There appears to be a stumbling block with the Trump EPA’s recently announced supportive biofuels policy. As covered in a recent Policy Brief, the following actions were announced on October 4 to be undertaken by EPA and USDA:
- In a forthcoming supplemental notice building off the recently proposed 2020 Renewable Volume Standards and the Biomass-Based Diesel Volume for 2021, EPA will propose and request public comment on expanding biofuel requirements beginning in 2020.
- EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020, and that the volume obligation for biomass-based diesel is met. This will include accounting for relief expected to be provided for small refineries.
- EPA intends to take final action on this front later this year.
- In the most recent compliance year, EPA granted 31 small refinery exemptions.
- Building on the President’s earlier decision to allow year-round sales of E15, EPA will initiate a rulemaking process to streamline labeling and remove other barriers to the sale of E15.
- EPA will continue to evaluate options for RIN market transparency and reform.
- USDA will seek opportunities through the budget process to consider infrastructure projects to facilitate higher biofuel blends.
- The Administration will continue to work to address ethanol and biodiesel trade issues.
However, a range of biofuels organizations have just raised an alarm. The following feedback from NATSO Vice President of Government Affairs, David Fialkov, covers the concerns:
“Unfortunately, EPA’s plan does not stay true to the President’s promise to account for gallons that are waived as part of the RFS’s small refinery exemption program.
“Specifically, today’s plan would provide accounting relief for just a fraction of the gallons that have actually been waived and base that relief on the far smaller number of gallons that the Department of Energy recommended be waived.
“When the deal was first announced on Oct. 4, many champions in the biofuels industry lauded the President because they thought that EPA received and understood the President’s message. Apparently this is not the case.
“In the deal President Trump negotiated, EPA was supposed to ensure that it would account for all of the gallons that are waived as part of the small refinery exemption process. Today’s plan simply does not do that. It is another ‘EPA bait and switch,’ where the White House announces a deal that, at a high level, is favorable for the biofuels community, and EPA later decides to bail out refiners at the expense of farmers. I’ve seen this movie before.
“The math here is simple. In 2016, EPA waived 790 million gallons under the small refinery exemption program. In 2017, it waived 1.82 billion gallons, and in 2018 it waived 1.43 billion gallons. This averages out to 1.346 billion gallons waived per year over the past three years. To provide the accounting relief that President Trump negotiated in his deal just two weeks ago, EPA would need to ensure that 1.346 billion gallons are added to the 2020 renewable fuel obligations.
“Instead, the proposal EPA Administrator Wheeler issued today would provide accounting relief for just 580 million to 770 million gallons — far less than the 1.346 billion gallons that President Trump promised.
“The irony in all of this is that by basing accounting relief on DOE’s recommendations, rather than the actual volume waived, this proposal shines a bright light on the damage that EPA has directly inflicted on the biofuels community in recent years by disregarding DOE’s recommendations and waiving more gallons than was recommended. It will undoubtedly generate the same level of opposition that the most recent round of small refinery exemption announcements generated, at a time when this Administration has enough on its plate already.”
Here is some additional feedback:
Quote from Kevin Ross, President of the National Corn Growers Association (NCGA): “While corn farmers appreciate the EPA’s intent to follow Department of Energy recommendations on waivers going forward, the proposed rule fails to provide the assurance needed that EPA’s practices for granting waivers will change going forward. Farmers have long been skeptical of the EPA’s administration of the RFS. This proposal doesn’t provide farmers confidence in EPA’s ability to follow through and make this right. President Trump made a commitment to farmers and instructed the EPA to follow the law, but this proposal appears to come up short again.” (Link to NCGA newsroom)
Quote from Tim Bardole, President of the Iowa Soybean Association (ISA): “The Environmental Protection Agency (EPA) has once again broken its promise to restore the integrity of the Renewable Fuel Standard. Today’s announcement backtracks on a pledge by President Trump to ensure future Renewable Volume Obligations would account for Small Refinery Exemptions (SRE) based on a three-year rolling average of past waivers. This previously agreed-upon proposal would provide certainty to a struggling biodiesel industry including refineries and farmers. Rather than restoring biodiesel demand based on the actual lost gallons, the EPA says it will look at past recommendations from the U.S. Department of Energy (DOE). The EPA consistently ignored DOE recommendations for years under the current administration. Today’s announcement further erodes farmer confidence in the administration’s ability to bring closure to the all-important issue of biofuels and its place in America’s energy future. With today’s proposal, countless farm families and biodiesel producers will continue to face lost income and further job cuts. More facilities will close as a result of the continued inaction and the economic losses it creates. The EPA must uphold the administration’s commitment to restore demand based on the actual three-year SRE average, beginning with the 2020 biofuel standard and years to follow. The already-waning vitality of America’s rural communities cannot afford to keep playing regulatory games with the EPA. ISA will continue to engage our elected champions, Senators Grassley and Ernst, Governor Reynolds and Iowa Secretary of Agriculture Mike Naig to ensure a victory for Iowa’s soybean farmers.” (Link to ISA newsroom)
Quote from Brian Jennings, CEO of the American Coalition for Ethanol (ACE): “Two weeks ago, ACE resisted the temptation to sing the praises of the White House ‘deal’ because it was short on details and dependent on a new EPA rulemaking. Today, EPA revealed how it intends to set the 2020 RVO. Simply put, the proposal fails to live up to the hype. The White House’s Oct. 4 announcement acknowledged Small Refinery Exemptions (SREs) would continue in the future but promised EPA would ensure that 15 billion gallons of ethanol be blended in 2020. Further, in an Oct. 3 phone call, Trump Administration officials told us the approach they would take to ensure at least 15 billion gallons for 2020 would be to prospectively account for the three-year rolling average of actual SRE volume from 2016-2018. In other words, EPA would apply the three-year rolling average of SREs for the 2016-2018 compliance years, approximately 1.34 billion gallons, and prospectively reallocate the volume to the 2020 RVO.” (Link to ACE newsroom)
Quote from Emily Skor, CEO of Growth Energy: “It is unconscionable that EPA’s proposal betrays President Trump’s promise to rural America. A week ago, Administrator Wheeler personally took to the airwaves and promised Iowa farmers that he would accurately account for lost gallons moving forward based on the ‘last three years of the waivers.’ Administration officials repeatedly said that 15 billion gallons will mean 15 billion gallons and this proposal fails to ensure that farm families and biofuel producers have the certainty they need to reinvest and rebuild after three years of massive demand destruction at the hands of EPA. After completely ignoring Department of Energy (DOE) advice to reduce exemptions, EPA now proposes to use DOE’s deflated numbers to turn a real fix into little more than a Band-Aid. To effectively address demand destruction moving forward, EPA’s fix must incorporate a projection of actual exempted gallons, not simply apply an out-of-date DOE recommendation. The proposal released today will do nothing to bring back the ethanol plants that have shut down or help the burden that many of our corn farmers currently face. Every day that passes without the true solution President Trump promised means more and more pain for America’s farmers and rural workers.” (Link to Growth Energy newsroom)
Quote from Geoff Cooper, President and CEO of the Renewable Fuels Association (RFA): “If the Oct. 4 announcement from EPA was a big step forward, today’s supplemental proposal is a step backward. It falls short of delivering on President Trump’s pledge to restore integrity to the Renewable Fuel Standard and leaves farmers, ethanol producers, and consumers with more questions than answers. It is baffling to us that the proposal sets the three-year average of exempted volume using the very same DOE recommendations that EPA blatantly ignored over and over. We are concerned that the volume of actual exemptions granted in 2020 could very well exceed the amount of projected exemptions from DOE, putting us right back into the quagmire where the 15-billion-gallon requirement is eroded and undermined. Simply put, this proposal is not what was promised by the administration just over a week ago and fails to answer President Trump’s personal call for a stronger conventional biofuel requirement of more than 15 billion. It is our hope that President Trump will personally intervene again to get the RFS back on track and ensure his EPA honors the commitments that were made.” (Link to RFA newsroom)
Quote from Monte Shaw, Executive Director of the Iowa Renewable Fuels Association (IRFA): “IRFA members continue to stand by President Trump’s strong biofuels deal announced on Oct. 4, which was worked out with our elected champions and provided the necessary certainty that 15 billion gallons would mean 15 billion gallons, even after accounting for SREs. Unfortunately, only 11 days after President Trump’s landmark announcement, the EPA proposal reneges on the core principal of the deal. Instead of standing by President Trump’s transparent and accountable deal, EPA is proposing to use heretofore secret DOE recommendations that EPA doesn’t have to follow. That means there is no guarantee that RFS exemptions will be accounted for in the RFS. Instead, the proposal today essentially asks Iowa farmers and biofuels producers to trust that EPA will do the right thing on SREs in 2021 when they have spent the last two years weaponizing SREs to unfairly undermine the RFS. It is unreasonable and counterproductive to expect Iowans to put their faith in EPA to fix the SRE problem when they were the ones who created the crisis in the first place. As this proposal goes against the core of President Trump’s deal that we continue to support, we will work with our elected champions and the President to get the deal he proposed, and we all celebrated, back on track. There must be certainty that 15 billion gallons will mean 15 billion gallons to restore integrity to the RFS.” (Link to IRFA newsroom)
Quote from Grant Kimberley, executive director of the Iowa Biodiesel Board (IBB): “On behalf of Iowa’s biodiesel producers, we are deeply concerned by EPA’s new proposal to address renewable fuel gallons lost through refinery exemptions to the RFS. The solution President Trump previously promised us would have estimated future exempted RFS volumes based on the average of actual volumes exempted over the past three years. That is the remedy we need to steady the renewable fuels market, help plants re-open their doors, and infuse rural economies still in crisis. This new plan from EPA appears to be a dramatic departure from the agreement struck with the President, and we expect markets to react accordingly. This is likely to inflict further damage on the already struggling biodiesel industry and farm economy. We will join our Iowa political champions, the National Biodiesel Board and other groups in scrutinizing this new proposal, and in ensuring the final rule fulfills the deal President Trump agreed to earlier this very month.” (Link to IBB newsroom)
Quote from Kurt Kovarik, Vice President of Federal Affairs for the National Biodiesel Board (NBB): “The notice that EPA issued today is significantly different from the agreement that biofuel industry champions negotiated with President Trump just two weeks ago, which was to estimate future exempted RFS volumes based on the average of actual volumes exempted over the past three years. EPA is proposing a brand-new method for making the estimate – one that was never previously proposed or discussed and significantly undercounts past exemptions. Once again, EPA is sending a signal to the biofuel industry that the volumes it sets in annual rules can’t be trusted. The proposed estimates lack transparency and undercut the President’s commitment to ensure that biomass-based diesel volumes are fully met. The biodiesel industry will work diligently with all appropriate federal agencies to ensure that the final rule scrupulously fulfills President Trump’s promise to soybean farmers and biodiesel producers.” (Link to NBB newsroom)