EPA RFS Plan Misses Target
Biofuel Advocates Maintain EPA Doesn't Meet President Trump's Promise on Biofuels
WASHINGTON (DTN) -- EPA officials on Thursday tried to pitch that they had met President Donald Trump's promise to increase biofuel volumes, but groups representing corn growers, biofuel producers and Midwest senators declared they are underwhelmed and EPA had failed them.
EPA finalized a revised rule setting required renewable fuel blend volumes under the Renewable Fuel Standard (RFS) for 2020 and the biomass-based diesel volume for 2021.
EPA Administrator Andrew Wheeler had maintained the new revisions to 2020 Renewable Fuel Standard volume obligations would assure 15 billion gallons of biofuels will be used under the RFS. Biofuel advocates maintain the strategy EPA came up with to meet that volume level doesn't cut it.
"President Trump turned his back on certainty for farmers and failed to keep the Sept. 12 deal," said Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA). "Instead of certainty, we are essentially being told to trust the EPA to uphold the RFS in the future even though for the past three years the EPA has routinely undermined the program. Every farmer and biofuel supporter I have talked to is deeply disappointed, frustrated and, quite frankly, angry. I don't think the White House truly understands the depth of discontent in farm country."
Biofuel advocates simply wanted EPA to offset its annual volume of small-refinery exemptions by requiring other petroleum refineries to pick up any volume of gallons that were granted as exemptions. Instead, EPA came up with a three-year-average plan the leaves uncertainty over whether 15 billion gallons of biofuels are actually used.
EPA, though, maintains its plan keeps to the president's promise made last fall. Under the plan, EPA is using a three-year methodology based on how the agency granted small-refinery exemptions for the years 2016-2018. EPA noted the Department of Energy had recommended 770 million gallons of small-refinery relief during that time. EPA will use this three-year average volume calculation from now on to grant small-refinery exemptions for 2019, 2020 and beyond.
So, essentially, EPA will propose 15.8 billion gallons of obligated biofuel volumes for 2020 to ensure it meets its target of 15 billion gallons.
"President Trump committed to our nation's farmers that biofuel requirements would be expanded in 2020," Wheeler said. "At the EPA, we are delivering on that promise and ensuring a net of 15 billion gallons of conventional biofuel are blended into the nation's fuel supply."
Sen. Chuck Grassley, R-Iowa, had a different take. Grassley pointed to a Sept. 12 meeting in the Oval Office with President Trump and several Midwest senators. Grassley said EPA's new rule "does not reflect what we agreed to in that meeting." Grassley said Wheeler has put Trump in a bad situation by not following the law as Congress intended.
"Once again, EPA is playing games and not helping President Trump with farmers," Grassley said.
Iowa farmer Kevin Ross, president of the National Corn Growers Association, had raised the issue of small-refinery exemptions with Trump last summer when the president came to Council Bluffs, Iowa, to tout year-round E15. Ross said EPA's plan appears to fall short of what was originally promised.
"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," Ross said. "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 gallon volume, as the law requires. We will use future rulemakings and other opportunities to hold the EPA accountable."
Stephanie Batchelor, a vice president overseeing the Industrial and Environmental Section at the group Biotechnology Innovation Organization (BIO), said EPA's decision will not grow the biofuels industry and will stagnate investment in green energy going forward.
"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," Batchelor said.
EPA found itself catching the wrath of farmers and biofuel producers in August when the agency granted 31 small-refinery exemptions amounting to roughly 1.6 billion gallons of waived RFS fuel obligations for 2018. Since 2016, EPA has granted 85 small-refinery exemptions, totaling more than 4 billion ethanol-equivalent gallons. At least 19 ethanol plants have halted production over that span.
EPA stated Thursday its actions would ensure conventional biofuel volumes, mainly corn-based ethanol, would meet the 15-billion-gallon target set by Congress for 2020. Cellulosic biofuel volumes for 2020 and advanced biofuel volumes will increase by almost 170 million gallons over the 2019 volume levels.
Biodiesel volumes for 2021 were also set at 2.43 billion gallons, the same as 2020 volumes. The National Biodiesel Board sees that as EPA blocking the growth of the biodiesel industry.
"EPA's final rule for the 2020 RFS volumes is simply out of step with Congressional intent and President Trump's promises," said Kurt Kovarik, NBB's vice president of federal affairs.
At least 10 biodiesel plants have shut down, cut production or laid off workers since the start of the year.
With the impact and weight that will be given to the Department of Energy's recommendations going forward, the Iowa Renewable Fuels Association also sent a letter to EPA asking the agency to be more transparent on small-refinery exemptions going forward. IRFA wants EPA to publish the Department of Energy recommendations from the past, present and future.
"Market participants must have faith in the process and must know whether or not EPA is following the DOE recommendations," Shaw said. "Further, to prevent any entity from gaming the system, this information should be made public to all market participants at the same time. In just a few months, EPA will begin adjudicating the 2019 compliance year SREs. It will be their first opportunity to demonstrate good faith and we'll be watching very, very closely."
Chris Clayton can be reached at Chris.Clayton@dtn.com
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