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The NDSU Extension weekly podcast In the Pod: Soybean Updates delivers timely insights and expert advice on soybean production.
You're listening to In The Pod, Soybean Updates, a weekly trek into the latest soybean information from NDSU Extension. Every commodity has its politics, and e fifteen is stirring the corn and soybean pot. Matt Gammans, NDSU assistant professor in ag policy, is here to guide us. Matt, what is E-fifteen?
Matt Gammans:The normal type of fuel that most gas stations are gonna offer, that most people are gonna put in their car, is E-ten. So what that means is 10% ethanol, typically produced from corn, and 90% a gasoline blend stock. That's been the pretty typical fuel for typical vehicles for a long time now, going back to the early days of the renewable fuel standard. What E-fifteen is, is bumping that up from 10% to 15%. Percent. So more ethanol, more demand for corn going into the gasoline fuel supply.
Bruce Sundeen:Why is E-fifteen in the news?
Matt Gammans:Recently there was a vote in Washington DC on year round E-fifteen. E-ten has been obviously able to be sold year round forever. E-fifteen has not. What has happened is there's been some state level waivers where the EPA says this year, this summer, in this state, it's okay to sell E-fifteen, but it hasn't been the case where gas stations had these confidence that this was going be something that every year they're going to be able to sell it all year round. And obviously summer is a big month for travel, so if you can't sell fuel in the summer, that makes it kind of concerning to put in the type of investment and infrastructure into a gas station that you might need to do to sell E-fifteen. So what we've seen is really low uptake of E-fifteen. This law basically takes that away and it says, nope, you can sell it year round. E-fifteen is gonna be legal for sale.
Bruce Sundeen:Why is some of the soybean side not as supportive?
Matt Gammans:Growing the biofuel demand and growing domestic demand for biofuels has been a big goal of agriculture for a long time, going back to, again, the renewable fuel standard. Certainly, we look at kind of disruptions with trade or other issues, domestic based biofuel demand is super important. So it makes sense that people are excited about the opportunity to again expand the share of ethanol that is in the gasoline fuel supply. When you look into the details of the renewable fuel standard and kind of how it plays out, that's where it gives some people a bit of pause. So there was a study out of University of Missouri that basically had some concerns that because of the way the RFS is structured, this might not be kind of unambiguously good news for soybeans. When you think about the RFS, you think about mandated volumes for different types of biofuels. So you have a bio based diesel, you can think of it as a big bucket that needs to be filled up with bio based diesel, and then you have your kind of conventional bucket that historically has been mostly filled with corn ethanol. But increasingly, bio based diesel has been kind of spilling out of its bucket into the conventional bucket and also generating demand for soybeans to fill that bucket. Some of the concern here from the soybean side is potentially if corn ethanol kind of takes up a bigger and bigger share of that conventional bucket, that's going to crowd out potentially some demand for soybeans. And I think we'll talk about the new RVOs and how those play into all of this, but that's one concern that people have.
Bruce Sundeen:How does this affect soybeans specifically?
Matt Gammans:There's this concern that over the past few years, soy based biodiesel, renewable diesel or biodiesel, has been generating credits as part of this conventional biofuel bucket in the RFS. And recently, the EPA has increased kind of the size of the bucket for bio based diesel specifically. So this is the type of a bucket that you can only fill with bio based diesel. So corn ethanol, you know, not allowed to contribute towards this mandate. And this was bumped up just a few months ago to 9,200,000,000 gallons, which is a really big increase over where it's been historically. So this is kind of how this exactly plays out, and, you know, whether there's enough supply of bio based diesel to fill this and then kind of still be spilling over into that conventional biofuel bucket to meet the conventional mandate is kind of an open question. And so I think different people have different views, and based on what you think is gonna happen with that, that really impacts whether you think that this is good or bad for soybeans in particular.
Bruce Sundeen:What's EPA's role in this?
Matt Gammans:The EPA has a lot of flexibility in how they administer these rules. Not only I think do we not know exactly what's going to happen with soy based biodiesel under the new mandate volumes, We also don't know kind of in the long run, if you're looking at five, ten years, what's going to happen with small refinery exemptions, the mandate levels, and other kind of policy levers that the EPA has. So there's a lot of uncertainty, unfortunately.
Bruce Sundeen:Matt, where's the bill at right now?
Matt Gammans:The bill passed recently in the past few weeks, and now it passed the house, but now it will go to the senate, and we don't know kind of what the timeline is going to be. Of course, you know, it needs to pass both the house and the senate and be signed by the president before this would take effect as law.
Bruce Sundeen:Thanks, Matt. Our guest has been Matt Gammans, NDSU assistant professor in ag policy. You're listening to In The Pod, Soybean Updates, a weekly trek into the latest soybean information from NDSU Extension, supported by the North Dakota Soybean Council.