Leaders in the ethanol and biodiesel industries expressed frustrations and optimism for the coming year at the Iowa Renewable Fuels Summit, the largest biofuels policy conference in the Midwest.
“Whenever you have a transition from one administration to the next, there's always a period of uncertainty, a period of change. And this one might be as big or as interesting as any of them,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association, which works to grow the biofuels industry in the state.
Several speakers said during the Feb. 4 conference that updating the Renewable Fuel Standard is their top priority for 2025. The federal program requires oil refiners and fuel importers to use a certain volume of biofuels, like ethanol, or buy credits from companies that do their own blending.
Under this policy, almost all gasoline sold in the U.S. is E10, a blend of 90% gasoline and 10% ethanol. Nearly 45% of all corn grown in the U.S. goes to ethanol. Corn production is concentrated in the Heartland, with Iowa and Illinois accounting for about one-third of the U.S. crop.
The U.S. Environmental Protection Agency implements the Renewable Fuel Standard in consultation with the U.S. Department of Agriculture and the Department of Energy. At the heart of it are “renewable volume obligations,” or RVOs, which set the required levels of biofuels.
Biofuel advocates say these RVOs have not kept pace with growth in ethanol and biodiesel production capacity in the U.S. and that the EPA has been chronically late in setting the requirements.
Devin Mogler is the president and CEO of the National Oilseed Processors Association. He said many of the group’s members crush soybeans into oil, and more of that oil is going toward biofuels.
“While half of that oil goes into the food supply, half of it is used for biodiesel, and that's an increasing percentage,” Mogler said. “And from my members perspective, the single most important issue is getting those RVO numbers higher.”
The EPA’s new administrator Lee Zeldin said during his confirmation hearing last month that he’s committed to setting appropriate and timely RVOs. Zeldin previously co-sponsored legislation to repeal and revise the Renewable Fuel Standard when he was a U.S. representative.
“I'll take him at his word on that,” said Kevin Studor, vice president of government relations at the Iowa Corn Growers Association. “I think it's our job at Corn Growers to hold his feet to the fire on those words, as we did with President Trump many years ago, on a lot of ethanol policy.”
Biofuel advocates pushed back in the early years of President Donald Trump’s first term when RVOs were undercut by exemptions for certain petroleum refineries. Studor said a high RVO doesn’t help corn producers and the ethanol industry if there are a lot of exemptions for refineries.
“Corn Growers will be watching that like a hawk,” Studor said.
The 45Z tax credit
The panelists said another priority this year is clarity on the 45Z tax credit for renewable fuels. It’s meant to reduce greenhouse gas emissions and replace other biofuel tax credits that expired at the end of 2024.
While the Biden Administration issued guidance in January, the rules have not been finalized.
“There's still a lot of uncertainty,” Iowa Renewable Fuels Association’s Shaw said. “There's still a lot of hesitancy to go forward and claim the tax credit.”
Shaw said he’s frustrated that the Biden administration did not finalize the 45Z rules before Trump took office.
Donnell Rehagen, CEO of Clean Fuels Alliance America, said he believes the delayed rollout is an indication of the complexity of this issue.
“Not everybody views renewable fuels as something that's great and should be supported,” Rehagen said. “So we all have to sort of double down on our efforts to educate and to advocate and to be unapologetic about that.”
Year-round E15 gasoline
Shaw said allowing year-round sales of E15 is another policy priority.
Most states can’t sell the 15% ethanol blend from June to September due to concerns that it creates more smog in the warmer months. Some research indicates the risks are the same as E10, which can be sold year-round.
Eight Midwestern states recently received an exemption from the EPA. Lawmakers also added a national allowance to a short-term funding package in December, but it was cut in the 11th hour.
Studor said he’s optimistic that year-round E15 will be added in the funding resolution in March. Others are placing their bets on more emergency waivers, which the EPA can issue during periods of potential fuel shortages.
“We've been able to sell E15 year round through emergency waivers or other means for six summers now, and so I don't think this administration is going to be the first one to take that away, particularly when they won the election based on grocery store prices, on fuel prices and all of that,” Mogler said. “You're not going to take away the most affordable option at the pump.”
Anthony Reed, a partner at FGS Global’s Washington, D.C. office and one of the policy panelists at the summit, added that Trump’s executive order declaring a “national energy emergency” has laid the groundwork to justify waivers.
Finding new markets for ethanol
Shaw said the ethanol industry cannot ignore the data. The corn supply is greater than demand.
“Roughly 98% of all gasoline in 50 states is blended with ethanol. We’ve saturated that market,” Shaw said. “There has been some growth with exports, but it hasn’t been enough to keep up with farmer productivity.”
Shaw said the solution is to build demand with new markets. One is the aviation sector, he said, which globally consumes 100 billion gallons of jet fuel a year.
In 2021, the International Civil Aviation Organization set targets to reach net-zero carbon emissions by 2050. That same year, the U.S. launched the Sustainable Aviation Fuel Grand Challenge with the goals of producing 3 billion gallons of sustainable aviation fuel in the U.S. by 2030 and meeting all domestic aviation fuel demand by 2050.
The first commercial ethanol-to-jet fuel plant opened in Georgia last year with funding from the Department of Energy.
“We do indeed have these fuels of opportunity, and they’re just over the next hill,” Shaw said.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues.
