NCPA - National Center for Policy Analysis

Proposed Ethanol Mandate Waiver

October 31, 2014

The Environmental Protection Agency is in charge of the Renewable Fuel Standard, a mandate that requires refiners to blend a certain amount of ethanol with traditional gasoline before selling it as fuel. The law has been in place since 2005, and the amount of ethanol that must be added to fuel rises from year to year. The standard ethanol blend is 10 percent, though there is also an E85 blend consisting of 85 percent ethanol. 

But the mandate has caused a number of problems, including lower fuel efficiency and higher corn prices. According to Zack Colman of the Washington Examiner, while refiners produce the high ethanol blends like E85 in order to comply with the mandate, few automobiles actually use the fuel. Of those that can take E85 fuel, each vehicle uses just one tank's worth of E85 annually.

Colman reports that a year ago, the Environmental Protection Agency proposed that oil refiners could be exempted from the mandate if there was a "distribution capacity" shortage -- for example, not enough gas pumps or pipelines to distribute higher ethanol blends, such as E85.

The biofuel industry insists that the fuel has low use only because it is not widely available. Oil refiners disagree, saying that gas stations do not carry the fuel because drivers are not interested in E85. Biofuel groups say that the waiver would allow oil refiners to escape the mandate if gas stations refuse to install the appropriate infrastructure to carry high ethanol blends. But refiners own less than 5 percent of all stations and have no say in adding new pumps, says Colman.

Moreover, there are other "distribution capacity" constraints beside gas pumps - a lack of storage tanks, tankers and enough cars that can run on high-ethanol blends could also qualify as a capacity shortage.

Source: Zack Colman, "Groups worried over biofuel waivers," Washington Examiner, October 30, 2014.


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