Media reports out of Washington this week indicate the White House is ready to announce a lift on the ban on summertime sales of E15 in most of the country, a barrier that has long been considered unnecessary, imposing a restriction that EPA research itself has shown is needless.
It would be a move by the Trump administration long awaited by the ethanol industry, which has questioned the president’s commitment to the change for the several months since he first endorsed the idea.
Expanding ethanol sales is critical to a farm sector that has been hammered by low commodity prices and is forecast by USDA’s Economic Research Service (ERS) to see a nearly 14-percent decline in inflation-adjusted net cash farm income this year, the lowest real-dollar level since 2009.
The administration’s trade war with China and other countries also is taking a toll on farmers and livestock producers. The Center for Agriculture and Rural Development (CARD) at Iowa State University says the average estimated loss for Iowa’s corn sector alone stemming from tariffs and other trade disruption totals some $333 million, while the pork/hog sector is facing a $776 million decline in revenue. CARD says the trade disputes have also led to a 2-percent drop in ethanol prices, resulting in approximately $105 million in lost revenues to Iowa ethanol producers.
The boost that could come in revenue from expanded E15 sales could at least make some dent in the nearly $2.25 billion in ethanol sales lost by the sector due to an explosion of waivers granted by EPA under former Administrator Scott Pruitt that exempted an unprecedented number of refineries from their biofuel blending requirements under the Renewable Fuel Standard.
But lifting the ban on summertime E15 sales is only one of the steps that can be taken by the White House to restore farm income to proper levels for the agricultural sector, including the ethanol industry. The Trump administration is in the middle of a public comment period on a proposal that could lead to a viable pathway to a high-octane, low-carbon, lower-cost transportation fuel for the future.
The proposed Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for model years 2021-2026 passenger cars and light trucks would essentially freeze fuel-economy standards for cars and light trucks, keeping them at 2020’s previously set fleetwide average standard of about 37 miles per gallon (mpg) through 2026. The rule adopted under the Obama administration would raise the standard for passenger vehicles to approximately 54.5 mpg over that six-year period.
The proposal gives EPA the opportunity to implement what the agency has known for years: increasing the octane level in the nation’s market fuel will enable use of more efficient, lower polluting engines. And that octane can be supplied, starting now, by increasing the use of available ethanol.
EPA’s own research has shown high-octane, low-carbon (HOLC) fuel is needed now to reduce greenhouse gas emissions and improve fuel economy. Given that liquid fuel will continue be used by the transportation sector for decades, it is important that fuels and combustion technologies be matched to further optimize emissions reduction. The use of HOLC fuels, which will be available in the market for all new vehicles by model year 2023, will keep reductions in emissions on an appropriate timetable. For this nation to meet fuel-economy goals that can be expected in 2050, we must begin requiring high-octane gasoline blends now.
Ethanol is available now to provide HOLC fuel at the least cost to consumers. Conventional ethanol is the least-cost octane enhancer, is abundantly available, and is capable of increased volumes immediately. Furthermore, engine technologies to use higher-octane fuels are well understood and available to the auto industry. In fact, infrastructure upgrades are in process now and will support an on-time transition to ethanol-based HOLC fuel by 2023.
Distribution via rail and truck tanks are compatible with growing ethanol demand, while at-station storage (underground storage tanks) have been compatible with ethanol blends up to E100 for many years. The transition of above-ground dispensing equipment to E25-40 compatibility has started and will be capable of supplying fuel to all vehicles that can use it by late 2022. It’s also comforting to know that no major, sweeping federal capital programs are needed or expected.
EPA is required to assure protection of health of Americans at least cost and best value. Given that the agency is charged with achieving the greatest degree of emissions reduction, taking into consideration availability, costs, and lead time of technologies and available fuels, EPA can regulate fuels, vehicles, or both, to achieve these reductions.
SfL urges stakeholders to use this public comment period, which is now set to expire Oct. 26, to demand EPA act to support the adoption of HOLC fuel to enable engine efficiency improvements and emissions reductions. The agency must also update its test methods and environmental assessments of ethanol blended fuels to reflect modern-day conditions and best available science. But most importantly, EPA must remove market barriers – including lifting the ban on E15 summertime sales – to expand the use of ethanol. Embracing the benefits of HOLC fuels using ethanol offers environmental and economic wins, for America’s farmer and U.S. consumers.