Ethanol Industry’s Blend Wall Logic Puts Taxpayers at Risk

Morning Consult

Sept. 30, 2016

By Wayne Allard and Nan Swift

This November, the election is not the only political decision that will affect American consumers in a big way. It also is when the Environmental Protection Agency is scheduled to announce how much ethanol must be blended into the 2017 fuel supply for our country to satisfy the federal Renewable Fuel Standard requirements.

Like the 2016 mandates, next year’s ethanol volumes are likely to breach the “blend wall” — the maximum quantity of ethanol that can be sold each year given infrastructure realities while still ensuring the safety of fuel-powered engines. Today, the blend wall stands at roughly 10 percent of America’s fuel supply, and E10 fuel (containing 10 percent ethanol by volume) is what’s most commonly sold.

But recently, the Renewable Fuels Association has taken to calling the blend wall a lie, saying it only exists because the oil industry won’t invest in infrastructure that would enable the sale of higher ethanol blends.

Never mind that fueling equipment is paid for by individual fuel retailers who simply aren’t seeing enough demand for E15 to warrant the infrastructure overhaul. In fact, absent market demand, much of the E15-compatible infrastructure being installed today is done on the taxpayers’ dime through U.S. Department of Agriculture grants that are matched by grants from Corn Belt state governments and private entities, including corn grower associations.

When taxpayers are bilked to finance infrastructure, or where states have biofuel mandates of their own, the volume of ethanol blended into fuel sold in those states can exceed 10 percent.

Read the full article here.