On Friday the U.S. Environmental Protection Agency (EPA) Administrator Andrew Wheeler signed the final action that would remove the key regulatory barrier to using gasoline blended with up to 15% ethanol (E15) during the summer driving season and reform the renewable identification number (RIN) compliance system under the Renewable Fuel Standard (RFS) program to increase transparency and deter price manipulation.
“Following President Trump’s directive, today’s action expands the market for biofuels and improves the RFS program by increasing transparency and reducing price manipulation,” said Wheeler. “As President Trump promised, EPA is approving the year-round sale of E15 in time for summer driving season, giving drivers more choices at the pump.”
E15, often marketed at the pump as Unleaded88, is a fuel blend containing 15% ethanol and is approved for use in all 2001 and newer vehicles. These vehicles make up roughly 90% of the vehicles on the road today and E15 is often sold at a three to ten cent discount to Super Unleaded E10.
Before the finalized rule, the outdated Reid Vapor Pressure (RVP) regulations forced fuel retailers to restrict sales of E15 to flex fuel vehicles (FFV) only from June 1 to September 15, the peak driving season. Since that regulation is now lifted, motorists can access E15 year-around.
Secretary Sonny Perdue said in a statement: “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.”
To further strengthen confidence in the RFS program, EPA will soon sign a Memorandum of Understanding with the Internal Revenue Service to promote collaboration and support efforts to prevent against RIN and blender tax credit fraud, EPA said.
Growth Energy CEO Emily Skor estimates the change will generate over 1 billion new gallons of ethanol demand in the next five years.
Jeff Broin, chief executive officer of the nation’s largest ethanol producer POET, said longer-term, “Nationwide adoption of E15 will drive the production of 7 billion gallons of biofuels, creating additional demand for 2 billion bushels of corn each year, and unlocking new domestic demand for homegrown fuels at a critical time for America’s farmers.”
Higher blends of renewable fuels such as E15 reduce fuel prices for drivers by three to ten cents per gallon and result in lower emissions, improving air quality and providing greater greenhouse gas reductions. Blending additional ethanol replaces some of the most harmful components in gasoline, and cleaner ethanol results in 43% fewer greenhouse gas emissions than gasoline, the National Corn Growers Assn. (NCGA) said in a statement.
Today, E15 is sold at more than 1,800 locations in 31 states, with many more expected in the months and years ahead, according to Growth Energy. Over the last decade, Growth Energy has worked with top fuel retailers, like Sheetz, to expand options for American motorists.
“This fix provides major regulatory relief for all retailers seeking to offer lower-cost, higher-octane options at the fuel pump,” said Mike Lorenz, executive vice president for Sheetz. “For too long, retailers had to pay millions to retool and relabel pumps each summer and fall, which creates needless confusion for drivers.
The petroleum industry has vowed for years to sue the EPA over the E15 rule.
“The key for this rule is not just that it approves year-round E15, but that it does so based on the best science and legal precedents that will survive the Big Oil onslaught in court. The petroleum industry has tried everything to stop this day from coming. It’s no surprise they don’t want to compete with E15, which is lower-cost, cleaner, and higher-octane,” said Iowa Renewable Fuels Assn. executive director Monte Shaw.
IRFA also expressed appreciation that the final rule did not include demand destroying provisions camouflaged as so-called RIN reforms. The EPA said it is finalizing regulatory changes to reform certain elements of the RIN compliance system of the RFS program to increase transparency and deter price manipulation in the RIN market.
The reforms include requirements for public disclosure if a party’s RIN holdings exceed certain thresholds and additional data collections to improve EPA market monitoring capability. These new reforms will also help EPA continue to gather the information needed to decide whether further action is needed to ensure stability in the RIN market.
NCGA submitted comments to EPA in April which highlighted the impact of EPA’s expansive RFS waivers to large, profitable refineries, which have taken a toll on farmers by undercutting the RFS and reducing corn demand. Since early 2018, EPA has granted 53 RFS exemptions to refineries for the 2016 and 2017 RFS compliance years totaling 2.61 billion ethanol-equivalent gallons of renewable fuel. EPA currently has 39 waiver petitions pending for the 2018 RFS compliance year.
“While corn farmers are immensely grateful that the barrier to year-round E15 has been lifted, we won’t be able to reap the full benefits if EPA continues to allow oil companies to avoid blending biofuels in accordance with the RFS,” NCGA president Lynn Chrisp said.
Rewewable Fuels Assn. president and CEO Geoff Cooper added the industry is cognizant, however, that the promise of the 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,” Cooper said.
Perdue added, “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.”