Trump moves ahead on E-15, in blow to refineries

Source: By James Osborne, Houston Chronicle • Posted: Friday, October 12, 2018

  • The Corn Plus ethanol plant on May 22, 2015, in Winnebago, Minn. (Glen Stubbe/Minneapolis Star Tribune/TNS) Photo: Glen Stubbe, FILE / TNS / Minneapolis Star Tribune
Photo: Glen Stubbe, FILE / TNS The Corn Plus ethanol plant on May 22, 2015, in Winnebago, Minn. (Glen Stubbe/Minneapolis Star Tribune/TNS)

WASHINGTON – President Donald Trump, speaking at political rally in Iowa Monday, said he has instructed the Environmental Protection Agency to begin allowing year round sales of E-15, a form of gasoline with a higher concentration of ethanol, a move long opposed by the refiners

The announcement comes with midterm elections just a month away and Midwestern farmers dealing with China’s retaliatory tariffs on U.S. agricultural products. Trump has hinted for months that he would move to amend federal regulations to help the corn farmers who supply ethanol production in this country.

“I shouldn’t say it now, but we’re going with E-15 year round,” Trump told the crowd of supporters, many of whom were wearing “Make Farmers Great Again” baseball caps. “I made that promise to you during the campaign. I made that promise to you during the primaries, remember. Promises made. Promises kept.”

E-15 fuel is 85 percent gasoline and 15 percent ethanol, compared to the most common gasoline blends that contain no more than 10 percent ethanol. Under environmental regulations, E-15 sales are banned in the summertime to limit air pollution when potential health risks are the highest.

Increased E-15 sales pose a threat for Gulf Coast oil refineries, which have already watched U.S. gasoline demand plateau with the roll out of more efficient cars and trucks under tougher standards set by the Obama administration. The oil industry, meanwhile, is preparing for a legal battle. Both the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, well-funded industry lobbying groups, said Tuesday they plan to challenge any rule change by EPA in court.

“There’s an agreement within the industry that we have no choice but to challenge it,” said Chet Thompson, president of American Fuel and Petrochemical Manufacturers. “Clearly, there’s a desire to get something to the Midwest before midterms, legality be damned.”

More gas station chains are offering E-15, which sells at a discount to standard gasoline. That has added to the pressure on the federal government to lift the ban on summertime sales. But when fuels with higher concentration of ethanol are burned, particularly in the summer, they produce more ozone, which is linked to respiratory problems including asthma and emphysema.

Such a scenario could pose a particular problem in Houston. With its heavy traffic and large petrochemical complex, Houston is routinely ranked as having some of the highest ozone levels of any city in the country. Air pollution is on the decline from a decade ago, but ozone levels in the Houston metropolitan area still fall below the minimum standards set by the Environmental Protection Agency.

It’s not clear, however, that the EPA has the authority to change the regulations restricting the sale of E-15. In 2010, when an ethanol trade group requested a waiver from air pollution laws for E-15, the EPA ruled that under the law passed by Congress such waivers were limited to fuels with an ethanol concentration of 10 percent or less.

“What seems to be contemplated here is a waiver across the board for blends up to 15 percent,” said Scott Segal, an energy attorney with the Bracewell law firm. “It is far from clear that the [Clean Air Act] permits this sort of action without direction from Congress,”

So far Congress has been unable to come to a consensus on E-15. Last year, Sen. Deb Fischer, R-Nebraska, and other Midwestern senators introduced legislation allowing year round sales of the E-15, but it never made it to the Senate floor for a vote.

A group of 20 Republican and Democratic senators, including Sen. John Cornyn, R-Texas, wrote to Trump last week urging him not to lift restrictions on ethanol sales.

“We are concerned that doing so would do nothing to address the policies impacting refinery jobs, could hurt millions of consumers whose vehicles and equipment are not compatible with higher ethanol blended gasoline and risk worsening air quality,” the letter said.

Oil-state and corn-state politicians have long bickered over the ethanol mandate, which was created in the 2000s — long before the shale drilling boom — to reduce U.S. dependence on Middle Eastern oil.

Upon coming into office Trump vowed to find a compromise between the two sides, but discussions were thrown for a loop earlier this year when the EPA began allowing large numbers of refineries waivers from the ethanol requirement on the grounds it presented economic hardship.

That drew outrage from ethanol interests, which on Monday praised Trump’s E-15 announcement.

“This is the right signal to the marketplace at just the right time, as both farmers and renewable fuel producers desperately need new market opportunities and sources of demand,” said Geoff Cooper, president of the Renewable Fuels Association, a trade group representing ethanol producers

But now refiners are aggrieved.

“The people working at those refineries helped get this president elected just as much as the corn farmers, so it’s disappointing he decied to side with the ethanol guys,” Thompson said.