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EPA Sets Renewable Fuel Standards below Mandate

Cellulosic volume is lower than the Congressional EISA target.

by on Jul.12, 2010

As always, the devil will be in the final rule details after lobbyists shape the regulations.

The U.S. Environmental Protection Agency (EPA) today proposed that the 2011 percentage standards for the four fuels categories under the agency’s Renewable Fuel Standard program must make up 7.95% of total gasoline sales.

The Energy Independence and Security Act of 2007 (EISA) established annual renewable fuel volume targets, reaching an overall level of 36 billion gallons in 2022 – 16 billion gallons of cellulosic biofuels; 15 billion gallons annually of conventional biofuels; 4 billion gallons of advanced biofuels; and 1 billion gallons of biomass-based diesel.

The 16-billion gallon cellulosic target looks laughable – EPA is projecting that less than 18 million gallons of the fuel will be available in 2011.

As the implications of the act continue to unfold, critics call it a needless subsidy for agri-business, one that would take food out of production.Hence the push for cellulosic since it can in theory be made form non-agricultural crops on land not in food production.

Mandating demand for products that don’t yet exist or haven’t been proven commercially viable or are not cost effective is the height of U.S. Congressional folly, in their view. In addition, a fierce debate about how much some of these fuels actually reduce greenhouse gas emissions is underway.

Almost every gallon of gasoline now sold in the U.S. contains ethanol: 98% as E10 – up to 10% ethanol for conventional autos, and 2% as E85 – 85% ethanol/15% gasoline for use in flex fuel vehicles only. (See How a Bad Bush Administration Energy Policy Begets More Bad Policy?)

Current law and infrastructure preclude the use of greater than 10% ethanol blends in conventional autos although agricultural industry lobbyists are pushing for higher levels. In 2012, the E10 market reaches saturation at approximately 12.5 – 14 billion gallons of ethanol annually. (See President Takes Steps to Boost Biofuels, Coal Use) EPA is considering upping the required amount of ethanol right now,  but isn’t due to rule until this fall.


To achieve the volumes required by EISA, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner, importer and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must be used in transportation fuel.

The proposed 2011 overall volumes and standards are:

  • Biomass-based diesel (0.80 billion gallons – 0.68%)
  • Advanced biofuels (1.35 billion gallons – 0.77%)
  • Cellulosic biofuels (5 to 17.1 million gallons – 0.004-0.015%)
  • Total renewable fuels (13.95 billion gallons-7.95%)


How a Bad Bush Administration Energy Policy Begets More Bad Policy?

Lavish taxpayer subsidies for ethanol fuels are not enough agri-business says. Hang onto your wallet as they ask for more.

by on Apr.16, 2009


There are far too many subsidized ethanol plants to meet too little demand for the gasoline additive.

The United States Environmental Protection agency this morning requested public comments on a waiver application to increase the amount of ethanol that can be blended into a gallon of gasoline to up to 15% of volume (E15). At the heart of this seemingly innocent request is a push by taxpayer-subsidized fat cats in the agricultural sector to have you pay more for a gallon of fuel even as demand declines and fuel efficiency increases.

Since 1978, the limit has been 10% ethanol (E10) for conventional (non flex-fuel) vehicles for sound technical reasons – ethanol picks up water and corrodes the fuel systems of the vast majority of vehicles on the road today. It also has less energy density per gallon than gasoline, which means that ethanol fuels provide fewer miles per gallon when you use a fuel with it, adding increased driving cost to the insult of taxpayer subsidies.

The request for the waiver to increase the percentage of ethanol in the fuel you buy comes from 54 ethanol manufacturers who are struggling to remain in business since the price of oil has dropped. Now even the taxpayer subsidized cost of ethanol is no longer competitive on the market. Today regular gasoline is averaging $2.05 a gallon, down from $3.40/gallon a year ago, according to AAA.

In the face of a decline in gasoline usage in the U.S., where even ExxonMobil says demand is probably at or near its peak, there are far too many ethanol plants to meet too little demand for the gasoline additive.

You are already subsidizing ethanol at 45 cents per gallon by way of a tax credit to companies that blend ethanol with gasoline, as well as a requirement that ethanol be blended into gasoline. As a result, U.S. consumption of ethanol last year exceeded 9 billion gallons — a record high, according to the Congressional Budget Office. That credit is costing U.S. taxpayers revenue losses of between $3 and $4 billion a year.

This production subsidy for ethanol applies to both domestic and imported ethanol, but the United States charges importers of ethanol a tariff of 54 cents per gallon and an ad valorem tariff of 2.5% of the value of the imported ethanol, which means countries such as Brazil that can produce ethanol much more efficiently than the U.S. are blocked from selling it here. (Prices for ethanol sold in the United States fluctuated between $1.61 and $2.90 per gallon in 2008.)

It was the business-interest subservient Bush Administration that put the subsidies in place by way of the Energy Independence and Security Act of 2007, and mandated that the required usage of biofuels in the United States be at least 20.5 billion gallons annually by 2015, or more than double the country’s usage in 2008. This from an administration that professed to “let the free market sort things out” while its leader Bush — aka “I’m the decider” — was doing exactly the opposite. (more…)