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EPA Seeks To Cool RFS Volume Rumors

Last week's rumors of significantly lower federal ethanol targets sparks concern among ethanol groups, industry stakeholders

Published on: Oct 15, 2013

Reports of lower requirements for cellulosic and conventional ethanol under the federal Renewable Fuel Standard last week had industry stakeholders and market participants concerned, though the Environmental Protection Agency says it is only working on a "draft proposal."

According to Reuters, agency documents indicate that requirements could be lowered to 15.21 billion gallons. That's compared to 2013 volume requirements of 16.55 billion gallons and the 18.15 billion gallon target that is required by law for 2014.

Though the cuts projected in the document are steeper than expected, the agency said earlier this summer that some changes could be expected. EPA has already approved a temporary cut to the cellulosic requirements to account for production infrastructure that is developing more slowly than expected.

Last weeks rumors of significantly lower federal ethanol targets sparks concern among ethanol groups, industry stakeholders
Last week's rumors of significantly lower federal ethanol targets sparks concern among ethanol groups, industry stakeholders

Reuters says the proposal is spelled out in a draft notice of proposed rulemaking and a presentation, dates of which coincide with the agency's submission of a proposal to the White House's Office of Management and Budget.

Despite the hubbub surrounding the proposal, a statement from EPA's Administrator Gina McCarthy on Friday did not address specific numbers, instead noting that no decisions will be made on 2014 standards until stakeholders have a chance to comment.

Much of the debate surrounding the volume requirements centers on the industry's ability to legally blend ethanol into the fuel supply, what some call the "blend wall" – when production levels exceed the volume needed to satisfy 10% ethanol blend requirements.

Renewable fuels groups have repeatedly called for improved adoption of higher ethanol blends, though RFS and ethanol critics say it diverts too much corn and other feedstuffs to fuel, and may harm engines.

Renewable fuels groups, on the other hand, dispute both assertions, and say rumors of significantly lower RFS obligations should be put to rest.

"The 2014 RVO rulemaking process is not final," Growth Energy CEO Tom Buis said, noting that the proposal has not taken the necessary steps for approval.

"Hopefully, the (government) shutdown ends soon, allowing the rulemaking process to resume, instead of everyone reacting to premature reporting of rumors or unverified leaks, allowing the EPA to follow proper procedures to propose a rule for everyone to comment on," he added.

Buis also called on the Commodity Futures Trading Commission to investigate the proposal's leak due to market movements believed to be caused by the rumored information.