Editorial: EPA should back off on RFS waivers

Source: By Editorial Board, Lincoln Journal Star • Posted: Monday, April 30, 2018

A collection of Midwestern senators, including Nebraska Sen. Deb Fischer, are fighting the good fight for their home-state corn farmers in Washington.

This bipartisan bloc of lawmakers has formally petitioned the Environmental Protection Agency to stop granting waivers to exempt smaller oil refineries from the Renewable Fuel Standard on the grounds of economic hardship.

The number of entities whose applications were successful has increased dramatically this year, with the senators estimating that the waivers approved could reduce biofuel demand by 1.5 billion gallons – 10 percent of the anticipated output for 2018

Allowing the smallest independent refineries to opt out of purchasing ethanol to blend with oil or purchasing government-issued credits is one thing. But, when the petitioners include refineries owned by energy behemoths such as ExxonMobil and Chevron – as Reuters has reported – that’s a step too far.

Such action also flies in the face of President Donald Trump’s stated plan to allow E-15, or gasoline that’s 15 percent ethanol, year round – a practice that’s currently banned by the EPA.

Increasing demand for corn, particularly at a time when low grain prices have hamstrung the Midwest’s farm economy, would be a huge boost for Nebraska. Allowing for that blend to be sold throughout the winter could increase demand for a key crop in this state that’s experienced a glut of production in recent years.

If these giant, multinational oil companies want to see hardship, they should follow the trajectory of commodity prices over the past several years.

Corn, the major component of ethanol, has seen its price per bushel halved in less than three years, owing to market forces that include a supply that’s exceeded demand. Further increasing exemptions will inevitably depress demand even more.

Bloomberg estimates 38 percent of the nation’s corn crop is directed toward ethanol production. That’s why ethanol, and the market access guaranteed by the RFS, is so critical to Nebraska, particularly at a time when the slumping farm economy is affecting the entire state.

Plus, ethanol has helped create steady jobs in rural Nebraska that likely wouldn’t have occurred without the capital investment to spark them.

Fittingly for a state whose moniker is the Cornhusker State, Nebraska is the nation’s second-leading producer of ethanol, trailing only Iowa in annual production. The 25 ethanol plants in the state boast a production capacity of more than 2 billion gallons along with distillers grains for cattle feed, according to the Nebraska Ethanol Board, and directly employ some 1,300 workers.

Clearly, this growth merits protecting, particularly at this juncture. The senators’ defense of farmers and ethanol production couldn’t come at a better time, and we encourage the EPA to heed their call.