Ethanol Use Falls for First Time in 20 Years

Source: By John Herath, Ag Wed • Posted: Monday, March 18, 2019

Ethanol use in the United States last year fell for the first time since 1998, according to data from the Energy Information Administration.

Gasoline pump shows a variety of fuel grades, including flex fuel © Wes Mills

RFA Blames Waivers for Refiners

Ethanol use in the United States last year fell for the first time since 1998, according to data from the Energy Information Administration. The Renewable Fuels Association (RFA) is blaming that fall on waivers EPA granted to refiners allowing them to forego the blending requirements of the Renewable Fuels Standard (RFS).

Ethanol consumption in the U.S. in 2017 was just short of 14-and-a-half billion gallons, but fell more than 100 million gallons in 2018.

What caused that slide?

“It certainly wasn’t ethanol’s price competitiveness,” said Geoff Cooper, president and CEO of RFA. “On average, ethanol was about 55 cents under gasoline through the course of the year.”

The overall gasoline blend rate for the nation was 10.13% ethanol in 2017. That fell to 10.07% last year, according to RFA economist Scott Richman. He blames the decline in blend rate on Renewable Identification Number (RIN) waivers, noting that the blend rate was a record high 10.75% in January of last year.

“Unfortunately, around that same time rumors and news stories about the small refinery exemptions began to filter into the market, and they really had an impact on RINS first of all, and second of all on ethanol blending,” Richman explained. “If you look at what happed a few months following that, ethanol blending really dropped.”

The RFS sets annual minimums for the amount of renewable fuels refiners are required to blend in gasoline and other motor fuels. EPA can offer economic hardship waivers to those rules for small refiners.  EPA granted five more of those waivers on Thursday.

“It’s extremely disappointing and outrageous to see EPA once again allow oil refiners to undermine the RFS and hurt family farms, ethanol producers and our environment by exploiting and abusing a statutory provision that exempts them from their obligations to blend renewable fuels,” Cooper said in a release. “The RFS was created to preserve the environment, protect America’s energy security and give Americans more affordable options at the pump. These exemptions undercut those goals, and today’s exemptions mean more than 2.6 billion gallons of RFS blending obligations have been erased with the stroke of EPA’s pen.”

According to RFA, no companies were denied waivers in 2016 or 2017. Twenty-nine waivers were granted for 2018. Two additional waivers are still being considered by the agency.

EPA this week did offer hope for expansion of ethanol consumption in 2019 and beyond by publishing rules to allow year-round sales of 15% blends of ethanol. Cooper said enactment of that rule by the June 1 summer fuel blend deadline is just one of the actions needed by the ethanol industry this spring.

“We cannot underscore enough that our industry needs to see a much more judicious and restrained and responsible decision making process on small refinery exemption petitions,” Cooper said. “We need to see restoration of the 2.25 billion gallons worth of RFS obligations that were raised by the 2016 and 2017 exemptions that were improperly issued. We need to see some sort of resolution on the negotiations with China, and then finally, we need to see expeditious completion of the E15 RVP rule and ensure that it’s done in a way that is legally defensible and provides a true fix that will allow year-round E15 sales in conventional gasoline markets.”