Biofuel supporters say final RFS falls short

EPA finalizes 2020 RVO blending levels but does not account for lost demand from previous years’ small refinery exemptions.

Jacqui Fatka, Policy editor

December 19, 2019

5 Min Read
ethanol plant with corn field in the front
Jim Parkin iStock

The Environmental Protection Agency finalized blending levels for 2020 under the Renewable Fuel Standard (RFS), but after months of negotiations and concerns from the biofuel industry, the Trump Administration’s plan appears to remain underwhelming, according to those in the biofuel sector.

Volumes of "conventional” biofuels, met primarily by corn-based ethanol, will be maintained at the 15 billion gal. target Congress set for 2020. However, based on discussions with President Donald Trump earlier this fall, biofuel supporters had hoped that the 2020 level would restore the billions of gallons of demand lost in 2016-19.

During a call with the media Thursday morning, an EPA official explained that EPA will be finalizing its methodology based on the 2016-18 annual average of exempted gallons. EPA said it has strictly followed the U.S. Department of Energy (DOE) recommendations for 770 million renewable identification numbers (RINs) in those years, including granting 50% relief where DOE recommended 50% relief. By proposing 15. 8 billion gal., EPA said it will net out at 15 billion gal.

“This is our general approach to adjudicating small refinery exemption (SRE) petitions going forward; beginning with 2019 SRE petitions and including 2020 SRE petitions and beyond, we are committed to following the DOE recommendations. By proposing effectively 15.8 billion gal. for 2020, we will ensure meeting our target of 15 billion gal.,” EPA said in a statement.

Related:Ethanol industry upset over RFS proposal

Sen. Chuck Grassley (R., Iowa), who has championed biofuels in discussions with the Administration, is not convinced. “Once again, EPA is playing games and not helping President Trump with farmers," Grassley said. "An agreement was reached on Sept. 12 in an Oval Office meeting between several Midwest leaders, President Trump and other members of his Administration. This does not reflect what we agreed to in that meeting. Simply requiring that the three-year rolling average be based on hard data and actual waived gallons rather than Department of Energy recommendations and EPA discretion would solve this problem and ensure the renewable volume obligations are met. [EPA Administrator Andrew] Wheeler has put the President in a bad situation by not following the law as intended by Congress and as the President has promised to uphold.”

National Corn Growers Assn. president Kevin Ross said corn growers are underwhelmed by the final renewable volume obligation (RVO). “The Administration has chosen to move forward with a final rule that corn farmers believe falls short of adequately addressing the demand destruction caused by EPA’s abuse of RFS refinery waivers. While using the DOE recommendations to account for waivers is an improvement over the status quo, it is now on corn farmers to hold the Administration to their commitment of a minimum of 15 billion gal. volume, as the law requires,” Ross said.

Related:Farmers meet at White House regarding RFS

Growth Energy chief executive officer Emily Skor said the rule uses an accounting formula based on DOE recommendations, which EPA has a poor track record of following. “All eyes will now be on EPA’s next round of refinery exemptions and future targets, which will signal whether Administrator Wheeler is truly committed to ending demand destruction,” Skor said.

The EPA official explained that any time the agency considers an SRE, it is sent to DOE for a financial analysis to determine if the SRE is warranted and a matric back with those recommendations. Moving forward, EPA will be consciously looking at what is being done in setting the yearly RVO and accounting for demand loss under the SREs granted.

The EPA official said looking at the three-year average allows the agency to reasonably anticipate the future number of SREs, whether full or partial, and allows EPA to honor the President’s commitment to establish the 15 billion gal. mark for conventional biofuel blending each year.

Cellulosic biofuel volumes for 2020 -- and, thus, advanced biofuel volumes -- will increase by almost 170 million gal. over the 2019 standard. Biomass-based diesel volumes for 2021 will be equivalent to the standard for 2020 -- still more than double the statutory requirement.

The Biotechnology Innovation Organization (BIO) said the latest EPA move adds more uncertainty to the U.S. renewable fuel policy. “Unfortunately, this final rule from EPA does not alleviate concerns we had when the draft rule was published earlier this year,” said Stephanie Batchelor, vice president of BIO’s Industrial & Environmental Section. “The lack of growth for advanced and cellulosic biofuels and the failure to fully reallocate the gallons lost from the drastic expansion of small refinery exemptions will continue to stifle investment in green energy breakthroughs. This final rule will have a long-lasting negative impact on the country’s renewable fuels industry, as we’ve already seen plants close because of the agency’s manipulation of the policy to date.”

Biofuel supporters do not anticipate backing down from the fight.

“No matter what EPA says about the impact of its waivers to oil companies making billions in profits, farmers and biofuels producers know and feel the negative impact of the agency’s actions," Grassley said. "I will hold EPA’s feet to the fire to make certain they abide by the Department of Energy’s recommendations and ensure integrity in the RFS. Whether that happens is up to Administrator Wheeler, and the President’s support among farmers is in his hands. The magic words from the Oval Office meeting were three-year rolling average based on hard data and actual waived gallons. Abiding by this would have solved all the problems EPA has created.”

Kyle Gilley, senior vice president, external affairs and communications at POET, the nation's largest ethanol producer, said, “Today was a missed opportunity to finally restore clarity to the ethanol and grain markets, but more opportunities lie ahead in 2020.”

Gilley added, “With these 2020 RVO levels now finalized, our near-term focus shifts to implementation of the remainder of the President’s critical biofuels package: ensuring 15 billion gal. means 15 billion blended, deploying an infrastructure package, changing the pump label and reforming the fuel survey.  These provisions together will provide a needed lifeline for farm families.”

The National Corn Growers Assn. said it, too, plans to use future rule-makings and other opportunities to hold EPA accountable.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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