U.S. Midwest May Enhance the Amount of Ethanol in Gasoline Under the EPA E15 Proposal

Illinois- The U.S. Environment Protection Agency (EPA) has offered a plan to incline the Ethanol percentage in biofuel production. According to a rule the EPA proposed on Wednesday, gasoline with greater Ethanol blends could be offered year-round in eight Midwestern states. However, the implementation of the plan and action towards completion of the same may take more than a year and could only be started after 2024. Moreover, the production rate and stock availability in the country have declined against the demand outlook. As a ripple effect, the price dynamics move northwards in the domestic market. Towards the end of the second month of the year 2023, the prices of Ethanol ranged between USD 720-770 per M.T., FOB Texas.

The plan is in response to a bid for the EPA to eliminate an effective prohibition on fuel containing 15% of Ethanol, made by the governors of corn-producing Midwestern states Iowa, Nebraska, and Illinois. Earlier, the appeal was declined as government officials and environmental experts were in doubt that the 15 percent Ethanol blended fuel would intensify smog during the hot weather. The EPA's plan, which the governors of the eight states had asked for, was accepted by the business community and members of Congress. However, implementation of the act can only be done after a year as the demand for corn will increase, and the farmers and government must elevate the feedstock production and final prices.

As per ChemAnlayst, the prices of Ethanol in the U.S. market are anticipated to incline at a stagnant pace in the upcoming quarter on account of demand strength. Apart from biofuel production, Ethanol has applications in the pharmaceutical and food sector. Currently, the U.S. government follows the E10 plan consisting of 10 percent Ethanol in biofuel. The decline in dependency on petroleum-based fuel from exporting countries is one of the major targets for the U.S. government.