Biofuel industry representatives are urging the U.S. government to maintain rather than scale back the requirements of the Renewable Fuel Mandate, which obligates oil companies to buy and blend renewable fuels like cellulosic corn ethanol into gasoline.
The Environmental Protection Agency expects to decide on its 2014 renewable fuel requirements by June, Administrator Gina McCarthy said last week.
U.S. demand for corn-based ethanol is driven by EPA’s requirements under the Renewable Fuel Mandate, which was initiated when gasoline consumption was higher than it is now and expected to keep growing. In fact, gasoline consumption has declined in recent years because of greater vehicle fuel efficiency, but the EPA’s mandates for the biofuel percentage in each gallon of fuel has increased for the past several years. The requirement for blending biofuels -- essentially cellulosic corn ethanol -- into gasoline is now approaching 10 percent, a level known as the "blend wall" that automakers warn has the potential to clog engines, cause breakdowns and void vehicle warranties. The ethanol lobby denies the existence of a blend wall at the 10 percent level.
Five witnesses testified in a hearing Tuesday before the Senate's Agriculture, Nutrition and Forestry Committee, chaired by Sen. Debbie Stabenow, D-Mich., arguing that if the EPA decides to reduce the minimum requirement of renewable fuel, it would reverse progress made to lower carbon emissions and retail gasoline prices.
“This really would put biofuels in a downward movement and stop the positive impact it has had on energy prices,” Jan Koninckx, biorefineries director of DuPont Industrial Biosciences, said at the hearing.
DuPont began researching cellulosic ethanol production a decade ago and opened a demonstration facility in Tennessee in 2009 to research methods of converting biomass into fuel. The company is currently building a plant in Iowa to produce fuel from corn stover.
"The product at first will be more expensive than corn ethanol, but the cost will come down over time," Koninckx said. "We anticipate competing with oil over time at $80 a barrel."
He added that “there really is no blend wall,” the highest percentage of ethanol blended into gasoline thought to be safe for engines, which is currently 10 percent in the U.S. or e-10. “The technology to go beyond e-10 is there.”
Coordinating Research Council, Inc., a non-profit supported by the petroleum and automotive equipment industries, concluded after testing that ethanol blends higher than 10 percent can damage engines and fuel systems of vehicles, even those approved by the EPA to use the fuel, causing them to break down. Many auto manufacturers refuse to honor warranties for damage caused by ethanol blends, and according to an AAA study only 12 million out of the 240 million light-duty vehicles on U.S. roads have been approved by manufacturers to use e-15 fuel, that is, gasoline containing 15 percent ethanol.
But many biofuel supporters argue that engine damage from ethanol blends is grossly exaggerated by the oil and auto industries.
“A lot of that’s a myth,” Richard Childress, a former NASCAR driver and now racing team owner, testified at the hearing. “The newer cars, 2001 and up, will not have a liability problem because they are built from the factories to sustain ethanol fuels.”
Childress, who aside from running an auto racing company, farms hay, corn, soybeans and Angus beef in North Carolina, has tested ethanol blends ranging from 10 to 30 percent and uses ethanol fuels in races. Ethanol has higher octane content and produces more horsepower than conventional gasoline, he said.
Childress believes e-15 should be a fuel option at retail gasoline pumps to give consumers more choice and help reduce the nation’s dependence on foreign oil.
According to the largest oil lobby in the U.S., the American Petroleum Institute, and a study by NERA Economic Consulting, exceeding the 10 percent ethanol limit could reduce America’s fuel supply and raise gas prices.
“The study predicts that continuing to implement the RFS [Renewable Fuel Standard] unchanged would, by 2015, cause the cost of diesel to increase by 300 percent and the cost of gasoline to increase by 30 percent,” Carlton Carroll, API spokesman, said in an email. “This would lead to a $770 billion decrease in U.S. GDP (gross domestic product) that would translate to a $580 billion decrease in take-home pay for American workers.”
“I'm not aware of any credible evidence that ethanol has lowered gas prices,” Carroll added.
Still, biofuel supporters are asking for more time with the mandate to ensure biofuel producers can access the oil industry-controlled fuel market. The mandate was introduced in 2005.
“2014 is a breakthrough year for this industry, but it’s still in its infancy,” Sumesh Arora, vice president of biofuel non-profit Innovate Mississippi, said.