EPA’s Renewable Fuel Quota May Rise as Gasoline Sales Climb

Sept. 2 (Bloomberg) — U.S. renewable fuel quotas may end

up higher than a proposal issued last year because gasoline use

is climbing, the Environmental Protection Agency’s chief said.

Administrator Gina McCarthy told an investors’ conference

in New York that the quotas, which are months overdue, will be

released soon. She declined to discuss any specific figures,

while laying out the rationale for a modest increase.

Tim Cheung, a research analyst at ClearView Energy Partners

in Washington, predicted the EPA will require 13.6 billion

gallons of ethanol be blended into gasoline for vehicles —

about 600 million gallons more than the agency proposed.

“We think the upward revisions are probably going to be

limited,” Cheung said in an interview.

Investors, representatives of refiners Valero Energy Corp.

and Tesoro Corp. and ethanol producers such as Poet LLC are

awaiting the EPA’s final quotas to figure out this year’s

requirements and anticipate the future course of the program.

The cost of a renewable fuel credit, or RIN, used by refiners to

meet the mandate, increased to about 50 cents in recent months,

after collapsing to 18 cents Nov. 15.

It was that day that the EPA issued draft 2014 standards to

require the use of 15.21 billion gallons (57.58 billion liters)

of renewable fuels, including about 13 billion gallons of corn

ethanol and 1.28 billion gallons of biodiesel. That’s a 16

percent cut from 18.15 billion gallon total in the 2007 law.

The EPA agreed with refiners who said they are limited in

how much ethanol can be blended into the overall fuel supply.

Ethanol and other renewable-fuel producers argue that only if

EPA forces refiners to use a higher share of renewable fuels

will they come up with ways to cross the so-called blend wall.

McCarthy’s comments today don’t indicate that the agency is

rethinking its analysis of the blend-wall constraints, Cheung

said.

To contact the reporter on this story:

Mark Drajem in Washington at

mdrajem@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Steve Geimann

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