ATLANTIC, Iowa — When officials at the new Elite Octane ethanol plant here planned their grand opening for May 31, they did so knowing that the U.S. Environmental Protection Agency had the goal of issuing a new rule by that day regarding the use of the 15 percent ethanol blend fuel known as E15 during the summer months.
The event turned into a celebration of that announcement, which will enable retailers to sell E15 year-round.
On the flip side, industry officials say they are still concerned about the refiner waivers that the Trump administration has continued to issue, which they say have undercut the ethanol market. And just hours before the EPA made its long-expected announcement, President Donald Trump threw farmers another curve when he announced that he planned to put new tariffs on Mexico because of problems at the border.
“It seems like it’s always two steps forward, one step back,” said Iowa Secretary of Agriculture Mike Naig, when talking about the various issues.
Most officials here and across the Midwest tried to focus on the positive in the wake of the E15 announcement. The move, Naig said, is good news for farmers at a time when they are dealing with low commodity prices and extremely difficult spring planting conditions.
“We’ve had some tough weeks in the ag world,” he said. “Iowa corn farmers could use some good news.”
And the E15 move was definitely good news. Organizations ranging from the Farm Bureau to the Farmers Union all expressed appreciation, saying that the change will help boost ethanol usage during the summer months.
EPA Region 7 Administrator Jim Gulliford said the event in Atlantic May 31 that the move wasn’t easy.
“It was a big challenge,” Gulliford said, explaining that rule-making is usually a long and complex process. Since the president announced eight months ago that he wanted this rule done by the 2019 summer driving season, it required a lot of work by the agency to come up with a legally defensible rule.
That rule sounds simple, but the actual document is several hundred pages long. It grants a Reid Vapor Pressure (RVP) waiver to E15, essentially ruling that E15 will be treated the same as E10 ethanol blends. In the past, E15 could not be sold for use in most vehicles in the Midwest during the summer months. That summer period begins on June 1, leading to the May 31 rule deadline.
The new final rule also includes language regarding Renewable Identification Numbers (RINs). Biofuel industry leaders had been concerned that it would change the rules on RINs to allow oil companies to manipulate them. It did not do that.
“The summer market restriction is removed,” Gulliford said. “We believe it will eventually lead to expanded markets (for ethanol).”
“It’s terrific news for the ethanol industry and also for Iowa consumers,” said U.S. Sen. Joni Ernst, R-Iowa, who added that “this has been a hard-fought battle.”
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said Trump and the EPA deserve credit for making the change, saying that “this checks the box.”
Two things put a damper on the announcement, or at least led industry leaders to sound a cautionary note.
One is the fact that the administration, thus far, has continued to grant hardship waivers to small refineries across the country. Those waivers have led to a drop in ethanol demand, Shaw said. And while over the long haul the E15 change will lead to an increase in ethanol usage, that increase will likely be modest this year due to the limited number of pumps in use for the product. Meanwhile, the waivers could impact ethanol demand much more than the E15 move in the short term.
“It’s a shadow” over the E15 news, Shaw said.
And the president’s announcement of tariffs on Mexico late May 30 left most farm leaders scratching their heads, both that the president would make such a move at all and also that he would choose to announce it before the two nations had approved the new United States-Mexico-Canada Agreement (USMCA).
“While we are focused on E15 today … we do have this other issue,” Ernst said. “I do think we need to keep these issues separate (trade and immigration).”
She said it is likely that the USMCA would still be approved in the Senate, but she didn’t know how it might impact the chances in the U.S. House or in Mexico.