Ethanol Blog

LINCOLN, Neb. (DTN) -- The governors of Louisiana and Alabama asked the U.S. Environmental Protection Agency to exempt their states from Renewable Fuel Standard requirements in 2027, saying in a letter to EPA Administrator Lee Zeldin that the blending requirements are hurting industries in their states.

"The RFS imposes a cost on every gallon of gasoline and diesel sold in our states," Govs. Kay Ivey, Alabama and Jeff Landry, Louisiana, told Zeldin in a letter on Monday.

"That cost is separate from, and in addition to, the price of crude oil. According to the U.S. Energy Information Administration, RFS compliance credits roughly doubled in value during the first half of 2026, and they reached record high prices in late May and June. These increased compliance costs are ultimately passed through to consumers."

The governors asked the EPA to grant a partial waiver for obligated parties under the RFS operating in their states and to adjust 2027 percentage standards downward.

The governors' request comes at a time when oil companies are reporting all-time high profit margins.

"The economies of our states depend heavily on agriculture, poultry and livestock, timber, trucking and manufacturing," the letter said, "all of which are acutely sensitive to the cost of diesel fuel. Given the level of combined crude distillation and the consumption of gasoline and diesel fuels within our states and collective region, it is evident that the implementation of the 2027 RFS itself -- rather than other economic factors alone -- would cause severe economic harm."

Biofuels and agriculture interest groups were quick to respond to the request on Tuesday, saying in a variety of statements to the press that the implementation of the RFS has nothing to do with higher pump prices.

"Any suggestion that ethanol blending compelled by the RFS is somehow raising gas prices is abjectly absurd and demonstrably false," said Geoff Cooper, president and CEO of the Renewable Fuels Association.

"Wholesale ethanol prices are $1 per gallon lower than wholesale gasoline prices today and DOE recently reported that E15 prices are 40 cents per gallon lower, on average, than standard E10 gasoline prices. Refiners have repeatedly shown that if they are not required to blend lower-cost renewable fuels into the gasoline supply, they won't. Far from delivering 'relief' at the pump, a waiver of the 2027 RFS requirements would remove a dependable source of lower-cost, lower-carbon fuel from the marketplace and cause higher gas prices."

Cooper said such a waiver also would "harm struggling corn and soybean farmers in Alabama, Louisiana, and across the country by undermining demand for their crops. EPA should swiftly and soundly reject these waiver requests."

The RFA said in a news release on Tuesday that EPA has received nearly two dozen RFS waiver requests from governors and another 14 requests from oil refining interests since 2008.

"In each case, EPA has correctly denied these waiver requests after finding that the RFS does not cause 'severe harm' to the economy of the requesting states or the refiners themselves," RFA said on Tuesday.

The American Soybean Association warned against granting the waivers and said on Tuesday that doing so would "strike a major blow" to domestic U.S. soybean markets and rural economies more broadly.

"At least one petition falsely claimed that a waiver would support agriculture and poultry producers, despite the economic benefits that strong renewable fuel demand provides to both industries and rural communities," the ASA said in a statement.

"Like all Americans, farmers are feeling the impact of the price at the pump and having to make difficult choices to remain in business. But make no mistake: undercutting the RFS by waiving compliance would result in a giveaway to refineries that are making record profits while U.S. agriculture would be left holding the bag."

U.S. oil and gas companies have made a record $160 billion in profits since April, according to the ASA.

"At the same time, American farmers are struggling to support their farms and cannot afford another market loss," the group said.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said in a statement that lowering RFS requirements would "undermine American farmers."

"With all due respect to the governors, during this time of high fuel prices, the last thing you want to do is reduce supply," Shaw said.

"The real solution is to unleash additional U.S. supply, which Congress can do by removing barriers to year-round E15 sales. Ethanol lowers fuel prices because it is less expensive than gasoline and adds gallons to the market. Expanding the use of low-cost ethanol, made right here in America, would lower prices at the pump. Consumers need real solutions, not ineffective political potshots."

Considering that 2027 has not arrived yet, Shaw said it was "absurd" for the governors to claim the RFS is causing severe economic harm.

"Now would be the worst time to reverse course," Shaw said. "IRFA urges President Trump to swiftly reject this misguided petition and ensure certainty for the marketplace."

Shaw said that since the 2026-27 RFS levels were announced earlier this year, Iowa renewable fuels plants have expanded production, restarted idled plants and "increased employment" in rural communities.

Growth Energy CEO Emily Skor said granting the waiver would lead to higher fuel prices.

"As any driver can see when they drive past a station that offers E15 or E85, the more ethanol in a fuel, the more affordable it is," she said.

"The president should not grant this request and should not break the promises he's made to rural America in order to further line the pockets of refiners that are already reporting record profits, made off the backs of American consumers and farmers."

Todd Neeley can be reached at todd.neeley@dtn.com

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