The US Senate is set to vote on the nationwide expansion of E15 gas sales

Supporters of a long-stalled effort to expand nationwide the sale of higher-ethanol E15 gas are following an uphill campaign to get the measure passed through a divided Senate. This is the last major hurdle before President Donald Trump signs the policy.

According to interviews with industry representatives, their plan is to attach the provision into a larger, must-pass legislation, and to ensure that it contains enough concessions for the refining sector to prevent them from blocking the bill.

This is a complex, inefficient process that is highly unpredictable. "Any change necessary to gain the support of one group may lose support from another", said an industry executive who requested anonymity in order to discuss private discussions.

This approach highlights the difficult task facing the proposal, in a chamber that is still heavily influenced by regional agriculture, refinery safety and party divisions. Success will depend on multi-layered negotiations, rather than a simple yes-or-no vote. In May, the House of Representatives narrowly approved the E15 bill. This exposed the regional and ideological divisions that will likely shape the Senate's debate. Midwestern Republicans, farm-state Democrats, and fiscal conservatives are all in favor of increasing the demand for corn-based bioethanol. However, some environmentalists, lawmakers from refinery states, and legislators from refinery-states oppose it because of its costs, fuel standards, and emissions concerns.

SENATE 60-VOTE HURDLE LOOM

These divisions will likely be more consequential in Senate, where supporters must assemble 60 votes for a filibuster to pass, forcing a more fragile and broader bipartisan coalition, and increasing the scope of negotiation.

"Getting that 60 percent vote is no easy task." Drew Monroe, vice-president at Capstone LLC who advises refineries and fuel marketers, said that there are many Senate holdouts.

If the supporters are unable to get the votes or accept any changes in the House 'bill language, then the legislation will need to be returned to the House for approval. This could potentially bring the fragile coalition to an end.

MULTI-TIERED STRATAGEGY

Monroe says that biofuel advocates, who lack a majority to pass the E15 legislation alone, are trying to add it to other, more unavoidable laws.

They said that the Farm Bill was widely seen as the most viable legislation vehicle, despite significant partisan differences over key issues, such as nutrition assistance and farm subsidy.

Geoff Cooper is the Chief Executive of the Renewable Fuels Association which represents biofuels producers.

Supporters are also trying to convince Republican Senators John Barrasso, John Boozman and others, who's support is seen as crucial but?conditional on protecting the interests of in-state refineries that do not like biofuel blend obligations.

SME REFINERIES EXEMPTIONS IN FOCUS

Sources told us that senators want assurances small refineries will continue to be exempted if the country's biofuels laws cause them financial hardship. Some senators representing refining states are opposed to a provision in the current E15 proposal which would exempt companies with plants that average less than 75,000 bpd from having to meet U.S. Biofuel Blending mandates. They argue that the threshold will exclude "the vast majority" of the industry which is composed of large integrated energy companies that own multiple refineries.

Barrasso & Boozman representatives did not respond when contacted for comments.

According to those familiar with the discussions, supporters of the E15 provision anticipate Democratic demands regarding other policy issues that could make the effort a more powerful bargaining tool. Some Democrats are quietly compiling negotiating demands. They recognize that the core group of Republicans wants to change ethanol policy.

Cooper, the RFA's?Cooper, said that senators from both refinery and farm states are currently negotiating possible adjustments to the SRE to find a compromise.

He said that options under consideration included adjusting the threshold of 75,000 barrels per day for exemptions, and re-examining the extent to which large refiners would be required to mix?more in order to compensate for the exempted volume.

Cooper said that if the Senate fails to pass E15 this session, its supporters will attempt to sneak it into future legislation such as the 2027 Appropriations Bill.

Cooper explained that this would be the alternative if it wasn't possible to include this in something earlier. "But we want to get this done by the end of September."

(source: Reuters)