WASHINGTON—The Environmental Safety Company proposed lowering the quantity of ethanol and different biofuels that should be blended into gasoline this 12 months and retroactively lowered final 12 months’s goal—a win for refiners who warned that elevating the requirement would carry costs on the pump.
The choice comes as the worth of ethanol, the most-dominant biofuel, has risen to its highest degree in a decade. Whereas U.S. fuel costs are pushed by the worth of crude oil, refiners say ethanol costs have contributed to larger costs on the pump, despite the fact that gasoline has dipped from current highs.
The EPA mentioned it could require refiners so as to add 18.52 billion gallons of ethanol and different biofuels to be blended into gasoline for 2021—down from a mandate of 20.09 billion gallon beforehand set for 2020. Though 2021 is nearly over, no mandate for the present 12 months has been set.
Company officers additionally lowered the quantity required for 2020 to 17.13 billion gallons, down from the 20.09 billion gallon-target it had set in late 2019, the final time the mix fee was set.
Had the EPA stored the 2020 mandate on the earlier degree, refiners would have needed to buy credit from the market to adjust to the legislation. Refiners had lobbied for that aid after the pandemic depressed vitality demand.
EPA officers say the brand new mandate for 2021 matches what the market is predicted to make use of this 12 months.
The company additionally proposed that refiners add 20.77 billion gallons of ethanol and different biofuels fuels subsequent 12 months, an quantity that it says ranks as the very best in this system’s historical past. The deal additionally contains $700 billion in federal help for biofuel producers.
“EPA stays dedicated to the expansion of biofuels in America as a important technique to safe a clear, zero-carbon vitality future,” mentioned EPA Administrator
Michael S. Regan
in an announcement.
Excessive fuel costs have contributed to inflation general, clouding President Biden’s political agenda together with his formidable plans to handle local weather change.
In current weeks, Mr. Biden has requested the Federal Commerce Fee to research whether or not the oil-and-gas trade was partaking in unlawful conduct to maintain costs excessive and agreed to faucet the nation’s Strategic Petroleum Reserve to extend provide.
The downwardly revised 2020 goal and newly proposed 2021 goal fall in need of what ethanol producers and different biofuel commerce teams had pushed for from regulators in current months.
Whereas he was campaigning for president, Mr. Biden mentioned a powerful biofuel mandate would assist struggling rural economies the place individuals discover work on the nation’s roughly 200 biorefineries.
The EPA units mix charges underneath the so-called Renewable Gasoline Customary, which was handed by Congress in 2005 to cut back international dependence on oil and scale back smog. It’s supported by lawmakers in states that develop corn, the principle ingredient in ethanol, however opposed by some oil refiners who balk at the price of compliance. Virtually all U.S. gasoline accommodates 10% ethanol.
Write to Katy Stech Ferek at katherine.stech@wsj.com
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