EPA boost renewable fuel requirements, but leaders say higher levels meaningless with waivers

Source: By Donnelle Eller, Des Moines Register • Posted: Wednesday, June 27, 2018

The Trump administration Tuesday bumped higher the amount of ethanol and biodiesel that must be blended into the nation’s gasoline supply, but renewable fuels leaders say the increased levels are meaningless with continued waivers that undermine the federal program.

The Environmental Protection Agency increased the total amount of ethanol and biodiesel that must used next year to 19.88 billion gallons under the proposed Renewable Fuel Standard for 2019, a 3 percent increase over this year’s levels.

But state and national ethanol and biodiesel advocates also wanted a commitment from EPA Administrator Scott Pruitt that the agency would stop providing dozens of hardship waivers to oil refineries.

The waivers are designed to help provide relief to small refiners but they’ve been doled out large oil corporations, too.

The industry estimates the waivers have slashed the demand for up to 1.6 billion gallons of ethanol and 275 million gallons of biodiesel.

“The ethanol number isn’t worth the paper it’s written on so long as Scott Pruitt is granting small refinery exemptions left and right,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“Rural America is already suffering from low commodity prices and tariff wars, and today’s proposal is a missed opportunity to provide good news for consumers and farmers,” Shaw said.

The nation’s use of renewable fuel is important in Iowa, the largest U.S. producer of ethanol and biodiesel. About half of Iowa’s corn crop is used to make ethanol and a high-protein byproduct fed to cattle and other livestock.

Most gasoline used in the U.S. today contains at least 10 percent ethanol.

On Tuesday, EPA proposed increasing the total renewable fuels level for 2019 by 590 million gallons over last year’s levels, with most of the gains for advanced renewable fuel, such as biodiesel and cellulosic ethanol.

EPA proposes requiring:

  • 15 billion gallons of conventional ethanol, mostly made from corn. It’s the highest level allowed under the federal standard.
  • 2.43 billion gallons of biodiesel in 2020, an increase of 330 million gallons in 2019. The agency is required to set the biodiesel limits a year in advance.
  • 381 million gallons of cellulosic ethanol, 93 million gallons more than mandated this year.

Cellulosic ethanol is the next generation of biofuel, made from biomass such as corn stalks, husks and cobs.

“Proposed biofuel volumes are meaningless when the EPA continues to hand out waivers to the largest and most profitable companies in the world,” said Kyle Gilley, a spokesman for South Dakota-based Poet, the world’s largest biofuels producer.

In Iowa, Poet is using crop residue to make ethanol in Emmetsburg, while Corteva Agriscience is selling it cellulosic ethanol plant near Nevada.

The waivers are “devastating for farmers who have faced more than four years of declining farm income and poor crop prices,” Gilley said. “Administrator Pruitt and the Trump Administration must stand up for farmers, immediately reallocate those lost gallons and cease bailouts to the oil industry.”

The ethanol industry has been roiled in controversy this year after leaders discovered that EPA had been providing hardship waivers to refiners.

On Tuesday, Reuters reported that EPA has consistently ignored recommendationsfrom the Department of Energy to reject or limit waivers to oil refiners seeking exemptions.

Industry leaders and congressional leaders including Sens. Chuck Grassley and Joni Ernst have said the waivers undermine President Donald Trump’s commitment to renewable fuel and farmers.

Republicans Grassley and Ernst have blamed Pruitt, the former attorney general from Oklahoma, an oil-rich state, for the waivers.

Shaw said ethanol leaders hoped Pruitt would announce plans to reallocate credits tied to the waivers, a move that would help shore up biofuel demand.

“We have to know how they’re handling waivers,” Grassley said Tuesday, “so we’ll know if other blenders will have to make up (for the gallons) that have been waived.

“Otherwise, it’s just smoke,” he said in a teleconference with reporters.

Ernst said Tuesday the proposed biofuels increase doesn’t make up for 1.6 billion gallons of demand lost by “Administrator Pruitt’s decision to hand out an unprecedented number of small refinery waivers.”

Iowa farmers “deserve honesty and transparency from the EPA on the Renewable Fuel Standard,” she said.

U.S. Rep. Dave Loebsack, an Iowa Democrat, said EPA must suspend granting the waivers until Congress can evaluate them.

“Instead of acting to boost farmers and rural communities, the EPA seems to be following the demands of big oil,” Loebsack said.

Earlier this month, the White House considered a deal that supposedly would provided for year-round use of gasoline with 15 percent ethanol and greater restrictions on the hardship waivers.

EPA rules currently ban the higher ethanol blend, called E15, during summer over smog concerns.

But the deal also would have let oil companies count renewable fuels compliance credits on exported biofuels, lowering the cost to meet the federal mandate but also reducing demand.

EPA will receive public comments on the proposed biofuels levels until Aug. 17. A final rule is due by Nov. 30.