Biden to Set in Motion Gasoline Policy Shift to Bolster Ethanol

March 01, 2023

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by Jennifer A Dlouhy (Bloomberg) ... The administration is set to outline its plans to formally propose the change soon, setting the change in motion in time for next year’s summer driving season, according to people familiar with the matter who asked not to be identified before a public announcement.

While that is a year later than ethanol advocates had hoped, it’s aligned with administration expectations that refiners and pipeline operators need time to add equipment to distribute, store and produce a new fuel to adapt with the move.

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Ben Hengst, deputy director of the agency’s Office of Transportation and Air Quality, is set to address the matter and other renewable fuel policy issues during a presentation Wednesday at the industry’s National Ethanol Conference in Florida.

At issue is a push by some governors from corn-producing Midwestern states to stop giving conventional E10 gasoline a partial waiver from volatility limits meant to curb air pollution. That would put E10 and E15 on the same regulatory footing in their states — and potentially encourage more sales of the higher-ethanol variety.

To meet the EPA requirements, refineries would have to churn out raw, unblended gasoline that is less volatile, essentially creating a boutique fuel for the affected Midwest states. Under the Clean Air Act, the EPA does not have latitude to deny the governors’ request — just delay it.

The Biden administration already moved to waive E15 from summer volatility requirements last year, allowing its sale in a bid to lower gasoline prices. But it’s unclear how the broader, E10 change would affect prices paid by motorists.

Analysis commissioned by a refining trade group predicts as much as 12 cents more per gallon in added industry costs to make and distribute the new fuel. However, biofuel boosters say that the shift would encourage more gas stations to offer cheaper E15 year round, and last year, it cost nearly $1-per-gallon less than conventional E10 in some areas. READ MORE

Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources (Reuters)

EPA’s Year-Round E15 Proposed Rule Pushes Sales into 2024 (AgWeb)

Proposed Rule in Response to Request From States for Removal of Gasoline Volatility Waiver (Environmental Protection Agency)

Biofuel groups frustrated by EPA proposal to delay Midwest summer E15 sales until 2024 (Agri-Pulse)

EPA proposes to allow higher ethanol blend gas in Midwest states (Farm Week Now)

EPA responds to Midwest petitions seeking year-round E15 sales (Ethanol Producer Magazine)

Ethanol Groups React to EPA Proposal (Energy.AgWired.com; includes AUDIO)

EPA to allow some summer E15 sales starting in 2024 (Politico Pro)

EPA Proposes Delaying Year-Round E15 Approval In Eight States To 2024 (Inside EPA)

Iowa governor says she'll use courts, waiver request to get E15 this summer (Agri-Pulse)

US EPA poised to lift E15 sales restrictions in the Midwest, but not until 2024 (S&P Global)

US Ethanol Industry Again Loses by Winning (AgWeb)

Growth Energy to EPA: We Need E15 in 2023 (Growth Energy)

EPA Signals Year-Round E15 Sales Could Begin in 2024 (Convenience Store News)

Hello summer. Goodbye Midwest E15 sales restrictions -- but not until 2024 (S&P Global)

Ethanol Blog -- Iowa, Nebraska Attorneys General to Sue EPA on Delay on E15 Rule Unless Effective Date Moved Up (DTN Progressive Farmer)

Excerpt from Reuters: The oil refining industry has traditionally balked at efforts to expand the ethanol market because it competes against gasoline at the pump and can be costly to blend.

The EPA enforces a summertime ban on E15 over concerns it contributes to smog in hot weather, though research has since shown E15 blend may not increase smog relative to the more common E10 sold year-round. E10 contains 10% ethanol.

President Joe Biden lifted the ban last summer in an attempt to lower historically-high gasoline prices. READ MORE

Excerpt from AgWeb: EPA on Wednesday issued a proposed rule by eight Midwest governors, including Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin, to allow the sale of E15 fuel blends all year, starting in 2024.

Historically, E15 sales were banned in the summer months due to claim that the blend increased smog. However, year-round sales have been on the table for many Midwest states since President Biden suspended the summer ban on E15 in 2022 as a means to mitigate rising fuel costs.

“EPA’s research has shown no significant impact on evaporative emissions when… the waiver is extended to E15,” the agency wrote at the time of the suspension. “With no significant impacts on emissions from cars and trucks, we expect consumers can continue to use E15 without concern that its use in the summer will impact air quality.”

Troubled Waters

While the ethanol industry has been pushing for the legislation since 2022, some stakeholders, including the Renewable Fuel Association (RFA), are dissatisfied with the proposed rule timeline.

“There is simply no justification for further delaying this action, which is already months overdue,” said Geoff Cooper, RFA president and CEO. “By law, EPA should have finalized approval of the governors’ petition more than seven months ago, which would have given the marketplace more than enough time to adjust and prepare for implementation this summer.”

According to Cooper, the Biden administration was pressured by the oil industry to “ignore” each states’ proposal. In pushing the year-round E15 implementation in 2024, Cooper is concerned the agency would put the oil industry above consumers needs for affordable fuel at the pump.

“We urge EPA to reconsider its proposal to delay implementation. There is still time for the agency to finalize the regulation—or to use other regulatory authority—to allow E15 sales to continue this summer,” Cooper said.

RFA and other groups will be offered an opportunity to share their thoughts on EPA’s proposed rule at a public hearing date to be announced in coming weeks. All listeners must register for by sending an email to RFS-Hearing@epa.gov.

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Caskey (Neil Caskey, National Corn Grower's Association CEO) says the next ethanol push will be rooted in the Next Generation Fuels Act—a bill that would seek to establish a minimum Research Octane Number (RON) of 98 for gasoline. This research level would be higher than the standard of 91 set today.

The act would also require sources of the added octane value to reduce carbon emissions by at least 40%. READ MORE

Excerpt from Farm Week Now: "So, we are told EPA will propose to kick the can on implementation of the governors’ petition until the summer of 2024, which leaves us in a bind for this summer," Cooper (Geoff Cooper, RFA president and CEO) said, later calling on Congress to pass policy permanently codifying year-round sales of E15.

President Joe Biden in spring 2022 announced EPA would use a national emergency waiver — tied to the war in Ukraine's impacts on fuel and energy supplies — to allow E15 sales during the summer.

That shift caused some momentum — it ultimately stalled — in the last Congress to pass legislation that would have permanently OK’d higher blend sales nationwide.

With that context, a bipartisan group of 17 Corn Belt U.S. senators, including Illinois' Dick Durbin, D-Springfield, and Tammy Duckworth, D-Hoffman Estates, sent a letter Tuesday to Biden asking him to again direct EPA to issue a waiver to allow E15 sales this summer.

They cited the war continuing to cause "global energy and security issues into this year," and said use of E15 will "continue to displace Russian oil and finished gasoline products, ease domestic and global supply constraints and lower net domestic fuel prices."

"Taking early action on E15 will send timely and necessary signals across the energy supply chain so that fuel producers and retailers will have the certainty they need to ensure affordable, reliable and cleaner fuel options for American consumers throughout the year," the Senators wrote.

“Fingers crossed that our senators’ efforts succeed with the Biden EPA,” said Adam Nielsen, Illinois Farm Bureau’s national legislative director. “Because nothing says ‘we’re not committed to renewable fuels’ more than if the agency fails to permit sales of E15 for this summer’s driving season.” READ MORE