RFS and the Push for Greater Ethanol Content in Gasoline

by Brian Milne (DTN) ... Owing to insufficient production, EPA has had to frequently issue waivers for the cellulosic biofuel nested category. However, EPA’s 2019 final rule pegged volume requirements below statute for total renewable fuel, triggering the agency’s reset authority under the RFS. Once triggered, EPA can modify statutory volumes based upon six factors, while doing so in coordination with the secretaries of energy and agriculture. Those six factors are: (1) environmental impact; (2) energy security; (3) annual production rate of renewable fuels; (4) impact on infrastructure, including the sufficiency of infrastructure to deliver and use renewable fuel; (5) cost to consumers; and (6) other factors, such as job creation, price and supply of agricultural commodities, rural development, and food prices.

2023 is the first year EISA does not specify volume requirements for the RFS. Instead, EPA proposed a set rule establishing the annual RVO. On December 1, 2022, EPA proposed volume requirements for 2023 through 2025, and a public comment period on the proposal ended on February 10. The final rule should be announced no later than June 14, based on the terms of a consent agreement between the ethanol trade group Growth Energy and the EPA. EPA’s checkered history in meeting deadlines under the RFS program prompted Growth Energy to seek the consent decree with the U.S. District Court for the District of Columbia.

In a review of expectations for increased ethanol consumption for this year through 2025, the Energy Information Administration offers a conservative projection, pointing to limitations in how fast retailers would invest, if at all, in their stations to allow for higher blends. Historically, pushing above the 10% ethanol blend rate in gasoline has been stymied by fuel volatility standards that are the most restrictive during the summer months, when increased ambient temperatures accelerate the release of volatile organic compounds into the atmosphere.

In determining estimated costs of the RFS, EPA projects slow growth in ethanol consumption from 2023 through 2025, projecting a year-on-year increase for 2023 at 14.5 million barrels or 4.35% to 347.4 million bbl which trails off to annual growth of 700,000 bbl or 0.2% in 2025 for consumption of 349.3 million bbl. For greater ethanol concentration in the gasoline pool, there needs to be investment at retail stations that make those outlets compatible to sell E15. As EPA notes in its analysis, stations with the capability to sell higher ethanol blends already have the infrastructure in place. Investment costs by retailers to sell higher ethanol blends could vary from a few thousand dollars to more than $100,000 per station.

Under EPA regulations, retailers storing gasoline with an ethanol concentration greater than 10% in underground tanks must demonstrate compatibility of their tanks by a certification or listing that the equipment is nationally recognized by an independent testing laboratory or have written approval by the equipment or component manufacturer.

The agency sees an opportunity for retailers to install new systems with the compatibility to store E15 when their existing storage tank systems are at the end of their warranty or need a repair or upgrade.

“In sum, the relatively small, albeit growing, number of stations offering E15 represents a significant constraint on the expansion of E15 through 2025,” said EPA.

On March 14, a bipartisan group of U.S. senators and members of the House of Representatives reintroduced the Consumer and Fuel Retailer Choice Act of 2023 that amends the Clean Air Act to allow the 1psi RVP waiver for E15 by inserting “or more” after “10%.”

“Originally introduced late in the last congressional session, the Consumer and Fuel Retailer Choice Act would harmonize fuel volatility regulations for ethanol-blended fuels across the country, allowing for the year-round sale of E15 in conventional gasoline markets,” said the Renewable Fuel Association in welcoming the legislation.

RFA notes, too, that if passed, the legislation would supersede an effort by Midwest state governors to make regulatory changes to assure the availability of E15 sales year-round in their states. On March 1, EPA announced a proposal granting eight Midwestern states their petitions to reject the 1psi RVP vapor pressure waiver for E10, which would require oil refineries to adjust their baseline gasoline to accommodate ethanol without a waiver. Those states include Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin.

While EPA called the effort “a permanent solution to provide year-round E15 in those states,” American Fuel and Petrochemical Manufacturers (AFPM) slammed the measure, indicating it would create a “new regional boutique fuel with lower RVP.” READ MORE