Reflections from The Hill

January 28, 2022

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by Tom Bryan (Ethanol Producer Magazine) ... I (Geoff Cooper, Renewable Fuels Association CEO and President) also think the industry understands that we have a vision for the future of ethanol production that’s progressive and exciting. Too many people are pessimistic about the future of ethanol and obsessed with the rise of electric vehicles and the possibility of less gasoline consumption. Yes, those are real issues—and we’ve analyzed them as much as anyone—but we continue to see a world of opportunity for ethanol.

I think we have really opened a lot of hearts and minds to the fact that ethanol’s future may not always be confined to being a motor fuel for light-duty vehicles. And last July when our members pledged to achieve a net-zero carbon footprint for ethanol by 2050, it got the attention of many others in the energy sector. They want to be part of that movement and so they joined RFA.

The ethanol molecule is incredibly elegant and can serve as a building block for so much more, from aviation fuels to off-road, heavy transportation applications to becoming a feedstock for producing electrons that could ultimately power EVs. There’s a lot more we can do with this molecule. And we’ve got a tremendous infrastructure in place to produce it right now. We’re trying to help the industry find those new markets and new uses for products.

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We are not, however, wild about the EPA’s proposal for 2021, and we will stand against any reopening of the 2020 RVO. In fact, we don’t think the EPA even has the legal authority to do it. They have been on the record numerous times in the past saying they don’t have the authority to retroactively reopen standards that have been finalized. We’re going to hold them to their words, and we’re hopeful that during this public comment period we will be able to convince EPA that it would be the wrong move to make. Yes, Covid affected the market, but the RVOs are based on percentages of overall use, so the mechanism is already there to account for big swings in gasoline and diesel consumption. We don’t think any further adjustments are warranted or legal, and we’re pushing back hard on it.

When they finalized the 2020 standards, all the way back in December of 2019, they did so based on an expectation of what gasoline and diesel consumption would be in 2020. That expectation did not come to pass because of Covid. Gasoline and diesel consumption were about 12% lower than projected. But the actual RFS blending requirements were also reduced proportionately by 12%. That’s one of the elegant features of the RFS; it self-adjusts when those things happen, so 2020 should absolutely be left alone.

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Cooper: The goal is to send a message to EPA that Congress is watching what the agency is doing with the 2020 RVO. With the Defend the Blend Act in both the House and Senate, Congress is reminding EPA that it was never their intent to allow EPA to go back in time and revise standards that have already been finalized. The proposed legislation, above all, sends a signal to EPA, and the administration that our friends on the Hill are watching and willing to legislate if they need to.

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Cooper: There are essentially two ways to achieve RVP parity for E10 and E15. One way is to give E15 the same 1-pound RVP waiver that E10 gets, which is what EPA did in 2019—an action that President Trump personally championed. Unfortunately, that is also the action that the D.C. Circuit Court overturned in July. So, for now, that door is closed.

The other way to establish RVP parity for E15 is to eliminate the necessity of the 1-pound waiver for E10. That’s what the governors are asking for guidance on, and that’s what RFA and five other trade groups have asked EPA to get started on—a rule to effectively lower the volatility cap for gasoline blendstock, which makes the waiver unnecessary for not only E10, but E15 as well. Because, after all, E15 is a lower volatility fuel than E10. So that would put the two fuels on equal footing and allow them to be sold year-round throughout the summer, nationwide. That’s the approach we’re focused on right now.

A legislative approach to resolving the RVP barrier is also possible. There have been bills reintroduced in Congress that could fix this issue once and for all. But the odds of getting that type of legislation across the finish line in the near term, without opening the door to mischief on the RFS and other priorities we care about, are low. So, we’re focused first on the regulatory approach to solving this.

EPM: Higher ethanol blends are also important. E85 and mid-level blends could play a big role in our industry’s growth, but according to a new brochure from RFA, only Ford and GM are offering FFVs for sale in model year 2022—and GM’s models are available only to fleet purchasers. In fact, the two manufacturers will offer just 11 FFV models in 2022. That’s down from more than 80 different models from eight manufacturers half a decade ago. How concerned should we be about this?

Cooper: I’ll start to answer that by saying that President Biden has said we need to achieve net zero emissions by 2050. We think ethanol itself can get to net-zero carbon by 2050 or sooner with the addition of things like carbon capture and sequestration, low-carbon farming practices, substituting natural gas with biogas and other strategies that are either already here or coming.

We can get ethanol to a zero CI, but we’ve got to have more vehicles to put that ethanol into in order to have the impact on reducing carbon emissions at a level that’s going to be necessary. E15 can help us get started, but we’ve got to go that next mile and get more FFVs out there. FFVs are hugely important to the future of the industry, and that’s why we continue to make it a priority to try to continue to restore some fairness in how automakers are encouraged, or incentivized, under fuel economy regulations to manufacture different alternative fuel vehicles. Right now, there is no incentive for automakers to make FFVs under current fuel economy regulations. But there are tons of incentives to make EVs. And if our goal is to reduce carbon emissions, there are lots of ways to do that. Let’s allow all fuels and vehicles that can reduce emissions to compete fairly, and lets reward those fuels and vehicles strictly based on the carbon reductions they achieve, not on what vehicle has the coolest commercial or celebrity endorsement.

Sens. Klobuchar and Ernst introduced legislation that would establish an alternative vehicle tax credit earlier this year. Unfortunately, it didn’t get wrapped into any legislation that has moved forward, but we see it as a football that could be picked up and run with in 2022.

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Cooper: When President Biden was campaigning, he came out with some very strong positions on the renewable fuel standard and small refinery exemptions, in particular. We liked what we heard from then-candidate Biden when he was campaigning. And when he got elected, he appointed people like Agriculture Secretary Tom Vilsack—a person we’re very familiar with and excited to see land back in that position—along with EPA Administrator Michael Regan, who said all the right things about the RFS in his confirmation process. In fact, shortly after this new administration took office, we saw EPA do a hard turn on small refinery exemptions. They really laid out a radical change in position on how they were going to be handling SREs, as early as March, but then we didn’t see anything. We were waiting for the administration to follow through on all those campaign promises during the first few months.

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There is just such a disproportionate focus on electrification and EVs, and one of the biggest challenges for us is just breaking through that noise to remind the administration—in particular Administrator Regan and Department of Energy Secretary Jennifer Granholm—that we have a fuel that is ready today, in large quantities, that can help the country meet its decarbonization goals. So our message to them is to take a fair, market-based approach to carbon reduction and allow ethanol to play a larger role. READ MORE