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The EPA raised the “blend wall” issue in its March notice for comment on finalizing fuel mandates for 2013. The agency estimated that refiners and importers could roll over credits good for as many as 2.6 billion gallons of ethanol to comply with the 2013 mandate.
“As the volume requirements of the RFS program increase, it becomes more likely that the volume of ethanol that must be consumed to meet those requirements will exceed the volume that can be consumed as E10,” the EPA notice said.
The number of excess credits also would reduce the actual number of gallons of ethanol that refiners and importers need to comply with 2013 mandates. The agency estimated that credits good for as many as 2.6 billion gallons of ethanol could be rolled over to meet whatever ethanol mandate is set.
University of Illinois economists Scott Irwin and Darrel Good warned in a recent paper that the higher prices for the credits are early signs that it will be costly for refiners and importers to continue to meet the ethanol mandate. Irwin and Good suggest that the EPA freeze the fuel mandates while policymakers decide how to proceed with renewable fuels.
“As it now stands, the mandate is problematic. Part of the role of the RFS is to motivate biofuels technology, production and consumption. If you ratchet down the mandates too much or too fast, then it won’t motivate growth into the future for biofuels,” Good said. “There is a bit of a balancing act there of what is reasonable and achievable.”