EPA actually considering scaling back on RFS's ethanol blending requirements?

As we are all painfully well aware, the esteemed bureaucrats at the Environmental Protection Agency rarely-to-never take kindly to the suggestion that they should provide the private sector with any leeway in complying with their ambitious regulatory agenda, nor otherwise cede any iota of their authority or admit to policy mistakes. So… this could actually be kind of huge. Via Reuters:

Federal environmental regulators are expected to significantly reduce their biofuel blending mandates for next year, marking a historic retreat from an ambitious 2007 law, according to industry and trade sources.

The U.S. Environmental Protection Agency (EPA) is considering a proposal that would set next year’s target for use of renewable fuels at 15.21 billion gallons, less than the 18.15-billion gallon 2014 target established in the law, according to the sources, who said the new figures have circulated in Washington policy circles over the past week.

At 15.21 billion gallons, the proposal would leave room only for some 13 billion gallons of corn-based ethanol to be blended into the nation’s gasoline supply – down from 13.8 billion this year and 14.4 billion required by law for 2014.

Speculation and media reports about the potential reduction in the blending levels ripped through financial markets on Thursday, spurring a major rally in the shares of independent refiners who have been paying hundreds of millions of dollars to buy ethanol credits to cover their blending obligations.

To review for any newcomers to the glorified piece of centrally planned corporate pork that is the Renewable Fuel Standard: Through the EPA-administered RFS, refiners are required to blend a certain amount of certain biofuels into the country’s fuel supply or else purchase credits to excuse themselves from doing so, and the government periodically increases the mandated blending ratio (you may recall that the EPA even tried to penalize oil companies for failing to adequately comply with last year’s level, never mind that the cellulosic biofuels to which they were referring were not actually commercially available in the necessary quantities, and then they went ahead and again increased the blending requirement anyway, supremely confident in their own misbegotten wisdom).

The debate over the Renewable Fuel Standard reached a pitch this summer when the aforementioned ethanol credits started to get particularly pricey as refiners complained that they were running up against the “blend wall,” meaning that the mixing the required volumes will exceed the 10 percent threshold the industry finds doable for use in cars and trucks.

The EPA has been heretofore undeterred in continually raising the requirements, but I suppose it must be getting harder to ignore that nobody but nobody except agribusiness and their associated Big Ethanol lobbyists are fans of ethanol — not oil companies, not environmentalists (and how often do those two groups unite?!), and certainly not American consumers paying higher food and gasoline prices as a consequence. Ergo, it sounds like they’re looking at easing up on furthering the expensive boondoggle — which is a nice improvement, but it is not enough to merely mitigate the impracticality of the whole thing. We need to do away with it once and for all, and there is, mercifully, growing bipartisan support for that endeavor.

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