Proposed Biofuel Regulations for 2017

The EPA proposed raising the amount of ethanol in gasoline in 2017.  The proposed regulations would raise the current regulations by 700 million gallons to 18.8 billion gallons of ethanol and biofuels blended into the gasoline supply.  Although on the surface, this appears to be a great increase, it is lower than expected.  rfs-volumes-chart-2014-2018-newThe original regulations set in 2007 proposed 24 billion gallons by 2017, but the EPA has revised the proposed amount after development was slower than expected.  The announcement caused a drop in stock prices of ethanol and biofuel producers, such as Archer Daniels Midland Company.  Critics argue the increase is more biofuel than current automobiles can bear.  EPA officials, on the other hand, argue the requirements are set based on the realities of the market and Congress’s original goals.   Pro-ethanol groups, though, believe the regulation did not go far enough and is simply catering to the oil industry.  One proponent stated “she was “encouraged” the EPA had increased the levels from previous years, but added that “it still falls short” of the statutory target and of what the industry can do.”

The regulation is currently in the comment period and will be decided later this year.

Going from here, the question remains if biofuel is the best alternative fuel to reach lower greenhouse gas emissions.  As a class, how do you personally feel about biofuels? Is forcing biofuel hindered development of other alternative fuel sources?  Do you agree with the more with the critics or the pro-ethanol groups?

More about the EPA’s Renewable Fuel Program here.

Source: WSJ

5 comments to Proposed Biofuel Regulations for 2017

  • Sam Wilson

    This is very interesting, I wonder how the development of the corona spark plug will effect this. I can see the development of the spark plug allowing for higher percentages of biofuel and also helping lead to a decrease in emissions. This decrease in emissions from the corona will most likely be from a lower gas to air ratio thus the fuel would be burned at a slower rate and thus emissions per spark will decrease because there will have been less gas burned off.

  • hochstadtd18

    I wonder about how this will affect the cost structure of gasoline. I know that some gas stations offer an E-85 grade of fuel and it significantly cheaper than all of the other grades available. Does adding more biofuels decrease the cost that consumers pay? Also, does it increase the total volume of fuel available? Currently, there has been a global supply glut that led to the drop in fuel prices throughout the U.S. and other parts of the world. The Saudi oil minister came out and said that they plan to keep volumes high, so what effect will increasing the amount of fluid do to prices and global supply?

  • adamsm19

    What, if any, impact does current gas prices have on the EPA’s decision making? It seems to me that with gas prices so low already oil companies would have a difficult time raising the amount of ethanol in gasoline to comply with the new regulations.

  • Barrett Snyder

    In response to David, the hot trendy thing to do in the performance car world is do an e-85 conversion. There is some cost involved as the e-85 can cause corrosion on components designed for gasoline engines that have to be replaced for e-85 compatible versions, however, there is the potential with a proper tune to significantly increase the power generated with the engine. This is a very common swap in Houston, Tx because e-85 is widely available there unlike areas close to me where you can’t find e-85 for 100’s of miles. So yes, availability is and issue, but there is potential there.

  • E-85 is driven not by the auto industry or the Dept of Energy but by the farm lobby. Corn is energy-intensive for fertilizer, and tractors don’t get good mileage. Making ethanol uses energy, too, and ethanol is less dense than gasoline = less miles per tank/gallon. This logic does not carry through to Brazil, where sugarcane bagasse provides a nearly free source of input to the fermentation stage.

    There are many experiments with other sources of carbohydrates (sawgrass = cellulose) and also algae but I’ve not seen anything recently. Silence is a weak argument, but it does lead to my working hypothesis that non-corn-based biofuels have not seen developments that change the underlying unfavorable economics for biofuels (or at least ethanol) in the US.