E15 and E85 Ethanol News: May 1, 2013

Here’s an update on recent news items and other public policy developments during the last few weeks relating to the use and market acceptance of 15% blends of ethanol into gasoline (“E15″) and other higher blends of ethanol such as E85.

E15 Federal Developments

Senate bill would allow MLPs for renewable fuels. On April 24, a bipartisan group of senators introduced a bill entitled the “Master Limited Partnerships Parity Act”, which would extend the benefits of these partnerships (MLPs) to renewable energy, biobased chemical, and energy efficiency technologies. MLPs, which have long been available for oil, gas and other traditional energy companies, have ownership shares that are traded like typical corporate stock but are taxed as partnerships rather than corporations. This structure is viewed as favorable to private investors but is not available to renewable energy companies. It is still too early to know the prospects for this bill in the current Congress, but it has apparently engendered strong support from across the political spectrum.

E15 Developments in the States 

Bills to repeal Florida’s Renewable Fuel Standard. As previously reported, House Bill 4001, a bill that would repeal the requirement that gasoline sold in Florida be blended with ethanol, was approved by the state House of Representatives on April 12, and the companion bill Senate Bill 320 was approved by the Senate Communications, Energy, and Public Utilities Committee. At an April 9 hearing held by the Senate Environmental Preservation and Conservation Committee, the Senate Bill was substantively amended to differ from the House version. The original version of the bill would have repealed the sections that required ethanol blending, but in the amended version, these sections would not be repealed, but would be amended to “encourage” ethanol blending rather than require it. Although the amended bill cleared the Committee by a 7-0 vote, on April 16 the full Senate adopted an amendment that once again made SB 320 identical to HB 4001, so that it would once again repeal the blending requirement. The Florida Senate passed the bill on a 33-1 vote on April 24. The bill now goes to the governor, with industry groups calling on Governor Rick Scott to veto the bill. A leading Florida biofuels company, Algenol, has said that the enactment of this legislation may cause them to reconsider a major expansion it has planned in the state.

Minnesota legislation. As reported in an earlier blog post, legislation is moving through the Minnesota legislature that would alter the state’s biofuel and ethanol mandates. Among the changes reported in the omnibus energy bill H.F. 976, the current requirement for 10% ethanol in all gasoline sold in the state would be revised to read “10% biofuel”; the requirement would be altered to require gasoline either to include the maximum percent of biofuel authorized by the EPA (i.e. E15) or to include 10% of an advanced biofuel;  and the tiered goals of current law would be amended to lower the short-term goals but raise the 2025 goal to 30% biofuels. Different versions of the bill have been passed by both houses, so the bill is now in conference committee to resolve these differences.

E85 News

E85 consumption, numbers of flex-fuel vehicles, rose in the U.S. in 2011. According to figures published by the U.S. Energy Information Administration, consumption of E85 in the U.S. increased 52% from 2010 to 2011, with over 500 million gasoline-equivalent gallons used in 2011. The rise in E85 usage came despite flat growth of E10 during the same period. EIA also reported that there were nearly 2.47 million E85-capable vehicles on the road in the U.S. in 2012. The full data set can be accessed on the EIA website.

Draft EPA policy may inhibit development of flex-fuel vehicles. EPA has published a Draft Guidance for how flexible fuel vehicles (FFVs) would be treated under its Light-Duty Greenhouse Gas Emissions Program for model years 2016–2019. The Emissions Program sets fleet-average limits on GHG emissions that all automakers must meet, and under current policy for model years 2012-2016, automakers receive a credit for FFVs based on the assumption that each FFV would be fueled with E85 50% of the time. The new draft guidance would reduce this “F factor” to 20% for model years 2016-2019. Many biofuel companies feel this will significantly discourage or deter further development of flex fuel vehicles. The comment period on this draft closed on April 22, but it is not known how quickly EPA will act to adopt a final policy.

High RIN prices and E85 sales. The Energy Information Administration, in its April Fuels Outlook issue, predicted that the high prices of ethanol RINs and the expected drawdown of banked RINs would stimulate E85 sales by lowering its price relative to E10, and also create increased incentive for biodiesel blending. Prices for ethanol RINs reached a two-week high on Monday, April 30: 2012 D6 RINs rose to $0.68/gallon and 2013 D6 RINs rose to $0.74/gallon.

Previous Biofuel Policy Watch posts on ethanol policy:

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass also serves as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of Joule Unlimited Technologies, Inc. or any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels


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