A new study by Informa Economics entitled “Analysis of the Potential Use of Biofuels toward the Renewable Fuel Standard in 2014” shows the originally intended Renewable Fuel Standard (RFS) 2014 blending requirements can be reached through expanded consumption of E85 and E15, as well as judicious use of carryover RIN credits. The study clearly demonstrates why the Environmental Protection Agency’s proposal to reduce RFS blending requirements is unnecessary and imprudent.
Using empirical data from 2013, the study shows that E85 sales volumes respond strongly to changes in RIN prices. This demonstrates the RFS program is working exactly as intended to drive expanded consumption of biofuels above the so-called E10 “blend wall.” The study finds, “It is possible for all statutory components and allocations within the Renewable Fuel Standard to be met in 2014, after adjustments have been made for a waiver of a large majority of the Cellulosic Biofuel Standard.”
The Informa analysis was commissioned by the Renewable Fuels Association and Iowa Corn Promotion Board. It will be used to support the groups’ comments to EPA on its proposed rule for 2014 RFS blending requirements.
The study takes a closer look at likely consumption, finding that ethanol consumption in 2014 could be at least 13.7 billion gallons, compared to the EPA’s assumption of 13.0 billion gallons. It points toward E85 as a major contributor, stating, “E85 accounts for most of the potential for expanded consumption.” And continues, “The increase could be even larger if E85 is priced at a sustained discount to gasoline (on an energy-equivalent basis), as the consumer response could be stronger than implied by historical data, since discounts have been transitory in the past.”
“This study is further proof that the so-called ‘blend wall’ can be easily scaled if the RFS is allowed to work as intended,” said Bob Dinneen, President and CEO of the Renewable Fuels Association. “As I have said time and time again, the RIN mechanism is the tool to drive innovation and infrastructure to accommodate higher ethanol blends like E85 and E15. There is absolutely no need to reduce or repeal the RFS. It is working.”
“We hope that this study further emphasizes that the EPA decision to lower the RVO just doesn’t make sense,” said Roger Zylstra, a farmer from central Iowa and current president of the Iowa Corn Growers Association. “As a corn grower, I know we have the science and the production to back up the current RFS. It is working and we need to move forward, not backward on our energy security.”
The Informa Analysis can be found here.