Ethanol Industry Critical of EPA Proposed Volumes DEADLINE FOR COMMENTS: TBD

July 08, 2019

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(Renewable Fuels Association/AgNewsWire) The Environmental Protection Agency on Friday issued proposed volume requirements under the Renewable Fuel Standard program for calendar year 2020, with a total renewable fuel volume of 20.04 billion gallons, of which 5.04 billion gallons are advanced biofuel, including 540 million gallons of cellulosic biofuel. That leaves the 15-billion-gallon requirement for conventional renewable fuels like corn ethanol unchanged from 2019.

Renewable Fuels Association (RFA) president and CEO Geoff Cooper says the proposal “completely betrays President Trump’s commitment” to uphold the integrity of the RFS by neglecting to prospectively reallocate small refinery exemptions and blatantly ignoring a court order to restore improperly waived gallons.

Cooper discusses the shortcomings of the proposal in this interview: RFA CEO Geoff Cooper interview on EPA RVO proposal READ MORE

U.S. EPA proposes hike in 2020 biofuel mandate but waiver volumes draw ire (Reuters)

Biofuels Groups Blast EPA for RFS Proposed Volumes (Energy.AgWired.com)

BIOFUEL GROUPS UNHAPPY WITH EPA’S PROPOSED RFS RULE (Brownfield Ag News)

EPA Proposal Would Bump US Biofuel Quotas (RigZone/Bloomberg)

EPA Proposes Renewable Volume Obligations for 2020 On Track to Meet Statutory Deadline (Environmental Protection Agency)

Iowa ethanol, biodiesel advocates decry EPA’s 2020 RFS regs (Radio Iowa)

EPA Takes Heat for Proposed RFS Volumes: Agency's Proposal Leaves Little Room for Growth in Biodiesel (DTN Progressive Farmer)

Iowa Biodiesel Board, Farmers Dismayed by EPA Proposal (River Cities' Reader)

EPA’s proposed RFS biofuel volumes for 2020 being slammed by biofuel industry (Biofuels Digest)

Are EPA’s Proposed RFS ‘Obligations’ Actually Just Suggestions? 2020 RFS Proposal Turns Blind Eye to Refinery Exemptions and Court-Ordered Remand (Renewable Fuels Association)

EPA proposes 2020 RVOs, 2021 RVO for biomass-based diesel (Ethanol Producer Magazine)

EPA Fails to Meet Administration's Promised Commitment to Farmers, Rural America (Solutions from the Land)

US EPA proposes stalling 2021 biodiesel RVO at 2020 level (Biodiesel Magazine)

Proposed RFS Obligations Widely Met with Dissatisfaction (EHS Daily Advisor)

Excerpt from Reuters: The issue has also gained more importance with many 2020 Presidential hopefuls looking to secure support in key states such as Iowa, a major ethanol producing state.

Since Trump took office, the EPA has more than quadrupled the number of waivers it has granted, saving the oil industry hundreds of millions of dollars but enraging another key constituency - corn growers - who claim the move threatens demand for their products.

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The EPA also proposed holding the biodiesel mandate at 2.43 billion gallons for 2021, unchanged from 2020. The agency sets biodiesel mandates a year in advance. Corn and ethanol producers have long urged the EPA to lift the figures to make up for the volumes waived under the small refinery hardship program.

The lack of it infuriated biofuel groups and Republican senators from corn state Iowa. “It’s unacceptable that EPA would set biofuel volumes below demand at a time when farmers, biofuels producers and agribusiness owners are forced to shed jobs and close plants,” influential Senator Chuck Grassley said.

“I urge President Trump to compel EPA to reverse course and keep his word to the forgotten Americans who have faithfully stood with him.”

American farmers have been among the most affected by Trump’s trade war with China, which once was a top export market for U.S. agricultural products - although the rural heartland has mostly remained loyal to him.

“EPA appears to be selling out to oil refiners — again — at the expense of rural America,” said Geoff Cooper, president and chief executive of the Renewable Fuels Association.

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The deadline for EPA to issue the final rule on blending requirements is Nov. 30. READ MORE

Excerpts from Bloomberg/Rig Zone: Renewable Energy Group Inc., one of the largest U.S. biodiesel producers, fell 15 cents, or 1%, to $15.59 at 12:51 p.m. in New York. The shares earlier traded as high as $15.80.

Exemptions Reviewed

Independent oil refineries and their allies on Capitol Hill have pushed back on the administration review of refinery exemptions, warning that Agriculture Secretary Sonny Perdue‘s involvement in waiver decisions could violate federal law and vowing to block the confirmation of Agriculture Department nominees over the issue.

The Fueling American Jobs Coalition of refiners on Friday asserted the exemptions have not affected ethanol demand, sales or production. Meanwhile, the group said, the U.S. biofuel mandate needs “wholesale repair.”

“The implementation of the Renewable Fuel Standard is deeply flawed, needlessly penalizing independent refiners, small gasoline retailers and others,” the coalition said.

The oil industry pressure campaign -- and a surge in tradable credits used to show compliance with quotas -- reflect growing speculation the Trump administration will dial back the exemptions. Since June 10, the day before Trump got an earful from disgruntled farmers and biofuel producers in Iowa, Renewable Identification Numbers tracking 2019 ethanol mandates have increased 61.4%.

The EPA will now take public comment on its proposed biofuel targets, keeping the agency on track to finalize next year’s quotas before a Nov. 30 deadline. It is still honing a separate, broader “reset” of the Renewable Fuel Standard. READ MORE

Excerpt from Environmental Protection Agency: Some key elements of today’s action:

“Conventional” renewable fuel volumes, primarily met by corn ethanol, would be maintained at the implied 15-billion gallon target set by Congress.
EPA is proposing an advanced biofuel volume requirement for 2020 of 5.04 billion gallons, which is 0.12 billion gallons higher than the advanced biofuel volume requirement for 2019.
The cellulosic biofuel volume requirement of 0.54 billion ethanol-equivalent gallons for 2020 is based on our production projection which is 0.12 billion ethanol-equivalent gallons higher than the cellulosic biofuel volume finalized for 2019.
We are proposing to maintain the biomass-based diesel (BBD) volume for 2021 at 2.43 billion gallons.

Proposed and Final Renewable Fuel Volume Requirements for 2019-2021

The Clean Air Act requires EPA to set annual RFS volumes of biofuels that must be used for transportation fuel for four categories of biofuels: total, advanced, cellulosic, and biomass-based diesel. EPA is using the tools provided by Congress to adjust the standards below the statutory targets based on current market realities. EPA implements the RFS program in consultation with the U.S. Department of Agriculture and the U.S. Department of Energy.

For more information on today’s announcement, go to: https://www.epa.gov/renewable-fuel-standard-program/proposed-volume-standards-2020-and-biomass-based-diesel-volume-2021 READ MORE

Excerpt from Biofuels Digest: Ok, so what’s so bad about this? Let’s start with cellulosic fuel…not much of an increase there with a 120-million-gallon increase which in the grand scheme of things is tiny, but ok, at least it’s an increase.

Maybe advanced biofuel is a bit better, right? Surely there must have been an increase there! Well, from 4.92 to 5.04, it’s not really moving the needle. Heck, if you round up 4.92 to 5 and round 5.04 down to 5 it’s almost the same.

Ok, ok, we get the point, not much increasing there either…how about ethanol. After all, corn farmers, year-round E10, ethanol is big here in the heart of the U.S., so surely there would be an increase there? Since it falls under “renewable fuel” in this table here, that leaves us with about 14.5 billion gallons. Wait, what? Let’s double check the numbers…2019 had about 14.58 billion gallons of renewable fuel and now in 2020 it’s actually decreased to 14.46 billion gallons? Can that be right?

What about the small refinery waivers? Were they accounted for at all in the EPA proposed numbers?

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Bottom Line

Flatlining, fed up, rolling back, disappointing, dismayed, betrayal…these are the words folks in the ag and biofuels world are using to describe the proposed EPA volumes and until EPA changes those proposed numbers, they will keep using those words…and probably much harsher ones behind closed doors.

Hopefully someone at the EPA is listening and will make some changes, so in the future we’ll be hearing words like “moving forward, improving the bioeconomy, increasing demand and support for biofuels” instead. The public hearing date hasn’t been set yet but that will provide another opportunity for farming and biofuels voices to be heard. READ MORE

Excerpt from Renewable Fuels Association: Making matters worse, EPA’s proposal continues to flout the D.C. Circuit Court’s 2017 order requiring the Agency to restore 500 million gallons of renewable fuel obligations that it inappropriately and illegally waived from the 2016 RVO. Unbelievably, the Agency is proposing to snub the court’s ruling by refusing to restore the 500 million gallons remanded volume.

“EPA’s stubborn refusal to obey a court order to restore lost demand is yet another kick in the teeth to U.S. renewable fuel producers and farmers already facing the worst market conditions in a generation. EPA’s suggestion that following the court’s directive would place an ‘additional burden’ on obligated parties is an insult and an affront to the farmers and ethanol producers who trusted this administration would follow the law. The RFS wasn’t intended to make oil refiners comfortable; it was intended to change the status quo by guaranteeing renewable fuels would have access to a marketplace otherwise closed to competition. Yet, EPA appears to be selling out to oil refiners—again—at the expense of rural America. The court found in favor of renewable fuel producers in 2017 because it was clear our industry had been harmed by EPA’s illegal use of a general waiver—now EPA is doubling down on that harm to the ethanol industry and farmers.”

Cooper said today’s proposal undermines the pledge President Trump made to farmers and renewable fuel producers that his administration would enforce the statutory RFS volumes. READ MORE

Excerpt from Biodiesel Magazine: “EPA's proposed rule would turn the RFS program on its head,” said Kurt Kovarik, NBB’s vice president of federal affairs. “It is likely to reduce America’s use of cleaner, lower-carbon biodiesel and renewable diesel for transportation over the next several years, encouraging more petroleum use. The proposal sends a chilling signal to America’s biodiesel and renewable diesel producers of EPA’s intent to limit market growth for cleaner fuels. EPA appears to have simply repeated the previous biomass-based diesel volume of 2.43 billion gallons for 2021 without analyzing our industry’s ability to achieve higher volumes. Worse, EPA refuses to reconcile its RFS rules with its small refinery exemption handout spree. EPA Administrator Andrew Wheeler asserts that by law he must grant RFS hardship exemptions to every refiner that asks. Yet in the proposed rule, EPA claims it can’t possibly predict whether oil refineries will once again take advantage of EPA’s open spigot on these handouts. We know that Administrator Wheeler’s public statements and EPA’s calculation of small refinery exemptions in the annual volumes can’t both be true.”

EPA’s calculation of the 2020 annual percentage standards uses “zero” as the number of gallons of diesel and gasoline produced by exempt small refineries, according to the NBB. For 2015, 2016 and 2017, EPA exempted nearly 28 billion gallons of gasoline and diesel produced by small refineries, without accounting for them in the RFS program. Those exemptions reduced demand for biodiesel and renewable diesel by hundreds of millions of gallons. According to University of Illinois Professor Scott Irwin, the demand destruction for biodiesel and renewable diesel could reach 2.45 billion gallons over the next few years causing a $7.7 billion economic loss for the biodiesel industry. READ MORE