OMAHA (DTN) -- At the American Coalition for Ethanol's annual conference in Omaha this week, the group's CEO, Brian Jennings, urged an industry on the ropes to continue to look to the future and to not stand on the sideline while the EPA continues to grant small-refinery waivers.
Ethanol companies are losing money, and the Environmental Protection Agency is granting Renewable Fuel Standard exemptions to small refineries that now total more than 4 billion gallons of lost ethanol demand since 2016. At the same time, a potential 3-billion-gallon Chinese import market closed to U.S. producers, and doubts are growing about the future of the RFS, Jennings said during a speech Thursday. The industry isn't doing enough in response, he said.
"We have to turn up the volume," Jennings said.
During President Donald Trump's recent visit to Southwest Iowa Renewable Energy in Council Bluffs, Iowa, ethanol producers and farmers gave the president an earful about how small-refinery waivers are hurting their industries. The president responded by directing USDA and EPA to review the program, bringing a sense of relief to agriculture that Trump was aware of the situation.
Then, the EPA dropped a surprise late last Friday, announcing it had granted 31 more small-refinery exemptions and denied six for 2018. Since 2016, the Trump administration has granted 85 small-refinery exemptions.
The industry feels betrayed.
Jennings noted, "Had the 2016 presidential election turned out differently and this was a (Hillary) Clinton EPA that granted 85 exemptions, rural America would not turn the other cheek. We would be raising so much hell. Why are so many of us turning the other cheek?"
Jennings said now is the time to "get angry" and to speak up about "the harm" it is doing to an industry that should be in a "much better place" if not for EPA's actions.
"EPA continues to mismanage the RFS with a refiner-win-at-all-costs approach to small-refinery exemptions, and, when you throw in trade wars for good measure, it constrains our ability to expand the use of ethanol here at home and around the world," he said.
"We've come to the conclusion we cannot merely play defense on the RFS and hope trade wars subside. We need to turn the page, to go on offense. We need a new vision for how to increase demand for ethanol and break free from the status quo."
Jennings said combining ethanol's high-octane and low-carbon strengths into a new growth strategy allows the industry to go on offense.
"It gives our champions in Congress something to be for as the discussion about climate change begins to ramp up in Washington," he said.
"ACE members have what it takes to make things happen. Too many of our members are running in the red, and there's not a lot of light at the end of the tunnel. I don't want to see any ACE member swept up in consolidation. For starters, we have to keep fighting EPA's brazen abuse of the RFS."
Jennings said his group supports two bills introduced in the U.S. House of Representatives that would require EPA to make public information about which companies receive waivers and another to require other refiners to blend more ethanol to make up for gallons lost to waivers.
In addition, Jennings said the industry needs to find its place in a low-carbon, high-octane future.
RICKETTS SPEAKS ON WAIVERS
Speaking to ACE members earlier Thursday, Nebraska Gov. Pete Ricketts, a Republican, pressed the Trump administration to stand behind the RFS.
"As the second-largest ethanol-producing state in the nation, President Trump's approval of year-round E15 is a big win for Nebraska," Ricketts said.
"There is, however, still more work to do. While the EPA granted fewer small-refinery waivers to the RFS this year, the 1.4 billion gallons waived undermines the purpose of the RFS. To deliver on President Trump's support for ethanol, the EPA should be more transparent about the waiver process and reallocate any waived gallons. They owe it to our farmers.
"It's not too much to ask that EPA actually follow the law."
In addition, Ricketts said it was important for the House to vote on the United States-Mexico-Canada, or USMCA, agreement.
"Especially with trade uncertainties with China," he said, "it is important to get the agreement done. Having USMCA strengthens the president's negotiating position. China, they need our ethanol. Their air quality is terrible. It's important that we get this right."
Todd Neeley can be reached at email@example.com
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