Government

Quick relief for ag under E15 no sure bet for Iowans

Trump expected to announce ethanol rule change in Iowa

A sign Friday advertises E15 gasoline for sale at Kum & Go in Cedar Rapids. President Donald Trump is expected to announce he is ordering the Environmental Protection Agency to go through the rule-making process of allowing year-round sales of E15, a higher blend of ethanol that would require more corn to produce. (Rebecca F. Miller/The Gazette)
A sign Friday advertises E15 gasoline for sale at Kum & Go in Cedar Rapids. President Donald Trump is expected to announce he is ordering the Environmental Protection Agency to go through the rule-making process of allowing year-round sales of E15, a higher blend of ethanol that would require more corn to produce. (Rebecca F. Miller/The Gazette)

 

When President Donald Trump on Tuesday visits Iowa, he’s expected to unveil several changes meant to bolster both the production and use of ethanol, which would be good news to the farm industry that supplies corn used to make the biofuel.

A senior White House official confirmed Monday the administration will allow year-round sales of a higher blend of ethanol called E15, which has been banned during the summer, and also enact restrictions to prevent fraud in the use of renewable identification numbers that show compliance with the nation’s renewable fuel law.

Trump — campaigning this week for 3rd District U.S. Rep. David Young, R-Van Meter, who has pressed the president on E15 — is scheduled to hold a rally Tuesday at the Mid-America Center in Council Bluffs.

His administration is boasting the changes he’ll announce there will boost the agriculture economy — meeting demands for relief from Midwestern politicians and farmers who face financial uncertainty under Trump’s trade wars.

But the administration is not proposing more funding to get E15 to the pump — it’s sold at only about 1 percent of the nation’s gas stations now — and rule-making is expected to take months and possibly lead to oil industry lawsuits.

That has Sebastian Pouliot, an Iowa State University professor specializing in agricultural and natural resource economics, skeptical of any immediate impact.

“Are fuel retailers willing to make the investment?” asked Pouliot, who has studied consumer willingness to pay for ethanol blends as high as E85. “That’s not obvious.”

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Ethanol is a renewable fuel made from plants, often corn. Most U.S. gasoline contains it — typically E10, which is 10 percent ethanol and 90 percent gasoline.

Higher blends — like E15, which contains 15 percent ethanol, and E85, which contains 51 to 83 percent ethanol with an average of 75 percent — are more narrowly used and more regulated.

Vehicles today are made to run with gasoline containing 10 percent ethanol. Most cars made in 2001 and after can use E15, too, though some are not intended to. Those automakers print “no E15” on fuel caps.

Only flexible fuel vehicles are intended to use E85, as it’s more corrosive to an engine.

E15, for now, can’t be sold during summer months because it doesn’t meet Reid Vapor Pressure requirements for the summer ozone season — between June 1 and Sept. 15, according to the Environmental Protection Agency.

Reid Vapor Pressure is a measure of and term for gasoline volatility, which defines its evaporation characteristics, according to the agency.

Corn-based ethanol does, however, reduce the life cycle of greenhouse gas emissions, earning it praise by some as the “cheapest, cleanest source of octane.”

Although U.S. law requires oil refineries to blend biofuels into their gasoline, the EPA can grant small oil refineries exemptions if they process less than 75,000 barrels a day and prove hardship. Former EPA Administrator Scott Pruitt had been issuing more such waivers.

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Trump, by lifting the summer ban on E15 and taking action against fraud, is giving a hand to producers who might have been harmed by the small refinery exemptions and recent tariffs.

But ISU’s Pouliot said he believes the ethanol industry remains worse off now than it was several years ago, unless retailers make a real investment into E15.

“They might have to install new pumps. They might have to install new tanks in some stations,” he said. “I don’t think they’ll make any investment to putting in E15 pumps. That’s why it might take years before it actually makes a difference. And that is if they decide actually to invest into that.”

Potentially holding retailers back from spending on infrastructure is the unpredictable nature of the ag industry.

“Next year, you get a bad corn crop, corn prices go up, ethanol prices also go up, and then fuel retailers are much less tempted to put E15 into their fuel station,” he said. “It all depends on the relative price of ethanol to the price of gasoline.”

In addition, the oil industry is combating pro-ethanol changes by threatening to sue over any risk to its share of the nation’s 143 billion gallon gasoline market, according to Bloomberg News, which reports only about 1,430 of the country’s 122,000 gas stations currently sell E15.

Lawsuits could overturn any regulation change, and some EPA officials have said they don’t think their agency can waive E15 from vapor mandates without congressional action, according to news reports.

U.S. Sen. Joni Ernst told Bloomberg that Trump’s expected announcement sends a “very clear message.”

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“He is behind the American farmer, he is behind our renewable fuels, and he is ready to make it happen,” the Republican said.

U.S. Rep. Steve King, R-Kiron, this week in an interview went farther than the president is expected to go.

“For me, I’m saying let’s not say E15. Let’s go beyond that. I don’t want to create another blend wall at E15. There’s no reason that we would do that except that it’s just gotten stuck in our vernacular,” King said. “I want to say let’s eliminate all of the vapor pressure waiver requirements and just let us blend anything that the market will demand and then the consumers can choose.”

Dan Mika and Rod Boshart of The Gazette contributed to this report.

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