Ethanol Blog

Governors: RFS Changes would Destroy Ethanol, Commodities Demand

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Days after the U.S. Environmental Protection Agency offered a settlement to Philadelphia Energy Solutions to forgive half of the now-bankrupt company's renewable identification numbers, or RINs, obligations in the Renewable Fuel Standard, a group of Midwest governors have asked President Donald Trump to make no changes to the RINs system.

Biofuels and agriculture groups have spoken out against the settlement, which essentially would forgive PES for tens of millions of dollars in RINs obligations. Those groups are concerned the agency will be doing the same for other small refiners, basically cutting the biofuels mandate in the RFS.

In a letter to Trump on Thursday, Govs. Pete Ricketts, Nebraska; Kim Reynolds, Iowa; Eric Holcomb, Indiana; Eric Greitens, Missouri; Dennis Daugaard, South Dakota; and Jeff Colyer, Kansas, urged the president to reject attempts to waive or weaken the RFS, which they said is a "key pillar" of the farm economy.

"Our nation's farmers represent the very best of American values, and they deserve the very best from our government," they wrote in the letter.

"As noted by (Agriculture) Secretary Sonny Perdue, economic conditions today 'are testing the resilience of the American farmer,' and many farmers 'continue to face tight bottom lines, even negative returns in some cases.' These challenges would only be exacerbated by demand-destroying alterations to the RFS -- a policy which has been a lifeline for farmers, driving job growth and attracting billions of dollars of investment to rural areas where opportunities are needed most."

Sen. Ted Cruz, R-Texas, has proposed capping the price of RINs at 10 cents. The governors said that would allow refiners to "skirt their RFS obligations, slashing demand for biofuels. Simply put, for every waiver credit issued by the EPA under the Cruz plan, the 15 billion-gallon RFS level would be reduced by one gallon. According to multiple studies by Midwest universities, that demand destruction for biofuels would exceed one billion gallons."

The governors point to Trump's own statements during the 2016 presidential campaign.

"As you stated during the 2016 campaign, 'The EPA should ensure that biofuel RVOs, or blend levels, match the statutory level set by Congress under the RFS.' We could not agree more. But make no mistake, adopting Sen. Cruz's RFS waiver credit proposal would have the same real-world effect as reducing RFS levels during an annual rule-making. It would directly violate your promise to rural voters to uphold RFS levels. A common sense solution would be to grant E15 the same RVP treatment as E10. This would drive down the cost of RINS.

"Your leadership has given a voice to rural communities, and we are grateful for your continued attention to the issues impacting farm families. That is why we are counting on you to reject any "RIN cap" or waiver credit proposal to reduce RFS levels."

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

Follow me on Twitter @toddneeleyDTN

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