US EPA makes E15 available all year in Midwest states, but not until 2025

The United States Environmental Protection Agency will allow Midwest states to sell a higher blend of ethanol gasoline year-round beginning in 2025, per a final rule issued Feb. 22.

The rule responds to requests by the governors of eight states -- Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin -- to exercise their Clean Air Act Authority to make gasoline containing 15% ethanol available in those states throughout the year. The policy shift is a victory for biofuels producers after a lengthy procedural tussle with the EPA, though the implementation leaves 2024 E15 availability in limbo.

"As the saying goes, 'better late than never,' but EPA had a legal responsibility to approve E15 year-round in these states more than a year and a half ago, so postponing the effective date to April 28, 2025 is disappointing," Brian Jennings, CEO of the American Coalition for Ethanol, said in an email.

Changing volatility standards

Gasoline blended with 10% ethanol, or E10, is widely available across the US and sold throughout the year. Current law prohibits the sale of E15 in conventional gasoline markets, which make up about 70% of the US market, from June 1 to Sept. 15 due to EPA air pollution restrictions. The current law also offers a summertime waiver of Reid Vapor Pressure (RVP) volatility allowance requirements to biofuel blends containing 10% ethanol. Section 211 (h)(5) of the Clean Air Act grants EPA the authority to forgo that waiver if a governor can show it increases emissions in their state.

In both 2022 and 2023, the EPA granted emergency waivers allowing E15 to be sold in summer months without any change to the 1-psi waiver. The new EPA rule removes the 1-psi RVP waiver, lowering the standard for conventional fuel in the Midwest from a 10 psi limit to 9. That provides low RVP blendstock needed for E15 to meet pollution standards and eliminate cost gaps between E10 and E15 blends, but also, according to oil refiners, requires the creation of a logistically challenging "boutique fuel" to be sold only in a handful of states.

"Studies show that even with at least a two-year lead time, the RVP change will reduce overall supply, increase costs, and make the region more vulnerable to supply disruptions," Patrick Kelly, American Fuel & Petrochemical Manufacturers senior director of Fuels & Vehicle Policy, said. "With less time, costs to produce and supply fuel and risks of supply disruptions could be greater."

The EPA's rule summary noted that it received multiple petitions from stakeholders "requesting an extension of the effective date" that was granted "due to concerns over insufficient fuel supply." Kelly said the delay wasn't long enough.

"We've made clear to the administration that it's too late for 2024 implementation and even 2025 would be problematic," he said. "Refiners start making the switch to summer production very early in the year and to minimize costs, there must be a reasonable transition to producing summer gas according to a different specification."

Uncertain solution

Biofuels producers and ethanol-inclined Midwest governors won the argument, but not before nearly years of EPA delays beyond its original deadline, in which time multiple emergency waivers were granted to allow E15 in the summer driving months.

With implementation of the new rule beginning in 2025, ethanol industry groups are pushing for 2024 the same emergency E15 waivers the EPA granted in 2022 and 2023.

"With the 2024 summer driving season just a few months away, we are urging the administration to take additional action that will ensure consumers have uninterrupted access to lower-cost, lower-carbon E15 this summer," Cooper said.

The need for emergency waivers has led to annual E15 uncertainty. On Feb. 20 US Department of Agriculture Secretary Tom Vilsack, speaking at the National Ethanol Conference in San Diego, said he was "confident" that "this summer, we'll have waivers as we have the last couple of summers."

In the meantime, both biofuels producers and traditional oil industry groups have consistently agreed on the need for federal legislation that standardizes E15 sales nationwide. The Consumer and Fuel Retailer Choice Act, a bipartisan bill introduced by Republican Senator Deb Fischer of Nebraska in March 2023, would allow the year-round nationwide sale of ethanol blends higher than 10%, preventing what Fischer's office called a "patchwork of uneven state regulations." Though commonly foes, all of RFA, ACE and the American Petroleum Institute support the bill, which has nonetheless stalled in the US Senate.

"If Congress passed the bipartisan Nationwide Consumer and Fuel Retailer Choice Act, we wouldn't be in this situation," Cooper said.

The EPA couldn't be reached for comment.