The Biden administration on Friday set new requirements that increase the amount of ethanol that must be blended into the nation’s gasoline supply but also retroactively reduce previous ethanol blending requirements due to a slump in fuel demand during the COVID-19 pandemic.
The Environmental Protection Agency said it will set 2022 levels for corn-based ethanol blended into gasoline at 15 billion gallons.
But even as the new regulations increased future ethanol needs, the EPA retrospectively reduced 2020 values by 2.5 billion gallons and 2021 by 1.2 billion gallons, reflecting the lower amount of ethanol produced and lower gasoline sales at one time , in which the coronavirus led to a drop in drivers.
Most gasoline sold in the US contains 10% ethanol, and the fuel has become an important economic factor in many Midwestern states. The fuel consumes more than 40% of the nation’s corn supply, and production plants for ethanol and other biofuels provide jobs in rural areas that have experienced steady population declines over the decades.
President Biden is among many politicians from both parties who have frequently pledged to support raising the renewable fuel standard.
“Today’s actions will help reduce our dependence on oil and put the RFS program back on track after years of challenges and mismanagement,” said EPA Administrator Michael S. Regan.
The Renewable Fuels Assn., an ethanol lobby group, criticized the retrospective reduction in biofuel targets but said future requirements would bring certainty back to the renewable fuel standard, help lower gas prices and lay a foundation for future growth.
In recent days, wholesale ethanol prices have been as much as $1.30 a gallon lower than gasoline, the group said.
The final order also denied exemptions for certain oil refiners from ethanol requirements, saying they failed to demonstrate exemptions were warranted under the Clean Air Act.
The American Fuel & Petrochemical Manufacturers Group, which represents refiners, called the 2022 figure “confusing and at odds with the government’s claims that it is doing everything in its power to provide consumer relief.” The group said unattainable mandates would increase fuel production costs and keep consumer prices high.
The Biden administration also announced on Friday that the US Department of Agriculture would allocate $700 million to support 195 biofuel producers in 25 states that have faced unexpected market losses due to the pandemic.
The money comes from the Coronavirus Aid, Relief, and Economic Security Act.