The vote for year-round gasoline blended with 15% ethanol (E15) represents the closest the industry has gotten 鈥宻o far to achieving a major goal they have sought for years, but they still face opposition from lawmakers in refining states and uncertainty in a deeply divided Senate.

A similar provision was 鈥媟emoved from a stop-gap funding bill in 2024, following opposition from Elon Musk, who was acting as the Trump administration鈥檚 efficiency chief, along with certain conservative lawmakers. A renewed push in January 2026 also failed, with lawmakers instead opting to form a task force to study allowing year-round E15 sales.

Representatives for Elon Musk did not immediately respond to a request to comment.

Both sides are lobbying Congress, with representatives from the Renewable Fuels Association, the American Petroleum Institute, and the Small Refineries of America meeting 鈥宭awmakers on Capitol Hill on Monday and Tuesday.

If passed, 鈦爐he H.R. 1346 bill, or the Nationwide Consumer and Fuel Retailer Choice Act, would allow, but not require, fuel retailers to sell gasoline blended with 15% ethanol year鈥憆ound nationwide, while also tightening rules for refineries seeking exemptions from the Environmental 鈦燩rotection Agency’s record biofuel-blending requirements on economic hardship grounds.

The E15 blend is typically barred during the summer months due to smog concerns, though the Trump administration has temporarily waived that restriction for 20 days from May 1 to help curb gasoline prices that have spiked since the Iran war.

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Supporters argue expanded E15 access could strengthen the domestic biofuels market and benefit consumers, farmers, and fuel suppliers鈥攅specially in corn-producing states like Iowa. However, some small and mid-sized refining advocates warn the related exemption changes could hurt refinery economics.

Lawmakers have so far declined to attach the E15 provisions to a federal spending bill. Instead, they approved a measure establishing a rural domestic energy council to study the issue, delaying action on broader legislation. The delay has prompted criticism from farm and biofuel groups that have long pushed to expand ethanol market access.

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While increasing blending volumes overall by raising the level for advanced biofuels, the new rule includes lower mandates for ethanol in 2024 and 2025 than the EPA had initially proposed.

Industry officials, farm advocates and members of Iowa鈥檚 congressional delegation said the levels ignore production capacity and projected growth in biofuels. The industry is an important market for Iowa farmers because more than half of the state鈥檚 corn is used to produce ethanol.

While the overall increased volumes for biodiesel are a slight improvement, it comes at the expense of ethanol, 鈥渢herefore pitting one biofuel against another,鈥� Iowa Secretary of Agriculture Mike Naig said in a statement.

Iowa Gov. Kim Reynolds said 鈥渂iofuels can play a key role in fighting off this energy crisis and provide millions of Americans with cheaper, cleaner burning fuel.鈥�

Ethanol plants in Iowa produced an estimated 4.5 billion gallons in 2022 鈥� a record 鈥� and supported more than 57,000 jobs and accounted for nearly $7.2 billion in economic activity in the state, according to the Iowa Renewable Fuels Association.

Environmentalists argue investing in increased corn production to generate more ethanol fosters unsustainable farming practices that erode soil and water quality, raises food prices and actually increases emissions.

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The Section 45Z tax credit provides biofuel producers (ethanol, biodiesel and sustainable aviation fuel) with an incentive to produce low-emission fuels. What makes this different is it could provide a business model in which the farmers鈥� carbon data is associated with their crop at the point of sale, rather than maintain the trend of carbon being an asset on its own.

Iowa farmer Mitchell Hora says his low-carbon intensity grain could be worth more than $400 per acre in 45Z tax credits.

That鈥檚 the good news. Here鈥檚 the catch 鈥� the Internal Revenue Service (IRS) has yet to issue its own regulation, which is the holdup for ethanol companies before giving a clear answer on the value to farmers.

鈥淥ur goal is to make the process simple, so farmers understand how they can receive 鈥� and increase incentives as they lead in meeting the vast and growing demand for lower CI products,” Paul Scheetz, ADM director of Climate Smart Ag Origination.

Grain will be assessed with a CI score, which has a set of parameters determined by the Department of Energy. Currently, the standard CI score for corn is 29.1. The Inflation Reduction Act sets a weighted average below 25.
鈥淭he value potential here is pretty good 鈥� 5.4 cents per CI point below the industry standard,鈥� says Paul Neiffer, a farm CPA. 鈥淚f you raise 200 bu. corn with a CI score of 0, that鈥檚 $1.57 per bushel and an extra $314 in value. Now, the ethanol plant isn鈥檛 expected to share 100%, but it could be 25% to 30%. There’s definitely potential here for material value to the farmer. I don’t think this is pie in the sky.鈥�

Unlike the previous program, these tax credits will provide the ethanol plants with an opportunity to sell excess credits on the secondary market. Note: 45Z is only good for three years: Jan. 1, 2025, to Dec. 31, 2027.

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