WASHINGTON The Obama Administration today proposed the first-ever reduction in the amount of ethanol in the gasoline supply, signaling retreat from the Renewable Fuel Standard passed by Congress in 2007.
The Environmental Protection Agency wants 15.21 billion gallons of renewable fuels blended into gasoline and diesel next year, down from 16.55 billion gallons this year. Most of it is corn-based ethanol.
The EPA is proposing the biofuel reduction as oil companies argue that if there is more than 10 percent ethanol in motor fuel it could cause engine damage, a potential issue thats known as the blend wall.
For the first time, EPA has acknowledged that the blend wall is a dangerous reality and that breaching it would serious impacts on Americas fuel supply and would be harmful for American consumers, said Jack Gerard, who leads the American Petroleum Institute, the oil industrys main trade group.
Biodiesel advocates said the ethanol is not a problem for engines. The Advanced Ethanol Council, a trade group, said today the oil industry is using imaginary blend walls, to try to keep biofuels from cutting into oil profits.
The ethanol group expressed hope that EPA could be convinced to change course before finalizing its decision.
The EPA said Friday that it will seek answers on how to deal with the 10 percent blend wall. Nearly all gasoline sold in the U.S. now has up to 10 percent ethanol, the agency said, and as vehicle fuel economy increases and demand for gasoline declines adding additional biofuels would push it higher.
So even though biofuel use should be growing under the targets set by the Renewable Fuel Standard passed by Congress six years ago, the EPA said that isn't feasible because of the blend wall.