A measure passed by the California Legislature would authorize the immediate sale of gasoline blended with 15% ethanol (E15) in the state if approved by Gov. Gavin Newsom. As of this writing, Gov. Newsom has not acted on the legislation. Reports say he has until October 12 to sign or veto it, although the governor has hinted he might veto the bill. He has said E15 should be reviewed by the California Air Resources Board before being authorized and indicated the measure would cost the state more dollars to enforce. According to the Renewable Fuels Association, California drivers consume roughly 1.4 billion gallons of ethanol a year and represent just over 10% of national consumption. At a 15% blend rate, ethanol consumption could exceed 2.0 billion gallons.
Much of Nebraska’s ethanol production is exported, the bulk of which goes to California and Texas. The Nebraska Corn Board says Nebraska’s ethanol plants use more than 750 million bushels of corn annually, over 40% of the state’s corn production. Kevin Van Trump, author of the Van Trump Report, estimated that the sales of E15 in California could result in another 240-245 million bushels of corn used in ethanol production. Nebraska generally accounts for roughly 14% of the nation’s ethanol production. California’s move, if it comes to fruition, could equate to another 33 million bushels of corn used for ethanol production in the state. But with a potentially record crop being harvested this fall, the additional corn usage, while positive, probably wouldn’t have much immediate impact on markets. And it’s uncertain how the market would supply the corn. Would it represent an increase in the usage of corn or simply shift usage from exports or feed?
Nebraska’s ethanol producers already make great efforts to supply California’s ethanol market, for example, by seeking to reduce the carbon intensity of their product to meet California’s regulations. They have also invested in facilities and transportation networks to allow for efficient and cost-effective transportation to California. Through these efforts, Nebraska ethanol producers are poised to capture additional sales if the use of E15 is authorized in the state.
