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Photo: House Ways and Means Committee Chairman Jason Smith, R-Mo., center left, talks with Rep. Adrian Smith, R-Neb., center right, during an April 2023 committee hearing. (AP Photo/Kevin Wolf)
In the latest setback for E15, mid-sized oil refiners say a congressional plan aimed at expanding the U.S. market for corn-based ethanol would cause them to shut down.
“Current draft proposals might work for the world’s largest oil companies, many of whom have offshored refining capacity, but these so-called ‘compromises’ will only force mid-size, independent American refiners out of business,” said the Fueling America Jobs Coalition, made up of union workers and energy copmanies.
After being created on the fly last month following the collapse of an E15 bill, the Rural Domestic Energy Council, made up of House Republicans, has until Sunday to offer up a plan for legislation that would allow year-round, nationwide sales of higher-ethanol blends, known as E15. With a discussion draft getting rejected by both small refiners and ethanol interests, the next steps aren’t clear. Even if a strong proposal emerges at the last minute, there’s no clear path to get it through Congress. The plan is to attach an E15 bill onto pressing legislation, boosting the likelihood of passage.
“The must-pass legislation strategy probably wouldn’t be until the end of the year,” Rep. Adrian Smith, R-Neb., says in an interview for this week’s Agri-Pulse Newsmakers. “I’d like to get this done even before that.”
The sticking point is division within the petroleum industry on how to deal with so-called small refinery exemptions (SREs) from federal biofuel-blending requirements under the Renewable Fuel Standard.
Ag groups, caught in the middle of an oil industry rift, are hoping President Donald Trump will press Republicans to stay focused on E15. Last month, speaking in the No. 1 corn state of Iowa, Trump said he expected House Speaker Mike Johnson and Senate Leader John Thune to deliver an E15 bill to him “very shortly” to sign into law.
“We know by now that when the president says something he’s going to follow through,” Smith says.
Lawmakers last month didn’t move forward with a bill teed up for passage alongside “must pass” funding legislation after independent refiner balked at a provision to slash the number of firms eligible for RFS exemptions.
The American Petroleum Institute, which represents large fuel makers, supports the idea, saying the process now lacks transparency and fosters market uncertainty. Independent refiners claim API is trying to gain competitive advantage.
API representatives didn’t respond to requests for comment.
Smith, a member of the E15 council, said progress is being made but there’s no details yet to share.
Along with smaller refiners, ethanol industry representatives say the council’s E15 plan falls short. Their objections include a proposal to keep the current SRE process in place, according to a person close to the situation. The bill last month called for automatic RFS exemptions for qualifying refiners starting in 2028, prompting an outcry from mid-sized and small oil firms.
Meanwhile, backers of E15 say corn farmers struggling with lower crop prices and high production costs need an expansion of ethanol markets to help increase demand for their harvests. More than a third of each year’s U.S. corn crop is used for making ethanol. E15 could be done in a way that prevents the need for future government aid to growers, Smith said.
Other crop watchers say rather than pursue a voluntary E15 law, it would be better for the corn market to focus on mandatory higher blends.
“Voluntary E15 blending all year round may increase (corn demand) by, let’s call it 100 to 300 million bushels,” AgResource Co. President Dan Basse says on Newsmakers. “Helpful, mind you, but not a panacea to get us to a new level of a crop usage rate that would change the balance sheets enough to get us bullish.”
For more news, go to Agri-Pulse.com.
*Sourced from Agri-Pulse.