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US ethanol associations demand EPA to restore lost biofuel demand

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Two US ethanol associations – Growth Energy and the American Coalition for Ethanol (ACE) – have called on the Environmental Protection Agency (EPA) to restore biofuel demand that has been lost to oil industry handouts.

The demands were submitted in comments on the EPA’s final 2020 Renewable Volume Obligations (RVO), which closed on 30 August. The RVOs, which are due by 30 November 2019, will determine 2020’s biofuel targets under the Renewable Fuel Standard (RFS).

“The president made a ‘giant’ promise on ethanol, but rural communities cannot afford to wait any longer,” said Emily Skor, CEO of Growth Energy. “More biofuel plants are closing their doors with each passing week, and farm families have run out of options. The EPA must take immediate action to restore lost demand under the 2020 biofuel targets and repair the damage from abusive refinery exemptions granted to oil giants like Exxon and Chevron.”

In comments written to the EPA, Growth Energy highlighted that the agency’s exemption processes ‘violate the letter and spirit’ of the RFS, which was initially adopted by the US Congress to promote growth in the country’s biofuel industry.

‘Illogical and unlawful’

“EPA’s proposal actively encourages blending less, not more biofuel,” wrote Growth Energy. “By maintaining the status quo of an unaccounted number of exemptions, EPA would permit the oil industry to revert to its 2013 level of usage and still achieve compliance. This is entirely illogical and unlawful.

“At this point, it is fair to say that EPA is destroying the RFS program. The overwhelming problem is EPA’s misguided and unlawful handling of compliance exemptions for small refineries. After initially allowing, through 2015, the number of exemptions granted each year to naturally dwindle, as intended, EPA has completely reversed course and suddenly begun granting dozens of exemptions covering billions of RINs, while providing no acceptable explanation as to why…

“EPA’s radical escalation of small refinery exemptions, coupled with its refusal to require that exempt volumes be made up, have thwarted Congress’s intent and effectively exempted the RFS program out of existence.”

SRE applications ‘skyrocketed’

The comments from ACE highlighted, among other issues, the radical changes made to EPA’s handling of SREs under President Trump’s administration. “During RFS compliance years 2016 through 2018, the average number of SRE applications skyrocketed to more than 30 per year and the average approval rate increased to 90%,” ACE wrote. “What’s more, the Trump administration waited until after the compliance year had closed to approve ‘retroactive’ refinery exemptions. By tilting the scale and the calendar in favour of refineries, the Trump administration has never reallocated the waived blending obligations as required by the statute.

“Not only has EPA allowed 85 SREs for the 2016 through 2018 RFS compliance years, it has not reallocated the 4.04 billion gallons of statutory volume exempted over that timeframe. If one were to assume, for example purposes, all this waived volume constitutes ethanol from corn, this is equivalent to losing a 1.4-billion-bushel crop, or the entire market for Minnesota corn farmers in 2018.

“The best way to spur market-based demand for farmers and improve conditions in rural America is to increase the production and use of renewable fuels. This is even more critical given the uncertainty created by trade wars and efforts to renegotiate existing trade pacts. EPA’s rule allowing US retailers the ability to offer E15 to their customers all year opens the door for greater market access long-term, but the net effect of E15 year-round is still in the hole when it comes to ethanol demand through the RFS without restoring the waived gallons for small refineries.”