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Ethanol-free gas usage drops in 2016, still exceeds EPA’s expectations

Published in blog.hemmings.com

Photo by Paul Joel Hancock.

Expecting demand for ethanol-free gasoline to dwindle last year, officers with the Environmental Protection Agency instead found that usage came in at more than double their estimates, as reported in the agency’s proposal to cut total ethanol volumes in fuel for the first time.

“For the 2016 and 2017 standards, we based the total renewable fuel volume requirement in part on the expectation that the RFS program would result in all but a tiny portion – estimated at 200 million gallons – of gasoline to contain at least 10 percent ethanol,” according to the proposal. “We now estimate that the volume of E0 used in 2016 was about 500 million gallons.”

In 2015 retailers sold an estimated 700 million gallons of ethanol-free gasoline.

As it did last year, the EPA attributed 200 million gallons of ethanol-free fuel demand to recreational boaters and either ignored or dismissed ethanol-free demand from owners of older vehicles ill-equipped to run ethanol-blended fuels. Instead, agency officials appeared to explain the persistent non-boater demand for non-ethanol fuels as a result of increased usage of biodiesel.

“We continue to believe that the market is capable of reaching a point wherein all but about 200 million gallons contains some amount of ethanol,” according to the proposal.

Still, EPA officials pledged in this week’s proposal to better account for usage of ethanol-free fuel when setting annual ethanol requirements in the future.

“We believe it is reasonable to adjust our approach to estimating the volume of ethanol that is reasonably attainable in 2018 to account for the likely market response to the applicable standards in terms of E0 volumes,” according to the proposal.

At the same time, the EPA suggested reducing the overall requirement for ethanol-blended fuels in 2018 to 19.24 billion gallons (about 10.62 percent of the nation’s fuel supply) from 2017’s 19.28 billion gallons (about 10.7 percent). The 2018 proposal calls for maintaining the 15 billion gallons of conventional corn-based ethanol from the 2017 standards, so the reduction would come entirely from advanced biofuels, including cellulosic biofuels.

The EPA is expected to finalize its 2018 numbers by November 30.

At least three bills at the federal level aim to limit the amount of ethanol in gasoline to 10 percent or eliminate the Renewable Fuel Standard altogether. All three remain in committee.