EPA Extends Renewable Fuels Mandate

WASHINGTON, D.C. – The Environmental Protection Agency (EPA) yesterday issued final 2013 quotas for the amount renewable fuel refiners are required to produce under the Renewable Fuel Standard (RFS) and granted refiners an extra four months to reach the goal of using 16.55 billion gallons of renewable fuel for 2013. It also indicated its intention to cut the 18.5 billion gallon mandate for 2014.

According to a report by Bloomberg, the extended deadline is due to quotas for 2013 being issued so late in the year. Additionally, the EPA cut this year's cellulosic biofuel requirement from a proposed 14 million gallons to six million gallons, stating that this fuel is not available in adequate volumes.

The RFS requires refiners to use a certain amount of renewable fuels each year as determined by their fuel market share. This is intended to both increase domestic fuel production and reduce greenhouse gas emissions, but some refiners have argued that a drop in demand for gas means they would have to blend gasoline with more than 10 percent ethanol, which they say is not safe for all vehicles.

"EPA's decision represents a positive sign for consumers and should help to prevent unnecessary increases in gasoline prices," Jason Bordoff, director of Columbia University's Center for Global Energy Policy, said in a statement.

The expected lower quote for next year is based on the estimated 13.2 billion gallons that could fit within the 10 percent blend wall, plus additional biodiesel or cellulosic fuels that would qualify, according to the report. Without a change, compliance in 2014 would "become significantly more difficult," the EPA stated.

Refiners that do not make or buy enough renewable fuels can purchase credits, known as Renewable Identification Numbers (RINs), but prices for these had increased as refiners worried that gasoline demand was not high enough to mix in a safe level of renewable fuels this year or next. For example, corn-based ethanol RINs dropped 13 percent following the EPA's announcement.

Some organizations, including the American Petroleum Institute, expressed disappointment with the quotas and called on Congress to end the mandate.