Ethanol demand boost from US EPA lifting summer E15 ban expected to be slow

Source: By Meghan Gordon, Platts • Posted: Monday, March 11, 2019

Washington — Even if the Trump administration completes a policy change allowing year-round sales of higher ethanol blends in time for this summer’s driving season, any major increase in demand may not materialize until summer 2020 because fuel stations saw the promised policy change as too uncertain to act on this year, according to observers.

The US Environmental Protection Agency on Monday sent its proposal for year-round E15, or gasoline blended with 15% ethanol, to the White House for review before issuing it publicly. The agency aims to adopt a final rule by June 1, the start of the driving season, when ethanol blends higher than 10% would otherwise be banned.

President Donald Trump promised in October to end the summertime ban on E15. But that alone would not have caused any fuel stations to start adding pumps or storage tanks in time for this summer, given the chances that the ban never gets lifted and the fact that E15 requires separate equipment from E10 fuel pumps and tanks.

“Most retailers will not even consider a fuel they can only offer eight and a half months a year,” said Robert White, vice president of industry relations for the Renewable Fuels Association, an ethanol trade group.

The RFA sees hundreds of fuel stations adding E15 equipment in the months after EPA adopts a final rule and thousands within several years.

S&P Global Platts Analytics expects E15 to expand in three phases after EPA lifts the ban: higher sales at stations that already sell E15, new stations adding tanks and pumps for the first time, and eventually new markets opening in the 20 or so states that currently do not allow E15, including California and New York.