Biden’s Support For E15 Raises Questions Over Biofuels’ Long-Term Future

Source: By Stuart Parker, Inside EPA • Posted: Sunday, April 17, 2022

President Joe Biden’s announcement that his administration will grant an emergency waiver to allow summer sales of 15 percent ethanol fuel (E15) is a short-term win for the biofuels industry amid an acute energy crisis, but raises questions over EPA’s commitment to biofuels long-term, amid legal threats from opponents of the sector.

Emily Skor, CEO of Growth Energy, a biofuels groups, told reporters that Biden’s announcement “gives us some good momentum” but “we are not done. We have got to make this a permanent fix” for summertime E15 sales.

Biden announced the move on an April 12 visit to Iowa, America’s premier corn-growing state and epicenter of the ethanol industry.

EPA “is planning to issue an emergency waiver to allow E15 gasoline that uses more ethanol from homegrown crops to be sold across the United States this summer in order to increase fuel supply,” Biden said, according to a White House transcript of the event.

“Without this action, E15 cannot be used in most of the country from June 1st to September 15th, and the EPA plans to take final action to issue the emergency waiver closer to June 1st,” the White House said in a fact sheet.

An EPA spokesperson could not say when the agency will issue its emergency order, other than that it will be before June 1.

The administration has also provided few if any details over what authority EPA will use to issue the order as biofuels opponents including refiners, fuel retailers and others are warning that the eventual order is “likely illegal,” and “will not lower gas prices.”

Under a ruling from the U.S. Court of Appeals for the District of Columbia Circuit, EPA cannot extend to E15 a waiver from fuel volatility limits that applies to E10 fuel, the most common blend. The regulatory requirement is intended to prevent additional evaporation of ozone-forming pollution during the summer driving season, from June 1 to Sept. 15.

But with gasoline prices at high levels due to inflationary pressures and Russia’s war in Ukraine, the Biden administration has been facing growing calls from biofuels groups to waive the air quality limits to allow for the summertime sale of E15.

“E15 is about 10 cents a gallon cheaper than E10, and some gas stations offer an even bigger discount than that,” Biden said, noting that without the emergency order, gas stations are not allowed to sell the fuel in the summer.

The White House is promoting the waiver as a response to high fuel prices, driven in part by the war in Ukraine. Ethanol “reduces our reliance on foreign oil. By adding this fuel to our gasoline — 10 percent or 15 percent, even more — it stretches the supply,” Biden said.

Limited Sales

Biden acknowledged that E15 is only sold in a limited number of gas stations, saying “even though E15 is only available in a few thousand pumps today, we’re investing more than $100 million to build biofuel infrastructure of the future — things like . . . blender pumps, the gas pumps that can handle higher blends of bio-ethanol and diesel fuel.”

Biden further referenced his plans to substantially boost production of sustainable aviation fuel (SAF) to reduce the carbon footprint of the aviation sector. The administration has indicated that it may open paths for producers to make SAF from ethanol, in addition to existing pathways for production of the fuel.

The biofuels industry “has a role to play in a sustainable energy future,” Biden said.

Biofuels producers have at times doubted the Biden administration’s commitment to their industry due in large part to an apparent preference for electric vehicles (EVs) as a means to drive down GHGs and conventional air pollution, and the administration’s failure to back their calls for increased biofuels blending mandates under the renewable fuel standard (RFS) or other mechanisms.

For example, EPA has proposed to retroactively cut biofuel blending mandates for 2020 under the RFS, citing the reduced fuel usage stemming from the COVID-19 pandemic, but proposes to restore blending to more ambitious levels for 2022.

Meanwhile, the agency has adopted a policy of rejecting all RFS compliance waivers for small refiners, in a major win for the biofuels sector that blames the waivers, issued in large numbers by the Trump EPA, for “destroying” demand for biofuels.

But its planned emergency waiver for E15 is expected to face legal challenges. In an April 12 research note, ClearView Energy Partners, a research firm, notes that while EPA has issued many emergency waivers from federal fuel regulations in the past, these are generally issued for brief durations, responding to specific events.

Even for waivers to address fuel supply issues during the pandemic, the waivers have been brief in duration.

Congress provided EPA authority to “temporarily waive” fuel specifications in “extreme and unusual” circumstances that could “not reasonably have been foreseen.”

“The statute sets several additional criteria for action under this authority, including that the waiver (1) would be limited to 20 days (plus a transitional period); (2) addresses a supply disruption; and (3) would apply to the smallest geographic area possible,” ClearView says.

A “plan to repeatedly invoke the [Clean Air Act emergency waiver] authority would seem to constitute a broader than typical application. We think the Administration could seek to limit its legal vulnerability by formally tying the action to petroleum market disruptions resulting from Russia sanctions and supply chain bottlenecks,” the group says.

According to EPA guidance, such waivers “cannot be issued to address concerns regarding the price of fuel,” ClearView says.

Previous Legal Precedent

But the Fueling American Jobs Coalition, which describes itself as a “coalition of union workers, local gas station owners, small retailers, and independent American oil refiners” opposed to the RFS, April 12 called EPA’s emergency waiver “likely illegal.”

“Given previous legal precedent, as well as EPA having clearly stated in the past that an emergency Reid vapor pressure (RVP) waiver, that would allow the summer sale of E15 gasoline, can only be used for natural disasters that create physical supply shortages, the administration’s call for a summer gasoline waiver under the pretense of high fuel prices, will likely be overturned in court,” the coalition says.

Further, “extremely limited availability of E15, which is due to lack of retailer investment and not air quality regulations, means summer sales of the fuel will not lower gas prices or increase the percentage of ethanol blended in the nation’s fuel supply. The Biden administration should know that because the Trump administration already tried it. The Trump administration’s illegal E15 waiver allowed the fuel to be sold year-round for three years before it was struck down in court,” the coalition says.

And some environmental groups are increasingly skeptical of ethanol’s environmental benefits, with major questions over whether conventional corn ethanol truly reduces GHGs, and whether it leads to land-use change, species habitat loss, and degraded water quality.

But biofuels advocates repeatedly stress studies finding that ethanol reduces lifecycle GHGs, and that biofuels in general are necessary to reduce GHGs from the many vehicles that will remain liquid fueled for the foreseeable future, even if EV sales greatly accelerate.

They also say that E15 is no more evaporative than E10, and will therefore not result in degraded air quality. It is “patently not true” that E15 is worse for the environment than E10, Growth Energy’s Skor said, while calling the pending E15 waiver a “strong signal” of the administration’s support for biofuels.

While pro-biofuels lawmakers have sought legislative fixes, none appear to have high chances of success in the short-term, given the regional, rather than partisan divides in Congress over the RFS and biofuel generally.

Some Midwestern governors backed biofuels’ groups push for an emergency waiver. But they have also explored more lasting solutions.

For example, the Renewable Fuels Association (RFA) has advocated a national regulatory change to reduce the RVP of gasoline “feedstock” that is blended with ethanol to make fuel, a move that would put E10 and E15 on an even regulatory footing year-round. This could also be achieved on a state-by-state basis at the request of governors, and Midwestern states are still in talks with EPA on this issue. — Stuart Parker (sparker@iwpnews.com)

|