Opening Markets for Higher Ethanol Blends

1. Opening Markets for Higher Ethanol Blends National Farmers Union, March 2018 Larry Pearce, Executive Director

2. About the Coalition • Governors from 20 states • Chair: Governor Kim Reynolds, Iowa • Vice Chair: Governor Mark Dayton, Minnesota • Past Chair: Governor Pete Ricketts, Nebraska (2017) • The Coalition’s goal is to increase the production and use of biofuels, decrease the nation’s dependence on oil, improve the environment, and stimulate the state and national economies. • The Coalition’s focus is developing and implementing national and state policies to advance biofuels derived from a range of feedstocks and processes to improve the environmental and economic performance of transportation fuels.

3. Yesterday’s Accomplishments • Governors called for Renewable Fuels Standard in 2000 – achieved in 2005 • Governors called for an expanded 36 billion gallon a year renewable fuels standard with an emphasis on advanced biofuels and environmental performance standards in 2006 – achieved in 2007 • In response to the governors’ request, President Obama issued the nation’s first Presidential Biofuels Directive on May 5, 2009, which established an interagency working group on biofuels with the goals to: • Develop a comprehensive market development program; • Coordinate biofuel infrastructure policies; and • Identify new policy options to promote the environmental sustainability of biofuel feedstock taking into consideration land use, habitat conservation, crop management practices, water efficiency and water quality, as well as lifecycle assessments of greenhouse gas emissions – achieved 2009

4. Yesterday’s Accomplishments Despite efforts to weaken the Renewable Fuels Standard, it remains the nation’s most successful energy policy and the foundation for the growth of the states’ biofuels industry. The Coalition’s governors are focused on the future and new ways to expand the biofuels industry, build on the RFS foundation, and prepare for changes in the nation’s automotive technology.

5. Today’s Initiatives • Today’s policy initiatives must expand a biofuels industry vital to the states' economies and must reduce carbon and other harmful emissions • Enforce the Clean Air Act (Section 202) to limit the use of toxic aromatics in gasoline and open the market for ethanol as a source of clean octane. • Urge EPA to drop the obsolete vapor pressure restrictions on higher ethanol blends. • Urge EPA to update its lifecycle carbon findings. EPA has failed to update lifecycle carbon findings for a decade, thereby sanctioning the use of obsolete data. This distorts the public’s perception of biofuels’ environmental benefits, and is a barrier to international and domestic markets that have adopted low carbon fuel standards.

6. Toxic Aromatics (BTX) make up 25% of every gallon of U.S. gasoline • BTX (benzene, toluene, xylene) is synthesized from oil by energy intensive catalytic reforming, is used to increase gasoline’s octane rating, and is the least desirable component of gasoline, based on the following criteria: • BTX is carcinogenic, a primary precursor of air toxics and fine particulates • BTX is energy inefficient, leading to gasoline yield losses of 20 to 30% • BTX is the highest cost component of gasoline • EPA is required to regulate BTX by the 1990 Clean Air Act Amendments • Reducing BTX would provide market-based signals for: 1) higher blends of renewable biofuels; 2) vehicle electrification; 3) natural gas vehicles; 4) other technological innovations. • BTX reductions would lower gasoline refining losses thereby lowering GHG concentrations in refining.

7. Coalition was an Early Advocate For Pairing Increased Fuel Efficiency with National Low Carbon Fuels Standard • Then Senator Obama keynoted Coalition’s February 2007 annual meeting in Washington, DC • GBC assisted Senator Obama in introducing his National Low-Carbon Fuel Standard Act, June 14, 2007, which would have required a 10% reduction in mobile source carbon emissions by 2020 • In combination with proposed fuel efficiency targets, it would have been the carbon reduction equivalent of removing 85 million cars from our highways every year • In 2009, President Obama issued an Executive Order which established the most aggressive tightening of fuel efficiency rules in history • The May 21, 2010 Presidential memorandum on fuel efficiency directed the EPA and NHTSA to develop harmonized rules for both advanced engine designs, and cleaner fuels, to achieve an average standard of 42.5 mpg equivalent by 2025.

8. Pathway for States to Demonstrate Use of Higher Ethanol Blends in State Fleet Vehicles Last July, Nebraska Governor Ricketts asked Administrator Pruitt for a simple pathway to demonstrate the use of higher ethanol blends up to E30 in light duty state-owned fleet vehicles. The purpose of the demonstration is to show that higher ethanol blends have no detrimental impact on vehicles and fewer harmful emissions than the fuel it replaces.

9. Why? Over a decade ago, many of the nation's governors signed executive orders requiring the use of 10 percent ethanol blended gasoline in all state fleet vehicles. At the time, E10 was the subject of allegations that it had harmful environmental emissions and would damage vehicles. The governors’ leadership then reassured consumers that ethanol would not damage their cars and, in fact, had significant environmental benefits. The U.S. Department of Energy and others have shown that high octane ethanol blends are cost-effective, improve fuel efficiency, and reduce the most harmful emissions.

10. Why? (Cont.) Governors are at the same threshold today for higher ethanol blends. It’s time to provide the same leadership they did a decade ago with E10. Automakers have asked EPA to create a commercial pathway to use higher-octane gasoline. Higher-octane gasoline is required for high compression engines that are designed to use higher-octane fuel. South Dakota legislature adopted a resolution calling for the use of E30 gasoline in all state fleet.

11. Why?(Cont.) More than a decade ago, the governors' leadership was instrumental in laying the foundation for what is today a $44 billion industry, employing nearly half a million Americans, transforming the nation’s agricultural economy, reducing harmful vehicle emissions, and saving the nation hundreds of billions of dollars for imported oil.

12. Nebraska EPA Application Nebraska requested exemption for the use of mid-level ethanol fuel blends in order to assess the effects of the fuel on vehicle performance, fuel economy, and emissions control systems in state-owned fleet vehicles, including non-flex-fuel vehicles. Application request seeks exemptions from two rules...

13. 40 C.F.R. Section 80.27, RVP Waiver The ethanol blends used will be above 25 percent ethanol and eliminate the need for a Reid vapor pressure waiver since ethanol blends above 10 percent have fuel volatility levels lower than those of base gasoline.

14. No RVP Waiver Needed...

15. 40 C.F.R Section 1068.210, Applicant’s Research Program to Test Higher Ethanol Blends in State-Owned Vehicles • Fueling Sites • Safeguards against misfueling • Testing Objectives

17. Watertown Police Department filling up on E30 savingmoney money

18. How would Americans benefit if President Trump ordered EPA (under section 202) to replace gasoline aromatics with 20% more ethanol (30% total) tomorrow? • Toxic carcinogenic aromatics would be reduced by over 60% • Carbon emissions would be reduced by 10% • Health benefits would be incalculable, especially for those Americans living in metropolitan areas • $84 billion more would be added to nation’s gross domestic product ($42 billion today) • An additional 1 billion barrels of imported oil would be displaced each year (510 million barrels today) • An additional 30,000 jobs in renewable fuel production and agriculture would be created (74,000 jobs today)