A statement made by President Trump at a mid-term campaign rally in Iowa on October 9, 2018 and subsequent October 11, 2018 White House press release indicate that the President has instructed the EPA to begin the rulemaking process to allow the year-round sale of gasoline blended with 15% ethanol (E15). Although White House officials indicated that this had been done through a Presidential Memorandum on calls with reporters, no such memo has yet been published.
Ethanol is an oxygenate created out of corn and added to gasoline to increase octane levels, reduce knocking, and help it burn more completely, which in turn reduces tailpipe emissions. Ethanol is the primary oxygenate blended into gasoline, with its use increasing steadily with the phase out of lead in gasoline during the 1980s, the introduction of oxygenate requirements in the 1990 Clean Air Act Amendments to help reduce carbon monoxide emissions, and the phase out of ethanol’s main competitor, MTBE, around 2000 over concerns about groundwater contamination. Laws and regulations encouraging and requiring the use of ethanol have generally been seen as a political gift to midwestern farming states, whose farmers depend on the ethanol market to take up 40% of their corn crops.
Though the oxygenate requirement was removed by the 2005 Energy Policy Act, that same law separately mandates ethanol use under a Renewable Fuel Standard(RFS) setting a minimum volume of renewable fuels that must be blended into the nation’s fuel supply. Despite the need to meet the RFS, and political pressure from corn states, EPA has been reluctant to allow gasoline with greater than 10% ethanol on the market due to separate air pollution concerns.
Under the Clean Air Act’s mobile source provisions, fuel additives such as ethanol may only be mixed into gasoline if they are substantially similar to those used in certifying that vehicles meet current emissions standards, unless EPA grants a waiver. While EPA has granted such a waiver for gasoline blended with 10% ethanol (E10), it has only granted a partial waiver for E15 allowing its sale only from September to April of each year, due to concerns that burning E15 during warm months increases smog and ground-level ozone pollutants. As a result, only about 1,400 of the country’s 122,000 gasoline stations sell E15, due to the cost of changing pumps for summer every year. President Trump’s instructions to EPA are to, essentially, change course and revisit its finding that year-round sale of E15 would run afoul of the Clean Air Act.
President Trump has also reportedly instructed the EPA to search for ways to increase transparency in and stabilize the so-called RIN market. Renewable Identification Numbers (RINs) are credits used for compliance with the RFS program. RINs are associated with batches of renewable fuel put into the market, and may be separately traded. Several scandals have been associated with the RIN market, including firms selling fraudulent RINS, price gouging, and the purchase of excess numbers of permits by non-industry parties like banks and other financial institutions. According to the White House’s October 11 press release, President Trump has directed EPA to consider reforms to the RIN market such as prohibiting non-industry (or “non-obligated”) parties from purchasing RINs, requiring public disclosure when an individual entity acquires RINs above a specified limit.