WASHINGTON - Inside EPA reports that the Environmental Protection Agency (EPA) is trying to downplay fears that its pending vehicle greenhouse gas (GHG) and fuel economy rule conflicts with compliance of the renewable fuels standard (RFS).
The issue arises as fuel economy rules dictate reducing overall fuel use, which could potentially lead to the need for higher ethanol blends. However, an infrastructure does not exist to accommodate the higher blends.
Margo Oge, director of the EPA Office of Transportation & Air Quality, said the agency will not be forced to sanction higher ethanol blends - from E15 up to E40 or E50 ?" though she did not say whether and by how much concentration levels would need to rise.
"We have done the analysis, and it is not E40" that is needed to meet the RFS when the 2017-2025 fuel economy rule is in effect, she said. However, she conceded that the E10 "blend wall" would be reached in 2013, after which "a little bit more ethanol" will be needed.
Oge was responding to concerns from representatives of the biofuels industry and NACS that the upcoming vehicle GHG rule for model years 2017-2025 will sharply reduce fuel use, which will make it difficult for refiners to meet the current RFS supply mandates, as there will be a smaller volume of gasoline in which to blend renewable fuels.
NACS told EPA in written comments on the proposed vehicle GHG rule that the RFS was designed to represent up to 25% of the gasoline market based on 2007 consumption levels and factoring in a 1% annual increase in demand.
However, the proposed new fuel economy rule could "dramatically" reduce the amount of fuel consumed in 2022 and beyond, "creating a situation in which renewable fuels will be required to represent a significantly greater share of the market than originally anticipated," NACS wrote.
As E10 and E85 are already finding it difficult to meet the RFS mandates, NACS warned the vehicle rule would only heighten the problem, projecting the need for a blend rate of 37.51% in 2022 and a fuel blend of up to E50 by2035, in order to comply with the RFS.
The problem with that scenario, NACS said, is "every fuel retailer will be required to replace all of their fueling equipment," at an estimated cost in excess of $20 billion.
The Renewable Fuels Association (RFA) said EPA conducted some analyses of the issue, concluding that a significant amount of high-level ethanol blends (primarily E85) will need to be sold to achieve the [second-phase RFS rule] goals" but that the agency overestimated the amount of E85 that could be sold due to infrastructure limitations.