POET ethanol plant in Marion, Ohio Jacqui Fatka
Pictured is POET's Marion, Ohio biorefining plant. Currently its production capacity is 70 million gallons with plans underway to expand production to 150mg by 2018.

Biofuel industry continues to defend strong RFS

Rural plant workers urge White House to stand firm against making changes to Renewable Fuel Standard.

In efforts following last week’s meeting between President Donald Trump and stakeholders of both the biofuel and refinery industries, the biofuel industry continues to call for a strong Renewable Fuel Standard (RFS).

One hundred fifty biofuel plant managers and industry leaders sent a letter to Trump urging the White House to “stand strong in defense” of the RFS. In it, they directly address the campaign waged by Sen. Ted Cruz (R., Texas) to “cut, cap or eliminate” the market for U.S. biofuels manufactured from renewable farm crops.

“The jobs we create allow more than 200 biofuel plants to serve as economic anchors across the heartland, helping to revitalize the rural economy,” the letter noted.

“After four straight years of declining agricultural income, your steadfast support of homegrown biofuels has been a lifeline for the farm economy, and we are deeply grateful to you for upholding the campaign promises made to our workers, our families and all our rural neighbors,” the plant managers wrote to Trump. “We ask that you send a clear and final signal that this Administration will no longer entertain misleading schemes designed to kill the RFS.”

The letter claims that there is no truth behind the notion that the White House must choose between rural jobs and strong refining revenues. “Refiners of all sizes are posting surging profits under the RFS – thanks, in part, to the extraordinary generosity of this Administration’s tax reforms,” the letter said.

Growth Energy chief executive officer Emily Skor explained that PBF, HollyFrontier and Valero are all posting surging profits, and Delta’s revenue from its Monroe, La., refinery is up too.

“Instead of pitting their own workers against rural jobs, refinery owners should be talking about pro-growth options, like lifting needless limits on summertime sales of E15. President Trump vowed to protect the RFS, and that’s the kind of policy that will support both refinery margins and America’s hardworking farmers,” Skor said.

The letter said a “true win-win” proposal would lift summertime restrictions on the sales of 15% ethanol blends, which would “support growth on all sides" while generating a new supply of renewable identification numbers (RINs) and easing pressure on refiners. However, the letter added that "this proposal holds no value if it becomes tied to destructive RIN caps that eliminate market access for biofuels.”

On Tuesday, the Center for Agricultural & Rural Development (CARD) at Iowa State University released an economic analysis detailing how changing the RIN market mechanism would reduce ethanol blending and affect corn prices, potentially by as much as 25 cents/bu. in the short run.

A leading RFS reform proposal considered by policy-makers would allow for sales of E15 (fuel containing 15% ethanol) throughout the year and implement a cap on D6 RIN prices of between 10 cents and 20 cents per RIN. 

CARD found that while year-round sales of E15 would encourage retailers to sell the fuel, capping D6 RIN prices would reduce consumption of E15 and E85 (an 85% blend). A cap on D6 RIN prices of 10-20 cents/gal. would likely reduce the effective ethanol mandate from 15 billion gal. to about 14.3 billion gal. in 2018.

National Corn Growers Assn. president Kevin Skunes said, “A drop of 25 cents/bu. in corn prices, as CARD economists project from a RIN price cap, would devastate farmers and stagger rural communities.”

Skunes said nearly 12,000 farms were lost in 2016, according to the Federal Reserve Bank. “This decline must be stopped,” he said.

“Providing regulatory parity for E15 and higher blends helps address concerns about RIN values,” Skunes added. “Allowing the RIN market to operate freely with year-round sales of E15 would increase the production and consumption of renewable fuels, increase the supply of RINs available for compliance and lower RIN values. Combining (Reid vapor pressure) parity with a RIN price cap is counterproductive and would lower ethanol blending.”

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