The U.S. Environmental Protection Agency lifted a ban on the sale of higher ethanol blends of gasoline during the summer months, a move that will benefit corn growers in Indiana but could adversely affect the environment.
The decision allows the sale of gasoline blended with up to 15% ethanol, a renewable fuel made from corn and other plant materials, throughout the entire year. It also ends an E15 ban put in place during the Obama administration to reduce smog pollution.
Ethanol proponents say removing the ban will help consumers and the environment.
“This move to approve the year-round use of E15 in time for the summer driving season provides consumers with more choices when they fill up at the pump, driving demand for our farmers and improving the air we breathe,” said U.S. Department of Agriculture secretary Sonny Perdue.
Corn growers in the Midwest are experiencing a streak of setbacks, making the lifted ban of even greater interest for the Indiana economy.
Heavy spring precipitation has slowed this year’s corn planting to a crawl. By June 10, only 67% of the 5.5 million acres of farmland scheduled for corn were planted. Last year, all of the state’s corn was planted by that date.
A tariff battle between the U.S. and China has hurt corn exports as well. Despite record corn production, the USDA projected a 25 million-bushel decline in exports in the next year.
Allowing ethanol to be sold throughout the year would help the corn industry in Indiana recover from the setbacks.
Indiana is the fifth-largest producer of ethanol in the nation. The state’s 13 ethanol plants make about 1.2 billion gallons of ethanol each year.
“Ethanol is a vital consumer of Indiana corn, and any expanded use of ethanol financially helps Hoosier farmers,” said Sarah Delbecq, president of the Indiana Corn Growers Association, in a statement. “This rule, which supports ethanol use and promotes corn demand, has certainly been a long time coming, and Indiana growers definitely welcome this announcement.”
Growers say nationwide adoption of E15 could drive the production of 7 billion gallons of biofuels and create a demand for 2 billion bushels of corn each year.
While the ethanol rule change has the potential to help the state’s corn growers, critics say the move could hurt the state’s environment.
The EPA, one of ethanol’s main critics, is the same agency responsible for lifting the E15 summer ban.
A 2018 EPA report found that biofuel production associated with large-scale cultivation of corn and soybeans results in an overall negative environmental impact. Researchers found that ethanol from corn grain has higher emissions across the life-cycle than ethanol from other sources. Most ethanol plants in the U.S. are coal-powered, which contributes to greenhouse gas emissions.
That finding is not representative of Indiana’s ethanol plants, which are mostly powered by natural gas.
Besides emissions, the EPA found that ethanol production also adversely affects other aspects of the local environment. The report’s authors found that demand for biofuel stocks could contribute to algal blooms and hypoxia in local bodies of water, have negative impacts to ecosystem health and biodiversity, and lead to the loss of soil nutrients and organic matter.
The biofuel industry disagrees with the EPA’s findings. A year earlier, the Biotechnology Innovation Organization, a trade organization representing the biotechnology industry, released its own assessment of ethanol’s environmental impact.
The organization says it found that summer use of E15 over the next 10 years can save between 7 million and 10.4 million metric tons of carbon dioxide-equivalent greenhouse gas emissions, the equivalent of taking at least 1.4 million cars off the road.
Every bit of ethanol that is allowed in a gallon of gasoline means fewer oil products are being sold. The boon to the ethanol industry will force it to butt heads with the oil industry, setting off a back-and-forth battle between the two.
The oil industry has already tried to take on ethanol with its use of EPA financial U.S. Renewable Fuel Standard hardship waivers.
The RFS is a federal program put in place in 2005 that requires transportation fuel sold in the U.S. to contain a minimum volume of renewable fuels like ethanol or buy compliance credits from competitors that do. The program was intended to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil.
The RFS allows the EPA to let refiners that produce less than 75,000 a day bypass the renewable fuel requirements by claiming the regulation would cause financial hardship, through what are called Small Refinery Exemptions.
Lawmakers in ethanol-producing states have argued that the Trump administration has allowed large or unqualified refiners to claim hardships. News agency Reuters found that Exxon Mobil Corp., a company that makes around $20 billion every year, applied for and received a financial hardship waiver for a refinery in Montana.
The waivers reduce the demand for corn and corn-based ethanol, while increasing uncertainty in farmers’ economic projections.
“These waivers directly impacted rural America and corn farmers,” said Delbecq. “With immense uncertainty now and in the future for the ag economy due to planting delays and trade disruptions, more waiver abuse would only exacerbate the damage to farmers’ bottom line and overall demand for corn. To offer a source of stability, the EPA needs to fulfill the intended goals and promises in the original RFS.”
A bipartisan group of 35 members of Congress, including Rep. James R. Baird, from Indiana’s 4th Congressional district, sent a letter to EPA administrator Andrew Wheeler addressing the perceived waiver problem. The delegation wants the EPA to stop granting improper small refinery exemption waivers and force the distribution of ethanol prevented due to the waivers.
The American Fuel and Petrochemical Manufacturers trade association filed a lawsuit to block the E15 expansion, escalating the battle between the oil and corn industries. The group says the federal government lacks the authority to make E15 available during summer months by making regulatory changes to ethanol restrictions.
“An E15 waiver is in no way a fix for the shortcomings of the RFS, which has for years plagued markets with volatility,” said AFPM president and CEO Chet Thompson.
The AFPM has intervened in other RFS decisions that sought to increase the amount of ethanol in the federally mandated ethanol-gasoline blend. The group argued that the RFS is ineffective in its goal to reduce greenhouse gas emissions and only exists to prop up a struggling ethanol industry.
The Government Accountability Office, the agency responsible for reviewing how taxpayer dollars are spent, found that the RFS had a limited effect on greenhouse gas emissions due to its reliance on conventional corn-starch ethanol. The GAO’s auditors found that the ethanol blends allowed by the RFS have a smaller potential to reduce greenhouse gas emissions compared with advanced biofuels, and that most ethanol is produced in plants exempt from emissions reduction requirements. The RFS has also resulted in higher gasoline prices in states outside the Midwest.
The Trump administration will continue to back biofuels and farmers in the near future.
On Tuesday, President Donald Trump signed an executive order directing the federal government to implement broad recommendations outlined by the Agriculture and Rural Prosperity Taskforce to speed up reviews of biotechnology.