On Tuesday, President Donald Trump stood in front of a crowd of renewable energy executives in Council Bluffs, Iowa, and praised his new fuel rollbacks as a win for farmers. Fulfilling a promise from last year, Trump said he lifted the Environmental Protection Agency's restrictions on 15 percent ethanol and 85 percent gasoline, or E15, a blend of corn-based fuel that currently cannot be sold during the summer in smog-prone areas because of its impacts on ozone formation.
For ethanol's biggest opponents, the deregulation could usher in a whole host of plagues, including environmental hazards and falling oil profits. While E10—gas blended with 10 percent ethanol—is now widely used in the United States, the higher blend lowers a vehicle's fuel efficiency more than E10, and still has a large environmental footprint.
Trump, however, focused only on corn producers, who could benefit from the increased demand. "I mean, quite simply, it means more energy," he said. "And what can be wrong with that? And it's very good energy."
Farm groups support the change in the hopes that it will boost corn production, just as the Renewable Fuel Standard, which passed in 2007 and requires most of the gasoline in the U.S. to be blended with 10 percent ethanol, has done for lower ethanol blends. Renewable fuel interests—along with some corn growers—have been pushing to increase production of E15 for years.
"We appreciate the President for taking a personal interest to ensure the unnecessary and ridiculous restriction on E15 was removed," Iowa Renewable Fuels Association's Executive Director Monte Shaw said in a statement on Tuesday. "Iowa farmers and biofuels producers are sincerely grateful."
The fight over renewable fuel standards has been a three-pronged battle: Now that the biofuels industry is one step closer to expanding ethanol sales, an unlikely pair of opponents stands in its way.
First there's the oil industry, which has a vested interest in promoting blends with higher proportions of oil over other biofuels. The largest oil refiner group in the country filed a petition with the U.S. Court of Appeals to block the Trump administration's rule just this week, claiming the EPA overstepped its authority in revoking the restrictions. "A waiver for E15 is unlawful, plain and simple," Chet Thompson, president and chief executive officer of the American Fuel & Petrochemical Manufacturers, said on Tuesday.
On this point of critique, the oil refiners align with environmental groups, which have made similar charges against E15 in the past. Jonathan Lewis, senior counsel for the environmental non-profit Clean Air Task Force, says the oil groups' comments filed in April echo conservationists' complaints. "Their interpretation of the relevant Clean Air Act provisions and why those provisions prohibit the EPA from taking this step were accurate," he says. Specifically, the environmental law exempts E10—and not E15—from its standard for Reid vapor pressure, a measure of how clean the fuel burns, and how much smog it creates. (Lewis says the question of whether environmental groups would sue was "still up in the air.")
The Clean Air Task Force and other non-profits oppose corn ethanol production on the basis that its expansion would convert more acres from habitat to farmland, polluting the air and water, and releasing more greenhouse gases into the atmosphere—ultimately, unleashing the worst outcomes of climate change.
With Trump's blessing, it may seem like farmers have won out. The president gave his speech in corn country, pledging to "more than double" ethanol sales this year. But it could be years before farmers see any gains from the rule—or oil interests and environmental advocates see any losses—according to Aaron Smith, a professor of agriculture and resource economics at the University of California—Davis.
Smith has been tracking the economic and environmental impacts of the Renewable Fuel Standard for the past decade. Although his latest study, funded by the National Wildlife Federation, found the 2007 policy led to a substantial increase in agriculture land-use, yielding "some pretty serious environmental harms," Smith says that Trump's latest rule won't have much of an effect just yet.
For one, there are the legal challenges: The Clean Air Act includes an exception to certain standards for E10, but not E15. "Blending at 10 percent, you're in this little sweet spot," Smith says. "So as soon as you deviate ... you're going to be above the required standard and you are in violation of the Clean Air Act." This is the crux of the oil refiners' argument, according to AFPM's statements. And distributors aren't likely to invest in E15 if the rule's stuck in court.
Then there's the problem that has dogged Trump since he took office: infrastructure. E15 is more corrosive than E10. In order for gas stations to store it, they'd need new tanks and pumps. Already, fewer than 2 percent of U.S. gas stations offer E15 during the winter, when it's legal. Smith expects this wouldn't change much in the summer. "Drivers would need to be educated as to what this fuel is in order for them to be willing to buy it and understand whether their car can run on it—and, perhaps more importantly, whether the manufacturer of their car will honor the warranty if E15 is used in the vehicle," he says.
In other words, the country is not ready for E15. All this could change if the Trump administration imposed a mandate for E15, instead of simply clearing a hurdle; changing markets might also make ethanol more appealing. But for that to happen, Smith says, oil prices would need to rise and corn prices would need to fall—and the latter is not expected to happen anytime soon, since record flooding exacerbated by climate change has delayed corn planting. "Given that we're not likely to see an increase in E15 sales ... I think this is an attempt to pull the wool over the eyes of farmers, more than anything," he says.
Until then, Trump will have to contend with opposition from the inside, as oil interests, generally seen to be friendly with the administration, ramp up their cases. "This has been the recent history of ethanol and renewable fuel policy in general," Smith says. "Whatever measures the administration tries to take, if it's unfavorable to the corn and ethanol side, they will sue. If it's perceived as unfavorable to the oil side, they will sue. At the very least, nothing happens."