To say the last year has been a rollercoaster ride for the ethanol industry would be an enormous understatement, Geoff Cooper, president and chief executive officer of the Renewable Fuels Assn. (RFA), said during a media call June 11. Today, more than 40 ethanol plants are fully idled, with many more running well below output rates, due to reduced fuel demand resulting from COVID-19-related stay-at-home orders as well as ongoing challenges with uncertainty over implementation of the Renewable Fuel Standard.

It was just one year ago when President Donald Trump visited an ethanol plant in Council Bluffs, Iowa, to announce the expansion of E15 ethanol blends for year-round use and had the opportunity to hear firsthand the impact of ongoing small refinery exemption (SRE) waivers granted by the Environmental Protection Agency.

This year started with a number of victories for the ethanol industry, including completion of the U.S.-Mexico-Canada Agreement and finalization of a Phase One agreement with China as well as a 10th Circuit Court of Appeals ruling that set a precedent that substantially limits EPA’s ability to grant SREs going forward. Cooper said the outlook went from optimistic in mid-February to early March to “crisis mode in a few short months.”

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“We are, fortunately, seeing some signs of recovery as gasoline consumption has picked up,” Cooper said. Ethanol production is up 50% from its low point in late April and approximately 25% from pre-COVID levels. He said it still isn’t clear how long-lasting the impacts to the fuel market will be.

RFA chief economist Scott Richman said fuel use is still running 20-25% below the same time period last year, but he’s encouraged by the initial recovery seen after the dramatic impact of the stay-at-home and shelter-in-place orders. “We realize it’s a tough road to hoe ahead of us,” he said, with businesses still constrained and 13% of the nation’s workers now unemployed.

Ethanol production dropped an estimated 3.0-3.5 billion gal. in 2019 compared to original expectations. The value of that ethanol, as well as the loss of economic activity and lost co-product sales, creates as much as $10 billion in losses attributable to the COVID-19 pandemic, which “may prove to be on the low end of estimates,” Cooper said.

Even with the lower fuel use, early indications point to E15 sales holding up fairly well during the downturn. Richman said E15 sales in Minnesota were down 12% for March, but this compares to overall fuel sales being down 15-20% from year-ago levels.

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In 2019, 430 million gal. of E15 were sold in the U.S., which is close to 50% over 2018 levels. Richman said E15 sales in 2019 increased by one-third in Minnesota and by more than 38% in Iowa.

Kevin Ross, a corn, soybean and beef farmer from Minden, Iowa, and president of the National Corn Growers Assn., said at the end of 2019, corn farmers were feeling a lot of momentum. Now, the impact of COVID-19 will remain for quite some time. Ross said the projected 3 billion bu. corn carryout could bring lower revenues for corn farmers, with projected losses at $59 per acre in 2019 and as much as $89 per acre in 2020.

Looking at what’s going on now with the biggest carryout since the 1980s and the lowest crop revenues since 2006, Ross said, “We need ethanol to get back so we can consume this [big crop] quicker. We certainly think the long-term success of ethanol partners is definitely a good way to paint a good economic picture for agriculture.”

Richman noted that the disruption seen with the dried distillers grain (DDG) markets following the dramatic slowdown of ethanol production is beginning to normalize. Livestock feeders were forced to adapt and use different feed ingredients as supplies dried up when more than 50% of ethanol production shut down. Prices initially increased substantially, but last week, the Midwest average DDG price was 122% to corn, which is a more normal price spread and allows DDGs to re-enter feed rations.

The ethanol industry also remains hopeful for direct assistance as part any future rounds of aid from Congress. Cooper said since the ethanol industry was left out of the Coronavirus Aid, Relief & Economic Security (CARES) Act, they’re hoping the strong bipartisan support shown will help the biofuel sector. The House-passed HEROES Act in mid-May offered some help, but the Senate now must decide how it wants to proceed. Senate action could happen soon after the July 4 recess, he said.

“Because the ethanol industry was left out of the previous package, and because our industry is still hurting with still more than 30% off line, assistance is justified and warranted for the industry,” Cooper said.

He added that lots of discussions are occurring among the oil industry regarding regulatory relief and purchasing crude oil for strategic oil reserves. “What we’re simply asking is for fairness and equity in how assistance is provided to ethanol,” Cooper added.

In an open letter to the President timed to the one-year anniversary of his appearance at the Iowa ethanol plant, RFA called on Trump to reject attempts to grant the oil industry more waivers from renewable fuel obligations as well as to offer support to the biofuel sector.

“Mr. President, we need your help,” he concluded. “We ask that you stand up for the Renewable Fuel Standard. Please direct your EPA to abide by the January court ruling and end the abuse of the refinery waiver loophole. You stood by us, farmers and consumers when you directed EPA to allow year-round E15. Now, we humbly ask that you stand with us again and ensure ethanol demand is not eroded by illegal refinery waivers.”

Mike Jerke, CEO of Southwest Iowa Renewable Energy, which hosted Trump one year earlier, said the ability to innovate comes from the genesis of the entire ethanol industry from farmers who find ways to better their opportunities and address problems.

“Ethanol has been a solution and continues to be and helps the rural economy. Today, as we talk about COVID and respiratory issues, ethanol stands right there as a shining light in replacing smaller particulate problems that can occur with traditional blending,” Jerke said.

Ross added that air quality benefits are an even bigger selling point for ethanol due to the impact COVID-19 has on those with respiratory issues.