On his way to a campaign rally in Iowa, President Trump started the regulatory process on Tuesday for year-round sales of a 15 percent blend of corn ethanol in gasoline, sought in the Farm Belt as a tonic for trade war jitters. E15 sales are banned during the summer now, and the EPA will have to move expeditiously, given the federal rule-writing process, to implement Trump’s order by next June 1, the usual cut-off date.
While a member of the Iowa Corn Promotion Board pointed to the possibility of a big, 2 billion-bushel increase in use of corn for ethanol, economist Scott Irwin of the University of Illinois said on social media, “I just don’t see E15 being a major breakthrough for the corn ethanol industry” or creating new demand in the near term for more-than-ample corn supplies.
Trump announced the order during a meeting with Republican senators and told reporters afterward that he was helping ethanol and farmers. “We want to get more fuel into our system and this is a great thing. But they’re great for our farmers.” Action on E15 would be coupled with additional control of trading in biofuel credits known as RINs that refiners must buy to comply with the Renewable Fuels Standard (RFS) if they do not blend enough ethanol. Refiners and ethanol makers fought for nearly a year over RINs prices and larger ethanol sales. The traditional blend of ethanol into gasoline is 10 percent.
Aboard Air Force One, Trump said he signed a “decision memo” on the RFS and predicted the process of changing the ethanol policy “is all going to go very quickly.”
Oil industry leader Mike Sommers said the EPA lacks the authority to approve summer-time sales. “The industry plans to aggressively pursue all available legal remedies against this waiver,” he said, hinting at a lawsuit. The National Wildlife Federation said the clean-air law set limits on fuel volatility to prevent evaporation that leads to smog, so the EPA cannot allow summer sale of E15 without a change in law. Ethanol industry leaders said they were confident in EPA’s power although uncertain how soon it would begin the time-consuming rule-making process.
“It’s a tight timeline, certainly,” said Emily Skor, head of the ethanol trade group Growth Energy, during a teleconference. “It’s do-able.” Executive vice president Mike Lorenz of Sheetz, an East Coast service-station chain that is the largest E15 retailer, said approval of summer-time sales “is going to be huge for us.” But many retailers will wait for EPA to finalize year-round sales before installing the pumps to handle E15 and will miss the first season of sales, he said. “You need the proper equipment to dispense higher blends.”
Farm groups generally applauded the president’s decision as a victory for home-grown energy and a boon for farm income. “This is the right signal to the marketplace at just the right time, as both farmers and renewable fuel producers desperately need new market opportunities and sources of demand,” said the Renewable Fuels Association. Iowa Sen. Joni Ernst tweeted, “Granting E15 year-round means that Iowans will see an increase in farm income, increased ethanol production and consumption and a boost in our economy.”
But the National Farmers Union said the White House package meant “a net loss in biofuel demand” because the EPA has exempted a growing number of small-volume refineries from RFS compliance. Iowa Sen. Chuck Grassley said, “I feel sympathy from [acting EPA administrator Andrew] Wheeler…He’s going to be more careful in granting waivers.” A long-time proponent of biofuels, Grassley was among the senators who met Trump at the White House for the E15 announcement.
Although some groups say E15 is not safe for small engines or older vehicles, it is approved for use in cars and light trucks built in 2001 or later. The fuel is now sold in 30 states.
Between three and four of every 10 bushels of the U.S. corn crop is used annually in making corn ethanol, the dominant biofuel in the nation. The EPA has a statutory deadline of November 30 to set the Renewable Fuel Standard for next year. In June, it proposed an RFS of 19.88 billion gallons, including 15 billion gallons of corn ethanol and 2.1 billion gallons of biodiesel. Iowa is the largest corn-growing and ethanol-producing state.