The renewable fuel standard has been key to marketing ethanol through public policy for the last 10 to15 years. This program, while adopted by congress a long time ago, gives an enormous amount of discretion to the Environmental Protection Agency (EPA) to determine the volumes.
“We’re at a pivotal moment with the renewable fuel standard where EPA is about to propose what it sees for the future of the RFS for 2023, 2024 and maybe beyond that point in time,” says Brian Jennings, CEO of the American Coalition for Ethanol (ACE).
Jennings adds, “This is crucial for our industry as we need to see robust volumes from EPA. We’re very concerned about the prior mismanagement of the renewable fuel standard program by the agency. It has not created the demand for E15 and E85 the way we want it to.”
Another problem with the implementation of the renewable fuel standard that they are working to fix moving forward is that there were many small refinery exemptions issued that eroded the demand for E15 and E85 in the market.
Jennings says they are working hard to rescue the market and make sure there is uninterrupted access for E15 year-round. They are working with eight midwestern states that have petitioned EPA to explain that they want to allow E15 in their state’s no matter what is happening at the national level. They are also working with bipartisan members of the United States Senate to get legislation adopted.
The Inflation reduction act has billions of dollars in new tax credits and incentives designed to boost the production of lower carbon fuels. The future demand for liquid fuels is going to be predicated upon its ability to reduce greenhouse gas emissions compared to gasoline. Corn ethanol already does that in a very significant way today but some of the new provisions in the inflation reduction act are set to even better lower the carbon footprint.
“For example, there’s $18 billion in climate smart agriculture money that farmers can take advantage of to implement practices such as conservation tillage or more efficient use of fertilizer. That’s important because corn production is responsible for about half of ethanol’s carbon footprint so if we can do things on the farm that become more efficient and reduce ethanol’s carbon footprint it helps us get to that point where we’re a low-carbon net-zero fuel,” says Jennings.
Now that the demand for ethanol is picking up again and there was a decent corn crop, the industry is beginning to rebuild and looks to be in good shape going into 2023.
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