The E–15 Rural Domestic Energy Council, created as part of last month’s budget deal to advance the House’s FY2026 spending bill and prevent a large scale government shutdown, is expected to propose legislation boosting biofuels production and consumption any day now. (They were notably required to release this proposal last Sunday, so we will see if/when it actually happens). Biofuels backers and corn producers are hoping for a deal that exempts E15 from air quality standards, allowing year-round, nationwide consumption. Taxpayers are worried exactly what that deal might look like.
The use of E15, a mixture of 15 percent corn ethanol and 85 percent gasoline, was first approved in 2011. At the time, EPA prohibited E15 use in summertime months due to concerns with air quality and limited the new fuel to only be used in certain engines—excluding older vehicles, motorcycles, chainsaws, lawnmowers, outboard/boat motors, and ATVs—due to concerns with the engine damage E15 causes. Despite these and other problems with E15 (more on this later) industry backers have continued to push for year-round E15 sales. And this year, the push is particularly strong.
Proposals expanding E15 sales to be year-round are not new (nor are our concerns). But a proposed amendment to the House’s must-pass five-bill minibus for FY2026 appropriations—which included funding for the Pentagon, Labor, Transportation, Treasury, Justice, and State Departments—that would have amended the Clean Air Act to allow nationwide year-round sale of E15, among other favorable provisions for biofuels, elevated calls for E15 to a fever pitch. Longtime opponents of biofuels subsidies were able to block consideration of the amendment, but to ensure the enormous bill could come to the floor with ethanol boosters on board, a compromise was reached—creation of the E–15 Rural Domestic Energy Council.
H. Res. 375 established the E–15 Rural Domestic Energy Council to investigate topics including, but not limited to, the sale of E-15, submit their proposal no later than February 15, and consider legislation no later than February 25. This first deadline went unmet. Predictions on whether a deal will be ready by the February 25 deadline depend on who you ask.
The problem is that any deal worked out with a select group of corn and oil interests may leave taxpayers high and dry. Both industries already benefit from billions in taxpayer handouts and Congress should be working to end these subsidies, not expand them. Exempting E15 from fuel standards that apply to other fuel sectors would only add to a distorted marketplace. The federal government provides numerous taxpayer-backed subsidies for higher ethanol blends like E15, including a federal biofuels mandate (the Renewable Fuel Standard), a lucrative production tax credit (45Z Clean Fuel Production Credit), feedstock subsidies for corn growers, and infrastructure grant programs. While originally pitched as needed support for a budding industry with promising benefits, 50 years of federal subsidies have only made a mature ethanol industry increasingly reliant on taxpayer support.
These distortions are growing larger. Despite a guaranteed market under the Renewable Fuel Standard, consumption of biofuels over the last two decades has continually failed to meet Congress’s expectations, especially in the non-ethanol categories (think fuel derived from non-food crops, like corn stalks and perennial grasses). Regardless, the Administration is proposing higher and higher volume requirements for 2026 and 2027.
The 45Z tax credit was also expanded by Congress in the One Big Beautiful Bill Act, with the potential for greater expansion as Treasury’s recently proposed rule creates a clear pathway for corn ethanol to qualify. 45Z is expected to cost taxpayers $53 billion over the next ten years (although the credit expires in 2030). Watering down eligibility requirements may drive that cost higher, as more producers claim more credits.
Increased E15 production, driven by these taxpayer subsidies, carries significant costs for consumers. Today, one third of U.S. corn is diverted to biofuel production. As biofuel production increases demand for corn, farmers plant less of other crops like sorghum, barley, and oats, leading to price bumps. These cost hikes hit livestock producers, who rely on corn and these other grains as a primary feed source, especially hard, and have a ripple impact on all food prices.
E15’s corrosive properties also impose real infrastructure costs. As higher blends are forced into the fuel supply, gas stations must undertake expensive retrofits to accommodate the corrosive fuel. These costs are passed onto consumers or require taxpayers to foot the bill through state and federal biofuel infrastructure programs.
Additionally, increased ethanol production contributes to habitat destruction and increased air and water pollution. Corn ethanol has even been shown to increase greenhouse gas emissions when factors like land use change (to grow more corn) are taken into account.
That’s why TCS is leading a diverse group of taxpayer, free market, and environmental organizations, and boat owners urging policymakers to oppose special waivers allowing for the year-round expansion of E15. Markets should be guided by consumer choice, not shaped by mandates, preferential treatment, and billions of dollars in federal subsidies.
It is time for Congress to stop dictating outcomes in the fuel market and stop forcing consumers, taxpayers, and the environment to bear the costs of failed ethanol policies.
