EPA: Ethanol limit ‘has been reached’

A top Environmental Protection Agency (EPA) official said on Wednesday that the agency’s biofuel program has led to an unrealistic demand for petroleum refiners, a confirmation of warnings that have long been made by oil companies.

Christopher Grundler, the head of the EPA’s Transportation and Air Quality Office, told the Senate Environment and Public Works Committee that the Renewable Fuel Standard (RFS) has threatened to force petroleum refiners to mix a blend of gasoline that cars can’t use. The threat of the limit, known as the “blend wall,” has been a repeated concern for oil-and-gas companies that want the program repealed.

{mosads}“We’re recognizing that the blend wall has been reached,” he said during Wednesday’s hearing on the annual mandate.

“Reaching the blend wall clearly presents constraints to using higher ethanol quantities because of the infrastructure and other market limitations,” Grundler added.

In November, the EPA proposed to dramatically scale back the amount of ethanol refiners will need to blend with gasoline in 2014, which many saw as an implicit recognition that the blend wall posed a danger to the RFS.

The proposal has been heavily contested by proponents of the renewable fuel sector, including lawmakers from states heavy with corn, from which ethanol is made.

“It is concerning that EPA is now proposing a significant rollback in the RFS,” Sen. Deb Fischer (R-Neb.) told Grundler.

With its 2014 proposal, she added, the EPA is “eliminating the incentive” to develop stronger infrastructure and technology to accommodate automobiles’ use of higher blends of ethanol.

Many car companies have told drivers that using a blend of gasoline with 15 percent ethanol could void their warranties. The driving club AAA has also warned that the blend is “potentially damaging” and could drive up gas prices at the pump.

Grundler said that the RFS’s impact on prices is “a very complicated equation” and “it’s not clear to me exactly” what the impact of a higher ethanol requirement on gas prices would be.

“Predicting gasoline prices is treacherous and we try to avoid it,” he said.

Lawmakers were displeased with that answer.

“It’s important that you would figure that out,” Sen. John Boozman (R-Ark.) said. “That really is a huge issue.”

“Grundler did predict that, over time, gasoline with up to 85 percent ethanol, known as E-85, would become increasingly more popular.”

“We’re anticipating more E-85 being sold next year than are sold this year,” he said. “Our estimates are based on that trend line and more E-85 stations being built.”