On The Front Lines: The Old Battle between Ethanol and Oil Takes Center Stage with the RFS.

by Erin Voegele (Ethanol Producer Magazine) Ethanol Producer Magazine recaps the many recent attempts to hinder the policy, and looks beyond 2022. -- ... But leaders in the ethanol industry are quick to point out this fight is not new; it’s the same battle over market share the ethanol industry has been fighting with the oil industry since the RFS was first implemented more than a decade ago. PES’s bankruptcy filing merely brought that fight to the surface.

Merchant refiners argued for a price cap on RINs, a move the ethanol industry said would squash demand. Ethanol producers, alternatively, have been calling on Trump to quickly implement a Reid vapor pressure (RVP) waiver, which would allow E15 to be sold year-round, increase blending and reduce the price of RINs. Merchant refiners, however, aren’t on board with that solution.

... EPA had effectively circumvented its mandate to enforce refiner RVOs by granting small refiner hardship waivers to refining companies that are neither small, nor experiencing economic hardship. Initial reports have found that at least 25 of these waivers have been awarded retroactively for the 2016 and 2017 compliance years.

During an April 24 hearing held by the Senate Committee on Agriculture, Nutrition and Forestry, Agriculture Secretary Sonny Perdue called the EPA’s actions “demand destruction” and estimated approximately 1.12 billion gallons of the 15 billion-gallon RVO for conventional biofuel were waived through the EPA’s misuse of its waiver authority.

Jennings (Brian Jennings, CEO of the American Coalition for Ethanol) also points out that many proposed changes that aim to undermine the RFS would likely violate the statute and fail to survive litigation. He says there does not seem to be enough votes in Congress to dismantle the program. “This has been the case for 10 years now,” he says, referencing repeated past efforts by some lawmakers to end or hobble the RFS.

Brent Erickson, executive vice president of the Biotechnology Innovation Organization, also says legislative action seems unlikely at this point.

Emily Skor, CEO of Growth Energy, says, “As long as we’re taking market share away from an entrenched incumbent, we’re going to see these types of challenges. This is part of our daily existence. We have had so much success as an industry. As a nation, we are blending more than 10 percent ethanol into our fuel supply, so now we have to fight for continued market access.

“We’ve saturated E10,” she adds. “So, now we need to look at E15 and even higher blends. So, that is going to have to be a fight—because again—higher blends means that we are taking market share away from the oil industry. It is straight up competition and they are not going to like it. … We are seeing that play out in politics and in terms of some of the allegations that are made about ethanol.”

RFS After 2022
“Contrary to popular belief among some, the RFS doesn’t simply end in 2022,” Jennings says.
In EISA, Congress only set statutory RFS blending targets through 2022. “After 2022, EPA must set the annual volumes based on six specific factors,” Jennings adds. These factors include environmental effects, energy security, production, infrastructure costs, and things like jobs and commodity prices, Jennings explains. “So, there are goal posts, if you will,” he says. “There are parameters to their consideration. It’s not going to be the Wild West.”

"... There needs to be a serious consideration of us pursuing, as a country, fuel choices and options to meet those [Corporate Average Fuel Economy] standards and provide high octane as an option to the American people. I think there is a potential that will serve both the ag sector as well as the auto sector and consumers across this country that we could pursue together.” (EPA Administrator Scott Pruitt)

“All politics is local,” Erikson says. “It really helps to keep inviting members of Congress and their staff to tour facilities and to make sure employees engage with local congressional offices on a quarterly basis.”

Jennings urges those in the industry to not become fatigued by some of the political fights that replay over and over. “Stay engaged, stay involved,” he says. “Organizations like ACE are only as effective as our members are contributing and engaged.

“Members of congress get sick and tired of hearing from people like me—the paid lobbyist who they’ve come to know over the years,” Jennings continues. “But there is something incredibly disarming and persuasive and authentic about having a retailer who is selling E15 and E85 meet with the EPA administrator and members of congress and explain that his or her business is hurt because they can’t sell E15 year round—that the sales of their fuel go down in summer months and so do sales inside the store, where they make most of their money…I feel ACE’s role is to provide opportunities to our members to speak up and speak out for the industry to demonstrate there is a strong, diverse grassroots network of people around the country that benefit from ethanol.” READ MORE

Excerpts from Platts: "I don't see an easy regulatory fix. I think it's going to have to come from [Capitol] Hill, and that's going to be tough," George David Banks said in an interview with Platts Capitol Crude that aired Wednesday.

Banks called the RFS "one of the most complicated issues that we have on the energy front." And yet special interest groups are fighting over a "very, very, very small percentage" of ethanol in the fuel supply, he said.

"If you didn't have the mandate, 90-plus% of the ethanol that's currently blended would still be blended," Banks said. "Folks are really fighting over a very small percentage of what's out there in the market."

Banks said the corn ethanol industry should be worried about what happens to the program in 2022, when the Environmental Protection Agency gets broad discretion over it.