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It Isn’t The Blending Wall We Should Be Worried About

February 6, 2010

New Math At The EPA

If you look at consumption statistics from the EIA you would find that the US consumed about 42 billion gallons of diesel and 136 billion gallons of auto gas in 2009.  Those stats show a decline in diesel usage and a tiny increase in auto gas usage over 2008, a year when both stats declined over 2007.  In 2009 the EPA mandated that 10.2% of that total consumption of 178 billion gallons of liquid hydrocarbon fuel be from renewable resources.  That would result in about 18 billion gallons of renewable fuel of which at least 10.5 billion gallons had to be fuel ethanol as outlined in the table in EISA 2007 (Section 202, page 31).  What is strange is that .6 billion gallons had to be “Advanced Biofuel” resulting in the total RFS requirement of 11.1 billion gallons.  So what was the other 6.1 billion gallons required by the EPA?

The EPA has just announced the 2010 standard.  The EIA 2010 projection is:  “Consumption of motor gasoline rises by 50,000 bbl/d, or 0.6 percent, and distillate fuel consumption increases by 80,000 bbl/d, or 2.1 percent.”  This would result in a diesel usage of  almost 43 billion gallons and an auto gasoline usage of  almost 137 billion gallons for a total of 180 billion gallons of liquid hydrocarbon fuel.  The EPA has set the renewable fuel mandate to be 8.25% or almost 15 billion gallons of renewable fuel.  Quite a drop don’t you think?  Of the total 12 billion gallons has to be fuel ethanol and .95 billion gallons has to be “Advanced Biofuel” for a total RFS mandate required by EISA 2007 of 12.95 billion gallons.  So what is the other 2.05 billion gallons of renewable fuel required by the EPA?  Anybody know?

Now here is the real problem, discounting the math which doesn’t obtain.  This year there was supposed to be 100 million gallons of cellulosic ethanol in that .95 billion gallons of “Advanced Biofuel” number according to the hard coded table in EISA 2007.  The EPA has lowered the quantity to 6.5 million gallons required.  Anybody noticing the huge difference! The change was made after 30 companies said they could not produce the required 100 million gallons.  Thirty companies couldn’t come up with 100 million gallons of cellulosic ethanol?

Do you know how many years the government has been throwing your tax dollars at cellulosic ethanol?  According to The Cellulosic Ethanol SiteModeling and experimental studies on dilute hydrolysis systems were carried out during the first half of the 1980s. DOE and USDA sponsored much of this work.”  The industry has said that a viable commercial cellulosic ethanol process is five years away for the last three decades and today they still say that “we are only five years away from a viable cellulosic ethanol process”.  And according to the above site your tax dollars are still being showered on them:  “In March 2007, the US government awarded $385 million in grants aimed at jumpstarting ethanol production from nontraditional sources like wood chips, switchgrass and citrus peels. Half of the six projects chosen will use thermochemical methods and half will use cellulosic ethanol methods.”  Apparently none of those 2007 grants produced much of anything since 30 companies can’t even make 100 million gallons of ethanol this year.

But the real crux of the problem is that after 2015 all of the increase in the ethanol mandate in EISA 2007 must be met by “Advanced Biofuels”, corn ethanol will be capped at 15 billion gallons.  In 2015, 6.5 billion gallons of “Advanced Biofuel” must be produced of which at least 3 billion gallons must be cellulosic biofuel (ethanol).  Never mind that the ethanol blending wall will be met no later than 2012, the true idiocy of the RFS mandate in EISA 2007 will be totally exposed when there is no way to get from 2015 to 2022.  Of course none of it will be needed unless the ethanol industry, Congress and the auto industry figure out how to move to E85 which was the whole point of EISA 2007 in the first place.  Read the act, it is a corporate welfare act for E85.  E10 is never even mentioned and there is no corporate welfare for E10, E15, ad nausea other than the blenders credit which actually pays for infrastructure upgrades for the oil distribution industry.

4 comments

  1. The EPA was still working on the final revised regs for the RFS when they published the 2009 program. They therefore used the existing regs, which only allocated the mandate based on gasoline production and imports, to come up with the 10.2%. The final regs allocate the mandate across both gasoline and diesel, hence the lower percentage rate of 8.25% for 2010. The mandate is a fixed volume each year and the percentage rate is just the mechanism the EPA uses to allocate the mandate amongst the regulated parties. The 18 billion gallons you’ve calculated for 2009 is incorrect. The mandate last year was 11.1 billion gallons. Again, the percentage rate only applied to gasoline. It also exempts small refiners, which likely makes up the rest of the difference from your number.

    You asked what makes up the rest of the mandate in 2009 and 2010. This is how it breaks down:

    2009: Total mandate of 11.1 billion gallons. No specific requirements for ethanol, biodiesel or cellulosic categories (again, because the EPA’s rules were not ready)

    2010: Total mandate of 12.95 billion gallons.
    – 0.95 billion must be advanced biofuels (GHG savings of 50% or more)
    – 0.065 billion must be cellulosic (as you described, the industry can’t meet the mandate and the law included mechanisms for dealing with this)
    – 1.1 billion gallons must be biodiesel (though some of this could have been met in 2009; EPA combined the 2009 and 2010 biodiesel standards)

    There is actually no ethanol-specific mandate. Much of the compliance defaults to that because that’s what’s available. Ethanol sales were, of course, the motivation for the law as well. Let’s be realistic. However, the way the law is written, only biomass-based diesel has a specific mandate and that tops out at 1 billion gallons. The rest of the mandate simply requires “renewable fuels.”

    I must stress that I am not defending the policy. Just trying to clear up some of the confusion around the numbers. I agree that Congress believed cellulosic fuels and E85 would be the solution and that it’s not likely to happen.


  2. While the table in Section 202 of EISA 2007 does not spell out ethanol by name, when you subtract out the specific allocations for Advanced Biofuel which is Cellulosic Biofuel and Biomass-Based Diesel, you are left with the only other renewable fuel defined by the act, Conventional Biofuel which is defined as “ethanol derived from corn starch” in Section 201 (1)(F).

    The EPA might not have been ready in 2009, but the table was, and it specified 10.5 billion gallons of conventional biofuel when you subtract out the advanced biofuel specification.

    Now if we go with your interpretation for 2009 that the allocation was only for gasoline, 10.2% of 136 billion gallons of gasoline is 13.8 billion gallons of biofuel, yet the table specified that the total RFS for 2009 was only 11.1 billion gallons of biofuel of which 10.5 billion gallons had to be Conventional Biofuel, which is ethanol. The numbers still do not add up.


  3. The reason your numbers don’t add up is because you failed to note a couple things. First in the EPA 2010 standards…

    “and their percentage standards apply to the total amount of gasoline and diesel they produce for such use.”

    The percentage applies to the fuel they produce not the final product that gets dispensed from the pump. In other words just the gasoline they produce not the gasoline plus ethanol that is the final product.

    Second in the EIA Petroleum Consumption table…

    d Finished motor gasoline. Beginning in 1993, also includes fuel ethanol blended into motor gasoline.

    The 136 billion that you quote is the final product.


  4. 12 billion gallons of ethanol is enough to take 108 billion gallons of gasoline E10 resulting in 120 billion gallons of finished gasoline. The nation will use about 137 billion gallons of gasoline, so E10 will represent 87% of our auto gasoline will be E10 this year.

    Now, if you take 8.25% of 137 billion gallons, that equals 11.3 billion gallons of ethanol, pretty close to the amount in the EISA 2007 table for ethanol production and enough to make the 120 billion gallons of E10 and some E85.

    But that leaves about 8.25% of 43 billion gallons of diesel which would be 3.5 billion gallons, but EISA only requires .95 billion gallons of advanced biofuel.

    So I guess the real question is 8.25% of what? And if the quota amount rises each year, why did the percentage decline from 10.2% in 2009? The reality is that more and more gasoline in the U.S. is going E10 and in a couple of more years it will all have to be E10.



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