RFA's Cooper: 2022 Among Ethanol's Best

ORLANDO, Fla. (DTN) -- Watershed years for federal biofuels policies are few and far between.

If you talk to biofuels enthusiasts, they'll point to the launch of the Renewable Fuel Standard in 2005 and an upgrade of the policy in 2007 as the pinnacle for the industry.

The year 2022 will be remembered in that same vein, Renewable Fuels Association CEO and President Geoff Cooper said during a state-of-the-industry address at the national ethanol conference in Orlando, Florida, on Wednesday.

"Indeed, your persistence was the reason 2022 turned out to be one of the best years in the history of the U.S. ethanol industry," Cooper said.

In 2022, the ethanol industry produced 15.4 billion gallons of ethanol -- an increase of 400 million gallons from 2021 and a 10% rebound from pandemic-laden 2020.

Domestic ethanol blending in 2022 was higher than in 2021 despite flat gasoline consumption.

Last year, the industry generated $57 billion in gross domestic product, which is the second highest ever. Cooper said average ethanol profit margins hit their highest level since 2006.

In 2022, the EPA put the RFS back on track after years of volume delays and other issues. The EPA proposed a so-called set RFS rule that gives biofuel producers policy certainty for the next three years once finalized.

The EPA also restored 500 million gallons of ethanol blending illegally waived by the agency and denied 69 small-refinery exemptions in a change of policy from the Trump administration.

"This didn't just happen on its own," Cooper said. "No, it happened because of RFA's persistence. It happened because of our diligent advocacy efforts and relentless outreach. It happened because, for years, we have been engaging policymakers and regulators in a constructive way to promote the benefits of the RFS program. It happened because of our incessant rallying cries to get the RFS back on track."

As has been the case for decades, Cooper said, the ethanol industry spent much of 2022 fighting back critics. In particular, oil industry interests have continued to push for the phasing out of the RFS based on the set provision.

Oil interests have been pushing the narrative that the RFS expired in 2022.

"Others fully understood the RFS doesn't expire -- but they still attempted to stoke fear about the uncertain fate of the program," Cooper said.

"They said the program would be doomed without Congressionally specified volumes. They said the ethanol industry should rush to the bargaining table to 'compromise' with oil refiners on a fuels policy for 2023 and beyond."

Former Texas Rep. Bill Flores, for example, said that beyond 2022, there is "no certain space for corn ethanol." Flores said legislative reform would be "much better than relying on a bunch of bureaucrats" beginning in 2022.

Flores called on the ethanol industry to support a proposed bill to replace the RFS with a flat 9.7% ethanol-blending guarantee.

The RFS calls on the EPA to set volumes beyond 2022, as outlined in the set proposal.

"But we didn't take the bait," Cooper said. "We stood our ground on the RFS. We worked with Congressional champions, fair-minded regulators, and our allies in agriculture to fortify the RFS and ensure a positive outcome from EPA's set rule."

ELECTRIC RINS

While the ethanol industry largely supports the new RFS set rule, Cooper said the RFA continues to oppose new electric renewable identification numbers, or E-RINs, proposal that opens the door for companies like Tesla to qualify for RFS credits.

"Now, we agree that the law allows electricity to participate in the RFS program if it meets certain conditions," Cooper said. "But by allowing companies like Tesla to generate E-RINs, EPA has proposed to create a novel program for renewable electricity that conflicts with RIN generation methods for all other renewable fuels. We believe EPA's E-RIN proposal is inconsistent with the statutory purpose of the RFS, which is to support the production of renewable fuels -- not the production and sale of certain vehicles."

Cooper said the RFS proposal still is good overall for the industry.

"As this new chapter begins for the RFS, the ethanol industry is in a great place," he said.

FUTURE OF BIOFUELS

Cooper said "persistent advocacy" on behalf of the ethanol industry in 2022 led to biofuels having a place in the "Inflation Reduction Act."

"In my view, the IRA marks the most significant federal commitment to low-carbon biofuels since the RFS was expanded in 2007," Cooper said.

"This legislation truly is a game-changer."

One of the IRA provisions is the Clean Fuel Production Credit, which is a technology-neutral tax incentive for fuels that reduce carbon emissions by at least 50% compared to gasoline. The value of the incentive increases as the carbon intensity of the fuel decreases.

"And because of our efforts, the law requires the use of the Argonne National Laboratory GREET model for measuring a fuel's carbon intensity and determining tax credit values," Cooper said.

"In addition, the bill creates the first-ever tax credit for sustainable aviation fuels; appropriates $500 million for higher biofuel blends infrastructure; and extends and improves the CCUS (Carbon Capture, Utilization and Storage) tax credit. Overall, the IRA's provisions will create long-term investment certainty and stimulate extraordinary technology innovation."

But as is the case with any new legislation, Cooper said, the "devil is in the details."

"That's why RFA continues to actively engage with the Treasury Department and other agencies to ensure the IRA is implemented in a way that truly stimulates the growth and investment intended by Congress," he said.

"As we continue positioning ethanol for long-term success and growth, we need to be persistent in telling our story to policymakers, regulators, the media, industry stakeholders and the general public. We can't let others define us. We define our future -- not oil refiners in Delaware; not environmental extremists; not ivory tower academics; not loud-mouthed cable TV talk show hosts."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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