By: Javier E. David
As the U.S. prods the oil industry to blend more ethanol into gasoline, charges are flying between refiners and biofuel advocates about the impact of such mandates—and whether the so-called Blend Wall is really a problem at all.
Under a law passed in 2007, refiners are required to mix a certain volume of renewable fuels into their gasoline each year. Therefore, when gasoline use declines—as it is currently—it effectively increases the percentage of the mix that is made of ethanol.
As a 10 percent “blend wall” that is supposedly the safe limit for automobile engines approaches, supporters are pushing for a higher ethanol mix, while opponents raise objections related to cost and logistics.
Ethanol proponents, however, dismiss the “blend wall’ as a self-inflicted controversy that the oil industry should have expected. They contend that falling gas demand was apparent back when standards were first implemented, and refiners never moved to adjust until it was upon them.
“They act as if they didn’t see this coming,” said Adam Monroe, president of Novozymes North America, a biotechnoloy company that makes enzymes used in biofuel production. Given the onset of the 2008 recession that crimped gas demand, the blend issue “wasn’t too hard to fathom,” he said.
Ethanol makers, auto manufacturers and regulators all moved to adapt by advancing “a huge wave of innovation” by pushing new technology, such as making cars compatible with alternative fuels. Refiners, he said, were slow to adjust because of the impact on their bottom lines.
“Building a supply chain for this is no easy feat and it does take time,” Monroe said. “But it doesn’t take years and years … this is not that heavy a technical lift for” oil companies, he added.
The oil industry has an entirely different take.
Read the rest of this article on CNBC’s website.
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