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As large corn crop comes off, ethanol use declining

While record and near-record corn yields are being reported in almost every producing region and the USDA’s Oct. 28 estimate projected a crop of 13.8 billion bushels, yet another potential battle is brewing between the renewable fuels industry and the oil industry.

About 40 percent of the nation’s corn crop goes to producing ethanol, which is blended with gasoline, as required by the 2007 Renewable Fuels Standard.

At present, ethanol is 10 percent of the gasoline available at most pumps. Except for a small number of really old cars and small-engine machines such as lawn mowers, snow blowers, weed whackers, etc., that have problems with ethanol blended fuel, the use of the 10 percent blend has been trouble-free.

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That will not be the case, various organizations contend, if the blend level is increased to 15 percent in 2014. The American Automobile Association has warned that E15 gasoline could cause accelerated engine wear, even failure, and automotive specialist say it would be damaging to pre-2001 cars, motorcycles, boats, etc. Many car manufacturers say their warranties won’t cover damage to engines or emission control systems caused by E15.

All this pales, however, in contrast to the ongoing tug of war between the petroleum industry, which is seeing demand for gasoline decline as Americans increasingly move to more fuel-efficient automobiles and drive fewer miles, and the ethanol industry, which has a financial interest in seeing increased use of its product, as required in the RFS law.

That mandate targets renewable fuels usage for 2014 at 18.5 billion gallons (13 billion gallons of ethanol and 2.21 billion gallons of biofuels). Gasoline manufacturers say that to use that much ethanol would force them to blend it at levels exceeding 10 percent, which could result in public revolt (and lawsuits) if large numbers of engine problems occurred. With declining gasoline usage, they say, the industry just can’t absorb that much ethanol, and further, production of biofuels from materials such as switchgrass, wood chips, and waste products has nowhere near reached levels projected in the RFS.

READ MORE: Bill would block increased ethanol percentage in gasoline

A recently leaked Environmental Protection Agency draft memo says the “blend wall” appears to be “an important reality,” and posits a reduction in the law’s 18.5 billion gallon 2014 renewable fuels target to 15.21 billion gallons. The draft has been submitted to the White House. The EPA is said to also be considering a substantial drop in the RFS 1.75 billion gallons cellulosic fuels requirement — to as little as 23 million gallons.

The Renewable Fuels Association contends the oil industry’s “blend wall” position is “completely false” and does not justify the EPA altering RFS requirements. A spokesperson for the National Biodiesel Board termed the proposal “wishful thinking by the oil industry.”

Watch for this to move to the courts.

TAGS: Corn
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