Spotlight: E15 may get boost with friendlier labeling at the pump

Source: By Corey Lavinsky and Zane McDonald, S&P Global • Posted: Sunday, January 31, 2021

The US biofuels industry experienced many highs and lows during the Trump presidency, with most of the good news pertaining to the expansion of gasoline blended with 15% ethanol (E15). In President Trump’s final week in office, the US Environmental Protection Agency (EPA) proposed a rule to either modify the label requirement for E15 on fuel dispensers or eliminate it entirely.

The agency cited suggestions from biofuel groups that “the existing E15 label is no longer necessary and simply interferes with additional growth of E15 in the marketplace” and that changing the color and language on the label “would increase lawful use” of the fuel. Right now, a bright orange label is used, warning consumers in various-sized fonts to only use the fuel in certain vehicles and not in others.

EPA’s proposed mock-up labels are much softer than the existing label and are less likely to dissuade a customer from using the blend. The proposal to eliminate the label entirely is less likely because it cannot be done without additional action from the US Federal Trade Commission (FTC).

The EPA’s proposed rule also proposes to make regulations less burdensome for Underground Storage Tank (UST) owners and operators that store E15 and other ethanol blends. The rule, if adopted, would also require new UST systems or replacement equipment to be compatible with blends up to 100%.

The EPA approved blends of 15% ethanol in gasoline for use in model year 2001 and newer passenger cars, light-trucks and medium-duty vehicles in 2011. One justification now being used in support of changing the E15 label requirement is that, as time passes, more pre-2001 vehicles get scrapped and more newer vehicles enter the fleet, lessening the opportunities for misfueling at the pump. While true, the average age of motor vehicles on the road has been steadily increasing, delaying the rate of fleet turnover. The average light-duty vehicle now remains in service for well over a decade.

With vehicles “living” longer, the fleet takes longer to replace itself. This phenomenon is compounded by consumer uncertainty and economic hardships, such as that brought to bear by the spread of the coronavirus pandemic. So removing warning labels cannot be taken lightly, as older cars may sustain damage if they accidentally fuel up with blends higher than E10.

The growth in E15 has been sharp over the past four years. When President Trump took office in January 2017, only around 400 service stations sold the blend in the US, compared to more than 1,800 currently. The key action during Trump’s tenure was an EPA rule change in 2019 allowing the year-round sale of E15, which increased sales volumes at existing pumps and induced more retailers to install E15 infrastructure.

Other factors contributing to the blend’s development included more states changing their regulations to allow sales of the fuel, and financial support through the US Department of Agriculture’s Biofuels Infrastructure Partnership (BIP) program, the USDA’s Higher Blends Infrastructure Incentive Program (HBIIP) and the ethanol industry’s Prime the Pump program.

The EPA’s proposed rule was published Jan. 19 in the Federal Register. A public comment period is open through April 19.

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