Iowans have an answer for Environmental Protection Agency Chief Scott Pruitt’s question of how to reduce RIN prices associated with the Renewable Fuel Standard. The answer is for EPA to grant the E15 ethanol blend the same RVP treatment as all other ethanol-blended fuels.
RVP (Reid vapor pressure) is a measurement that’s part of an EPA rule prohibiting the sale of E15 during summer.
At present, E15 can’t be sold from June 1 to Sept. 15 because it doesn’t meet the RVP requirements for the summer ozone season. The 10% (E10) ethanol blend can be sold year-round, but not the 15% (E15) blend. Granting E15 a waiver would be favorable for the ethanol industry and corn growers as it would increase the market share for ethanol.
Making E15 available year-round may also be the answer to the block on Iowa Ag Secretary Bill Northey’s nomination to serve as a USDA undersecretary. One of the reasons U.S. Sen. Ted Cruz from oil-producing Texas has put a “hold” on Northey’s nomination is Cruz believes the price of RIN ethanol credits is too high.
Petroleum refiners are required to buy RINs if they don’t blend enough ethanol into the gasoline they produce. Cruz is refusing to hold a Senate vote on Northey’s nomination to the USDA post, unless EPA takes action to lower the price of RINS.
Pruitt gets message
On Jan. 30 while Pruitt was testifying before the U.S. Senate Environmental and Public Works Committee, the annual Iowa Renewable Fuels Summit for 2018 was taking place in Des Moines. Attendees were signing a letter to Pruitt asking him to grant E15 RVP parity.
A copy of the letter summit attendees signed, and a photo of the signed poster, was sent to Pruitt’s office on Feb. 7.
Pruitt has publicly expressed his concerns over the price of RINs. Iowa Renewable Fuels Association Executive Director Monte Shaw says E15 will unlock the solution. “From Harvard professors to Iowa retailers, the experts agree E15 RVP parity is the fastest way to lower RIN prices,” Shaw says. “It is simple supply and demand. Allowing retailers to blend E15 all year-round would flood the market with RINs and reduce the price of RINs.”
EPA may issue answer soon
During the Senate hearing, Pruitt told Iowa Sen. Joni Ernst the EPA is in the process of determining if the agency will provide E15 RVP parity. “I’m hopeful we’ll have a conclusion on that soon. It’s very important; we are working to get an answer as soon as we can,” Pruitt said.
U.S. Secretary of Ag Sonny Perdue has told Congress and Pruitt that making E15 more available is the answer to the RINS controversy. “Ethanol has been good for the American farmer,” Perdue said. “We need to help facilitate a movement into the RVP waiver for the 15% ethanol blend.”
Perdue has talked with Pruitt and the energy industry about the need to grant the waiver as a solution to the RIN situation.
A new Harvard University study concludes that a year-round E15 waiver would boost the number of RIN credits issued by EPA and lower RIN prices. RINs are a provision of the Renewable Fuel Standard, a federal law requiring the petroleum industry to blend a certain amount of ethanol into the nation’s gasoline supply each year. Of course, Ted Cruz and the oil industry would like to get rid of the RFS.
Grassley asks Senate for Northey confirmation
Sen. Chuck Grassley of Iowa on Feb. 7 sought unanimous consent from his Senate colleagues to confirm Iowa Ag Secretary Bill Northey to serve as undersecretary of agriculture for Farm and Foreign Agricultural Services at USDA.
President Donald Trump’s nomination of Northey to serve in this important post has been kept from a vote in the Senate since October due to the objection from Cruz. Senate approval of the Northey nomination is the last step toward Northey assuming the USDA position.
The Senate Ag Committee voted unanimously in October to send the nomination to the full Senate. Grassley has worked to clear the objection of Cruz, saying it’s based on an issue Northey will not be involved with at USDA, and putting an outstanding leader like Northey in place is vitally important to American agriculture during debate this year on a new farm bill.
Confirmation further delayed
Barring objection to Grassley’s request for unanimous consent, Northey would have been confirmed to serve at USDA. But Cruz objected, further delaying Northey’s confirmation.
Grassley spoke on the Senate floor Feb. 7 about the issue and was joined by Senate Ag Committee colleagues Sen. Debbie Stabenow of Michigan, ranking member of the committee, Sen. Joni Ernst of Iowa and Sen. Amy Klobuchar of Minnesota.
Grassley also spoke with Iowa reporters about the Northey hold and the RFS. Audio of that call can be found here. Grassley released an internal analysis last week, which supports numerous independent studies regarding the RFS and the Pennsylvania oil refinery bankruptcy, showing no link between the success of refineries and RIN costs.
While Grassley has suggested multiple ways to lower RIN costs, including increased market transparency to reduce speculation and making E15 available year-round. And independent analyses do not support the claim that the Pennsylvania oil refinery bankruptcy was due to the RFS. The EPA in November found, “After reviewing the available data, EPA has concluded that refiners are generally able to recover the cost of RINs in the prices they receive for their refined products, and therefore high RIN prices do not cause significant harm to refiners.”