The Obama administration on Friday proposed to reduce the amount of biofuels in the nation’s fuel supply for the first time, dealing a big setback to the ethanol industry.
The change would require almost 3 billion fewer gallons of biofuels — mainly ethanol — to be blended into gasoline in 2014 than under the current federal mandate. The Environmental Protection Agency, which is proposing the reduction, said the mandate would have generated more ethanol than could be used next year.
The federal agency insisted Friday that it remained a strong supporter of biofuels.
“Biofuels are a key part of the Obama administration’s ‘all of the above’ energy strategy, helping to reduce our dependence on foreign oil, cut carbon pollution and create jobs,” said EPA Administrator Gina McCarthy.
But ethanol industry officials said Friday’s decision spoke for itself and would be a devastating blow. Federal officials had bowed to the oil industry’s wishes to use less ethanol, they said, and the proposed reduction would cripple the biofuels industry.
“What they’re really saying is, we are going to listen to the petroleum industry,” said Dave Vander Griend, CEO of ICM in Colwich, Kan., which is a leading provider of equipment and technology for ethanol plants.
He said the decision meant biofuels, including corn ethanol, would not grow, and he called it a “death blow” to cellulosic ethanol. Technical and other problems have kept cellulosic ethanol from gaining traction, but some companies and environmentalists have still had hope for the fuel. Because it’s made from switchgrass, wood, corn stalks and other waste, cellulosic ethanol does not compete for corn.
The EPA’s decision was a victory for the American Petroleum Institute, an oil industry trade group, which lobbied heavily against the mandate. The trade group said it was pleased but not fully satisfied with the proposed reduction.
“Ultimately, Congress must protect consumers by repealing this outdated and unworkable program once and for all,” said Jack Gerard, the petroleum group’s president.
Gerard said it was the first time the EPA had acknowledged that unless the biofuels mandate was reduced, there was a threat of hitting a “blend wall” — that there would be so much biofuel that the U.S. gasoline supply could not absorb it.
Most gasoline blended with ethanol now is known as E10, because it’s 10 percent ethanol. E85 is 85 percent ethanol, but it can be used only in specially equipped “flex fuel” vehicles and never became popular.
To expand the market for ethanol, the EPA said last year that gasoline with up to 15 percent ethanol could be used in a majority of vehicles, but not older models, and it hasn’t taken off either.
The biofuels industry thinks the oil industry’s opposition comes from ethanol being a competitor. Ethanol, mainly used in E10, has displaced about 6 percent of the country’s need for petroleum.
The 2007 law requiring the mandate, called the Renewable Fuels Standard, sought to address global warming while curbing petroleum imports by requiring oil companies to blend billions of gallons of biofuels into their gasoline each year. The mandate called for growing amounts of it until 36 billion gallons of biofuels would be used annually by 2022.
Legislators who wrote the law, however, didn’t anticipate the drop in U.S. gasoline sales, in part from improved fuel economy, that has happened in recent years.
But Geoff Cooper, vice president of the Renewable Fuels Association in St. Louis, said if the mandate was going to be cut whenever the oil industry said it couldn’t be met, “then we are doomed.”The Associated Press contributed to this report.