Ethanol and biodiesel supporters are fuming, angry at the Environmental Protection Agency for undermining the Renewable Fuel Standard by granting compliance waivers to more than two dozen oil refineries last year.
The waivers, designed for small refineries experiencing financial hardships, could lower biofuel demand in 2018 by as much as 500 million to 1 billion gallons, says Monte Shaw, executive director of the Iowa Renewable Fuels Association. “This is an assault on the RFS, and it must be stopped.”
EPA has refused to release the number of waivers it granted or which refineries received the exemptions. News reports digging into the situation said there were 25 waivers issued in 2017 with some of them going to highly profitable refineries.
Andeavor, one of the nation’s biggest oil refining firms with net profits of $1.5 billion last year, received EPA waivers for its three smallest refineries in 2016, which could reduce its regulatory costs by more than $50 million.
Grassley: EPA may be breaking law
Sen. Chuck Grassley, R-Iowa, says EPA may be breaking the law by issuing the secretive waivers. “If refiners are being allowed to get out of their renewable volume obligations EPA assigned them last November, that undermines the RFS,” he notes. “Giving big firms like Andeavor a free pass when other companies are required to follow the law isn’t only unfair, it may be illegal. EPA is required to follow the law passed by Congress.”
Ethanol groups are also disappointed with court approval recently of a settlement between Philadelphia Energy Solutions (PES) and EPA that waives most of the bankrupt refiner’s RFS obligation. This settlement is another example of how EPA is willing to dismantle the RFS, Shaw says.
These waivers lead to demand destruction for renewable fuels, says Bruce Rastetter, an Iowa ag entrepreneur who has experience in the ethanol business in Iowa and Brazil. “This situation is trending in the wrong direction,” he says. “Clearly, granting those waivers, without having E15 blending year around, is not a solution to the RIN issue that the oil refiners are concerned about.”
E15 all year
If EPA is going to hand out these waivers to refineries, then EPA should allow year-around blending of E15 ethanol, Rastetter says. “EPA should allow E15 to be sold in E10 pumps at retail gas stations. That market-based solution needs to happen.”
Corn growers can help make it happen, he adds. When you pull into a gas station and only see E10 as an option at the pumps, and you pull into another station and see E10, E15 and E85 being sold, you should ask that first retailer why they aren’t supporting rural communities and ethanol production in their area, he says.
“We worry about trade issues and China’s tariffs,” Rastetter says. “And we should. But we can do a lot more to solve the problem of oversupply of ethanol and ethanol demand not growing. EPA is clearly headed in the wrong direction with these RFS waivers.”
In many areas of the U.S. E15 isn’t allowed to be sold during summer because of EPA restrictions. “We need the freedom to go beyond E10 and have E15 widely available throughout the year,” Rastetter says. “Farmers in recent years have produced significantly more corn, as ethanol production has increased demand for corn. In addition to E15 being made widely available, we also need free and open trade to be able to export ethanol to foreign markets. Europe and China are not allowing U.S. ethanol to be imported into their countries tariff-free or without significant regulation.”
Trump supports ending E15 restrictions
President Donald Trump announced April 12 that he supports approval for year-round consumer access to E15. “This is welcome news for Iowa’s farmers and American motorists, as it will help expand the availability and market access for higher blends of ethanol,” says Mark Recker, president of the Iowa Corn Growers Association. “However, our work in defending the RFS is still not done.”
Recker says ICGA will continue to work with the Trump administration and elected leaders to protect the integrity and intent of the RFS from potentially damaging RIN cap proposals and small refinery exemptions.
“Iowa farmers will continue to stand up for their farms and support the biofuels industries that have kept our communities in rural America alive and thriving,” he says.
Work isn’t over
“For corn farmers, ethanol remains our top market,” Recker says. “By allowing year-around E15 sales in the U.S., we will increase demand for corn and provide homegrown fuels to consumers. As a nation, we should be doubling down on our need for reliable, homegrown biofuels, not blocking their market access. Having a strong RFS and year-around sales of E15 would keep Iowa’s ethanol industry viable and provide a key market for our corn going strong.”
It was during the White House meeting April 12, with several Midwest governors and senators, that Trump stated he would like to see E15 be sold year-round, instead of being restricted to eight months of the year due to EPA restrictions.
ICGA’s Recker notes, “While this E15 announcement by the president is definitely positive progress and it shows that the ‘call-to-action messages’ many farmers have sent to President Trump are being heard, our work on E15 is not over until we see action from the administration, likely through a rulemaking from EPA.”
Read ICGA’s statement in response to Trump’s E15 comments last week.