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NO END TO MADNESS

December 17, 2014

As 2014 comes to a close, it is interesting to note that the ethanol mandate in EISA 2007 is all but dead, though nobody seems to have a silver bullet to put it out of its misery or the nation’s misery. No one is willing to drive a stake through its heart, so we will pretend that it’s still a viable program.

Funny thing happened on the way to the funeral. Not only did the EPA fail to fulfill its legal responsibility for issuing the 2014 quotas, it has now said it won’t set quotas for 2015 until some indeterminate time in 2015 (if ever), according to this article in Bloomberg Businessweek. Seems the EPA has decided the 2014 quotas will be whatever the gasoline producers used; somewhere around 13.3 billion gallons of ethanol, not the 14.4 billion gallons proscribed in the table in Section 202 of EISA 2007.

Of course, once that table became meaningless when the EPA couldn’t enforce the advanced biofuel quotas back in 2011, I guess it naturally became easy to ignore it completely in 2014 and now 2015.

It’s time to cease the charade that anything in the RFS in EISA 2007 is legally meaningful. The quota table gets more absurd every year. In 2015 the table requires 3 billion gallons of cellulosic biofuel, yet the industry can’t make even 100 million gallons after 30 years of trying to find a commercially feasible process. The funniest thing is that 2015 marks the cap of corn based ethanol, the amount of which cannot be blended into our gasoline production because nobody wants to buy E85, which was the whole intent of the law. But nobody wants to talk about that problem. After 2015 all of the increases in the quota table are supposed to be satisfied with cellulosic ethanol, which can’t be made.

Oh, and on more slight little snag, that nobody is willing to talk about. Pretty soon, ethanol will cost more to blend into gasoline than the gasoline itself. This has happened twice since 2007 when the RFS was passed. So now, instead of reducing the price of gasoline, which the ethanol industry promised when oil was $100 / barrel, it will raise the price of gasoline while reducing mileage.

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