The very program that made biofuels commonplace in the US transportation fuel supply has ethanol producers looking abroad.
Years of delays in the nearly decade-old Renewable Fuel Standard — which mandates minimum volumes of ethanol, biodiesel and advanced biofuels that industry must produce — have undermined confidence in the program. The US Environmental Protection Agency, which oversees the program, failed to produce blending requirements for 2014, missed a November deadline for 2015 mandates, and is now saying it will catch up on 2014, 2015 and 2016 deadlines by June. The EPA’s track record is so bad that Chris Grundler, director of the EPA office of transportation and air quality, offered a frank apology last week to the Renewable Fuel Association’s National Ethanol Conference in Grapevine, Texas.
“I know words are cheap but in this case they are sincere, because I know and I get there are consequences when government fails to act,” Grundler told the conference.
The ethanol industry has ceded no ground to opponents in its defense of the RFS, but it may be losing confidence in the administration’s appetite for the program. Low crude prices not only reduce the profitability of blending ethanol into conventional fuels — they erode the urgency for lawmakers to tinker with new ways to reduce prices in the fuel supply. Corn producers already face low prices this year, based on projections by the US Department of Agriculture, so ethanol producers are trying to show they can grow markets for their product without federal mandates.
But time may be growing short. In 2019 a tax credit that gives automakers incentive to produce flex fuel vehicles that can use up to 83pc ethanol blends is expiring. This gives sellers a limited amount of time to build up consumer demand in the US.
Retail chains and local regulators are being encouraged to make higher-ethanol fuel blends more widely available, while the expected retirement of thousands of fuel dispensers across the US over the next few years creates an opportunity for many more fuel stations to offer higher-ethanol blends when they replace the equipment.
And ethanol producers are working to increase exports to new overseas markets. Canada, Brazil and the European Union are all major markets today, but producers see new opportunities in Asia, where US production costs outperform local sources.
“The bottom line is that there’s a lot of potential for [higher ethanol blended fuel] E85,” John Eichberger, director of the Fuels Institute, told attendees at the Grapevine conference. “But there’s got to be a lot of work.”
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