renewable fuel standard primer low res

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Renewable Fuel Standard

August 2015For the latest report, please visit www.api.org/policy-and-issues/fuels and

www.filluponfacts.com

Fill Up On Facts

America’s Oil and Natural Gas Industry


http://slidepdf.com/reader/full/renewable-fuel-standard-primer-low-res 2/28 The Renewable Fuel Standard:Fill Up On Facts | August 2015

Table of Contents

Fill Up On FactsWhat is the RFS? ..............................................................................................Page 1

Problems with Predicting Demand ...................................................................

Problems with Predicting Supply ......................................................................Page 3

Problems with Choosing Technologies .............................................................Page 4

What is “The Blend Wall?” ................................................................................Page 5

Running Up Against the “Blend Wall” ...............................................................Page 6

E15 and Your Car .............................................................................................Page 7

The RFS Is Broken............................................................................................Page 8

The RFS - Economics and Security ..................................................................Page 9

Magical Thinking on E85 and Ethanol Mandates ..............................................Page 10

E15 in Chicago .................................................................................................Page 11

Potential Vehicle Damage .................................................................................Page 12,13,14

Chain Restaurants on the RFS Ethanol Mandate..............................................Page 15 The RFS and Outdoor Power Equipment.........................................................Page 16,17

The National Turkey Foundation on the RFS .....................................................Page 18

E15 - A Bumpy Ride for Motorcyclists ..............................................................Page 19,20

RFS Ethanol Mandates a Kitchen Table Issue...................................................Page 21,22

Rising Ethanol Blends Don’t Float All Boats ......................................................Page 23,24

Resources ........................................................................................................Page 25



Page

The Energy Independence and Security Act of 2007

(EISA07) included an expanded Renewable Fuel

Standard (RFS2), which the EPA used to develop a final

rule effective July 1, 2010. To comply with the RFS2biofuel producers and importers must blend increasing

amounts of biofuels into gasoline and diesel,

Petroleum refiners and importers then must acquire

sufficient RINs to demonstrate compliance with RFS2

based on the amount of gasoline and diesel they

produce and/or import. The RFS2 is complex with fournested volumetric mandates: total renewable biofuel,

advanced biofuel, cellulosic biofuel and biomass-based

diesel.

What is the RFS?



Page

EISA07 was based on significantly greater gasolinedemand projections, but the U.S. Energy Information

Administration’s 2013 outlook for 2022 projects 25

percent lower demand vs. the 2007 outlook, when

EISA07 was enacted. Cellulosic technologies were

expected to develop within a few years of EISA07,

but by the end of 2014, only one plant in the U.S.

was producing cellulosic ethanol.

Declining gasoline demand, combined with increasingmandates, means we are approaching the limit of

blending ethanol into gasoline (10 percent ethanol or

E10) for widespread use. The EPA rushed through

approval of an up to 15 percent ethanol blend (E15)

without adequate testing. In addition to compatibility

problems with E15, expanded use of another alternative

fuel (E85), has not occurred due to poor consumer

acceptance and significant infrastructure and cost

challenges.

Page

Problems with Predicting Demand

h u n d r e d b

i l l i o n

g a l l o n s

p e r y e a r

Motor Gasoline Consumption(hundred billion gallons per year)

Reality Gap

Projected 2007 Actual and 2014 Projected

2008 2010 2012 2014 2016 2018 2020 2022

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

Source: U.S. Energy Information Administration – Annual Energy Outlooks 2007 to 2013. Visit: http://1.usa.gov/122CHde



Page

EISA07 also assumed declining domestic production of

crude oil and far greater crude oil imports. Both of these

assumptions have been completely reversed by the

shale oil revolution and dramatically increased

North American energy production – the U.S. is now the

world’s leading oil and natural gas superpower. The RFS

is thus based on an economics and security perspective

much different from the reality of today.-

Problems with Predicting Supply

millionbarrelsperday

Crude Oil Domestic Crude Production(million barrels per day)

Reality Gap

Actual and 2014 Forecast 2007 Forecast

2008 2010 2012 2014 2016 2018 2020 2022

4

5

6

7

8

9

10

millionbarrelsperday

Gross Imports Crude(million barrels per day)

Reality Gap

Actual and 2014 Forecast 2007 Forecast

2008 2010 2012 2014 2016 2018 2020 2022

4

6

8

10

12

14




Page

Problems with Choosing Technologies

Contrary to claims, the EPA mandate for increased use

of cellulosic biofuels is disconnected from reality. Though

there was no commercial cellulosic production in 2010,EPA set the mandate for 2011 at 6.6 million gallons.

There was no commercial production in 2011, either, yet

EPA mandated 8.65 million gallons for 2012.

A total of 20,000 gallons were produced in 2012, but it

was exported to Brazil and didn’t count toward RFS2

compliance (chart above). The original target of one

billion gallons set for 2013 was retroactively reduced in

May 2014 to 810,185 gallons to reflect actual supply. In

December 2014, the EPA announced that it would not

release the 2014 target until 2015. With each passingyear, EPA targets diverge further and further from actual

production, creating expensive uncertainty for refineries

busy meeting American fuel needs.

Source



Page

What is the “Blend Wall?”

As biofuel mandates increase, the ethanol volume

required for blending into gasoline will exceed 10percent – known as the “E10 Blend Wall.” Declining

gasoline demand accelerates and exacerbates the

Blend Wall. EIA demand projections for gasoline, E85

and combined ethanol consumption indicate RFS2

targets will not be met even if the cellulosic standard is

waived —notwithstanding EIA’s optimistic projections

about E15/E85 acceptance. The oil industry’s ability tosupply gasoline (as limited by the E10 Blend Wall) does

not meet EIA demand projections.

percentbyvolume

Ethanol Share of U.S.Gasoline Consumption 2009-2014(percent by volume, blue highlights projected values)

Ethanol Share of U.S. Gasoline Consumption

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q

2

6

7

8

9

10

11




Page

A study by NERA Economic Consulting buttresses theargument that the RFS2 is irretrievably broken. The

study details the approaching ethanol Blend Wall, the

point at which ethanol mandates under the RFS2 force

more ethanol into the nation’s fuel supply than is safe for

most motorists and their vehicles. According to NERA,

continued implementation of RFS ethanol mandates by

2015 could:

•

Lead to fuel supply disruptions that ripple adverselythrough the economy.

• Cause the cost of diesel to rise 300 percent and

the cost of gasoline to rise 30 percent.

• Decrease U.S. GDP by $770 billion.

• Reduce worker take-home pay by more than

$580 billion.

Source

Running Up Against the “Blend Wall”

Running Up Against the “Blend Wall”

ource: NERA Economic Consulting

Economic Harm in 2015

• $770 billion decrease in GDP

• $2,700 decrease in Average

Household Consumption

When the Blend Wall is

Reached, NERA Found:

• Maximizing biofuel blending alone

does not ensure compliance.

• Companies could comply by reducing

the volume of fuel supplied to thedomestic market

Individual OPs reduce

production to decrease

RVO and remain

in compliance

EPA raises

Compliance

Percentage for

next year

RVO increases as

fuel production

decreases

Cycle Repeats-

Economic Harm Intensifies

Obligated Parties

(OPs) seek

compliancethrough available

mechanisms

Renewable Volume Obligation

(RVO) exceeds market ability to

absorb renewable fuels (Blend Wall)



Page

E15 and Your Car

Testing by the Coordinating Research Council (CRC),

which has been the gold standard in vehicular research

for the better part of a century, determined that millions

of vehicles on the road today could suffer engine

damage from using fuels containing higher levels of

ethanol than for which they were designed. Likewise,a separate CRC study found that fuel pump systems

could seize up or otherwise be damaged by higher-

content ethanol fuel.

As a result, a number of groups are concerned about

efforts to force increased use of E15 gasoline, fuel

that contains up to 15 percent ethanol (compared to

the standard grade used in the U.S. that contains up

to 10 percent ethanol). These include automakers,

AAA, the California Air Resources Board (CARB), and

environmental non-profits. The stakes are high for

consumers who could be left stranded on the roadside

and/or stuck with potentially expensive repair bills.

MANUFACTURER MODEL YEAR

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2

BMW No No No No No No No No No No No No No No

Chrysler No No No No No No No No No No No No No No

Ford No No No No No No No No No No No No Yes Yes Y

GM No No No No No No No No No No No Yes Yes Yes M

Honda/Acura No No No No No No No No No No No No No Some1 Y

Hyundai/Kia No No No No No No No No No No No No No No

Jaguar No No No No No No No No No No No No No Yes Y

Land Rover No No No No No No No No No No No No No Yes Y

Mazda No No No No No No No No No No No No No No

Mercedes No No No No No No No No No No No No No Some2 So

Mitsubishi No No No No No No No No No No No No No No

Nissan No No No No No No No No No No No No No No

Subaru No No No No No No No No No No No No No No

Toyota/Lexus No No No No No No No No No No No No No Some3 M

VW/Audi/

Porsche No No No No No No No No No No No No No Yes Y

Volvo No No No No No No No No No No No No No No

Source: http://www.edmunds.com/ownership/howto/articles/120189/article.html and auto company contacts

1

Accord, Civic, Crosstour, CR-V, CR-Z, Insight, Odyssey, Pilot; Acura: ILX, MDX, RDX, RLX, but not Ridgeline, TL, TSX 2C, CLA, CL, E, GL, GLK, M, S, SL, SLK, but not CLS, G, SLS AMG3 Avalon, Camry, Corolla, Highlander, iQ, Prius, RAV-4, Scion tC, Sienna, Venza; Lexus: CT200H, ES350, GS300/350, GS450H, IS250, IS350, LS460, RX350, RX450H, but not 4Runner, FJ

Cruiser, Land Cruiser, Sequoia, Tacoma, Tundra, Yaris; Lexus: IS250C, IS350C, IS F, GX460, LX5704Not Chevrolet City Express5GL, M, S Sedan, SL, SLK, but not C, CLS, E, G, GLA, GLK, S Coupe, SLS AMG6Not xB, FRS

Vehicle Manufacturers and E15Auto manufacturers and models recommendations for E15 in non-flex fuel vehicles as of January 2015.

Most vehicles on the road today aren’t recommended for operating on E15 by manufacturers.



Page

The RFS Is Broken

The RFS is indeed broken. In November the EPA

basically agreed, announcing it was giving up on issuing

ethanol-use requirements for 2014 with just a little over

a month to go. Instead, the agency said it will complete

the 2014 targets in 2015 “prior to or in conjunction with

action on the 2015 standards rule.”

The agency’s inability to meet the RFS deadline – it

hasn’t actually met the statutory deadline once in the

past five years (though the 2011 rule was only nine days

late, close enough to call it on time) – offers little hope

that things will improve. The RFS is an example of top-

down central planning that’s detached from reality and

which has created distortions in the marketplace and

uncertainty among those who’re obligated to operate

under it.

What the RFS has become is an illustration of the pitfalls

of government trying to mandate consumer behavior

through a program whose goals have largely been

achieved by surging U.S. energy production.

The Renewable Fuel Standard (RFS) is indeed broken.

In November the EPA basically agreed, announcing it

was giving up on issuing ethanol-use requirements for

2014 – already a year overdue – with just a little over a

month to go in the calendar year. Instead, the agency

said it will complete the 2014 targets in 2015 “prior to or

in conjunction with action on the 2015 standards rule”

– standards that also are late.



Page

The RFS – Economics and Security

With the supporters of increased ethanol use waging

an aggressive campaign to defend the flawed RFS2, ithas never been more critical to push forward the facts.

This means telling the truth about ethanol’s appropriate

role in the overall fuel picture, the performance of fuels

containing higher levels of ethanol and the market’s tepid

embrace of it and the fantasy of the EPA’s cellulosic

biofuels mandate. Some key facts:

• Contrary to some claims, ethanol is not responsible

for lower U.S. oil imports. From 2008 through 2014,

net imports have fallen by more than 6 million barrels

per day while domestic oil production has increased

by more than 3.5 million barrels per day. Whileethanol production has increased by 328,500 barrels

per day over that period, it is far too small to deserve

credit for reduced imports.

• Contrary to claims, ethanol is primarily an additive

to gasoline, not a replacement for gasoline. It isonly a replacement for gasoline when sold as E85

fuel. In 2012, only 100.2 million gallons of E85 were

sold, meaning that as a fuel (rather than an additive),

ethanol displaced just 50.7 million gallons of gasoline

when you account for ethanol’s lower energy

content. Context: The U.S. consumes about 352

million gallons of gasoline every day.



Page

Magical Thinking on E85 and Ethanol Mandates

Some have suggested that requiring more production

of higher ethanol-blend fuels like E15 and E85 can

satisfy RFS mandates but these measures expensive,

temporary at best, and could have serious impacts on

consumers and the broader economy.

E85 has several limitations, for starters, only flex-fuel

vehicles (FFVs) can use it, which becomes a logistical

issue because there’s a lack of E85 pumps across

the country – only about 2,500 retail stations out of

more than 150,000 offer it. That’s not because “Big

Oil” is blocking the sale of E85, but because there’s a

lack of consumer demand (see chart). Next, there’s a

mismatch between pump locations and FFVs, illustrated

by a recent Department of Energy (DOE) Inspector

General’s report that found DOE has been fueling its

FFVs with regular gasoline instead of E85, eliminatingmany supposed environmental or cost benefits of

having a fleet of cars that can use fuel containing up

to 83 percent ethanol. And finally, E85 has not been

competitive – just look at AAA’s website that tracks retail

E85 prices.

RFS supporters, desperate to avoid the blend wall

suggest that E85 be “heavily discounted” to reach

maximum sales, but the numbers have not added

up: actual sales of E85 have never come close to the

annual rate which would be needed and E85 has been

more costly on an energy-equivalent basis. Such

arguments ignore ethanol market dynamics. Ethanol

production has expanded and the U.S. has been a net

exporter of ethanol since 2010. Trade flows of ethanolare responding to market signals, which appear to be

placing a higher value on ethanol for its use as a low-

level blend gasoline blendstock than as a high-level

blend as a gasoline replacement (such as E85).

As suggested by economic theory, it is entirely possible

that markets would place a higher value on marginal

ethanol (above what can be consumed in E10) as

an export product. The economic law of supply and

demand is at work, and it is not pointing to E85 being

“heavily discounted” to gasoline containing 10 percent

ethanol.

Trying to come up with fantastical solutions to justify

bad policies are just another distraction from the real

problem: The RFS is fundamentally flawed and its

ethanol mandates are broken. Rather than trying to push

higher ethanol-blend fuels into the market, which the

consumer isn’t demanding (E85) or which could harm

engines (E15), we need the Congress to address the

RFS with long-term and meaningful action.



Page

E15 in Chicago

“…most cars on the road are not approved by their

manufacturers for E15. Why would the city council use

your engine as a guinea pig?” — Chicago Tribune

Chicago Mayor Rahm Emanuel and his allies on the city

council deserve credit for putting a stop – for now at

least – to an ill-conceived proposal that would mandate

the sale of higher ethanol blend E15 fuel at city service

stations. Ill-conceived because, as argued here and here

earlier this year, the E15 requirement could be full of risk

for consumers and small business owners – while mainly

benefiting ethanol producers. Recently, AAA urged

Chicago lawmakers to vote against the ordinance.

Later, the Chicago Tribune editorialized:

“The touted cost savings and environmental benefitsare dubious. E15 produces less energy than regular

gasoline, so vehicles would get fewer miles to the

gallon on it. And the production of ethanol uses a great

deal of energy. So why is the ethanol industry pushing

this? Because it has a massive supply of ethanol and

not enough demand for it. There is no natural market

demand for this. Without a government mandate

for more ethanol, more ethanol won’t get sold. …

Aldermen, really. Why would you want to prop up an

industry by creating a risk for your constituents? Stop

this ordinance once and for all.”



Page

Potential Vehicle Damage

The reasons for this view are pretty straight-forward – which we’ve underscored recently with a dash of humor:

Potential vehicle damage – Research has shown E15 could damage engines and fuel systems in millions of vehicles on

the road today. Automakers have warned that using E15 in vehicles that weren’t designed to use it could void warranties.

The real-world impacts of pushing more E15 into the

fuel supply could fall on consumers and the broader

economy, according to a NERA Economic Consulting

study. If Chicago imposes the E15 proposal, it could

impact small businesses that own a number of the

city’s service stations. One owner, Russell Garcia,made the point in a letter to the editor of the Tribune

in October:

“The idea of mandating the sale of E15 gasoline in

Chicago is poor public policy. … (M)y businesses

would be negatively impacted by this mandate, and

my customers would be harmed too. E15 provides

no cost savings. While E15 has a sticker price that is

about the same as traditional gasoline, its poorer gasmileage makes it more expensive. Plus, the cost of

retrofitting new underground tanks at my stations and

my competitors’ would necessitate even higher gas

prices.”



Page

Potential Vehicle Damage (continued)

Refueler, beware – E15 also poses potential risks in a number of other areas. For example, if you own a gasoline-powered leaf

blower or a snowmobile.



Page

Potential Vehicle Damage (continued)

Refueler, beware – E15 also poses potential risks in a number of other areas. For example, if you own a gasoline-powered

snowmobile.

The point being that E15 could foul up engines in all

kinds of outdoor equipment. As the Tribune editorial

noted:

The biggest risk comes if equipment is stored for the

season with fuel still in the tank. Ethanol tends to make

rubber and plastic parts more brittle. Ethanol attracts

water, which can increase corrosion in moving parts.

A long winter in contact with this mix can compromise

the equipment.Higher concentrations of ethanol in fuel

can make small engines run hotter, which in turn can

cause malfunctions. Many manufacturers of outdoor

power equipment will not honor warranties if owners

use E15 fuel. They strongly oppose diluting gasoline

with more ethanol.

E15 also poses potential risks for marine engines and

motorcycles.

The Tribune is right: Chicago officials should kill this

proposal once and for all.

Source: http://www.filluponfacts.com/#/?section=e15inchicago

http://www.filluponfacts.com/#/?section=e15inchicago

http://www.filluponfacts.com/#/?section=e15inchicago



Page

Chain Restaurants on the RFS Ethanol Mandate

U.S. policy on biofuels, and on corn ethanol in particular,

is a widely-recognized contributor to food price

inflation. Experts from across the political spectrum

now recognize this fact, and many are now calling foran end to Federal subsidies and supports for the corn

ethanol industry. Although NCCR continues to support

incentives for advanced biofuels, such as cellulosic

and others that hold promise for a future of greater

U.S. energy independence, we oppose continuation

of subsidies and supports for the mature corn ethanol

industry. – NCCR

“ Through years of promoting ethanol as a solution to

America’s energy issues, Congress has unknowingly

worked to increase commodity prices on retailers

throughout the supply chain. These subsidies have

artificially increased the price of corn, which in turn has

driven up costs for restaurants and the customers they

serve.” – Rob Green, NCCR executive director

We estimate the impact of the 2015 RFS mandates

at 2011 levels of food purchases under two scenarios

… For the average quick service restaurant, these

input cost increases are the equivalent to $18,190 per

restaurant in the first scenario and $2,894 per restaurant

in the second scenario. For the average full service

restaurant, the cost increases are $17,195 and $2,736

per restaurant, respectively. – PwC report for NCCR

“Ethanol diverts a significant share of the US corn cropeach year. And, by doing so, it makes corn prices higher

than they otherwise would be.” – University of Missouri

economist Pat Westhoff, via VOA News

“ The use of corn-based ethanol required by the federal

Renewable Fuel Standard mandate has dramatically

distorted the market and increased costs throughout the

food supply chain. The RFS has had an adverse effect

on the chain restaurant industry, which has witnessed

marked increases in commodity prices and associated

costs to the tune of billions of dollars a year.”

– Rob Green, NCCR executive director

“Chain restaurants aren’t all mega-corporations. Many

are systems of small business franchises like the one

my family owns. … The government picked winners

and losers when they passed the RFS mandate.

This mandate is costing me $20,000 to $30,000 per

restaurant. It is blatantly unfair and we urge Congress to

repeal it.” – Ed Anderson, Wendy’s franchise owner and

NCCR member.

Source: #ReapealtheRFS - http://bit.ly/1daq9Wk



Page

The RFS and Outdoor Power Equipment (continued)

Source: #E15 - http://1.usa.gov/1bgNwfo

ethanol blended gas will attain fewer miles per gallon than

those running on conventional gasoline (E10). This means

you must fill your gas tank more frequently when usinghigher ethanol blended fuel. – OPEI

“ The higher the ethanol content, the more acute the

effects.” – OPEI

Manufacturers of outdoor power equipment and their

engines say they will not honor the warranty of a product

someone has been running with E15. The reason?

Besides the above effects of ethanol, engines running

even E10 gasoline run hotter. And with E15, the results

can be dangerous, considering reports of “unintentional

clutch engagement”—such as a powered-up chainsaw that suddenly decides, because it’s running so

hot, that you’ve pressed the button to start the chain.

Manufacturers see a train wreck coming because their

customers will ultimately blame them for problems.

– Consumer Reports.org

“E15 is universally opposed by our entire industry

because of the problems it causes. … Research has

shown that using E15 can have harmful and costlyconsequences on small engines and outdoor power

equipment. Most engines would have great difficulty in

meeting both emissions and performance expectations

with this type of alcohol range. … Most gas stations have

tanks where the supplier puts the mixed gasoline into the

storage tank and the pump pumps it up. Because alcohol

separates from gasoline, consumers can get a higher mix

of alcohol in their fuel. If you increase to 15%, the effect

gets multiplied, so you might end up with double the

alcohol you expected. That’s a problem.” – Brad Murphy

of OPEI member Subaru Industrial Power Products.



Page

The National Turkey Foundation on the RFS

Source: #ReapealtheRFS - http://bit.ly/17DKm4D

Feed corn prices increase the cost of raising turkeys and

other meat protein animals we raise for food. Consumers

ultimately pay more for these added costs of raising meat

and poultry. – NTF

“Consumers have seen food prices increase faster than

general inflation since the current RFS was enacted in

2007. Food affordability, which had been improving for

decades, now is deteriorating.”

“We saw how price spikes caused by this government

mandate impacts turkey growers when corn prices

reached almost $8 per bushel: U.S. turkey production

declined by 9 percent, resulting in loss of rural jobs.”

“Corn is the major ingredient in turkey feed and almost

all livestock and poultry. Corn is the primary reason why

one turkey company went bankrupt in 2012 and why the

industry already has lost 750 jobs in the last 12 months.”

“ The RFS has destabilized corn and ethanol prices by

offering an almost risk-free demand volume guarantee

to the corn-based ethanol industry. Domestic and export

corn users other than ethanol producers have been

forced to bear a disproportionate share of market and

price risk. Ethanol prices should reflect the fuel’s energy

value relative to gasoline, not a corn price that is both

inflated and destabilized by the inflexible RFS. As corn is

syphoned off to ethanol, animal agriculture is losing jobs in

rural America.”

“ The National Turkey Federation encourages pointed

discussion of the RFS. Animal agriculture has long been

suffering at the hand of this broken policy, especially

feed costs in the turkey business. The RFS has caused

an increase of $1.9 billion in feed cost alone for turkey

farmers, as corn continues to be syphoned off to

ethanol.”

“RFS has been such a poorly managed mess, it’s time to

drain the swamp. The RFS needs a fresh start in order toput in place a smarter policy on the mix of fuel and feed.”

– Joel Brandenberger, NTF President

“It’s safe to say RFS is hitting consumers, poultry

producers, and farmers squarely in the pocketbook.”– Dr. Thomas Elam, president of FarmEcon, LLC,

speaking on behalf of the NTF and the National Chicken

Council



Page

E15 - A Bumpy Ride for Motorcyclists

Source: #ReapealtheRFS - http://bit.ly/1bWk7De

“ Thanks to the U.S. Environmental Protection Agency,

there’s a new threat facing motorcyclists nationwide, and

possibly all Americans. The danger is posed by a certainblend of motor vehicle fuel called E15, which may damage

the engines of motorcycles, all-terrain vehicles, boats and

powered equipment.” – Wayne Allard, AMA vice president

for government relations

… E15 could lower fuel efficiency and possibly cause

premature engine failure for motorcycles and ATVs.

– AMA

… the U.S. Environmental Protection Agency’s decision

to allow E15 into the marketplace would impact every

American who owns motorcycles and ATVs, not to

mention cars, lawnmowers, boats and snowmobiles.

– AMA

… the U.S. Department of Agriculture was subsidizing

ethanol production from the start by providing grants to

purchase special ethanol blender pumps. … Agriculture

Secretary Tom Vilsack announced in 2011 that the

USDA intends to install 10,000 blender pumps by 2016.

[Rural Energy for America Program] REAP will be a key

component to achieve the secretary’s goal and, thus, help

grow the availability of E15 fuel. These special ethanol

blender pumps will further limit access to E10-or-less

fuel in rural areas. This will be a problem because ruralareas tend to have an older “legacy” vehicle fleet than

other parts of the country. Moreover, rural areas are the

most vulnerable places for motorcyclists and users of

small engine devices because options for regular gasoline

may be few or even non-existent. The REAP will help

one segment of the rural economy at the cost of other

segments. Ultimately, the higher costs will have a negative

impact on small rural economies. – AMA

Automobile and motorcycle manufacturers must certify

that the on-highway vehicles they produce will meet

applicable U.S. EPA and National Highway Traffic Safety Administration emissions, fuel economy and safety

requirements prior to selling the vehicles. The fuel that

the vehicles must use for this requirement is called the

“certification fuel.” Changing the certification fuel to E15

or E30 is at odds with the 22 million motorcycles and

all-terrain vehicles currently in use, not to mention the

legacy fleet of cars, boats, lawnmowers, generators

and hundreds of millions of small engines in commerce

today. None of these vehicles and engines is designed to

operate on fuel with more than 10 percent ethanol. – AMA



Page

E15 - A Bumpy Ride for Motorcyclists (continued)


in use, not to mention the legacy fleet of cars, boats,

lawnmowers, generators and hundreds of millions of

small engines in commerce today. None of these vehiclesand engines is designed to operate on fuel with more

than 10 percent ethanol. – AMA

“When you have a type of fuel that, if inadvertently used,

has the potential to damage engines and fuel systems

and void a manufacturer’s new-vehicle warranty, you

really should move with caution when it comes to putting

that fuel in the marketplace. Issuing rules that allow the

sale of E15 at gas stations without adequate testing to

be sure it’s safe in motorcycles and ATVs, not to mention

engines in boats and power equipment, just isn’t wise.”

– AMA Board Chairman Maggie McNally

100 percent of the 22 million motorcycles and all-terrain

vehicles on the road and trail in the U.S. today are not

designed to run ethanol blends higher than 10 percent,and many older machines favored by vintage enthusiasts

have problems with any ethanol in the fuel. And yet the

opportunity to misfuel and damage an engine with higher

ethanol blends such as E15 is very real. It is time to set

the record straight.

The bottom line for the AMA is this: Motorcyclists simply

want safe fuels available at all fuel retailers and measures

employed by retailers to ensure they cannot inadvertently

put unsafe fuels in their tanks. – AMA

“It really doesn’t do much good to have laws and rulestelling refiners to create volumes of ethanol-gasoline

blends that consumers won’t buy.” – Wayne Allard, AMA

vice president for government relations



Page

RFS Ethanol Mandates a Kitchen Table Issue


“ As American consumers continue to cope with a

period of pro-longed economic turmoil, and U.S. food,

beverage and consumer products makers from farmto fork struggle with record high commodity prices, we

believe it is EPA’s duty to grant a waiver for the applicable

volume of corn ethanol required by the RFS.”

“Congress should adopt an energy policy that, while

promoting sustainable, domestic, and affordable energy

sources, does not lead unnecessarily to increased food

prices.”

“In total, corn is used in 75 percent of the food on

supermarket shelves. Losses in grain yields, therefore,

have a severe impact on U.S. food production for both

domestic consumption and exports such as corn,

soybean, and meat products.”

“It’s not just corn – food-to-fuel policies create a ripple

effect for all agricultural products, also increasing prices

for basic staples like bread, eggs and milk.”

“[W]ithout a high biofuels mandate, the market more

easily adjusts to short-supply situations because ethanol

producers will, at some corn-price level, also reduce

corn usage. Conversely, high biofuels mandates create

inflexibility in markets, the study says, and “any required

adjustment in demand (for corn) would occur outside theethanol industry” (e.g., feed, livestock/poultry, food).”

– American Meat Institute

“The corn-based ethanol mandate impacts the baking

industry twofold: First, the government mandate to

grow corn for fuel instead of food drives farmers to move

away from planting wheat; second, the wheat market

typically follows the much larger corn market, and when

corn prices rise due to government created demand for

ethanol, wheat prices rise as well. With an estimated 40

percent of the corn crop needed to satiate demand for

the corn-based ethanol mandate, there is little doubt thatthe mandate impacts corn prices and supplies, which

will also impact the wheat market. ABA once again calls

on Congress to stand with consumers and repeal the

corn-based ethanol mandate.”

- American Bakers Association (ABA) President & CEO

Robb MacKie

Restoring the

balance betweenfood and fuel cro

is long overdue.

– ABA President & CEO Robb Mac



Page

RFS Ethanol Mandates a Kitchen Table Issue (continued)


Due to the 2005 and 2007 corn-based ethanol

mandates, wheat could not (and cannot) competefor finite acreage against other biofuel crops. With the

addition of E15, estimates show that corn acreage may

need to increase to as much as 110 million acres in order

to meet demand. With increasing ethanol mandates due

to the RFS2, and with the inability of second generation

biofuels to come online quickly to relieve pressure on the

demand for corn-based ethanol, corn will continue to win

the battle over finite farmland in the and drive food prices

both domestically and internationally – Comments to the

House Energy and Commerce Committee

“ The corn-based ethanol program and the Renewable

Fuel Standard (RFS) continue taking their toll on thebaking industry and consumers. Corn-based ethanol

has accelerated the decrease of wheat acreage in the

U.S. over the past 30 years and tightened food supplies

around the world.” – ABA President & CEO Robb MacKie

Restoring the

balance betweenfood and fuel cro

is long overdue.

– ABA President & CEO Robb Mac



Page

Rising Ethanol Blends Don’t Float All Boats


With nearly 13 million registered boats (and nearly

16 million boats in the field) and 70 million boaters

nationwide, the recreational marine industry is a major

consumer goods and services industry that contributed

$30.5 billion in new retail sales and services to the U.S.

economy in 2009 and generates nearly 340,000 jobs

nationwide. … NMMA strongly opposed – and continues

to oppose – the granting of a “partial” or “conditional”

waiver for E15 or any other ethanol blend level over

ten percent ethanol (“E10”) because it will substantially

increase public confusion and lead to persistent misfueling

and consequent engine performance failures, emissions

control failures, and consumer safety concerns.

– NMMA Comments to the U.S. Environmental Protection Agency

The Department of Energy’s National Renewable Energy

Laboratory has tested the effects of E15 gasoline on

some standard marine engines, and the majority of these

engines suffered significant damage or exhibited poor

engine runability, performance, and difficult starting – none

of which is acceptable on a boat at sea.

– NMMA Letter

… we have determined that e15 blends of ethanol would

cause considerable damage to the 7.5 million outboard

engines in use in this country today. This damage is

unnecessary and can be avoided by freezing the ethanol

content of gasoline at 10% by volume. NMMA has never

been anti-ethanol. We are simply opposed to fuel blends

that will ruin our engines and place lives at risk.

–Thomas J. Dammrich, President NMMA

There is a significant amount of technical and anecdotal

information that concludes that the introduction of

E10 into the gasoline supply has caused significant

damage and failure to boats. Although boat and engine

manufacturers have adjusted and now design equipmentto run on E10, the introduction of E15 will result in:

• Damage to rubber parts;

• water contamination in the fuel system due to

ethanol’s hygroscopic properties;

• increased water absorption and phase-separation of

gasoline and water while in tank;

• corrosion of fuel system components and fuel tanks;

• higher exhaust gas temperature due to enleanment;



Page

Rising Ethanol Blends Don’t Float All Boats (continued)

Source: #ReapealtheRFS - http://bit.ly/1aKg5A

performance issues, such as drivability

(i.e. starting, stalling, fuel vapor lock);

• damage to valves, push rods, rubber fuel lines and

gaskets.

– Minnesota Testimony, NMMA

Currently, there are nearly 13 million registered recreational

boats in operation in the U.S. No gasoline marine engine

– or any other marine equipment including gasoline

generators – currently in the field was designed,

calibrated, certified or is warranted to run on anything

over 10 percent ethanol.

EPA’s own “engineering judgment,” as well as all availabledata (supported by these two new studies), strongly

suggests that all of the 12.8 million registered boats on the

water today (with the exception of approximately 260,000

diesel-powered boats and the roughly 430,000 registered

non-motorized craft) may be negatively impacted by any

gasoline with more than a 10 percent ethanol blend.

– NMMA Petition to EPA

The Renewable Fuels Standard must be revised to

prevent the damage that ethanol blends above the 10%

level will cause to engines of all types. … Unless the

renewable fuels mandate is changed, it is likely that EPA

would require 35%-40% ethanol in gasoline by the year

2022. Every time EPA changes the percentage of ethanol

in gasoline, engines have to be recalibrated and engine

designs changed. – NMMA Policy Brief



Page

Resources

NERA Economic Consulting, “Economic Impacts Resulting from Implementation of RFS2 Program” http://bit.ly/12dJD2j

Coordinating Research Council, “Intermediate-Level Ethanol Blends Engine Durability Study” http://bit.ly/12dCjS0

Coordinating Research Council, “Durability of Fuel Pumps and Fuel Level Senders in Neat and Aggressive E15”

http://bit.ly/12dCHju

Rep. Sensenbrenner, “E15 Automaker Responses” http://1.usa.gov/12dCSLJ

AAA, “New E15 Gasoline May Damage Vehicles and Cause Consumer Confusion” http://bit.ly/12dCZqw

Environmental Working Group, “Senators Seek to Block Higher Ethanol Blend” http://bit.ly/12dD5yw

National Academy of Sciences, “Potential Economic and Environmental Effects of U.S. Biofuel Policy” http://bit.ly/12dF0TL

Stanford University, Center for Food Security and the Environment http://stanford.io/12dFfOO

Food and Agriculture Organization of the United Nations, “OECD-FAO Agricultural Outlook 2012-2021”

http://bit.ly/12dFk51

World Bank Policy Research http://go.worldbank.org/QPII43RIJ0

Schornagela, Niele, Worrell, and Böggemann, “Resources, Conservation and Recycling; Water accounting for (agro)

industrial operations and its application to energy pathways”, December 2011. www.elsevier.com/locate/resconrec

The National Academy of Sciences, “Potential Economic and Environmental Effects of U.S. Biofuel Policy”http://1.usa.gov/12dFt8l

Energy Tomorrow, Bob Greco Blog http://bit.ly/17JzgbE

Energy Tomorrow Blog, Mark Green, “The RFS is Broken” http://bit.ly/1997VzZ

Energy and Power Subcommittee, House Committee on Energy and Commerce, “Overview of the Renewable Fuel

Standard: Government Perspectives,” June 2013 http://1.usa.gov/1e3OKIU

Fill Up On Facts http://filluponfacts.com/

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