EPA Reduces US Ethanol Mandate, Industries Respond

The U.S. Environmental Protection Agency (EPA) has proposed to lower the targeted amount of ethanol to be blended into gasoline following months of intense lobbying from biofuel and petroleum industries.

The agency proposed to lower the volume requirement next year to 15.2 billion gallons down from the original target of 18.15 billion gallons. This is the first time the EPA has done such recommendation since the enactment of the Renewable Fuel Standard (RFS) requiring oil refiners to increasingly blend ethanol into the country's gasoline supply.

Nearly all gas sold in the U.S. contains up to 10 percent ethanol (E10). The oil industry has vigorously opposed further increases and intensely lobbied to repeal or scale-back the RFS biofuel mandates, arguing that the industry was rapidly approaching a "blend wall," when the ethanol supply would outpace the amount motorists could use, due to the mandate. Critics also argued the RFS distorted markets and raised food prices.

The EPA recommendation drew bitter reactions and criticisms from ethanol producers and their industry allies, including the American Farm Bureau Federation, National Corn Growers Association, American Soybean Association, Advanced Ethanol Council, Renewable Fuels Association, Biotechnology Industry Association, Brazilian Sugarcane Industry Association and more.

Once the proposal is published in the Federal Register, it will be open to a 60-day public comment period.