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Ethanol standard's "brave new world"

Jael Holzman
May 22, 2023
Iowa ethanol plant

An ethanol plant in Nevada, Iowa. Photo: Luke Sharrett/Bloomberg via Getty Images

The renewable fuel standard’s future is increasingly unclear as EPA is freed from some of its requirements to boost ethanol with the program.

Why it matters: Ethanol's not going to vanish from gas stations anytime soon. But federal officials now have more leeway to reduce its prevalence.

  • Industry allies say they expect to be on indefinite defense as a standard that's shaped gas markets, climate policy and presidential politics fades in political popularity.

Driving the news: A legal requirement that EPA meet specific minimum targets for renewable fuel on the market expired at the end of 2022.

  • EPA remains bound under Bush-era laws to set a renewable fuel standard, which requires a certain amount of biofuel to be blended into gasoline.
  • The standard is expressed in a percentage of total renewable fuel blended into gasoline and is met by combining both corn starch-based "conventional" fuel and "advanced" resources, like biomass-based fuel.
  • It's why we have fuels like E15, which is gasoline blended with roughly 10% to 15% of ethanol.
  • But EPA no longer has statutory minimum blending volumes, so it can now choose its own floor for how much biofuel is available.
  • “This is really the first year in that brave new world for the RFS,” said Renewable Fuels Association CEO Geoff Cooper, who predicts EPA’s newfound latitude will be a problem “for the foreseeable future.”

Between the lines: Losing the minimum volume mandates feels especially threatening because political support for the RFS isn't what it used to be.

Between the lines: Sen. Joni Ernst — one of ethanol’s biggest backers — doesn’t like the odds of Congress reinstating minimum blending volumes.

  • Ernst told Axios she would “love to do legislation,” but “we just haven’t even seen support from Democrats. Just a handful, those from the Midwestern states.”
  • RFA’s Cooper agrees with Ernst: “I don’t think there is an appetite in Congress to re-legislate on the renewable fuel standard. ... I think Congress is mostly comfortable with the idea of EPA taking the reins of the program.”

The other side: EPA proposed new blending volumes for 2023-25 in December that industry said set up a good short-term future.

  • Cooper said he isn't focused on legislation for new volume requirements.
  • Instead, he said, the RFA and its allies are working on “protect[ing] the RFS against any legislative tinkering that would result in undermining the progress that we’ve already made.”
  • Cooper doesn't believe Biden or any other future president will chip away at volume amounts because of ethanol's current ubiquity.

Flashback: Just a few years ago, ethanol backers were yelling at then-President Trump over lower-than-preferred blending levels and refinery exemptions.

What we’re watching: Talk of a “clean fuel standard” in Congress centered around low-carbon transportation fuels, as opposed to merely biofuels.

  • The Senate Environment and Public Works Committee held a hearing in February on a clean fuel standard, which Chair Tom Carper wants to include hydrogen.
  • The RFA doesn't want a clean fuel standard to supplant the RFS. Cooper testified at the hearing that ethanol should be part of any such standard.
  • It’s unclear whether a bill establishing a clean fuels standard will be introduced this Congress and if such legislation could pass the Senate — let alone the GOP-held House.
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