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POET blames ‘oil bailouts’ on decision to idle production

Jacqui Fatka POET ethanol plant in Marion, Ohio
Pictured is POET's Marion, Ohio biorefining plant. The plant expanded capacity in 2018 from 70 million gallons to 150mg.
Over half of POET’s 28 plants have reduced production levels due to small refinery exemptions slashing ethanol demand.

POET, the world’s largest biofuel producer, will idle production at its bioprocessing facility in Cloverdale, Ind., due to recent decisions by the Administration regarding small refinery exemptions.

POET has a network of 28 production facilities across seven states. At full run rates, POET purchases 5% of U.S. corn and produces 2 billion gal. of ethanol, 10 billion lb. of distillers dried grains and 600 million lb. of corn oil annually. However, the waivers issued by the Environmental Protection Agency have resulted in significant demand destruction, and POET said it has had to make significant cutbacks.

The process to idle the plant will take several weeks, after which the Indiana plant will cease processing more than 30 million bu. of corn annually, and hundreds of local jobs will be affected. POET has reduced production at half of its biorefineries, with the largest reductions taking place in Iowa and Ohio. As a result, numerous jobs will be consolidated across POET’s 28 biorefineries, and corn processing will drop by an additional 100 million bu. across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota and Missouri.

“The Renewable Fuel Standard [RFS] was designed to increase the use of clean, renewable biofuels and generate grain demand for farmers. Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard. Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process,” POET chairman and chief executive officer Jeff Broin said.

The RFS authorizes small refinery exemptions for refiners that: (1) process fewer than 75,000 barrels of petroleum per day and (2) demonstrate “disproportionate economic hardship.” Over the past two years, EPA has issued waivers to refineries owned by ExxonMobil, Chevron and other large oil companies — none of which are small, and none of which are facing economic hardship.

POET said EPA’s “mismanagement” of small refinery exemptions has created an artificial cap on domestic demand for ethanol and driven renewable identification number values to nearly zero, which weakens the incentive for retailers to offer higher blends.

“Oil is making billions of dollars yet still using EPA to stop biofuel growth by handing out hardship waivers to some of the wealthiest companies in the world, in contradiction with President [Donald] Trump’s public comments. So far, the EPA has cut biofuels demand by 4 billion gal. and reduced demand for corn by 1.4 billion bu., causing severe damage in rural America,” POET said in a statement.

“POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies. The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity across Indiana,” POET president and chief operating officer Jeff Lautt said.

The recent announcement of 31 new waivers comes in stark contrast to Trump’s approval of year-round E15 availability earlier this summer. The small refinery exemptions are wiping out any near-term growth potential for year-round E15 use and challenging the President’s promises to family farmers and rural communities, POET said, adding that Trump now has the opportunity to show his leadership on this issue and turnaround the rural economy.

“My long-term fear isn’t for the biofuels industry; it’s for rural America. POET can continue to produce ethanol with cheap grain, but we don’t want to lose our family farmers. The EPA has robbed rural America, and it’s time for farmers across the Heartland to fight for their future” Broin said.

Reuters reported that Trump held a two-hour meeting on Monday with members of his Cabinet after hearing blowback from farm groups over the decision to grant 31 refineries exemptions from the nation's biofuel laws. The meeting included representatives from the U.S. Department of Energy, the U.S. Department of Agriculture and EPA, Reuters reported.

In June, Trump spoke at an Iowa ethanol plant and promised biofuel supporters that he had their best interests in mind. However, Reuters reported that it was Trump who gave the final okay to approve the 31 small refinery waivers.

In a statement Tuesday evening, Growth Energy criticized EPA for making comments that the waivers have not affected rural America. Growth Energy CEO Emily Skor said in the statement the latest reports indicate that Trump felt misled about EPA's most recent batch of small refinery exemptions.

"That's hardly a surprise. The EPA spent months trying to paper over the devastating impact these refinery handouts have had on farm communities and rural workers in America's biofuel sector," Skor said. "They can't hide the simple fact that dozens of biofuel plants have cut production and ethanol consumption fell for the first time in 20 years in the wake of these exemptions. Closures in Iowa, Illinois, Kansas, Minnesota, Florida, Virginia, Texas, Pennsylvania, Missouri and Nebraska are only the beginning."

On Tuesday, reports indicated that an EPA spokesperson said there was "zero evidence" of demand destruction for ethanol due to the numerous refinery exemptions allowed by EPA. In response, Renewable Fuels Assn. president and CEO Geoff Cooper said, "To suggest that there is ‘zero evidence’ of ethanol and corn demand destruction from small refinery waivers is as insulting as it is absurd."

Cooper added, "At least 15 ethanol plants have now shut down or idled since EPA began its refiner bailout bonanza last year, and more than 2,500 jobs have already been affected. Ethanol production and demand continue to slide, prices continue to sink and margins continue to bleed red. Meanwhile, the waivers are eroding corn demand, with USDA cutting its estimate of corn use for ethanol by 225 million bu. — equivalent to erasing demand for the entire Michigan corn crop. Farm bankruptcies and debt are on the rise, and farm income is plunging, yet EPA pretends nothing is wrong. Rome is burning, while EPA plays Nero’s fiddle.”

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