EPA Adm. Wheeler Says RFS Ethanol Volumes Will Net 15 Billion Gal

Source: By Jordan Godwin, OPIS • Posted: Wednesday, October 9, 2019

Future conventional ethanol volumes under the Renewable Fuel Standard (RFS) will “net out at” 15 billion gallons as EPA begins to prospectively account for small-refinery exemptions (SREs), agency Administrator Andrew Wheeler said on Tuesday.

Wheeler’s comments, which came during an interview on WZFG radio in North Dakota, were made a day after President Donald Trump said conventional ethanol volumes next year will be “close to 16 billion” gallons.

Trump originally misspoke, saying the volumes will be close to 16 billion barrels, rather than gallons, but he was quickly corrected by Iowa Lt. Gov. Adam Gregg at a White House ceremony for the U.S.-Japan trade agreement.

“That’s a lot of gallons,” Trump said. “So I think they – so they should like me out in Iowa and all of the different places, huh?”

“Very appreciative of your actions, sir,” Gregg said, to which Trump replied, “I think so.”

Trump was touting his administration’s compromise proposal, released Friday, on how EPA will handle RFS obligated volumes lost to SREs.

In an outline of the plan released Friday, EPA said it would release a supplementary proposal to begin accounting for SREs on a three-year rolling average. The plan was hailed by most biofuels advocates and industry groups as a win, but uncertainty around the specifics of the proposal remain.

Asked during the radio interview whether EPA sides with refiners over farmers on the RFS, Wheeler said the Obama administration’s policy toward SREs was successfully challenged in court by small refiners. He added that under the Trump administration, the volumes waived by SRE dropped to 1.4 billion gal in 2018 from 1.7 billion gal in 2017.

“Going forward, we’re going to estimate how many small-refinery exemptions we expect to grant next year and increase the number for 2020 by that amount,” Wheeler said. “So, at the end of the day, we will net out at the 15 billion gallons that’s in the Clean Air Act for the ethanol program.”

In its Friday press release, the agency said, “EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020.”

Whether the total will be “net” 15 billion gallons as Wheeler said Tuesday, “more than 15 billion gallons” as EPA said Friday or “close to 16 billion galls” as Trump said Monday remains unclear.

The proposal has had a bearish reaction on ethanol-related D6 Renewable Identification Number (RIN) credit values, which have tumbled nearly 30% from Friday’s peaks of 27cts/RIN to as low as 19.5cts/RIN on Monday.

“Going forward, it should not impact or hurt the corn farmers,” Wheeler said.

“We’ll still have some small-refinery exemptions, but it should not negatively impact the corn farmers or the ethanol industry, and we’ll end up at the 15-billion-gallon level.”

Wheeler also highlighted the warm reception the proposal received by most in the ethanol industry.

“I think people are very pleased with the compromise,” Wheeler said. “The small refineries are pleased that they will still get that relief if they need it, and the ethanol industry across the board has been very pleased and has spoken in favor of it to make sure that we net out the 15 billion gallons.”

–Jordan Godwin, jgodwin@opisnet.com