The U.S. Congress will soon hold hearings on whether to modify the Renewable Fuel Standards (RFS), according to the Specialty Equipment Market Association (SEMA).
The law mandates that an increasing amount of ethanol or other biofuels be blended into gasoline each year—levels that may be unattainable in the current marketplace. Congress enacted the RFS in 2005 and then expanded the volume of renewables to be blended each year, from 9 billion gallons in 2008 to 36 billion gallons by 2022.
SEMA says the RFS has been the driving force behind a decision by the U.S. Environmental Protection Agency (EPA) to allow the content of ethanol in gasoline to rise from 10% (E10) to 15% ethanol (E15). E15 then becomes the way refiners will meet RFS mandates.
In order to track compliance with the RFS quotas, the fuel producers are assigned “renewable identification numbers” (RIN) by the EPA. The producers are permitted to sell and trade RINs to meet their individual quota.
However, there is now a struggle to meet the increasing ethanol quotas since few gas stations are selling the fuel and the car companies will deny warranties for E15-related damage. As a result, RIN prices have skyrocketed from $.07 in January to more than $1. The gasoline refiners are warning that the “blend wall”—the point at which the gasoline supply cannot handle any more ethanol, has been reached, according to SEMA.
Key Congressional leaders have issued a letter to the EPA asking for immediate action to address the issue of rising RIN costs and potential fuel price increases. SEMA is working with a coalition of organizations to oppose E15 and set realistic goals for the Reformulate Fuel Standard.