Ethanol Industry’s Blend Wall Logic Puts Taxpayers at Risk

This November, the election is not the only political decision that will affect American consumers in a big way. It also is when the Environmental Protection Agency is scheduled to announce how much ethanol must be blended into the 2017 fuel supply for our country to satisfy the federal Renewable Fuel Standard requirements.

Like the 2016 mandates, next year’s ethanol volumes are likely to breach the “blend wall” — the maximum quantity of ethanol that can be sold each year given infrastructure realities while still ensuring the safety of fuel-powered engines. Today, the blend wall stands at roughly 10 percent of America’s fuel supply, and E10 fuel (containing 10 percent ethanol by volume) is what’s most commonly sold.

But recently, the Renewable Fuels Association has taken to calling the blend wall a lie, saying it only exists because the oil industry won’t invest in infrastructure that would enable the sale of higher ethanol blends.

Never mind that fueling equipment is paid for by individual fuel retailers who simply aren’t seeing enough demand for E15 to warrant the infrastructure overhaul. In fact, absent market demand, much of the E15-compatible infrastructure being installed today is done on the taxpayers’ dime through U.S. Department of Agriculture grants that are matched by grants from Corn Belt state governments and private entities, including corn grower associations.

When taxpayers are bilked to finance infrastructure, or where states have biofuel mandates of their own, the volume of ethanol blended into fuel sold in those states can exceed 10 percent.

The national blend wall is a legitimate concern.

Janet McCabe, the EPA’s acting assistant administrator for the Office of Air and Radiation, acknowledged the blend wall when the 2016 ethanol volumes were introduced, as did Chris Grundler, director of the EPA’s Transportation and Air Quality Office, all the way back in  2013. Grundler admitted to Congress that “Reaching the blend wall clearly presents constraints to using higher ethanol quantities because of the infrastructure and other market limitations.”

The fact is, gasoline containing more than 10 percent ethanol is not approved by the EPA and may not be warrantied for use in motorcycles, boats and power equipment due to a litany of problems it can spark in some engines. The danger isn’t limited to small engines either; a majority of vehicles on the road — any model year 2000 or older — are not EPA-approved for fuel blends higher than E10.

The likelihood of consumer misfueling increases as E15 and the taxpayer-funded E15 blender pump infrastructure proliferate.

That’s a central reason why 2016 Misfueling Mitigation plans put forward by the biofuel lobby, and adopted by the EPA, resurrects a once-rejected policy to require a 4-gallon fueling minimum from any pump that sells both E15 and E10 through the same hose. Because nearly a quart of whatever fuel is previously sold from a blender pump can remain in the hose, the EPA believes a minimum volume purchase may be needed to dilute residual E15 and shield consumers from potential damage. Unfortunately, most motorcyclists, recreational boaters and other consumers filling small tanks won’t be able to comply because their fuel tanks do not hold more than 4 gallons. They would be better avoiding blender pumps altogether.

All consumers should ask: If the EPA has to resort to a 4-gallon minimum fuel purchase policy to protect consumers, how can E15 really be considered safe for the millions of vehicles on our nation’s roadways?

What’s more, because of the RFS and its increasing ethanol mandates, the fuel supply is projected to change significantly and further restrict consumer choice.

For example, the supply of fuel that many motorcyclists, boaters and small engine operators want and need, ethanol-free E0, is projected to drop dramatically from more than 8 billion gallons in 2014 to only 200 million in the near future. That’s an incredible reduction deemed mathematically necessary to meet RFS blending targets and a telling example of what can happen when mandates are given precedence over markets.

Fortunately, a solution is gaining support that would protect consumer fuel preferences and address the blend-wall challenge.

Reps. Bill Flores (R-Texas) and Peter Welch (D-Vt.) have introduced the bipartisan Food and Fuel Consumer Protection Act (H.R. 5180), with more than 110 cosponsors. The bill would cap biofuel mandates at 9.7 percent of projected gasoline demand. This measure would protect consumers and their engines and keep consumer choice as the primary market driver of available fuels.

Americans have the right to decide which fuels they want to use, and government has an obligation to put consumer interests and safety ahead of market-meddling policies. As momentum continues to build around legislation that would prioritize markets and consumer choice over a flawed government mandate, the EPA must continue to acknowledge blend-wall threats and lower the 2017 ethanol blending requirement in November.


Former Sen. Wayne Allard (R-Colo.) is vice president of government relations for the American Motorcyclist Association. Nan Swift is federal affairs manager for the National Taxpayers Union.

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