E15 Sales Resume as Proponents Push for Year-Round Access

Growth Energy, RFA highlight demand destruction for ethanol

WASHINGTON -- Sales of E15 resumed in most markets on Sept. 16 as a regulatory or legislative fix that would allow its sales year-round remained elusive.

From June 1 to Sept. 15, the 15% ethanol blend is prohibited for sale to any vehicles other than flex-fuel vehicles in most markets by the U.S. Environmental Protection Agency (EPA). The EPA has not yet waived summertime Reid vapor pressure (RVP) standards for E15, despite President Donald Trump’s repeated expressed support for the move.

Marking the nearly 30 years that the summertime RVP restriction has prevented E15’s sale, ethanol industry group Growth Energy has launched a bus tour that will take it to different events around the Midwest to raise awareness. Its first stop was in Waterloo, Iowa, at the Cattle Congress on Sept. 15.

“We’re calling on policymakers to make certain that 2018 was the last summer that drivers are denied a chance to save money on fuel while supporting local farmers,” said Emily Skor, CEO of Washington, D.C.-based renewable fuels group Growth Energy. “Our bus tour will help spread the message at fairs, campaign rallies and community events across the heartland that rural America wants action on E15, and we want it now.”

Skor noted that the United States has seen a fifth consecutive decline in farm income, and that increased ethanol demand means more demand for the grain that becomes the biofuel.

Demand Destruction

The Renewable Fuels Association (RFA), Washington, D.C., has estimated that moves made by former EPA Administrator Scott Pruitt have already destroyed more than 2.25 billion gallons of biofuel demand.

RFA Chief Economist Scott Richman pointed to a recent analysis by the Food & Agricultural Policy Research Institute (FAPRI) of the University of Missouri that found blending exemptions Pruitt had granted to several refiners could destroy an additional 4.6 billion gallons of ethanol demand for almost $20 billion in lost sales. In May, RFA joined other groups in suing the EPA for granting several of the waivers.

In FAPRI’s most recent Baseline Outlook for Agricultural and Biofuel Markets, its economists assume that if the EPA continues to follow the trend of small refinery waivers, blending obligations under the Renewable Fuel Standard (RFS) would drop from the current 15 billion gallon statutory level to 13.7 billion gallons, with ethanol consumption falling an average of 761 million gallons per year from 2018 to 2023.

Meanwhile, ethanol used to fuel up flex-fuel vehicles (FFVs) and contained in midlevel blends would drop 17% by 2023. And prices of Renewable Identification Numbers (RINs), the credits that obligated parties under the RFS use to show compliance to blending quotas and which many large retailers and blenders sell, would fall 10 cents from 2018 to 2023.

“The FAPRI analysis clearly shows that demand destruction from small refiner exemptions is real and has substantial economic consequences,” said Richman. “If EPA continues to retroactively grant these exemptions, it will cause further harm to the ethanol industry through lower prices, reduced production, and additional demand erosion. The solution to this problem is straightforward: EPA should project exempted volumes when it sets the annual RVOs (renewable volume obligations, the blending targets for refiners), which effectively reallocates them to other obligated parties and keeps the RFS whole.”

Photograph courtesy of Shutterstock 

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