Ethanol Blog

The National Biodiesel Board and the American Soybean Association have asked for a meeting with President Donald Trump on small-refinery exemptions to the Renewable Fuel Standard, in a letter to the president on Wednesday.

The EPA recently granted 31 small-refinery waivers to the RFS, bringing the total to 85 since 2016 for a volume of 4.03 billion ethanol-equivalent gallons not blended in petroleum. The biodiesel industry has seen several hundred million gallons waived.

In the letter, the groups detail how the latest round of waivers had an "immediate and devastating impact" on the biodiesel industry.

"Last week, in the wake of EPA's decision to grant a new flood of small-refinery exemptions, one of the largest U.S. biodiesel producers announced the shutdown of three plants located in Pennsylvania, Georgia and Mississippi," the letter said. "Already, other large producers have announced closings and laid off workers, and we believe there are more closings and layoffs to come if policies remain unstable."

The letter signed by American Soybean Association President Davie Stephens and National Biodiesel Board Chief Executive Officer Donnell Rehagen, said the biodiesel industry often is left out of the discussion when it comes to small-refinery waivers.

"According to a University of Illinois economist, nearly all demand eroded by small-refinery exemptions falls on biodiesel and renewable diesel producers by nature of how the RFS is constructed," the letter said. "That disproportionate impact on biodiesel and renewable diesel producers in turn hits U.S. soybean farmers already having a tough time from tariffs and insurmountable weather issues this planting season."

Rehagen said in a press statement that biodiesel producers have "been ignored" when it comes to discussions about how to "repair the damage."

"The RFS was designed to support growth of advanced biofuels, but the small-refinery exemptions have turned the program upside down," Rehagen said.

In the letter to Trump, the groups said although many economists have expressed concern about a possible recession looming, "America's farmers are already facing a severe economic downturn."

"We would appreciate an opportunity to discuss how the administration can repair the uncertainty created by zero growth in biomass-based diesel coupled with demand destruction caused by the waivers. We look forward to an opportunity to sit down with you and discuss solutions to the crisis our industries are facing as a result of recent policy decisions."

An analysis completed by University of Illinois economist Scott Irwin showed that virtually all of the demand destruction from small-refinery waivers is falling on the biodiesel industry. He estimates the damage to the U.S. biodiesel and renewable diesel industries could reach $7.7 billion or 2.54 billion gallons.

The groups said in the news release that a small refinery processing 75,000 barrels of oil per day can produce nearly 1 billion gallons of gasoline and diesel per year. The refinery's annual RFS obligation would create demand for nearly 20 million gallons of biodiesel or renewable diesel.

"Dozens of biodiesel producers across the United States produce less than 20 million gallons each year," they said.

Read the letter here: http://kce.informz.net/…

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

Follow me on Twitter @toddneeleyDTN

(TN)

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