EPA Allows Year-Round Sales of E15

May 31, 2019

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by Eric Pfeiffer (Hoosier Ag Today) The EPA announced Friday morning that they have met the deadline for the summer driving season to allow year-round sales of E15, a fuel blended with 15 percent ethanol.

“Corn farmers have been long-time advocates of higher blends of ethanol such as E15, touting its benefits to both the farmer and the consumer,” NCGA President Lynn Chrisp said. “Farmers are facing some tough times which makes this announcement particularly welcome. We thank President Trump for following through on his promise to rural America and USDA Secretary Sonny Perdue and supporters in Congress for their outspoken commitment to year-round E15.”

The final rule from the Environmental Protection Agency (EPA) eliminates the outdated barrier that required retailers in many areas of the country to stop selling E15 during the summer months by allowing E15 to receive the same summer volatility adjustment EPA permits for E10. READ MORE

Final Rulemaking for Modifications to Fuel Regulations to Provide Flexibility for E15 and to Elements of the Renewable Identification Number Compliance System (Environmental Protection Agency)

EPA Issues Final E15 Rule--Biofuels Industry Leaders, Stakeholders Celebrate Historic Announcement to Provide Uninterrupted Access to E15 (Vital by Poet)

NCGA: YEAR-ROUND E15 A WIN-WIN FOR FARMERS AND CONSUMERS (National Corn Growers Association)

Oil Industry Poised to Attack as Trump Boosts Ethanol in Fuels (Bloomberg)

Secretary Perdue Statement on Final E-15 Rule (USDA)

YEAR-ROUND SALES OF E15 ANNOUNCED (KTIC Radio)

Trump to allow use of ethanol gas in move to benefit farmers (The Hill)

E15 and E85 Demand Under RIN Price Caps and an RVP Waiver (CARD Policy Brief 18-PB 21, March 2018)

The Effect of a Higher Ethanol Blend RVP Waiver on RIN Prices (Harvard University)

RFA Applauds Final Rule Allowing Year-Round E15 (Renewable Fuels Association)

Trump Administration Lifts Summer Ethanol Ban (Wall Street Journal)

EPA opens up sales on higher ethanol content gasoline, in blow to refineries (Houston Chronicle)

Ethanol Industry Applauds Final Rule Allowing Year-Round E15 (Energy.AgWired.com)

Trump traveling to Iowa June 11 (Quad City Times)

EPA Regional Administrator to Attend Elite Octane Ethanol Plant Grand Opening in Atlantic, Iowa, and Provide E-15 Update (Environmental Protection Agency)

E15 MINUTES OF FAME: (Politico's Morning Energy)

EPA finalizes plan to expand ethanol use in gasoline this summer (WMAY)

Ethanol Report on Year Round E15: RFA CEO discusses EPA final rule (Energy.AgWired.com AUDIO)

EPA Finalizes E15 Rule--Agency Leaves Potential Biofuel Credit Reforms on Table for Later Time (DTN Progressive Farmer)

Trump ends summer ethanol ban meant to prevent smog (Los Angeles Times)

New EPA ruling expands sale of 15% ethanol blended motor gasoline (U.S. Energy Information Administration)

Excerpt from Environmental Protection Agency: On May 30, 2019, EPA finalized regulatory changes to allow gasoline blended with up to 15 percent ethanol (E15) to take advantage of the 1-psi Reid Vapor Pressure (RVP) waiver that currently applies to E10 during the summer months. EPA is also finalizing regulatory changes to modify certain elements of the renewable identification number (RIN) compliance system under the Renewable Fuel Standard (RFS) program, in order to bring greater transparency to the market and deter price manipulation.

Under the finalized expansion, E15 will be allowed to be sold year-round without additional RVP control rather than just eight months of the year.

The finalized reforms to RIN markets include:

Requiring public disclosure when RIN holdings exceed specified thresholds
Collecting additional data to improve market transparency and enhance EPA oversight

Final Rule (PDF) (170 pp, 1 MB, prepublication, signed May 30, 2019, About PDF)
Response to Comments (PDF) (137 pp, 869 K, EPA-420-R-19-004, May 2019, About PDF) READ MORE

Excerpt from Houston Chronicle: The expanded sales of ethanol deal a blow to U.S. oil refineries, who are already watching national gasoline sales stagnate under increased efficiency standards for cars and trucks.

Representatives of the oil and gas industry are already hinting they plan to challenge the rule change in court.

"The statutory language leaves no question that the EPA lacks authority to extend the E10 volatility waiver to E15. Finalizing this aspect of the proposed rule would clearly be unlawful, and we strongly oppose it," Chet Thompson, president of American Fuel & Petrochemical Manufacturers, said in a statement last month.

In its announcement, the EPA said it was also changing the rules for the trading of credits used to track that ethanol is being blended into the fuel supply - known as Renewables Identification Numbers, or RINs. The price of those credits had skyrocketed in recent years amid increased speculation from Wall Street investors.

Traders that exceed a certain threshold of RINs now will be required to disclose their holdings publicly. Also, EPA said it will improve its monitoring of the RIN market through increased data collection and work with the Internal Revenue Service to stamp out incidents of RIN fraud. READ MORE

Excerpt from USDA: U.S. Secretary of Agriculture Sonny Perdue issued the following statement in response to the Environmental Protection Agency’s final rule on E-15:

“I appreciate President Trump’s steadfast support for our patriotic farmers and for his commitment to expand the sale of E15 and unleash the full potential of American innovation and ingenuity as we continue to demonstrate our rightful place as the world’s leader in agricultural and energy production,” said Secretary Sonny Perdue. “This move to approve the year-round use of E15 in time for the summer driving season provides consumers with more choices when they fill up at the pump, driving demand for our farmers and improving the air we breathe. While the Trump Administration and USDA are expanding the ethanol market in the United States, we continue to fight for more export markets in Brazil, Mexico, China, and other countries across the globe. I applaud Administrator Andrew Wheeler for moving expeditiously to finalize this important E15 rule.” READ MORE

Excerpt from Renewable Fuels Association: “We are cognizant, however, that the promise of today’s E15 announcement could be undermined if EPA continues its unprecedented assault on the RFS with indiscriminate small refinery hardship waivers. Against the intent of Congress, EPA has been granting RFS exemptions to refiners without requiring them to demonstrate their claimed ‘hardship’ is somehow connected to the RFS. The demand destruction caused by EPA’s waivers must end. We urge the President to build upon the momentum of today’s announcement by reining in EPA’s abuse of the small refiner exemption program.” READ MORE

Excerpt from The Hill: Wehrum (Bill Wehrum, assistant administrator for the Office of Air and Radiation at EPA) said the new rule would also allow the renewable fuels market to expand.

“Now we are at the point where the market is saturated with E10, and to blend more ethanol into the market we have to go above E10,” Wehrum said, pointing to the most common blend of year-round gas with a percentage of 10 percent ethanol.

The plan additionally aims to better regulate the RIN market in an attempt to make sure there is no manipulation of credit pricing. While EPA officials said they have not seen evidence of outside manipulation, they hope the new controls would make it easier to study the claims. Specifically, the changes will make it harder for refiners to trade RINs. The administration’s RIN reform would include requiring public disclosure of RINs, limit the length of time that nonrefineries or importers can hold a RIN and improve compliance obligations on a more frequent basis.

That portion of the rule is expected to please refiners, many which have protested the expansion of E15.

Wehrum said the expanded use of E15 in the summer months would not lead to significant increases in air pollution because E10 has already been sold in those months. While acknowledging that E15 will increase tailpipe emissions slightly, he said the fuel would not largely increase fuel evaporation.

“At the end of the day, from an environmental standpoint this doesn’t make any significant difference,” he said. READ MORE

Excerpt form CARD Policy Brief: b. RVP Waivers and Biofuel Use

Restrictions on Reid vapor pressure (RVP) for retail gasoline-ethanol blends limit sales of E15 and certain higher blend in summer months. RVP is a measure of gasoline’s volatility. The U.S. Clean Air Act limits RVP during high ozone seasons to reduce evaporative emissions from gasoline.7

Figure 1: RVP and Ethanol Blending

Source: National Renewable Energy Laboratory

Blending ethanol into gasoline impacts a fuel’s RVP nonlinearly. At blending levels below about 50%, RVP levels generally exceed Clean Air Act standards. Blends with greater than 50% ethanol meet the RVP restrictions. Figure 1 graphs the relationship between ethanol blending and RVP along with the nine pounds per square inch (psi) summertime limit.8 As can be seen, any ethanol blend below 50% violates current summertime standards.

The Clean Air Act includes a waiver for E10, allowing the fuel to be one psi greater than the limit for other fuels. While the Act includes some exceptions, the waiver has generally allowed E10 to be sold year-round in all states. Higher blend ethanol fuels, however, do not have a waiver. For very high ethanol blend fuels like E85, this is not an issue since RVP levels are below the nine psi limit. However, the lack of a one psi waiver for E15 and other mid-level ethanol blends necessarily limits retailers’ ability to sell the fuels in the summer. READ MORE

Excerpt from Harvard University: RVP Background
RVP is a measure of how evaporative a liquid is. Higher RVP values imply more evaporative fuel emissions, which contributes to low-level ozone. As ethanol is added to petroleum blendstock, the RVP increases initially, plateaus at blends in the range of 10-15% ethanol, then slowly declines (Figure 1). The Clean Air Act limits gasoline to a maximum RVP of 9 pounds per square inch during the ozone season, but grants a waiver of an additional 1 psi to ethanol blended at 10%. The bills under consideration propose to extend the E10 RVP 1 psi waiver to all ethanol blends of 10% and higher.

Because the RVP of E15 is essentially the same as E10 for a given blendstock, extending the waiver to E15 would not increase the RVP of fuels sold. However, it would permit the summer sale of E15 produced from the same blendstock as E10. This would facilitate sales year-round E15 sales, for example via a blender pump with a two-tank system of E10 and E85.

The E10 RVP waiver has exceptions and regional nuances, however those details are not important for the analysis here. See the Congressional Research Service report on S. 517 and H.R. 1311 (Bracmort (2017)) for details. READ MORE