Accelerating Domestic Ethanol Use in 2023

With its D.C. fly-in happening at the end of March, the American Coalition for Ethanol's CEO is optimistic about the industry's ability to make progress on higher ethanol blends, both E15 and E85, and laser focused on making it happen.
By Brian Jennings | February 13, 2023

ACE is laser focused on increasing ethanol use, and there are several reasons to be optimistic about making real progress for higher ethanol blend demand in 2023.

For example, EPA is taking action on petitions from the governors of Iowa, Illinois, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin to ensure E15 use in these 10 Midwestern states, which collectively represent nearly three-quarters of the existing E15 market. The agency has told us they intend to approve these requests prior to the June 1, 2023, summer driving season. These Midwest governors have submitted data to EPA showing that reducing fuel volatility in their states will significantly cut evaporative emissions and pollution, not to mention save drivers in their states an enormous amount of money at the pump. While this would not achieve nationwide market access for E15, the governors’ initiative is a point of leverage that has mobilized more support for a legislative solution which would.

In fact, the likelihood that 10 or more states will have lower vapor pressure fuel requirements than most of the country has motivated the American Petroleum Institute to join ACE and our biofuel allies who have been pushing hard for bipartisan and bicameral legislation in Congress to permanently allow E15 use across the entire nation. This major development should dramatically improve our chances for finally enacting legislation in Congress, hopefully prior to June 1. If action has not been taken on this legislation by the ACE fly-in March 29-30, we will make it a major priority for our Hill visits.

When the E15 market is indeed nationwide, it will eventually move massive volumes of ethanol, billions of gallons of new demand—just in time, as overall fuel consumption may decline. While we work to make this a reality, we must not overlook the fact that E85 presents a near-term opportunity to significantly increase ethanol use today.

The largest E85 market is California, where ACE has worked to support Pearson Fuels, a company with more than 275 retail locations selling E85 across the state, and more than 100 additional retail stations under contract to open in the next two years. According to Pearson officials, California likely reached 100 million gallons of E85 use in 2022, displacing at least 73 million gallons of gasoline. In 2022, most retail E85 stations partnering with Pearson Fuels priced E85 more than $2.00 per gallon below retail unleaded gas in California. This means the owner of a flexible fuel vehicle (FFV) could have been completely immune from the record-high gas prices California experienced last year because they had the option to use E85.

To keep this momentum going and accelerate domestic ethanol use, ACE will continue capitalizing on the infrastructure incentives for higher blends being made available from USDA and the recently enacted Inflation Reduction Act. Building on the historical steps Secretary of Agriculture Tom Vilsack has taken to provide USDA funds to install biofuel infrastructure, Congress included a record-level commitment of $500 million available until Sept. 30, 2031, for USDA to massively expand this effort. Importantly, Congress also authorized USDA to make 75 percent cost-share grants, which will help make new installations much more affordable and enticing for retail locations.

The opportunities do not stop there. Indeed, new legislation, beyond the E15 RVP fix, will be considered in the 118th Congress which would increase ethanol demand as well. First, support is growing for a national low carbon fuel standard (LCFS) which would require the carbon intensity of fuels to fall over time. When LCFS policy is technology-neutral and science-based, it supports demand for higher ethanol blends. Second, there is an expectation the Next Generation Fuels Act will be reintroduced in Congress as well. This legislation would overcome a host of regulatory barriers currently standing in the way of expanding the use of ethanol from E15 to higher blends such as E25 or E30, and reinstate incentives for the production of more FFVs.

For industry advocates who want to help promote these important opportunities to increase ethanol demand, we invite you to join ACE at the end of March for our D.C. fly-in.

Author: Brian Jennings
American Coalition for Ethanol
[email protected]