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June 11, 2015 | Views on the News | Scott Irwin and Darrel Good | Views: 1090

Does It Matter Whether the EPA Targets Volumetric Or Fractional RFS Standards?

Analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel

In a farmdoc daily article last week, we analyzed whether the ethanol mandates recently proposed by the EPA for 2015 and 2016 were high enough to provide a "push" for biofuels use beyond the E10 blend wall. The analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel, but this depends on assumptions about growth in gasoline use and ethanol inclusion rates. Relatively modest increases in the rate of growth in gasoline use and slightly higher ethanol inclusion rates largely eliminated the push above the blend wall. Our analysis assumed that the EPA targeted fixed volumes of ethanol when proposing RFS standards. There is some uncertainty on this point given that the standards are actually enforced in a fractional manner. The purpose of today's article is to examine how estimates of the push above the blend wall implied by the 2015 and 2016 ethanol mandates change depending on whether the EPA targets a fixed volumetric or fixed fractional standard.

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