EPA Final Rule on Biofuels

On Thursday the EPA released the Final Rule on the amount of biofuels that will be required for 2018 and 2019. The EPA is required under the Clean Air Act to set the Renewable Fuels Standard (RFS) or the amount of renewable fuel that must be blended in the nation's gasoline and diesel fuel by November 30th for the following year. The EPA left the ethanol and biodiesel requirement unchanged for 2018. It seemed the ethanol industry was pleased and the biodiesel industry was disappointed that biodiesel requirements were not increased.

It is not surprising that the petroleum industry was not happy about not decreasing the RFS for 2018. However the little known fact about the petroleum industry is that they would be blending ethanol into their gasoline even if there was no requirement. Ethanol provides the octane which means they can refine a much lower quality gasoline and enhance it with ethanol. About 9 percent ethanol is required to raise the octane level in gasoline to acceptable levels. Ethanol is much cheaper than any octane enhancer the petroleum industry can manufacture themselves.

Ethanol also provides the oxygenate for the gasoline which means it burns much cleaner. Ethanol is much cheaper than any oxygenate the petroleum industry can make too. Plus it is much safer for the environment. Remember a while back California was using MTBE for an oxygenate and it began showing up in their groundwater?