EPA Raises 2017 Ethanol Mandate

Published June 15, 2016

The U.S. Environmental Protection Agency’s (EPA) proposed 2017 renewable fuel standards (RFS) would raise the amount of biofuels required to be blended into gasoline and diesel from 18.11 billion gallons in 2016 to 18.8 billion gallons.

While the 2017 mandate is 3.8 percent higher than the 2016 level, it remains far below the 24-billion-gallon biofuel target Congress established in the 2007 Energy Independence and Security Act. The law allows EPA to set lower target levels if market or technological conditions justify it. As it has in previous years, EPA cited market conditions for setting the lower levels. 

Cellulosic Biofuels Lag Behind

One reason the country has been unable to meet the required targets is a consistent shortage of cellulosic ethanol—ethanol produced using wood, grasses, or the inedible parts of plants.

“There’s really just no way the 2007 mandates are plausible today,” said Isaac Orr, research fellow at The Heartland Institute, which publishes Environment & Climate News. “The government was trying encourage the development of advanced biofuels, basically using, wood, grasses and other inedible parts of plants in order to help meet the RFS. Frankly, we’ve not been able to produce any meaningful amount of cellulosic ethanol, so they have had to waive that requirement.”

Cellulosic biofuel has long been an issue when it comes to meeting RFS targets, because there’s often a stark difference between expected production and actual production. When Heritage Foundation Fellow Nicolas Loris testified in front of two U.S. House of Representatives subcommittees in March 2016, he described how EPA had been forced to reduce the legislative goal for cellulosic fuel in 2010 from 100 million gallons to just 6.5 million. Even that amount was unobtainable, as no cellulosic biofuel was produced in 2010.

A 2015 Congressional Research Service report notes cellulosic fuel production failed to match EPA’s reduced mandates in 2011 and 2012. In 2013, EPA reduced the one-billion-gallon goal for cellulosic fuels to just six million gallons, but just 48,846 gallons were actually produced that year.

Breaking the Blend Wall

Orr says too much ethanol in the nation’s fuel supply risks breaching the “blend wall,” the maximum amount of ethanol that can be safely blended into gasoline. Most car engines, unless they are specifically designed to handle high-ethanol blends, cannot accommodate fuel with containing more than 10 percent ethanol. Amounts above this level risk engine damage. For smaller motors, such as boats or lawnmowers, damage occurs even at the 10 percent level.

“Small engines really aren’t equipped to handle more than small amounts of ethanol,” said Orr.

The Institute for Energy Research says EPA’s 2017 proposal goes beyond the blend wall, meaning while flex-fuel vehicles can accommodate E15 and E85 blends—fuels with 15 percent and 85 percent ethanol, respectively—the vast majority of vehicles on roads would suffer damage using this much ethanol. 

Market Implications

In addition to causing engine damage, ethanol actually costs more per mile than gasoline.

“The price of ethanol may be lower, but it only contains two-thirds of the energy in a gallon of gasoline,” says Orr, meaning drivers have to fill up their vehicles more often because of the lower energy-efficiency levels. Those costs can add up. The Institute for Energy Research estimates Americans spend an additional $10 billion annually due to the presence of ethanol in fuel.

These costs are separate from the general market disruptions caused by the RFS mandate, which also include increased food and feed prices.

Vehicles’ inability to accommodate higher levels of ethanol, the decreased efficiency and higher costs of the fuel, and the market distortions for food have led groups such as the American Petroleum Institute, the American Fuel and Petrochemical Manufacturers, the American Energy Alliance, and the National Restaurant Association, among others, to call for an end to the ethanol mandate.

Bills and amendments have been introduced in Congress in the past to repeal or reform the program, but they have thus far failed to pass.

Ann N. Purvis ([email protected]) writes from Dallas, Texas. 


Nicolas Loris, “Examining the Renewable Fuel Standard,” Testimony before the House Committee on Oversight and Government Reform Subcommittee on the Interior and the Subcommittee on Healthcare, Benefits, and Administrative Rules, March 16, 2016: https://www.heartland.org/publications-resources/publications/examining-the-renewable-fuel-standard