Obama ethanol pump program runs dry

Source: Marc Heller, E&E News reporter • Posted: Tuesday, January 16, 2018

An Obama administration program to promote high-ethanol fuel is quietly drawing to an end, taking away one of the incentives gas stations had to install equipment for E15 fuel.

The biofuel infrastructure partnership was a $100 million creation of the Department of Agriculture, promoted by then-Agriculture Secretary Tom Vilsack. The program was set to expire at the end of last year, although industry sources said hurricane-stricken states received an extension because storms delayed some of the work.

Pro-ethanol groups said they haven’t heard of any push for another round of funding. During the Obama administration, there had been on-and-off talk of extending it, said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

Shaw said the program was a “massive success on every level,” drawing matching funds from companies to install pumps, storage and other equipment for high-ethanol fuel in 21 states. With matching funds included, the program totaled $210 million, according to USDA.

Agriculture Secretary Sonny Perdue’s office didn’t return a message seeking comment on the program. Perdue has said he supports ethanol, including mandates for mixing biofuel into the nation’s fuel supply.

Without the incentive program, the administration’s commitment to E15 isn’t clear. U.S. EPA Administrator Scott Pruitt has spoken positively of allowing gas stations to expand offerings but suggested the responsibility may be up to Congress through legislation (Greenwire, May 4, 2017).

Federal regulations restrict the sale of E15 in summer, based on fuel volatility standards tied to smog. The ethanol industry is pushing for year-round availability, saying E15 doesn’t contribute any more to smog than E10, the gasoline routinely sold across the country.

E10 is 10 percent ethanol; E15 is 15 percent ethanol.

The biofuel infrastructure partnership funded equipment at 1,486 gas stations. The biggest awards went to Florida, with 892 pumps and 70 tanks at 130 stations, valued at nearly $16 million in federal funds, according to USDA.

USDA promoted it in 2016 during an event at a Sheetz gas station in Manassas, Va. (Greenwire, Oct. 27, 2016).

Higher-ethanol fuels are a sore point with oil and gas companies, which have campaigned against the renewable fuel standard and efforts to boost E15. Groups representing boat owners, as well, oppose it, saying ethanol can damage boat engines.

With the incentive program going away, some ethanol supporters may turn their eyes to another program — the Rural Energy for America Program, a loan financing and grant program that at one point allowed money to be used for high-ethanol blender pumps.

Congress prohibited that use in the 2014 farm bill, which led Vilsack to come up with the biofuel equipment program.

“Actually worked out much better for us,” Shaw said.

Growth Energy, an ethanol industry group, would like to see that prohibition lifted in this year’s farm bill, said Majda Sarkic, the group’s director of communications.

So far, lawmakers aren’t indicating a move in that direction. Some REAP supporters resist the idea, for fear the REAP program could become bogged down in divisive E15 politics, said Andy Olsen, senior policy advocate at the Environmental Law and Policy Center in Madison, Wis., which promotes renewable energy in rural areas.

Allowing funding of blender pumps was a “headache” for the program, which otherwise has broad support, Olsen said. “We don’t want blender pumps back in there.”

Unlike the biofuel infrastructure partnership, the REAP program has staying power; Congress included REAP in the budget baseline for the farm bill, at $50 million annually, Olsen said.

Growth Energy always figured the biofuel infrastructure program was a one-time deal to give the industry a boost, Sarkic said.

“The reality today is that E15 is seen as smart business, and that’s created a competitive market,” Sarkic said.