Insight Focus
The California Senate has approved E15, opening a large ethanol market. The move advances year-round E15 sales nationwide, with supporters seeking Congressional action and backing from President Trump. A record corn harvest and falling prices increase the urgency to expand ethanol markets.
California Senate Approves E15 Sales
The California Senate recently voted unanimously on a bill to allow the sale of E15 in the state and Governor Gavin Newsom is expected to sign it into law.
California was the only state that did not permit E15 sales. Newsom directed the California Air Resources Board to take immediate steps toward allowing E15 sales, meaning the legislation is set to take effect immediately.
Allowing E15 sales in California opens a 600-to-800-million-gallon ethanol market at a time when farmers need expanded markets. The move toward E15 in the state gained momentum this year as an increasing number of oil refineries closed, raising concerns about lower gasoline supply and higher prices.
“With passage of the legislation, California is taking a big step toward lower gas prices and a cleaner, more sustainable future for families across the state,” said Geoff Cooper, president and CEO of the Renewable Fuels Association (RFA).
Trump Support Could Drive National E15 Bill
California’s approval of E15 sales provides the ethanol industry another opportunity to push for the US Congress to legislate year-round E15 sales nationally.
Troy Bredenkamp of the RFA told news sources that the year-end spending bill in Congress this December could be a good place to insert an E15 measure, possibly by attaching the National Consumer and Fuel Retailer Choice Act, led by top Midwest sponsors. He added that support from President Trump could make the difference in passing a national bill, as farmers face a price-depressing record corn crop.
Cooper told reporters that as other countries move to implement higher blends of ethanol, it is beyond time for action at home. “We’re the world’s leader in ethanol production and consumption. Why are we being passed by others that were blending almost no ethanol 10 years ago?” He asked. “India is a perfect example. Its nationwide average is around E15 today, and it is on its way to E20. If it can do it, why can’t we?”
Source: USDA
Speaking at the recent Farm Progress Show, RFA Senior Vice President of Industry Relations and Market Development Robert White said, “Our goal is to make sure we have a list of retailers ready to go, and their equipment ready to go, so all that’s left is to put on some labels and drop the fuel into the ground.”
“I think what we’re going to see is that once the first retailer moves, the marketplace will move faster than any other market we’ve seen, just because of the price point,” White added.
White noted that RFA hosted three E15 workshops at the recent California Fuels & Convenience Alliance convention. “It was very exciting to see the interest level in those workshops,” he said.
“There were literally thousands of stations represented. From small independents and mom-and-pop stores to major refiners, they were all in the rooms learning about what requirements there are, what the blending economics are, what the value proposition could be—not only for making more margin per gallon, but also for lowering their price point for the consumer and potentially becoming the price leader.”
USDA Report Signals Urgent Action for Farmers
The September crop report from the USDA confirmed that farmers are expected to harvest a record corn crop of 16.8 billion bushels (an increase over August’s estimate), with prices projected to fall to six-year lows.
Source: USDA
According to a September 15 press release from RFA, the report underscores the urgent need to quickly open and expand markets for corn, including removing unnecessary barriers that limit market opportunities for ethanol.
“The severe financial distress facing America’s farmers today is directly linked to the outdated and irrational policy barriers blocking larger volumes of ethanol from entering the marketplace,” said RFA’s Geoff Cooper. “Unless Congress and the Trump administration take immediate action to open the market to larger ethanol volumes, farmers could be headed for the worst economic crisis since the early 1980s.”
