US ethanol groups weigh in on Ontario’s E15 plan

Source: By Ethanol Producer Magazine • Posted: Thursday, July 18, 2019

Growth Energy, the Renewable Fuels Association and the U.S. Grains Council sent joint comments to Ontario’s Ministry of Environment, Conservation and Parks July 8 regarding its proposed plan and schedule for implementing E15. The comments encourage higher blends of ethanol and offer technical expertise on implementing E15.

In late 2018, the Ontario government released a proposal indicating the province could require E15 as soon as 2025.

Within their comments, Growth Energy, the RFA and USGC discuss how Ontario’s current proposal could reduce demand for ethanol.

“Overall, we believe that there are a number of unintended consequences of the MECP’s proposed implementation of the 15 percent mandate,” the groups wrote. “For example, based on calculations by our technical experts, Ontario would result in reduced volume demand for ethanol from 2021 to 2028. Our organizations are certain that the purpose of announcing the 15 percent mandate was to do the opposite: to encourage more rather than less blending.”

Growth Energy, the RFA and USGC raise several red flags regarding the proposal. First, they say demand destruction must be avoided. “MEC’s proposal will reduce demand for ethanol starting in 2021 through to 2028,” they wrote. “Due to a constant downward pressure on [carbon intensity (CI) for North American ethanol, the demand for liters of ethanol will be lower in 2025 than in 2020 under the MECP’s proposal, even though the volumetric requirement will be increased to 11 percent.” This trend would only be reversed in 2028 under the current proposal.”

Second, the groups Ontario should take action to implement an average ethanol blend of 10 percent as soon as possible and then build on that momentum for E15. That 10 percent benchmark is not currently expected to be reached until 2028.

Third, Growth Energy, the RFA and USGC stressed that early action credits would allow Ontario’s ethanol producers to monetize CI improvement or increased production as soon as those changes are realized and would create an incentive to make investments early on in the implementation of the mandate.

Fourth, the groups said experience in the U.S. shows that the use of blender pumps rather than gas station overhauls is a more cost-effective way to offer ethanol blends of E10 and higher.

The comments also offer a recommended schedule of implementation that would increase the volume requirement by 1 percent annually starting in 2022, reaching 15 percent in 2026. The group also suggest a 45 percent greenhouse gas (GHG) reduction requirement should be in place through 2028, when it would increase to 50 percent. The GHG reduction requirement would then increase to 55 percent in 2030.

A full copy of the comments can be downloaded from Growth Energy’s website.