How Much Ethanol Can Be Consumed in E85? 

Bruce Babcock and Sebastien Pouliot

Briefing Paper 15-BP 54

September 2015

Center for Agricultural and Rural Development

Iowa State University

Ames, Iowa 50011-1070

www.card.iastate.edu

Sébastien Pouliot is Assistant Professor of Economics, Iowa State University, Ames, IA. Email: 

pouliot@iastate.edu.

Bruce A. Babcock is Professor of Economics and Cargill Chair of Energy Ecnomics and is the director of 

the Biobased Industry Center at Iowa State University, Ames, IA. E-mail: babcock@iastate.edu.

Partial support for this work is based upon work supported by the National Science Foundation under 

Grant Number EPS-110 1284. Any opinions, findings, and conclusions or recommendations expressed in 

this material are those of the author and do not necessarily reflect the views of the National Science 

Foundation. Funding for this project was also provided by the Biobased Industry Center and the USDA 

Policy Research Center at Iowa State University.

This publication is available online on the CARD website: www.card.iastate.edu. Permission is granted to 

reproduce this information with appropriate attribution to the author and the Center for Agricultural and 

Rural Development, Iowa State University, Ames, Iowa 50011-1070.

For questions or comments about the contents of this paper, please contact Sébastien Pouliot,

pouliot@iastate.edu.

Iowa State University does not discriminate on the basis of race, color, age, ethnicity, religion, national origin, 

pregnancy, sexual orientation, gender identity, genetic information, sex, marital status, disability, or status as a U.S. 

veteran. Inquiries can be directed to the Interim Assistant Director of Equal Opportunity and Compliance, 3280 

Beardshear Hall, (515) 294-7612.
Executive Summary

EPA’s justification for proposing to reduce ethanol mandates in the Renewable Fuel Standard 

(RFS) is that consumer demand for ethanol is not high enough to meet the original targets. About 

13.7 billion gallons of ethanol can be consumed in E10, which contains 10% ethanol. The 

original mandate for conventional biofuel (widely assumed to be corn ethanol) was supposed to 

increase to 15 billion gallons in 2016. This would require that 1.3 billion gallons of ethanol 

would need to be consumed in gasoline-ethanol blends that contain more than 10% ethanol. The 

two blends that contain more than 10% ethanol approved for sale are E15 and E85. The number 

of stations that sell E15 is currently quite small whereas almost 3,000 stations sell E85. Thus 

EPA focuses on the contribution of potential E85 sales to make its claim that there is insufficient 

demand for ethanol to support a mandate of 15 billion gallons.

EPA writes in its proposed rule: “Thus we believe it is possible for the market to reach 

volumes perhaps as high as 600 million gallons under favorable pricing conditions” (p. 61). 

Adding this 600 million gallons to 13.7 billion gallons of ethanol consumed in E10 means that 

EPA believes that a maximum of 14.3 billion gallons of ethanol can be consumed in the United 

States. This is why EPA proposes to reduce mandates for the non-advanced biofuel from 15 to 

14 billion gallons in 2016.

Estimation of the demand for E85 requires data matching various E85 price levels with the 

corresponding amount of E85 sales. A rich source of data was provided to us that we used to 

estimate directly the proportion of U.S. owners of flex vehicles who buy E85 at various price 

points. The data contains daily station fuel sales and prices of a major Midwest chain of retail 

gasoline outlets. We report on how owners of flex vehicles in two metropolitan areas respond to 

changes in the price of E85 and extrapolate the results to the national level. Perhaps uniquely, 

this chain’s aggregate market share in these two metro areas was much greater than 90%, thus 

allowing us to estimate the proportion of owners of flex vehicles in the area who chose to switch 

from E10 to E85 at various price levels. Using these new direct estimates of consumer demand, 

we find that owners of current flex vehicles in all US metro areas would consume 250 million 

gallons of E85 if it was priced at parity on a cost per mile basis with E10, and one billion gallons 

of ethanol if E85 were priced to save drivers 23% on a cost per mile basis. These estimates 

assume that no new E85 stations are installed. If new stations were installed so that drivers in 

metro areas had the same driving distance to an E85 station as drivers do in one of our study 
areas, then more than one billion gallons of ethanol would be consumed in E85 in US metro 

areas if E85 were priced to save FFV drivers 10% on a cost per mile basis. These estimates 

significantly understate total US E85 consumption because consumption in non-metro areas is 

not included. 

Our results show that meeting the original 15 billion gallon RFS ethanol target in 2016 is 

feasible. The two key conditions needed to meet this consumption level is to allow the market for 

RINs to work as intended, which will allow the price of E85 to fall to induce consumers to buy 

the fuel, and for EPA to set a consistent policy signal to industry that they will indeed have to 

meet this target. A clear and consistent message from EPA is needed to foster investment in 

fueling stations that will allow enough consumers to access E85.

How Much Ethanol Can Be Consumed in E85?

EPA’s justification for proposing to reduce ethanol mandates is that the supply of ethanol that 

consumers will use is less than original mandates specified in the Renewable Fuels Standard. 

Using more straightforward language, EPA believes that consumer demand for ethanol is not 

high enough to meet the original targets. The US Energy Information Agency (EIA) pegs current 

US consumption of gasoline at about 137 billion gallons. Nearly all of this gasoline contains 10

percent ethanol (E10). Thus, as much as 13.7 billion gallons of ethanol can be consumed in E10. 

The original mandate for conventional biofuel (widely assumed to be corn ethanol) was 

supposed to increase to 15 billion gallons in 2016. This would require 1.3 billion gallons of 

ethanol consumption in gasoline-ethanol blends that contain more than 10 percent ethanol. The 

two blends that contain more than 10 percent ethanol approved for sale are E15 and E85. The 

number of stations that sell E15 is currently quite small, whereas almost 3,000 stations sell E85. 

Thus, EPA focuses on the contribution of potential E85 sales to make its claim that there is 

insufficient demand for ethanol to support a mandate of 15 billion gallons.

EPA writes in its proposed rule: “Thus, we believe it is possible for the market to reach 

volumes perhaps as high as 600 million gallons under favorable pricing conditions” (p. 61). 

Adding this 600 million gallons to 13.7 billion gallons of ethanol consumed in E10 means that 

EPA believes that a maximum of 14.3 billion gallons of ethanol can be consumed in the United 

States. This is why EPA proposes to reduce mandates for the non-advanced biofuel from 15 

billion to 14 billion gallons in 2016.

In a study that we conducted in 2014, we estimated that, under favorable pricing, consumers 

would buy no more than one billion gallons of ethanol in E85 given no change in the fueling 

infrastructure.

1

 Our estimate relied on a number of modeling assumptions that were required to 

estimate US consumer response to changes in E85 prices. One key assumption that we made was 

that US owners of flex fuel vehicles (FFVs) would switch from E10 to E85 similar to Brazilian 

FFV owners switched from gasoline (which contained between 20–27 percent ethanol) to E100. 

However, Brazilian consumers have much more experience choosing between alternative fuels 

than US consumers—more than half of Brazilian cars are FFVs and all stations have had to sell 

 1Pouliot, S. and B.A. Babcock. “The Demand for E85: Geographical Location and Retail Capacity Constraints.” Energy 

Economics 45(2014):134-143.
How Much Ethanol Can Be Consumed in E85? / 2

both E100 and gasoline for many years. In addition, we had to make assumptions about the 

distance that owners of FFVs had to drive to find a station that sold E85 in order to estimate the 

required E85 price discount that would be needed to cover the cost of a special trip.

After we conducted our 2014 study, we obtained access to a rich and relevant data source 

that allows us to directly estimate the proportion of US owners of FFVs who buy E85 at various 

price points. The data contains daily station fuel sales and prices of a major Midwest chain of 

retail gasoline outlets and covers sales of all stations from 2011 through 2014. During this time 

period the price of E85 relative to E10 has varied dramatically, allowing us to trace out how 

consumption of E85 varies with price. Here we report on how owners of FFVs in two 

metropolitan areas respond to changes in the price of E85. Perhaps uniquely, this chain’s 

aggregate market share in these metro areas was much greater than 90 percent, thus allowing us 

to estimate the proportion of owners of FFVs in the area who chose to switch from E10 to E85 at 

various price levels. Using these new direct estimates of consumer demand, we find that owners 

of current FFVs in all US metro areas would consume 250 million gallons of E85 if it was priced 

at parity on a cost-per-mile basis with E10, and one billion gallons of ethanol if E85 were priced

to save drivers 23 percent on a cost-per-mile basis. These estimates assume that no new E85 

stations are installed. If new stations were installed so that drivers in metro areas had the same 

driving distance to an E85 station as drivers do in one of our study areas, then more than one 

billion gallons of ethanol would be consumed in E85 in US metro areas if E85 were priced to 

save FFV drivers 10 percent on a cost-per-mile basis. These estimates significantly understate 

total US E85 consumption because consumption in non-metro areas is not included.

Data Needed to Estimate E85 Demand

Much of the debate about the potential for using E85 as a way of meeting expanded ethanol 

mandates arises from uncertainty about how willing US drivers are to switch from E10 to E85. 

Switching is only possible for current owners of FFVs. Because potential demand in a region is 

limited by the number of FFVs owned in that region, data on FFV ownership is needed for any 

study region. As part of this study, we purchased data that reports ownership of FFVs by US zip 

code for the entire United States as of January 1, 2015. Figure 1 shows where FFVs are located. 

Not surprisingly, they are located where people live in metropolitan areas. This data set shows 

that 18 million FFVs were registered in the United States.
How Much Ethanol Can Be Consumed in E85? / 3

FIGURE 1. Density of FFVs

Note: Yellow indicates a low concentration of FFVs and a darker shade of red indicates greater concentration. The 

areas in grey indicate that no data were available.

The second factor that affects the amount of E85 consumed is its price relative to E10. 

Because E85 contains about 78 percent as much energy as E10, a car travels approximately 22

percent fewer miles on a gallon of E85 than on E10. Thus, the cost per mile traveled on E85 is 

greater than on E10 unless the pump price of E85 is 22 percent lower than the pump price of 

E10. It seems reasonable to assume that most owners of FFVs will not want to switch to E85 

unless it saves them money. It is difficult to estimate the demand for E85 without sales data that 

has been generated when E85 is attractively priced for consumers. 

One way that E85 can be attractively priced is if the price of ethanol that is blended with 

gasoline reflects the price of RINs (Renewable Identification Numbers). RINs are tradable 

permits that are generated and sold with each gallon of ethanol produced. Buyers of ethanol who 

blend it with gasoline can separate the RIN from the ethanol at blending. The separated RIN can 

then be used for compliance with blending requirements or it can be sold on the RIN market. To 

see why a high RIN price can make E85 attractively priced, suppose that the wholesale price of 

ethanol at a blending station is $2.00 per gallon and the RIN price is $0.50 per gallon. The 

blender pays $2.00 for the ethanol and the attached RIN. To break-even on the transaction, the 
How Much Ethanol Can Be Consumed in E85? / 4

blender can sell the RIN for $0.50 and price the ethanol in the blended fuel at $1.50 per gallon. If 

the gasoline in the blended fuel costs $2.00, the blender can create E85 (75 percent ethanol and 

25 percent gasoline) at a break-even cost of $1.625 per gallon, and E10 at a break-even cost of 

$1.95. Thus, at the wholesale level, the E85 can be priced 16.7 percent lower than E10. If the 

RIN price increases to $0.75 per gallon, then the break-even price of E85 is $1.44, which is 25

percent lower than the break-even price of E10. Thus, a higher RIN price makes it possible to 

price E85 at levels that are attractive to consumers.

Figure 2 shows the ratio of a calculated wholesale price of E85 to a calculated wholesale 

price of E10 based on observed futures prices for gasoline and ethanol and the reported price of 

RINs. Since March of 2013, the RIN-adjusted price of E85 has usually been low enough to make 

the cost per mile of running an FFV on E85 lower than on E10. However, this “theoretical” 

wholesale price of E85 will not reflect the actual price that consumers pay unless there is 

sufficient competition between oil companies, between gasoline blenders, and between retailers 

to ensure that RIN prices are fully reflected in the price that consumers pay at the pump. In 

addition, taxes and markups that are imposed on a per-gallon basis will have a greater 

proportionate impact on the wholesale-to-retail price spread of E85 than E10. 

FIGURE 2. Ratio of the wholesale price of E85 and E10
How Much Ethanol Can Be Consumed in E85? / 5

Owners of oil refineries are obligated to meet the blending targets of the Renewable Fuel 

Standard. They have a financial incentive to see more ethanol sold as E85 because that will 

generate the RINs that they need for compliance. Of course, the same companies also have a 

financial incentive to see less E85 sold because higher E85 sales cuts sales of traditional 

gasoline. Retailers have an incentive to sell more fuel and drive traffic to their stations. If E85 is 

attractively priced, then this makes them more willing to sell the fuel. Blenders have a financial 

incentive to sell the RIN and then not discount the price of ethanol in their blends if they can get 

away with it, which occurs when there is insufficient competition in the ethanol market. Thus,

there needs to be sufficient competition among blenders to ensure that a large proportion of the 

RIN price is reflected in the wholesale price of E85. 

It is clear that the pump price of E85 in many parts of the country has not always reflected 

RIN prices. However, the retail chain that cooperated with us was able to price E85 at various 

times at retail prices that did reflect RIN prices. Figure 3 shows the average weekly price ratio of 

E85 to the price of E10 across the retailer’s stations in one major Midwest metro area from 2011 

to 2014. The large variation in the price ratio at the pump during this time is what is needed to 

estimate how owners of FFVs respond to E85 price changes.

FIGURE 3. Weekly price of E85 relative to E10 price in a major midwest metro market from 

2001 to 2014
How Much Ethanol Can Be Consumed in E85? / 6

Estimating Market Penetration of E85

A key factor that determines the amount of ethanol that can be consumed by FFVs is the 

proportion of FFV owners who choose to run their vehicles on E85 instead of E10. It seems 

reasonable to assume that a lower E85 price will induce a greater proportion of owners to use 

E85. The difficulty with estimating market penetration is that the price of E85 is not typically 

uniform across the country or even in a region. Some owners of FFVs have access to low-priced 

E85 whereas others do not. It is difficult to derive a meaningful measure of what price to use to 

measure consumption response in a region when some stations price E85 at cost-per-mile parity 

while others price it at cost-per-gallon parity. 

Our data allows us to avoid this problem because the retailer that provided us data owned 

nearly all the stations that sold E85 in two metro areas. Furthermore, the retailer charged a uniform 

price for E85 at all the stations within each metro area. Thus we have data that shows the response 

of all drivers of FFVs in two metro areas to various E85 prices. We estimate how many FFVs are 

driven in these metro areas by identifying all the zip codes in the metro areas and then adding up 

all the FFVs in each of the zip codes. Of course, some of these FFVs will fill up outside their metro 

area and FFVs from outside the area will fill up inside the metro area. We have no data that allows 

us to control for these movements so we simply assume that they cancel out. 

We have data on the aggregate amount of E85 sold in the two metro areas on a weekly 

basis, but we have no data on the total volume of fuel consumed per week by owners of FFVs. 

We estimate the total amount of fuel sold to these vehicles by assuming each FFV would use 10 

gallons of E85 per week. This translates to 520 gallons of fuel per year, which, with a 20 mpg 

vehicle, means that each vehicle is driven 10,400 miles per year. With this assumption, we can 

then estimate market penetration by dividing the observed level of E85 consumption by the 

upper limit of E85 that could be consumed by all the FFV motorists in the two metro areas. 

Figure 4 presents the weekly data.

The effect of lower prices on E85 consumption is apparent in the data. In metro area 1, the 

relationship is approximately linear for relative prices above the cost-per-mile parity line. For 

each 5 percentage point drop in the relative price of E85, market penetration increases by 

approximately 2.5 percent. When the relative price drops below parity, however, market share

appears to become more responsive to price. A greater response makes sense because once E85 
How Much Ethanol Can Be Consumed in E85? / 7

FIGURE 4. Market penetration of E85 in one midwest metro area

is priced low enough to save drivers money, low E85 prices will catch the attention of FFV

owners who might not normally consider filling up with E85. In metro area 2, the relationship 

between relative prices and E85 market penetration is less obvious. One reason is that E85 prices 

are much higher in area 2, never falling below cost-per-mile parity in the metro area. A second 

reason is that the number of E85 pumps in metro area 2 has increased over time, causing an 

outward shift in the consumption of E85 over time, a shift that is evident in Figure 4.

We can establish the relationship between the number of fuel stations and market 

penetration (measured by E85 market share) using a simple regression model. One nonlinear 

functional form that can be fit to the data is a power function whereby the natural log of market 

share is linear in the natural log of the relative price, the natural log of the number of FFV per 

E85 station and a dummy variable for the metropolitan area. The regression yields

Log(share) = 4.68 – 5.68*Log(Price ratio) – 1.04*Log(FFV per station)

+ 0.20*Metro area 2, (1)

where the intercept, the coefficients for the price ratio and the number of FFVs per station are 

significant at the 99 percent confidence level and the coefficient for the dummy for metro area 2 
How Much Ethanol Can Be Consumed in E85? / 8

is significant at a 95 percent level. The regression says that the consumption share is proportional 

to the concentration of FFVs, such that a one percent increase in the number of FFVs per station 

causes a 1.04 percent drop in consumption share. This result has two implications: (1) new 

owners of FFVs have the same preference for E85 as existing owners; and (2) historically the 

addition of a new E85 pump has caused new consumption of E85 without negatively affecting 

E85 consumption at previously existing E85 pumps. It is also interesting to note that after 

controlling for the price of E85 and the number of FFVs per station, the demand for E85 in metro 

area 2 is 20 percent greater than in metro area 1. This is notable because metro area 1 is located 

in a Corn Belt state that produces a lot of ethanol and metro area 2 is located in a state that 

produces no ethanol but a lot of oil and natural gas.

The predicted market shares of E85 in the two metro areas are 28.5 percent in metro area 1 

and 12.0 percent in metro area 2 when the number of FFVs per E85 fuel station is at each area’s 

observed values at the end of December 2014 and the relative price of E85 equals 0.7 in both 

areas. Extrapolating a bit outside the range of the actual data, the predicted market share using 

this function reaches 43.5 percent in metro area 1 and 18.3 percent in metro area 2 when the 

pump price of E85 is 65 percent of the pump price of E10. At this pump price the cost per mile 

of driving with E85 is about 17 percent less than with E10. With this magnitude of cost savings, 

it seems that 43.5 percent and 18.3 percent market shares are likely lower than what would 

actually occur if E85 were as widely available as E10. The 18.3 percent predicted market share

among FFV motorists in area 2 with a 35 percent discount on E85 reflects the lack of easy 

availability of E85. 

The regression above allows us to extrapolate our findings for these two metro areas to all 

US metro areas with respect to the concentration of FFVs per E85 fuel stations and the ratio of 

E85 and E10 prices. 

Extrapolation of Results to the National Level

If E85 achieved a 30 percent market share nationally among FFV motorists, then that is 

equivalent to 5.4 million of the 17.9 million FFVs filling up on E85. At 520 gallons per year, this 

would mean that 2.1 billion gallons of ethanol would be consumed in E85, which is far greater 

than needed to meet expanded ethanol mandates. However, such consumption is not possible 

without increasing the number of stations that sell E85. The two metro areas examined here 
How Much Ethanol Can Be Consumed in E85? / 9

respectively contain 41,000 and 46,000 FFVs, which together account for about 0.5 percent of 

the national total. However, these two metro areas together have 0.8 percent of the nation’s E85

stations. In metro areas 1 and 2, there is one fuel station that offers E85 for about 2,070 and 

5,750 FFVs, respectively, at the end of 2014.

To extrapolate our findings from these two metropolitan areas, we identified zip codes with 

a population per square mile that is at least as large as the minimum population per square mile 

of the zip codes in metro area 1. The rationale for choosing these zip codes is that limiting our 

extrapolation to urban areas is more justified than extrapolating to both urban and rural areas.

Figure 5 shows a map of the zip codes selected. It includes major US cities and suburbs

including both metro areas that we studied. Comparing Figures 1 and 5, observe that densely 

populated areas are those with the most FFVs.

In the selected metropolitan areas there are a total of 9.65 million FFVs and a total of 1,534

fuel stations offering E85, for a concentration of 6,300 FFVs per E85 fuel station. Based on the 

regression in (1) we can derive the demand for E85 in these selected metro areas. We do this 

based on the demand for E85 in metro area 1, which we believe provides a more conservative 

FIGURE 5. Selected metropolitan areas
How Much Ethanol Can Be Consumed in E85? / 10

description of the demand for E85. Recall that demand in area 2 is estimated to be 20 percent 

higher than demand in area 1. Thus, the demand of E85 we derive assumes nationally that 

consumers have preferences for E85 similar to those in metro area 1. The blue line in Figure 1 

shows the estimated demand for E85 given a concentration of 6,300 FFVs per fuel station—as 

observed on average in US metropolitan areas. We derived that demand again, assuming that the 

average motorist consumes 10 gallons of gasoline per week. At price parity, the consumption of 

E85 is about 250 million gallons. The consumption of 1 billion gallons of E85 in US metro areas 

requires a price ratio of 0.60. Note that additional consumption of ethanol from the 8 million 

FFVs located outside US metro areas is not included in these consumption estimates.

To match the concentration of stations in metro area 1 would require an additional 3,128

E85 stations strategically located in US metro areas. The orange line in Figure 6 shows the 

demand for E85 if this investment were to occur. The difference between the blue and the orange 

lines represents new consumption because of easier access to E85. The more E85 pumps, the less

costly it is for motorists to fuel with E85.

FIGURE 6. Estimated demand for E85 in selected metropolitan areas
How Much Ethanol Can Be Consumed in E85? / 11

With new E85 pumps installed, a price ratio of 0.74 is sufficient to generate the 

consumption of 1 billion gallons of E85 containing 750 million gallons of ethanol. With a 

relative price of E85 equal to 0.7, the consumption of E85 increases to about 1.35 billion gallons.

With a lower relative price of E85 the quantity demanded increases rapidly as motorists switch 

from E10 to E85.

The demand curves in Figure 6 are of course not representative of the demand for E85 in 

the entire United States because it considers only metropolitan areas. Thus, they significantly 

underestimate the total demand for E85. The demand curves however show the potential for 

significant consumption of E85 when discounted with respect to regular gasoline.

Policy Implications

The decision by EPA to propose to reduce RFS ethanol mandates on the basis that consumer 

demand for ethanol is insufficient to meet a 15 billion gallon target seems to be based on EPA 

believing that owners of FFVS will not switch to E85 if is it attractively priced to save them 

money and/or that there is insufficient incentive in the market-based RIN trading system to 

facilitate expansion in the number of stations that sell E85. Our analysis here, based on newly 

available data, shows that a significant proportion of FFV owners will buy E85 if it is priced to 

save them money on a cost-per-mile basis. In one metro area that has one E85 station for every 

2,070 FFVs, the market share of E85 exceeded 15 percent when E85 saved FFV owners money. 

Using these new data to estimate a functional relationship between the relative price of E85 and 

market share, we predict a market share of greater than 40 percent when the price of E85 relative 

to E10 drops to 0.65. This same function shows that increasing the number of E85 stations 

significantly increases E85 sales. If investment in sufficient E85 stations in all US metro areas 

were accomplished to match the ratio of one E85 station per 2,070 FFVs found in one of our 

study areas, then we estimate that more than enough ethanol would be sold in E85 to meet 

expanded ethanol mandates in metro areas if the pump price of E85 were 70 percent of the price 

of E10. Additional large amounts of ethanol would also be sold in rural areas. We calculate that 

it would take investment in more than 3,000 new metro E85 pumps to accomplish this ratio of 

E85 stations to FFVs in all metro areas.

Our finding that owners of FFVs like to save money on their fuel purchases is not too 

surprising: all of us do. Perhaps what is surprising is that EPA’s proposed decision to cut ethanol 
How Much Ethanol Can Be Consumed in E85? / 12

mandates reveals so little faith in their own compliance mechanism—the RIN trading system.

EPA knows that the way to get lower E85 prices is to have a high RIN price. High RIN prices 

come about with biofuel targets that are more difficult to meet. Because the price of RIN’s 

represents a tax on gasoline production that is sold domestically, a lower RIN price lowers the 

tax on gasoline producers. Thus, gasoline producers have an incentive to increase the supply of 

RINs to lower its price. One low-cost way of increasing the supply of RINs is to expand the 

consumption of E85. EPA set up the RIN trading system to create the incentive to invest in the 

infrastructure that is needed to expand the consumption of biofuels which, in turn, lowers RIN 

price. Using the power of the marketplace has proved to be an efficient method of achieving 

policy objectives. 

However, gasoline producers chose to try to reduce RIN prices and their RFS compliance 

costs not by increasing the supply of RINs but rather by reducing the demand for RINs. A 

reduction in the demand for RINs can be accomplished by convincing EPA to lower biofuel 

mandates. If the proposed reduction in biofuel targets is finalized by EPA, then the strategy of 

gasoline producers to invest in lobbying efforts to lower RIN demand by lowering biofuel 

mandates will have proved successful. Such success would be disheartening to those who believe 

that one role of government is to agree on policy objectives and then use efficient market 

mechanisms to achieve the objectives. Consistency in policy is needed to get regulated industry 

to make the investments needed to be able to comply with the policy. A rollback of biofuel 

mandates would demonstrate to future regulated industries that instead of using their resources to 

lower the cost of meeting regulations, they could instead use their resources to lobby for a 

reduction in the stringency of the regulations.