U.S. EPA Proposes Reduced Ethanol Standard for Renewable Fuel

Alert Summary

The Environmental Protection Agency proposes the first “reduction” in the ethanol standard since the introduction of the Renewable Fuels Standard program.

3E Analysis

On 15 November 2013, the EPA proposed to set the 2014 requirement of the amount of ethanol that must be blended into fuels at 15.21 billion gallons, equal to the 2012 mandate.

The ethanol mandate is a part of the Renewable Fuels Standard that Congress created in 2005 and expanded in 2007. The new standard is the first year-to-year drop in the mandate since the program was created. The agency’s proposal also suggests rolling back the 2011 cellulosic biofuel target offering a refund to companies for a portion of their costs spent in trying to meet the target.

Business Impact

The proposed standard will have a significant impact on manufacturing and production by the corn industry as well as producers of advanced biofuels. Before now, these producers were likely reliant on an ever-increasing standard which would require higher ethanol production in coming years. Ethanol producers will have to adapt production plans to the new standard.

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