Making Sure Our Best Days Lie Ahead

While increasing demand for ethanol will require getting the RFS back on track and securing market access for year-round E15, creating meaningful industry growth also hinges on maximizing ethanol’s low carbon value in future carbon markets.
By Brian Jennings | August 23, 2021

Recent adverse court decisions reminded me of that Chinese proverb, “may you live in interesting times.”

Frankly, boring would be a nice change of pace given these court rulings occurred on the heels of our unfortunate exposure to mismanagement of the Renewable Fuel Standard, trade wars, and a global pandemic. But alas, it seems boring is never going to be reality for those of us in the ethanol industry.

While our power to control the courts, Congress, COVID, and EPA is varied and limited, we have complete control over how we react and push forward to make sure ethanol’s best days lie ahead.

Hopefully by now you have come to the correct conclusion that the Supreme Court’s 6-3 decision on small refinery exemptions (SRE) is regretful but not disastrous. The court narrowly ruled refineries can seek RFS waivers at any time. That’s it. Justices did not say EPA must approve unwarranted exemptions, nor did they make it easier for refineries to receive waivers. In fact, if EPA adheres to the other restraints the Tenth Circuit decision placed on SREs, restraints which were not addressed by the Supreme Court and makes exemptions harder to obtain, the days of SREs being handed out like Halloween candy should be over. The Biden EPA knows what it should do going forward, we just need them to do it.

The DC Circuit’s 3-0 decision to invalidate EPA’s regulation allowing E15 to be sold year-round in all parts of the country is much more serious and concerning. If a solution is not found to ensure uninterrupted availability of E15 by the summer of 2022, the vital growth market we secured in 2019 encompassing two-thirds of the U.S. will be taken away. That’s why there is a sense of urgency to pursue all options to keep the E15 market alive. What are those options? First, bipartisan, bicameral bills to allow E15 sales year-round are pending in Congress and could be attached to infrastructure or other must-pass legislation. Second, it is expected the DC Circuit’s decision will be appealed, which could buy more time and keep E15 on the market. Third, EPA could issue a revised interpretation of the statute; essentially a new proposed regulation to address evaporative emission limits on ethanol-gasoline blends and allow E15 sales during the rulemaking process.

While increasing demand for ethanol depends upon getting the RFS back on track and once again securing market access for E15 year-round, creating a meaningful growth trajectory also requires us to capitalize on ethanol’s low carbon value in future carbon markets.

Elected officials at all levels of government in the U.S., indeed around the globe, are exploring policies to create carbon markets that mitigate the negative effects of climate change, and ACE has been actively promoting corn ethanol as an immediate and meaningful part of the solution. The good news is that our efforts are bearing fruit.

At the state-level, ACE has helped mobilize a diverse coalition of groups and companies behind the Midwest Clean Fuels Initiative. The initiative put forth a blueprint for Midwest governors and legislators to follow in drafting clean fuel or low carbon fuel standards. Our blueprint was used by lawmakers in Minnesota to introduce the Future Fuels Act, bipartisan legislation to reduce the carbon intensity of the state’s fuel by 20 percent in 2035. Modeling we helped commission indicates increasing the use of E15 and E85 are low-cost ways to achieve this standard. We are encouraged by the progress in Minnesota and the fact many other Midwestern states are considering legislation for 2022.

At the federal-level, ACE is engaging Congress and the Biden administration to position corn ethanol as part of the solution to their policy efforts designed to reduce climate emissions. We have also joined a diverse coalition to encourage Congress to take up legislation establishing a technology-neutral low carbon fuel standard to boost demand for midlevel ethanol blends.

Our best days lie ahead if more of us are willing to put in the effort to position ethanol as part of the climate solution. I encourage you to join ACE in pushing forward.

Author: Brian Jennings
American Coalition for Ethanol