Market access: Industry grips with E15’s future in key Senate hearing

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In Washington, hearings took place today on the future of E15 ethanol in the United States Senate Environment and Public Works Committee on S. 517, the Consumer and Fuel Retailer Choice Act.  S. 517 was introduced in March and has 18 bipartisan sponsors, including Sens. Deb Fischer (R-NE), Joe Donnelly (D-IN), and Chuck Grassley (R-IA).

The issue

The regulation in question governs Reid Vapor Pressure (RVP), a measure of evaporative emissions in fuel.

Gasoline evaporation contributes to ozone formation. Under current law, evaporative emissions from gasoline are limited during summer months, from June 1 through mid-September to prevent ozone formation. In primarily large, urban areas that are not in attainment of National Ambient Air Quality Standards (NAAQS) evaporative emissions and gasoline are even more strictly regulated.

In 1990, Congress limited the amount of evaporative emissions from vehicle fuel at 9 pounds per square inch (psi) RVP. Pure ethanol has a 3 psi RVP, only when combined with gasoline at low levels, does the RVP of ethanol blended fuel exceed 9 psi. Despite E15 having a lower RVP profile than E10, E10 has been granted an one pound per square inch (psi) RVP waiver, while E15 has not received the same treatment.

Consequently, access to E15 is severely limited in many regions of the U.S., especially during the summer driving season, creating confusion for consumers and discouraging many retailers from offering E15 altogether.

Iowa RFA members described it in a letter to Senator Joni Erntz of Iowa as “common-sense legislation”, “E15 is a safe, clean and low-cost fuel which can be used in 9 out of every 10 cars on the road today. But due to a burdensome regulation this fuel is blocked from being sold in from June 1 through September 15 each year in most of the country.”

E15 deployment would expand the US market on the galoline replacement side to as much as 21 billion gallons.

The Rationale

It’s a year for regulatory relief, and this is the relief issue on the industry agenda with the broadest support from producers, growers, and policymakers. And farmers are looking for support at a time when net farm income has dropped 50 percent over four years.

The Fear?

Michief-making. The bill opens the way to a host of Senate amendments aimed at limiting the RFS itself.

The IRFA said:

Because S. 517 amends the Clean Air Act, we are concerned this narrow RVP correction may draw amendments on a variety of other issues. S. 517 should be considered separate from other issues in order to maintain its narrow purpose and keep the focus on the technical fix under consideration.

The positioning

According to the Iow Corn Growers Association:

Fuel retailers want to offer American drivers another choice at the pump that can save motorists money, increase vehicle performance, help improve their business and improve the environment. For corn farmers, who currently sell one-third of their crop for renewable fuel production, removing a barrier that discourages many retailers from selling E15 is a no-cost means to increase grain demand that provides significant benefits to consumers as well. 

According to ICGA, using E15 nationwide would reduce transportation-related greenhouse gas emissions by 39.5 million tons, the equivalent of removing 6.3 million vehicles from American roadways.

According to the Biotechnology Innovation Organization, during the summer months alone E15 can reduce greenhouse gas emissions equivalent to taking 2.1 million vehicles off the road.

The Advanced Biofuels Association breaks from the pack

Mike McAdams, president of the Advanced Biofuels Association (representing producers of 3 billion gallons of biodiesel and renewable diesel capacity) expressed “deep concern that S. 517, the Consumer and Fuel Retailer Choice Act, will be detrimental to the future of advanced biofuels in the U.S. We believe the future of renewable fuels in the U.S. hinges on the advanced and cellulosic industries, both of which desperately need comprehensive reform of the Renewable Fuels Standard (RFS) to survive. Rather than focusing on this stop-gap waiver for E15, we encourage you to dedicate your time and resources to broader RFS reform.”

“The waiver authorized by S. 517 would enable corn ethanol volumes to exceed the 15 billion gallon statutory mandate established by Congress in 2007. Because corn-based ethanol is the lowest-cost ethanol molecule on the market, increasing the E15 mandate simply makes it more economically challenging for cellulosic and other advanced fuels to compete, reducing the program’s ultimate sustainability and potential for GHG reductions. Rather than supporting the market, this bill would undercut its future. ABFA would support granting the RVP waiver request for advanced biobutanol and ethanol rather than ethanol writ-large.”

The hard data

BIO’s recent analysis, “GHG Benefits of the Consumer and Fuel Retailer Choice Act,” is available here.

BIO developed a baseline scenario of transportation fuel use from the U.S. Energy Information Administration’s (EIA) 2017 Annual Energy Outlook. EIA projects transportation fuel use to fall steadily between 2018 and 2027. EIA also projects ethanol use in transportation to decline, but at a slower rate than gasoline use. In EIA’s annual projections, reported gasoline use represents E10, the average fuel blend sold in the United States. The agency also expects use of E85 blends (51 to 83 percent ethanol) in flex fuel vehicles to increase, particularly after 2020.

The concern over small boat owners

The Outdoor Power Equipment Institute (OPEI), an international trade association representing more than 100 small engine, utility vehicle and outdoor power equipment manufacturers and suppliers, said “While Growth Energy and other pro-ethanol lobbying organizations have spent millions of dollars to bring higher ethanol fuel blends to the marketplace, they continue to fail to acknowledge that higher ethanol fuels may damage or destroy many engines, especially non-road engines.

Growth Energy was having none of it, releasing a new survey concluding that U.S. small engine owners “are pleased with the performance of their fuel and find it easy to pick the best option, including regular unleaded blends of 10 percent ethanol.”

“Consumers appreciate having clean, affordable options at the pump, and small engine owners are no exception,” said  “Biofuel critics like to claim that competition at the pump leads to confusion,” said Emily Skor, CEO of Growth Energy,” but they obviously haven’t checked with American consumers who report that choice at the pump and small engine performance go hand-in-hand.”

According to the survey, 95 percent of owners found it easy to pick the right fuel, 98 percent reported satisfaction with their fuel’s performance, and 90 percent considered it important to have options at the pump, including ethanol blends. The numbers were the same or even higher among only those respondents who reported using standard unleaded gasoline, which contains 10 percent ethanol.

Reactions from stakeholders

Emily Skor, CEO, Growth Energy

“E15 is increasingly popular in 29 states and counting – it has more octane, it costs less, and it’s cleaner. This bill will lift a needless burden on retailers so consumers can pick their own fuel and continue to open new market opportunities for the next generation of low-carbon, homegrown biofuels. Growth Energy is rallying all our friends in the environmental, retail, consumer, and advanced biofuel community to ensure that America’s fuel options aren’t limited by outdated regulations.”

POET-DSM Board Chairman Jeff Pinkerman

“For cellulosic biofuels to be successful, our elected leaders must remove barriers that unnecessarily restrict the availability and growth of biofuels in the marketplace,” he said. “Lifting this outdated regulation will help cultivate demand for cleaner-burning biofuels and provide a catalyst for expanded research and development of promising new clean fuel technologies.”

POET CEO Jeff Broin

“This is about giving Americans the freedom to choose fuels that can actually help clean the toxic air we breathe. We know drivers are pleased to find that E15 costs less – 5-15 cents per gallon – but when they learn E15 also substantially lowers emissions, they can be confident they’re filling up with a product that’s easier on their wallet and better for our planet.”

The Biotechnology Innovation Organization (BIO) and Advanced Biofuels Business Council

“This legislation is vital to the advanced biofuels industry, which is making significant progress in expanding production of advanced and cellulosic biofuels. Fixing the RVP issue will ensure that E15 can be sold year round in any state where E15 is approved and give our advanced and cellulosic fuels an opportunity to compete at the pump.

“Moving to E15 not only reduces the cost of gasoline by between 5 and 15 cents per gallon, but also reduces emissions harmful to the environment. Recent analysis from the Biotechnology Innovation Organization indicates that in just the summer months E15 can reduce GHGs equivalent to taking 2.1 million vehicles off the road. In addition to the environmental benefits, the Energy and Environmental Studies Institute has written that E15 can lower the public health impacts from transportation emissions like cancer and asthma.”

Brian Jennings, EVP, American Coalition for Ethanol 

“Senators Fischer (R-NE), Ernst (R-IA), and Duckworth (D-IL), all members of the EPW Committee, are providing timely leadership in making sure this priority issue gets the attention it deserves in Congress,” said   “We’re encouraged that today’s hearing can be the first step toward enactment of legislation to give retailers the choice to offer E15 and higher blends to their customers year-round.”

Bob Dinneen, CEO, Renewable Fuels Association

“The biggest remaining obstacle to E15 growth is the inequitable application of gasoline vapor pressure regulations. The U.S. Environmental Protection Agency’s current regulations have created an un-level playing field for E15 and other higher-level blends. Many gasoline retailers have rejected E15 because EPA’s current RVP regulations make it nearly impossible for them to sell E15 to EPA-approved conventional automobiles year-round. Most gas stations are not willing to dedicate storage tank space and dispensing equipment to a fuel that they can only sell for part of the year. Resolving the issue of RVP parity for E15 will remove the regulatory barrier that currently hinders stations from offering year-round access to E15 and other higher level ethanol blends.”

The Digest’s Take

OMG, opening up the Clean Air Act.

Forget fuel haters, the Senate is replete with members who have choice provisions of the CAA they would like to send to the devil. We’re prayerful that the industry will find a way to get an amendment through without presenting an opportunity for dangerous and dark forces to to dark and dangerous things.