The Renewable Fuels Association this morning tweeted:

This is in many ways progress in that it is a de facto admission that RIN prices are rising because we are hitting the “blend wall” on ethanol, and that a solution is needed.  Unfortunately the solution in this case is crazy.  From Platts:

Well-known energy economist Phil Verleger several years ago first brought up the likelihood that the refining industry might need to promote the sale of E85 as a way around the Gordian knot of a 10% ethanol blendwall combined with a rising mandate for the use of renewable fuels plus a decline in gasoline demand in the US…“The obvious solution to the RIN price problem involves no EPA intervention and no regulatory action at this point,” Verleger writes. “It simply calls for boosting E85 sal... more »

The ethanol lobby doesn’t like the latest research on E15 – gasoline containing 15 percent ethanol – because it raises questions about EPA’s premature decision to approve E15 for use in post-2001 cars and light-duty trucks. The Coordinating Research Council (CRC) study warns that E15 could damage fuel pumps and onboard fuel measurement systems, potentially affecting millions of vehicles. This follows last year’s CRC finding that E15 could damage car and truck engines.  

Since ethanol producers’ goal is more ethanol use, and an EPA pullback on E15 would get in the way of that goal, attacks on both studies – such as those by the Renewable Fuels Association – aren’t surprising. But let’s be candid: They won’t be around if and when motorists end up on the side of the road with a seized-up... more »

With the U.S. Court of Appeals for the D.C. Circuit hearing oral arguments today in a lawsuit over the cellulosic biofuels mandate contained in the Renewable Fuel Standard (RFS), here are some points to bear in mind.

First, the Energy Independence and Security Act of 2007 expanded the RFS, significantly increasing required volumes of biofuels (including cellulosic) over earlier levels set out in 2005.

Under the law EPA is to establish an annual mandate for cellulosic production based on U.S. Energy Information Administration (EIA) data. Yet, for 2011, EIA recommended 3.94 million gallons and EPA, ostensibly to drive production, set the mandate at 6.6 million gallons. For 2012, EIA recommended 6.9 million gallons, and EPA set the mandate at 8.65 million gallons.

Meanwhile, there has... more »

The problem of fraudulent biodiesel Renewable Identification Numbers (RINs) – used to demonstrate compliance with federal mandates – continues. With U.S. refiners making plans for 2013, they don’t know how the sale of more than 140 million fraudulent RINs may impact their costs, nor do they know whether the problem will be fixed going forward. That’s the situation despite months of deliberation by EPA and the White House.

The impacts could be costly. Companies that unknowingly bought fake biodiesel RINs may have to pay fines and then buy new RINs to replace the fraudulent ones. Potentially, these are added costs to operations that could hurt consumers. API’s Bob Greco, group director for downstream and industry operations, discussed the issue in a conference call with reporters:

“... more »

An article in The Hill lays out EPA's explanation for denying API’s request to exempt refiners from the cellulosic biofuel blending mandate under the Renewable Fuels Standard. EPA said it:

"reasonably considered the production capacity likely to be developed throughout the year, while API would have EPA rely narrowly and solely on proven past cellulosic biofuel production...”

Silly us, with our narrow focus on reality. More from The Hill:

"In its court filing, EPA said its estimates were based on a 'reasonably attainable' amount of cellulosic biofuels for 2012."

Let's have a look at what the EPA considers reasonable:

The first column (blue) is the annual cellulosic mandate from Congress. But since you can’t just mandate fuel into existence the EPA, in its regulatory... more »