levels set by Congress.

Under the new rule, the EPA will require 18.1 billion gallons of renewable fuels in 2016 - most of it ethanol. The amount is far below the 22.5 billion gallons envisioned by Congress in 2007, but more than the 17.4 billion gallons originally proposed by the agency in May.

Janet McCabe, acting assistant administrator for EPA's Office of Air and Radiation, said the new standards provide for "ambitious, achievable growth."

"With today's final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time," McCabe said.

The EPA was required by a settlement with the oil industry to publish the final rule on Monday.

This is the first time since 2013 that biofuel standards have been set. The agency also retroactively set the 2014 and 2015 standards for the actual amount of biofuel used those years.

The EPA said that the final renewable fuel standard relies on the latest, most accurate data available, and was set after considering more than 670,000 public comments.

Next year's standard for cellulosic biofuel, the fuel with the lowest carbon emissions, is nearly 200 million gallons more than the market produced in 2014, and the 2016 standard for advanced biofuel is nearly 1 billion gallons higher than the actual 2014 volumes - an increase of 35 percent.

"The biofuel industry is an incredible American success story, and the renewable fuel standard program has been an important driver of that success - cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development," McCabe said.

Meanwhile, the oil industry has voiced its concerns that the new standard could push the amount of biofuel in the nation's fuel supply past the "blend wall," which it says is a percentage of biofuel in gasoline that can be processed without harming a vehicle's engine.

The American Petroleum Institute had asked the EPA to set the final ethanol mandate to no more than 9.7 percent of gasoline to help avoid a 10 percent ethanol blend wall.

The new rule will allegedly break that wall.

"EPA's final rule relies on unrealistic increases in sales of higher ethanol fuel blends despite the fact that most cars cannot use them," American Petroleum Institute President and CEO Jack Gerard said. "Motorists have largely rejected these fuels."

Gerard also said that it is confusing "that the (Obama) administration is pushing corn ethanol at the same time they pursue a climate agenda in Paris to lower greenhouse emissions. Data from EPA, Environmental Working Group, and numerous academics show corn ethanol emits more greenhouse gases than gasoline."

American Fuel & Petrochemical Manufacturers President Chet Thompson ridiculed the Renewable Fuel Standard program, calling it "irreparably broken" and stating that "the only solution is for Congress to repeal it outright."

"For starters, that EPA is just now - on the last day of November - establishing standards for calendar years 2014 and 2015 is indicative of just how dysfunctional the program has become," Thompson said. "While EPA hasn't suffered consequences from its tardiness, consumers and obligated parties are not so lucky."

Thompson said that the advanced-biofuels industry "still has not delivered on its promise of commercially viable fuels, and only the corn ethanol and biodiesel industries benefit from the renewable fuels standard."

Ethanol groups, on the other hand, blame the oil industry for keeping the standards for renewable fuel well below the targets set by Congress.

Chip Bowling, president of the National Corn Growers Association, said that it is unfortunate that the oil industry's "campaign of misinformation" continues to carry weight in the court of public opinion and in the EPA's decision.

"While we are pleased to see the EPA take a step forward and revise its original proposal, the fact remains that any reduction in the statutory amount will have a negative impact on our economy, our energy security, and the environment," Bowling said.

Renewable Fuels Association President and CEO Bob Dinneen said that the final rule fails to provide consequences for "Big Oil's bad behavior" and "places the potential growth for biofuels like ethanol in the hands of the oil companies."

Dinneen said, "It will have the unfortunate consequence of increasing Big Oil's ability to thwart consumer choice," and he added that the EPA's decision is "perplexing" because it "continues to reflect the administration's conflicting views regarding ethanol."

"The Department of Agriculture continues to fight for ethanol, working hard to secure necessary infrastructure, promoting exports, correcting food-versus-fuel myths, investing in new technologies and new feed stocks and advocating for ethanol's positive climate change benefits," Dinneen said. "The Department of Energy, too, works hard to complete biofuel research on higher ethanol blends and infrastructure that is moving this industry forward. Why is EPA so out of step?"

On the other hand, the American Soybean Association was pleased with the agency's new biomass-based diesel volume levels, which were increased from the EPA's original proposal.

The association said the new standard will provide some certainty to biodiesel producers and feedstock providers, while continuing to generate benefits for consumers and the environment.

"The administration wants to address climate change and reduce greenhouse gas emissions and biodiesel can contribute more to that effort," association president Wade Cowan said.

"As an industry we have always advocated for renewable fuel standard volumes that are modest and achievable and the biodiesel industry has met or exceeded the targets each and every year that the program has been in place," he said.

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