By Timothy Cama, Staff Reporter This story appears in the Nov. 26 print edition of Transport Topics.
Federal regulators rejected a plea from several states to waive the requirement for gasoline producers to blend ethanol into their fuel, saying the economic conditions necessary for such a waiver did not exist.
Governors of eight states told the U.S. Environmental Protection Agency earlier this year that the mandate to use ethanol was driving up food costs, especially after the drought this summer proved to be the worst in decades.
At the heart of their petition is fear the severe drought would reduce the amount of corn available for ethanol and farmers would have to divert corn from food and livestock uses to meet the ethanol requirement, which is part of the renewable-fuels standard. This diversion would increase corn prices and bring down the economies of those eight states.
“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” Gina McCarthy, assistant administrator for the EPA’s Office of Air and Radiation, said
in a Nov. 16 statement. “But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”
The law requires that fuel refiners include 13.2 billion gallons of ethanol in 2012 and 13.8 billion gallons in 2013.
The states wanted EPA to reduce the standards for 2012 and 2013 as the agency deemed necessary, but EPA’s analysis, conducted with the U.S. Department of Agriculture, found that the ethanol standard will increase food prices by only about 1% in 2012 and 2013.
A separate analysis with the Department of Energy found the standard would have no effect on home-heating costs.
Those conditions do not meet Congress’ requirement for a waiver or decrease in the standard, EPA said.
“EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a state, a region or the United States, the standard established by Congress in the Energy Policy Act of 2005,” the agency said in its statement.
The Renewable Fuels Association commended the agency.
“We applaud the EPA for basing its decision on thoughtful analysis of the facts and not emotion or panic,” Bob Dinneen, president of RFA, said in a statement. “The RFS is working as designed. The flexibility that is built into the RFS allows the marketplace to ration demand, not the government.”
But Sen. James Inhofe (R-Okla.), who had joined six other senators in August in support of the waiver petition, blasted the move. Inhofe is the top Republican on the Senate Environment and Public Works Committee.
“This is what we should expect now that Obama has been re-elected: costly mandates with no flexibility — even in the face of compliance difficulties and rising prices,” Inhofe said in a statement.
