President Donald Trump will allow year-round sales of renewable fuel with blends of 15% ethanol, or E15, as part of an emerging deal to make changes to the Renewable Fuel Standard (RFS).

Republican senators—representing both biofuel and refiners’ interests—and the White House announced the deal on May 8 after a closed-door meeting, the latest in a series of White House sessions on ethanol.

The Environmental Protection Agency (EPA) currently bans the 15% blend during the summer. Iowa Sen. Chuck Grassley called the agreement good news for farmers and drivers alike, saying it would increase ethanol production and consumer choice at the pump.

At the conclusion of the meeting, Trump tasked Secretary of Agriculture Sonny Perdue and EPA Administrator Scott Pruitt to work out the details of the plan, though no formal timeline has been set.

Linking RINs and ethanol exports

In a portion of the plan that was not clearly agreed upon, it was proposed by Senator Cruz to allow exported gallons of biofuel to qualify for a RIN. An export RIN would decrease the demand for ethanol and likely be viewed as a subsidy by U.S. global trading partners. Refiners argue that an export RIN would lower the price of RINs, minimizing their compliance costs.

The legality of this portion of the plan is also in question.

Republican Sen. Joni Ernst, from the ethanol-producing state of Iowa and who was at the meeting, said she was happy about the E15 part of the deal, but had questions about the export part.

She said EPA Administrator Scott Pruitt committed to not pursue the export piece of the deal in a letter sent to her in October.

“While I am still assessing the full implications of the president’s notion to attach Renewable Identification Numbers (RINs) to exported ethanol, an idea Administrator Pruitt committed to not pursue in a letter last October, I am pleased that the president did not move forward with a RIN cap that would have destroyed demand, hurting both farmers and biofuel producers,” she said.

Industry reactions

Statements from those in the industry largely echoed Ernst’s.

“We are grateful the Administration will deliver on its promise for year-round E15 sales,” Growth Energy CEO Emily Skor said. “[However] attaching a RIN to ethanol exports would have a crippling impact on American agriculture – significantly reducing demand for ethanol and corn. Further, export RINs would be a clear violation of the RFS, which is intended to increase the domestic use of biofuels.”

Last fall, Growth Energy commissioned research that showed the damaging impacts of an export subsidy for biofuels. The analysis showed immense impact on jobs, rural economies, and corn prices, including an immediate drop of corn prices by 56 cents per bushel.

The portion of the plan that allows for year-round sale of E15, though, was roundly applauded.

“President Trump’s decision to allow the year-round sale of E15 at the pump and not cap Renewable Identification Number (RIN) prices is welcome news and comes at a critical time,” said Adam Monroe, Novozymes President, Americas. “In order for this decision to bring summer driving season relief as promised, the EPA must act immediately to enable swift regulatory change. This will allow the biofuel industry to deliver more low-carbon, low-cost renewable fuel that consumers demand year round.”

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Geoff Hayward

Communications Writer at Novozymes
Geoff writes about Bioenergy for the Communications team at Novozymes. When he isn’t advocating for an industry that’s changing the world for the better, he can be found on a North Carolina bike path or playing slide guitar.