WASHINGTON -- President Donald Trump, legislators and regulators have reached an agreement to make E15, the 15% ethanol gasoline blend, available for year-round sale. But the actual regulatory steps are yet to be made.
After a meeting May 8 at the White House between Trump, officials with the U.S. Department of Agriculture (USDA) and U.S. Environmental Protection Agency (EPA) and senators representing corn-growing and oil states, participants announced that they had come to an agreement to provide a permanent Reid vapor pressure (RVP) waiver to the 15% ethanol blend during the summer months. The EPA currently does not waive RVP regulations on E15, which prohibits use of the fuel in most vehicles and markets from June 1 to Sept. 15, the busiest driving period of the year.
The announcement comes after several fuel retailers sent letters to Trump urging him to support E15’s year-round sale.
The White House group also agreed to not pursue an artificial cap on Renewable Identification Number (RIN) prices, which the retailers and ethanol industry groups argued would have destroyed biofuels demand.
"President Trump is pleased to announce that a final decision has been made that allows E15 to be sold year-round, while providing relief to refiners," a White House spokesperson told Bloomberg. "This outcome will protect our hardworking farmers and refinery workers. The president is satisfied with the attention and care that all parties devoted to this issue.”
“President Trump agreed to allow for the sale E15 year-round. That’s good news for farmers and consumer choice at the pump,” said Sen. Chuck Grassley of Iowa in a statement. “Allowing higher blends of ethanol to be sold in the summer months fits in well with EPA’s deregulatory agenda.”
In its comments to Bloomberg, the White House did not specify what the “relief to refiners” would be.
Refiner Relief
Sen. Ted Cruz of Texas, who has led in representing the interests of refiners, hailed the agreement in a Tweet as a “win-win for everyone.” He also suggested one of the potential refiner relief measures.
Terrific final decision from @POTUS meeting: E15, year-round plus RINs for all exports. This is a WIN-WIN for everyone. More corn will be sold (good for farmers), plus lower RINs (saves blue-collar refinery jobs), plus more ethanol exports (good for America).
— Ted Cruz (@tedcruz) May 8, 2018
“Terrific final decision from @POTUS meeting: E15, year-round plus RINs for all exports,” Cruz said. “More corn will be sold (good for farmers), plus lower RINs (saves blue-collar refinery jobs), plus more ethanol exports (good for America).”
Attaching RINs to exported biofuels could serve as a means to address the gallons of biofuels that have not been blended thanks to the controversial hardship blending exemptions for small refiners that EPA had granted to many large refiners in 2018. In an analysis, the Renewable Fuels Association (RFA) calculated that the exempted volumes likely total 1.6 billion gallons or more.
Biofuels groups attacked the idea of attaching RINs to exports, arguing it would undermine the Renewable Fuel Standard’s (RFS) aim to increase domestic biofuel blending.
“With the RIN cap officially dead, Sen. Cruz is attempting to revive an old gimmick in a last-ditch attempt to kill ethanol demand,” said Emily Skor, CEO of ethanol industry group Growth Energy, in a statement. She noted that in October 2017, EPA Administrator Scott Pruitt had sent a letter to senators in which he confirmed that the EPA would not pursue a change to regulations that would allow RINs to be attached to exports.
“Attaching a RIN to ethanol exports would have a crippling impact on American agriculture—significantly reducing demand for ethanol and corn,” Skor said. “It would also have major trade implications, as export RINs would be considered a subsidy by our global trading partners, who will likely challenge this as unnecessary advantage to U.S. ethanol. Further, export RINs would be a clear violation of the RFS, which is intended to increase the domestic use of biofuels.”
RFA President and CEO Bob Dinneen also blasted the idea. “The real disgrace with a proposal of this nature … is that ethanol producers and farmers would bear the brunt of any retaliatory tariffs; they would be subsidizing highly profitable oil companies, who would benefit from the reduced RINs costs,” he said in a statement. “In no way will that ever be acceptable or considered a win for our industry.”
Pruitt and U.S. Secretary of Agriculture Sonny Perdue are now tasked with coming up with a plan to enact all of the agreed-upon elements. As Grassley Tweeted shortly after the meeting, “Need to see Perdue+Pruitt plan. Devil in details.”
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