House Committee Examines ‘Blend Wall’ Challenges

The House Energy and Commerce Committee released its first in a series of white papers that examines a number of issues emerging with the Renewable Fuels Standard and is asking for input from interested stakeholders.

WASHINGTON – Launching a bipartisan review of the Renewable Fuels Standard (RFS), the House Energy and Commerce Committee released last week its first in a series of white papers that examine a number of issues emerging with the current system and solicit input from interested stakeholders.

Energy and Commerce Committee Chairman Fred Upton (R-MI), Ranking Member Henry A. Waxman (D-CA) and other committee members are leading the effort to review the law and its implementation.

In the 112th Congress, Fred serves as co-chair of the House Energy Action Team, a working group of GOP members focused on communicating positive energy solutions including those encompassed by the American Energy Initiative. He held a similar role in the 111th Congress serving as co-chair of the House Republicans’ American Energy Solutions Group, which focused on lowering energy prices for American families and small businesses through the development of domestic energy sources. Fred strongly supports an “all of the above” approach with a greater emphasis on domestic exploration, the advancement of breakthrough technologies, and the development of nuclear power. Fred has also been a leading opponent of cap-and-trade legislation and needless EPA regulations that stifle growth, destroy jobs, and raise energy costs.

“It has been more than five years since the RFS was last revised, and we now have a wealth of actual implementation experience with it,” the white paper explains. “In some respects, the RFS has unfolded as expected, but in others it has not. Several implementation challenges have emerged that received little if any consideration prior to passage of the Energy Independence and Security Act of 2007. Furthermore, the overall energy landscape has changed since 2007. It is time to undertake an assessment of the RFS.”

The white paper addresses the so-called “blend wall,” the point at which adding the required volume of ethanol to gasoline supplies would result in ethanol blends that exceed 10%, which is the maximum ethanol content approved for sale for use in all vehicles. As gasoline demand has declined in recent years, and ethanol targets have continued to rise, the blend wall is approaching much faster than anticipated. The required volumes of ethanol as set by the RFS must now be added to a smaller-than-expected pool of gasoline, and many experts predict the 10% blend wall may be reached as soon as this year. While blends containing up to 10% ethanol (E-10) have long been used, refiners may need to start producing E15 to stay in compliance. Four subsequent white papers with questions will address other economic, environmental, and policy issues.

The approaching blend wall raises a number of issues for producers, refiners, auto manufacturers, and fuel retailers. The Renewable Standard Assessment White Paper examines these issues and poses a number of questions for discussion. The committee is requesting interested stakeholders to send responses to these questions by April 5, 2013.

Questions for Stakeholder Comment

1. To what extent was the blend wall anticipated in the debate over the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007?
2. What are the benefits and risks of expanded use of E-15 to automakers, other gasoline powered equipment makers, refiners, fuel retailers, and others involved in the manufacture and sale of gasoline and gasoline-using equipment?
3. What are the risks of the introduction and sale of E-15 to the owners of pre-2001 motor vehicles, boats, motorcycles, and other gasoline-powered equipment not approved to use it? Are there risks to owners of post-2001 vehicles? How do these risks compare to the benefits of the RFS?
4. What is the likely impact, if any, of the blend wall on retail gasoline prices?
5. What is the timing of the implementation challenges related to the blend wall? Will some entities face difficulties earlier than others?
6. Could the blend wall be delayed or prevented with increased use of E-85 in flexible fuel vehicles? What are the impediments to increased E-85 use? Are there policies that can overcome these impediments?
7. Is E-15 misfueling unavoidable? Are there lessons from the labeling and dispensing of diesel, E-85 and other fuels that prevent their misfueling that can also be applied to E-15? What specific actions are companies taking to address potential misfueling concerns under MMPs?
8. Can blend wall implementation challenges be avoided without changes to the RFS? Is the existing EPA waiver process sufficient to address any concerns? If the RFS must be changed to avoid the blend wall, what should these changes entail? Should any changes include liability relief or additional consumer protections for addressing misfueling concerns?
9. Have the 2017 and Later Model Years Light Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy standards for cars and light trucks changed the implementation outlook of the RFS?
10. What other methods, including the use of drop-in fuels, are available to industry to ease the challenge posed by the blend wall?
11. What are the impacts on renewable fuel producers if the RFS is changed to avoid the blend wall?

Please send responses to [email protected] by April 5, 2013.