Despite Support From Trump, EPA Continues to Examine 15% Blend

Source: By Chris Clayton and Todd Neeley, DTN • Posted: Monday, April 16, 2018

LAVISTA, Neb. (DTN) — Although President Donald Trump made clear on Thursday his support for granting a waiver to allow year-round sales of E15, the EPA told DTN on Friday the agency hasn’t yet made a decision on E15. E15 fuel is a blend of 15% ethanol and 85% of gasoline.

At a White House meeting Thursday focusing on agriculture and trade, Trump said his administration will approve E15. Talking briefly to reporters, the president said regarding ethanol, “We’re going to raise it up to 15% and raise it to a 12-month period.”

Trump’s brief comment came after news reports last week surfaced that EPA granted small-refinery hardship waivers at a breakneck pace in 2017.

On Friday, an EPA spokesperson said the agency hasn’t reached a decision on E15.

“EPA has been assessing the legal validity of granting an E15 waiver since last summer,” the spokesperson said. “The agency has been awaiting a clear outcome from the ongoing RFS (Renewable Fuel Standard) discussions with the White House, USDA and Congress before making any final decisions or developing any associated regulatory actions.”

Nebraska Gov. Pete Ricketts recalled Thursday’s meeting when he addressed state ethanol leaders at the Nebraska Ethanol Board conference early Friday. In regard to Trump’s E15 comments, Ricketts said, “That is a big deal. We have been asking for that for quite some time.” Ricketts credited the Trump administration for listening to farmers.

Todd Sneller, administrator of the Nebraska Ethanol Board, told DTN on Thursday that even if EPA grants a waiver for E15, it would be awhile before the fuel becomes widely available.

“I think everybody reacted positively; the one caveat is this may take 12 months or so,” Sneller said at the forum Thursday.

Sneller added that Trump will be directing EPA Administrator Scott Pruitt to draft a rule and get it out for public comment. Sneller also said a number of people have met with Pruitt on this topic, and the administrator has said he feels that the agency has the authority to advance a rule on E15.

Ricketts also acknowledged there remains a great of work ahead to get EPA to change the policy. The governor added that more advocacy will be needed to get EPA to finalize a rule on year-round E15.

“The thing we have to remember is the president is the one elected by the American people and the administrator works for the president,” Ricketts said.

“This is the first time the president has said he supports E15 year-round,” Ricketts said. “That’s one of the key things we have to do is continue advocating that with the EPA and the president to make sure that gets implemented.”

Because of concerns about ozone depletion, EPA restricts E15 sales in certain parts of the country from June 1 to Sept. 15.

Sneller said the restriction has prevented fuel marketers from going all in on E15.

“They were concerned about liability issues,” he said. “I think that’s weighed heavily on their minds. I think when that impediment has been removed, that starts to free a pathway for some to start making investment in infrastructure. I think the imprimatur of EPA being on that product helps. So I think a number of good things flow through the marketplace with that first step coming from EPA.”

Robert White, vice president of industry relations for the Renewable Fuels Association, said granting an E15 waiver is good for the industry.

However, RFS waivers granted to small refiners could nullify market gains from E15. At this point, it is uncertain how much biofuel blending didn’t occur because of the waivers. Estimates are the volume could be more than 1 billion gallons not blended between 2016 and 2018 — far exceeding potential E15 gallons coming online in the short term and nullifying market gains that could be realized by E15.

“What’s happening is the RIN (renewable identification numbers) value is going down,” White said.

Ricketts told ethanol producers that lawmakers and governors also expressed concern about the way EPA has been granting RFS exemptions to small refiners.

“We think going to E15 helps reduce the price of RINs,” Ricketts said. “What we want to do is make sure we don’t undermine the RFS in general.”

Ricketts said he and others will continue to ask EPA for more transparency on how those small-refiner waivers are being granted.

White, who is heavily involved in expanding ethanol markets at the retail station level, said the E15 experience is similar to what occurred with E10.

When the EPA approved the use of E15 in vehicle models 2001 and newer, the agency also required warning labels on pumps to limit E15 use to flexible-fuel vehicles, limited E15’s availability because of ozone concerns, and required retailers to jump through a number of other hoops.

“When E15 was coming down the pike, I kept telling our members it took us 32 years to do E10,” White said. “You have to tamper your expectations because, if this was something set up easy by EPA, it’s still going to take time. Well, they didn’t. They made it almost impossible to do with RVP restrictions, (you) get surveyed at your retail, you have to register with EPA — something retailers never had to do before — and they don’t like it.”

However, gasoline retailers, including Scheetz, decided to take a chance on E15 and “were all financially rewarded,” White said.

The ozone restrictions, in particular, have been the major barrier to E15, he said.

“There’s no doubt I can tell you there’s thousands of stations that have said we can’t go down this road until we can offer it year-round,” White said, “whether it’s chains or mom and pops. You can’t discount the importance of this. It’s unfortunate it has taken maybe six or seven years, but none of that comes overnight.”

Steve Seabrook, vice president of commercial relations for Poet Ethanol Products in Wichita, Kansas, said E15 is not allowed to be blended in the major gasoline markets of California or New York. Without those states, E15 potentially can be blended in 67% of the conventional gasoline market in the United States.

“The industry has to stand up and say ‘no’ to a partial waiver,” he said. “We need a 100% RVP waiver on E15 or it won’t matter.”