US Government Looks Into Policy Shift To Support Ethanol

The Environmental Protection Agency (EPA) outlined a proposal on Wednesday to boost ethanol which is expected to encourage filling stations to sell higher-ethanol E15 gasoline and offer it year-round.

• Under the proposal, the change would start by the April 2024 Ben Hengst, deputy director of the EPA’s Office of Transportation and Air Quality, said.
• Supporters have been calling for changes by this summer, but refiners and pipeline operators argued they needed time to adapt.
• Some governors from corn-producing Midwestern states had asked the EPA last year to stop giving conventional E10 gasoline a partial waiver from volatility limits meant to curb air pollution. That would put E10 and E15 on the same regulatory footing in their states — and potentially encourage more sales of the higher-ethanol variety. Under the Clean Air Act, the EPA does not have latitude to deny the governors’ request outright, though the agency can delay it in one-year increments.
• In response to the governors’ requests, the EPA is proposing to remove the E10 waiver in Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin.
• Refiners and industry analysts say the change risks isolating the Midwest’s fuel supply from the rest of the country. Pipeline systems fully contained within the Midwest and refineries primarily serving the region would generally shift to the new specification, but in-region refiners probably would have to find new markets for butane and other cheap, volatile hydrocarbons that lower the cost of gasoline.
• “A new Midwest summertime gasoline blend for 2024 and subsequent years would cost more to produce and distribute, reduce overall supply and inflict unnecessary harm on consumers,” said Patrick Kelly, senior director of fuels and vehicle policy at the American Fuel and Petrochemical Manufacturers association. “The push to outlaw the current blend of summertime gasoline and replace it with a boutique blend is going to impose major costs on the Midwest’s fuel supply chain and consumers.”
• The Biden administration already moved to waive E15 from summer volatility requirements last year, allowing its sale in a bid to lower gasoline prices. However, the broader E10 change could have uneven effects on prices at the pump.