EPA raises amount of ethanol that must be blended with gas

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DES MINES, Iowa — The Biden administration has set new requirements for Friday that will increase the amount of ethanol required to be blended into gasoline supplies. However, it will reduce the previous ethanol-blending requirements because of a drop in fuel demand due the coronavirus pandemic.

The Environmental Protection Agency said it would set the 2022 levels for corn-based ethanol blended into gasoline at 15 billion gallons. The new rules increase future ethanol requirements. However, the EPA retroactively decreased 2020 levels by 2.5 billion gallons. 2021, levels were reduced by 1.2 billion gallons. This was due to the lower production and lower gasoline sales during a period of low driving.

Most gasoline sold in the U.S. contains 10% ethanol, and the fuel has become a key part of the economy in many Midwest states. It consumes more than 40% corn supply. Ethanol and other biofuel production plants provide jobs in rural areas that have experienced steady population declines over time.

President Joe Biden has been among many politicians from both sides who have repeatedly promised to support higher renewable fuel standards.

“Today’s actions will help reduce our dependence on oil and put RFS program back onto track after years of difficulties and mismanagement,” stated Michael Regan, EPA Administrator.

The Renewable Fuels Association is an ethanol lobbying organization that criticizes the retroactive reduction in biofuels targets. However, it stated that future requirements would bring certainty back into the renewable fuel standard, lower gas prices, and provide a foundation for future growth.

In the last few days, wholesale prices for ethanol have been as high as $1. 30 per gallons is lower than gasoline, the group stated.

The final order also denied exemptions to certain oil refineries from ethanol regulations, stating that they had failed in their obligation to justify exemptions under the Clean Air Act. The American Fuel & Petrochemical Manufacturers group representing refineries called the figure “bewildering” and said it was contrary to the administration’s claims that they were doing all they could to provide relief for consumers. They also stated that unachievable mandates would increase fuel production costs and keep prices high.

The Biden administration also announced Friday that the U.S. Department of Agriculture would provide $700 million to support 195 biofuel producers in 25 states that faced unexpected market losses due to the COVID-19 pandemic. The money comes from the Coronavirus Aid, Relief and Economic Security Act.

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