Thune says year-round higher ethanol blend will require compromising with small oil refiners

Opponents point to research showing emissions from higher ethanol blends could worsen summer smog — although the biofuels industry disputes that — while encouraging the conversion of grasslands for corn farming. Some lawmakers from oil-producing and refining states also oppose the expansion. 

Year-round ethanol blend bill passed by US House faces uncertain Senate path

The U.S. House approved a bill in May authorizing year-round E15 sales, and year-round E15 language is in the Senate version of the farm bill under consideration by that chamber’s Ag Committee.

Walter Wendland, president of the South Dakota Ethanol Producers Association, asked Thune during Wednesday’s Midwest Agricultural Export Summit in Sioux Falls whether Congress could approve year-round E15 without making concessions to small oil refiners regarding the exemptions they receive from the Renewable Fuel Standard.

“Probably not,” Thune said.

Thune said E15 supporters need senators on board from states with small oil refiners. He listed Montana, Wyoming, Oklahoma, Arkansas and Tennessee lawmakers as those who might be inclined to support E15, but won’t without addressing small refineries’ concerns.

“At some point, we’ve got to get this done,” Thune said. “And I think at some point it becomes a decision of what can you get the votes to do.” 

The dispute centers on the Renewable Fuel Standard, overseen by the Environmental Protection Agency. It requires oil refiners to blend a minimum amount of renewable fuels, such as ethanol, into their fuel supply, or pay for compliance credits. 

Refineries processing 75,000 or fewer barrels per day can obtain a small refinery exemption if they can show that complying with the standard would cause them “disproportionate economic hardship.” 

Whether the Renewable Fuel Standard is actually met depends partly on whether larger refiners make up for the exemptions granted to small refiners.

Current law allows no automatic exemptions. Small refiners must prove a hardship and can receive full or half exemptions. 

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The House bill would allow small refiners to receive automatic 75% exemptions, but the bill would require companies to aggregate their facilities rather than applying exemptions to individual plants. Seventeen of the 33 facilities that applied last year would be ineligible under that scenario. The House bill would not require exempted amounts to be reallocated to other refiners.

The Senate version would grant automatic full exemptions to small refiners without changing rules regarding aggregate versus individual facilities. The Senate version would require some reallocation of exempted amounts to other refiners.

Thune told the Sioux Falls audience that, “try as we did on the House-passed version of it, we weren’t going to get there, and it was the small refineries issue.” The Senate bill is a work in progress. 

Sioux Falls-based POET ethanol’s Senior Vice President of Corporate Affairs Joshua Shields said year-round E15 would be a positive development for biofuels, regardless of the changes to small refinery exemptions. 

“This is about expanding market access for homegrown biofuels,” he said in a statement. “When motorists are given the freedom to fuel with E15, a cleaner, more affordable option, that relies less on volatile petroleum spikes, we are confident that’s what they will choose.”