Surprisingly the EPA has announced it might actually reduce the biofuel mandate.
In 2007 congress set a mandate that requires refiners to sell an increasing volume of biofuels, this includes blending ethanol in gasoline. The idea was that "foreign oil" was a threat and ethanol would save us. The EIA advised that oil prices would fall back to "normal" and demand would grow forever. So we have a mandate for biofuels use that increases forever or at least until 2022.
There is a limit to how much ethanol can be blended into gasoline without doing damage to older engines. This limit has been set by the EPA at 10% it's called the "Blend wall".
Now if the EIA had accidently been right and consumption of gasoline had continued to increase forever there would have been no problem, increasing consumption would have prevented refiners ever reaching the 10% "blend wall". Turns out peak oil was the real threat. With yearly average prices now at all time highs, demand destruction has kicked in, reducing gasoline consumption to a 14 year low.
The upshot is the mandate for increasing ethanol use is close to the blend wall. Either the 10% gasoline content limit must be raised or the ethanol mandate must be lowered.
I really thought the blending limit would be raised, that's been the talk (hope) for a year or two in the Ag press. Turns out that the Koch boys won out and the mandate will be lowered instead:
As a result, on Tuesday the agency said that next year it would take the unprecedented step of seeking to reduce the amount of renewable fuel that the oil industry must use, saying it "does not currently foresee a scenario in which the market could consume enough ethanol."
http://online.wsj.com/article/SB1000142 ... 92732.html--
Some other stuff:
The EPA authorized E15 (15% ethanol) a couple of years ago but along with E85 retailers must invest in different facilities to sell it and they aren't. E85 is a loser for the consumer because the miles per gallon is lower (less energy in an ethanol gallon) but since the mandate supports the too high price - miles per dollar is lower.
There is also the bit about
credits, this is t0o mind numbing even for me to write about so I'll C&P:
A side effect of the blend wall is the recent “RINsanity” of skyrocketing biofuel credit prices. The EPA assigns a unique Renewable Identification Number (RIN) to every gallon of ethanol produced and a credit for each gallon sold as motor fuel. Refiners who cannot blend enough ethanol to meet their quota can use surplus credits accumulated during previous years or purchased from other refiners.
Because the blend wall makes the annually increasing quota more and more difficult to meet, RIN credits are suddenly in high demand. Credits that cost only 2-3 cents a gallon last year now sell for about 70 cents. Consumers ultimately pay the cost — an extra 7 cents for each gallon of E10 sold, or an additional $11.7 billion in motor fuel spending in 2013, according to commodity analysts Bill Lapp and Dave Juday. Ouch! Ethanol was supposed to reduce pain at the pump, not increase it.
http://www.globalwarming.org/2013/05/07 ... literally/--
So, after spending a day, on and off, writing this, I see the WSJ article has updated their piece saying:
The Environmental Protection Agency said it would lower the mandated consumption of alternative fuels, but it didn't say whether that would specifically include reducing corn-ethanol consumption.
LOL, that means they will probably NOT reduce the mandate for corn ethanol after all but be forced to admit the reality that cellulosic ethanol just aint gonna happen. The mandate by 2022 was for 21 MM gallons with 6 being cellulosic, since none has been produced commercially to date a court forced the EPA to reduce the quota to 0.
http://energy.nationaljournal.com/2013/ ... hp#2315982And of course the next logical step would be to reduce Brazilian cane ethanol use by regulation or tariff - even though cane ethanol returns more net energy than corn but gotta keep Grassley happy.
http://uk.reuters.com/article/2013/07/1 ... 7F20130712--
Crap, my head hurts. I thought I was gonna make a nice concise roundup post, LOL
Lots of great responses to the National Journal article
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)