Ethanol-industry leaders in Nebraska and Iowa — the two largest ethanol-producing states — rejoiced Thursday at a federal requirement that maintains blending levels of the motor fuel.
The EPA on Thursday mandated that refiners use 15 billion gallons of conventional renewable fuels — corn-based ethanol, primarily — in the nation’s fuel supply next year. That’s the same as the EPA’s initial proposal in July; some had feared that political wrangling might cause the agency to reduce the amount in its final requirement issuance.
The EPA is charged with such decisions after Congress, in bipartisan legislation, agreed that renewable fuels should be inserted into the nation’s gas tanks, mostly now as the E10 blend of 10 percent ethanol combined with 90 percent clear gas.
The annual Renewable Fuel Standard, or RFS, is big news in Nebraska and Iowa. The states are the largest corn producers — the grain’s distillation is the main feedstock for ethanol — and the two largest ethanol producers, with about two dozen distilling plants in the Cornhusker State and about 42 in its neighbor.
“Setting the conventional biofuel target consistent with statutory levels helps to ensure that biofuels like corn-based ethanol will continue to play an important role in meeting demand for less-expensive, cleaner-burning transportation fuels,” said Todd Sneller, Nebraska Ethanol Board administrator.
His point is at least partially economic: The University of Nebraska-Lincoln has determined that the ethanol industry contributes about $5 billion a year to the state’s economy.
Shares of Omaha-based Green Plains, the second-largest owner of ethanol plants in the U.S. and No. 662 on Fortune Magazine’s list of the country’s biggest companies, rose sharply on the announcement. Green Plains stock gained nearly 3.4 percent on the day to close at $16.85 a share.
“Finalizing the proposed volumes in a timely manner with minimal changes provides much-needed predictability, which helps ethanol producers plan for their businesses and spurs growth in the biofuels industry,” Nebraska Gov. Pete Ricketts said.
Of course, there are detractors, those who say it benefits mainly corn farmers and is a mirage for motorists, with the lower energy content of ethanol-added gas not making up for the lower pump price.
“Unfortunately it appears that EPA is bowing the knee to King Corn,” said Chet Thompson, president of the American Fuel and Petrochemical Manufacturers, which lobbies for oil companies. “We think this action is bad for U.S. manufacturing and American consumers and encourage Congress to finally fix the RFS.”
There is also politics. EPA Administrator Scott Pruitt, appointed by ethanol supporter President Donald Trump, had said he is committed to set final quotas at levels “equal to or greater than the proposed amounts.”
That concession came in an October letter to farm-state senators after they agreed to stop blocking the confirmation of a top EPA official over possible changes that could undermine the biofuel mandate.
The final plan shows Pruitt sticking by that pledge — but not making aggressive moves to go beyond it.
“Maintaining the Renewable Fuel Standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the agency by upholding the rule of law,” Pruitt said Thursday.
Trump visited ethanol plants while campaigning for president and promised Iowa’s voters he would protect the mandate.
This report includes material from Bloomberg News.
Reaction from Midlands lawmakers
“The volumes released today provide greater clarity for Nebraska’s agriculture producers and the innovators focused on the future of biofuels.”
— Nebraska Sen. Deb Fischer
“While the EPA’s announcement is a great improvement from their previous proposal, I am disappointed the agency didn’t strengthen the biodiesel volume levels.”
— Iowa Rep. David Young
“Today’s announcement shows that the Trump administration has not forgotten its promises to those of us who support the increased use of renewable fuels.”
— Iowa Rep. Steve King
“This decision puts the issue to bed, and certainty is so important.”
— Iowa Sen. Chuck Grassley
“These assurances are a win for Iowans. I am grateful that the administration is keeping its pledge to rural America to advance the full potential of the RFS.”
— Iowa Sen. Joni Ernst