Op-Ed: Open the Door to Higher Blends

Source: By Doug Somke, Biofuels Digest • Posted: Thursday, February 14, 2019

Doug Sombke, President, South Dakota Farmers Union and Farmers Union Enterprise

 Once again, the ethanol industry seems determined to play small ball and unwittingly limit itself to ever realizing its full potential.  Reports out of Iowa following the renewable fuels summit that the industry is thriving defies any rational thinking.  The reality is that the RFS is going backwards, we have effectively capped the use of corn ethanol in the United States, and the EPA continues to play lip service to the President they work for and the public they are supposed to serve.

For many of our farmers and ethanol plants we are far from thriving, we are worried about surviving, and nothing is going to change until we kick down the door to higher blends.  We export ethanol in part because we cannot use it here. Corn prices are below the cost of production.  Cellulosic ethanol is stalled out for a host of reasons.  Automakers would rather work with refiners than with American agriculture or our biotech companies and refuse to facilitate the use of higher blends of ethanol.

And who can we blame for this situation?  How about ourselves. It isn’t exactly the art of the deal to begin negotiations with the most fundamental, basic asks of giving us an rvp waiver for E15 and defending a program that is the law of the land.  These should be givens and at least from the corn ethanol perspective, 15 billion gallons should be in our rear-view mirror by now as we move ahead.  But instead we fail to lay out a comprehensive, long term plan that could put an end to what seems like a never-ending debate over ethanol.

Reports out of Washington that EPA’s Andrew Wheeler is looking at “fixing” the RFS while they are supposed to be implementing a direct order by the president to allow the vapor pressure waiver to apply to blends above E10 is alarming.  Federal agencies implement programs, they do not make policy.  Congress and the President do that.  EPA should be providing industry the tools it needs to meet the RFS.  The role of any federal agency is to develop rules to support the laws passed by Congress, with the clear objective of making the programs work and giving them every chance to succeed.  EPA has done the exact opposite by undermining ethanol at every turn and concocting reason after reason as to why biofuels and ethanol must stay in a corner.  The obvious roadblocks like the rvp waiver and the laughable “hardship” waivers, along with creating an annual wailing wall in the form of issuing the volume obligations have drained resources and diverted attention from any forward-thinking policies.

What have become second tier issues, yet issues that could answer all the questions as to how we meet the full RFS and achieve a range of other public policy objectives, never get raised.  If you had President Trump one on one and asked him what he thought the ethanol industry wanted he would almost certainly recite the talking points of RVP and protecting the RFS.  Raising issues like the need to fix lifecycle and emissions models, enforce toxics controls, reinstate vehicle credits, approve the use of any volume ethanol under the sub-sim statute, and the rest of the roadmap to success would get you a blank stare.  In his defense, it is understandable because all he has been told is the industry only needs E15 and an RFS.

Our demonstration of E30 blends in the Midwest is a prime example.  In extensive comments we have filed with EPA, the agency has been asked to clarify that ethanol is no more subject to volume limitations than aromatics or any other component in gasoline.  E10 is now part of the base fuel in this country and we have a solid legal opinion that it is permissible at any level.

In fact the only documentation that it would not be legal was recently dismissed by a Department of Justice (DOJ) ruling.  A decades-old letter from an official at EPA suggesting higher blends were only allowed in Flex Fuel Vehicles has no force of law, according the DOJ, and what they term as “informal guidance” is not the basis to regulate.   So the burden of proof to show otherwise is on EPA, and we are forging ahead with our E30 Challenge in South Dakota and aggressive demonstration programs endorsed by the Governors of Nebraska and South Dakota.

These higher blends can set into motion a number of actions that would be a political bonanza to Trump that Republicans and Democrats alike would have a hard time disputing.

  • Allowing blends of any volume, and in this case we have demonstrated the value and performance of E30, would for starters fix the so called rvp problem. Basic ethanol science shows us that as the volume of ethanol increases the vapor pressure goes down, so at 30% the fuel is near its starting point before any ethanol is added.
  • The 15 billion gallon corn starch cap in the RFS becomes irrelevant because E30 would be sold on its octane and price advantage. Doubling the corn grind for ethanol would be an unparalleled and timely boost to US agriculture and negate much of the damage of the trade wars . (It is not illegal to use more than 15 billion gallons from corn, you simply do not get a RIN.   And that’s a good thing–  additional use above RF mandated volumes would be based on value, not a requirement).
  • Corn prices go up and fuel prices go down– historical trends do not lie.
  • Speaking of octane, an E30 fuel provides enough of an octane boost to incent automakers to design for higher compression vehicles and even re-flash the existing fleet to take advantage. An opportunity to jump start that is on the table right now with the Safe Affordable Fuel Economy Rule. EPA and the Department of Transportation could set a national higher octane standard in the interest of public health and efficiency. (They can call their counterparts in Brazil and get a quick refresher on how a nationwide fleet can adapt! )
  • With cars now able—and willing—to accept higher blends, the 20 billion gallons of advanced and cellulosic ethanol envisioned by the RFS that had nowhere to go now would have an answer to the question of where are they going to put the fuel….and perhaps finally break through and produce the billions of gallons they have promised.
  • Automakers could quickly warrant vehicles and in the interest of clean octane and public health, as part of the current fuel economy rules, all new cars could be required to honor E30 ethanol blends.
  • Vehicle credits can be reinstated to reward automakers for their efforts to reduce petroleum consumption.
  • Either as a new executive order or as an action responding to previous orders to reduce duplication and unnecessary regulations, EPA could be required to use the Department of Energy Lifecycle analysis that shows ethanol blends on par with advanced biofuels, thus opening all new markets for low carbon fuels, including internationally.
  • Similarly, the faulty emissions models that states are required to use that currently would prohibit higher blends have been shown to contain serious flaws that do not reflect real world fuels and if corrected, would open the door to E30 and higher blends.

What do all these proactive measures have in common?  For starters they can all be enacted at the agency level as clarifications to existing rules or proposed as new rules.  Secondly, they have absolutely no cost to taxpayers.  These are two powerful, compelling points. Getting anything through Congress in the era we find ourselves in is close to impossible.  These measures are consistent with the Trump executive orders of two years ago and meet economic, environmental, and energy security objectives.

Our message to the industry—which needs to be conveyed to the Administration– Open the market to higher blends, let us compete, let American agriculture and our biotechnology sector do what it does best, and indeed we can thrive.

Doug Sombke is the President of the South Dakota Farmers Union and Farmers Union Enterprise