Fuel Fix: Renewable fuel standards distort markets, critics say

May 22, 2013

Emily Pickrell, May 21- Renewable fuel standards are distorting the refining industry in ways  lawmakers didn’t foresee when they set the mandates,  industry representatives said Tuesday at a Houston conference.

Import of renewable  fuel from Brazil, production fraud and and a misinterpretation of rules governing the use of a 15 percent ethanol blend called E15 are among the problems that have arisen from existing  renewable fuel standards, said Charles Drevna, president of American Fuel and Petrochemical Manufacturers.

He spoke at the North American Refined Products conference sponsored at the Saint Regis Houston  by Platts, an energy information service.

Most domestic ethanol is made from corn, but imports of cheaper, sugar-based ethanol from Brazil have cut into demand for ethanol from domestic producers.

The resulting glut in domestic capacity  has prompted producers to advocate a 15 percent ethanol content in gasoline.

“E15 is the best answer for the corn ethanol industry,” said Andy Lipow, president of Lipow Oil Associates. “It is plagued with overcapacity and E15 is seen as the answer.”

But refiners and some consumer advocates contend older vehicle engines  can’t handle the higher blend.

The first renewable standard, which Congress passed in 2005, required all fuel sold in the United States  for transportation to contain a specified minimum volume of  fuel produced from renewable sources.