California lawmakers pass E15 bill, opening the last state that banned 15% ethanol blends

California's legislature unanimously passed a bill to allow E15 sales, clearing the way for 15% ethanol blends in the one big market that still kept them out. California is roughly 10% of US gasoline demand, so opening it is a large addition to domestic ethanol demand. Iowa producers, who ship into the West, stand to gain on volume.

The vote was unanimous in both chambers, which almost never happens on fuel policy in Sacramento. Aemetis, which runs an ethanol plant in Keyes, called out the passage and the size of the prize. For jobbers, E15 is a cheaper blend at the rack most of the year, so more California stations able to sell it means a wider spread between E10 and E15 to pass along or pocket.

Watch the signature and the CARB rulemaking that follows. The bill sets the path; the agency writes the labeling and station rules, and that timeline decides when pumps actually change.

EPA exemptions

Biofuel groups are pushing back on EPA small-refinery exemptions, the waivers that let some refineries skip their RFS blending obligations. Every gallon exempted is a RIN that does not get retired, which softens demand for ethanol and biodiesel and pressures RIN values. Refiners want relief; producers want the mandate held whole.

If EPA grants a large batch, RIN prices could ease and blending economics tighten for the producers who just got the California news. The two stories pull against each other.

REX earnings

REX American Resources posted record Q2 net income, helped by ethanol margins and tax credits. The company reported strong cash and laid out an expansion plan, and its Q3 outlook leans on continued ethanol demand. The 45Z clean fuel production credit is doing real work on producer bottom lines, and REX's numbers show it.

REX's results run the other way from the exemption fight. Producer economics look healthy right now, credits included, even before California volume shows up.

Feedstock traceability

Producers chasing the low-carbon credits face a documentation job that is getting heavier. Ethanol Producer Magazine flagged that feedstock traceability rules are coming, and 45Z scoring rewards low-carbon-intensity corn and used cooking oil that can be traced back to origin. Plants that cannot prove where their feedstock came from may score worse and earn smaller credits.

What to watch

Watch whether California's governor signs and how fast CARB moves. Watch how many small-refinery exemptions EPA grants and what that does to RIN prices. And watch whether the 45Z traceability requirements land in a form producers can actually meet without gutting their carbon scores.

Diesel is at a two-year high, which raises hauling costs for the shippers moving these gallons.