Biden to Set in Motion Gasoline Policy Shift to Bolster Ethanol

(Bloomberg) -- The Biden administration is preparing to advance a fuel policy shift demanded by Midwest governors that would encourage filling stations to sell higher-ethanol E15 gasoline and offer it year round. 

The administration is set to outline its plans to formally propose the change soon, setting the change in motion in time for next year’s summer driving season, according to people familiar with the matter who asked not to be identified before a public announcement. 

While that is a year later than ethanol advocates had hoped, it’s aligned with administration expectations that refiners and pipeline operators need time to add equipment to distribute, store and produce a new fuel to adapt with the move.  

Representatives of the Environmental Protection Agency did not immediately respond to an email seeking comment. Reuters previously reported elements of the plan. 

Ben Hengst, deputy director of the agency’s Office of Transportation and Air Quality, is set to address the matter and other renewable fuel policy issues during a presentation Wednesday at the industry’s National Ethanol Conference in Florida. 

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At issue is a push by some governors from corn-producing Midwestern states to stop giving conventional E10 gasoline a partial waiver from volatility limits meant to curb air pollution. That would put E10 and E15 on the same regulatory footing in their states — and potentially encourage more sales of the higher-ethanol variety. 

To meet the EPA requirements, refineries would have to churn out raw, unblended gasoline that is less volatile, essentially creating a boutique fuel for the affected Midwest states. Under the Clean Air Act, the EPA does not have latitude to deny the governors’ request — just delay it. 

The Biden administration already moved to waive E15 from summer volatility requirements last year, allowing its sale in a bid to lower gasoline prices. But it’s unclear how the broader, E10 change would affect prices paid by motorists.

Analysis commissioned by a refining trade group predicts as much as 12 cents more per gallon in added industry costs to make and distribute the new fuel. However, biofuel boosters say that the shift would encourage more gas stations to offer cheaper E15 year round, and last year, it cost nearly $1-per-gallon less than conventional E10 in some areas.

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