Good News And Bad News For The Ethanol Industry

Last week the ethanol industry cheered when the EPA proposed a rule that would allow 15% ethanol blends to be sold year-round. But by the end of the week they were complaining as the EPA granted more waivers to refiners seeking exemption from ethanol-blending requirements.

Ethanol supporters cheered last summer when Environmental Protection Agency (EPA) Administrator Scott Pruitt resigned. As Oklahoma’s Attorney General, Pruitt had sued the EPA over the Renewable Fuel Standard (RFS). As EPA Administrator, Pruitt seemed determined to weaken the RFS.

Pruitt angered the ethanol industry by liberally granting waivers to some refiners that sought relief from their ethanol blending quotas. Refiners save money with these waivers, but they also lower the value of the credits refiners must pay to comply with the mandate. That means the waivers weaken the RFS, so they were an irritant for the ethanol industry and its supporters.

Following Pruitt’s departure, Andrew Wheeler, who was Pruitt’s second-in-command, took over as EPA Administrator.

Last week the agency unveiled a proposed rule to allow year-round sales of 15% ethanol fuel blends (E15). Year-round E15 sales had been restricted because of the potential to form smog from evaporative emissions.

The ethanol industry had long sought to sell E15 year-round and cheered the news. The new rule would also establish trading restrictions to curb speculation in renewable identification numbers (RINs). Speculation in RINs — which are used to enforce the ethanol mandate — has been blamed for driving ethanol prices higher at times.