Ethanol industry sees court case, new demand, vehicles in future

Source: By The Hagstrom Report • Posted: Thursday, February 13, 2020

Anne Steckel, biofuels adviser for the National Farmers Union, stands in front of the Jeep Wrangler built by Hauk Design for the Renewable Fuels Association to demonstrate that high performance vehicles can run on E85. Photo by Jerry Hagstrom/The Hagstrom Report

HOUSTON – After acknowledging that 2019 “was a difficult year for the ethanol industry – one of the worst we’ve ever had” with production down 300 million gallons from the record achieved in 2018 to 15.8 billion gallons, Renewable Fuels Association President and CEO Geoff Cooper said here Wednesday that 2020 looks bright.

Cooper pointed out to industry officials attending the National Ethanol Conference with “a frenetic burst of activity in the last few weeks of 2019, it became clear we were definitely heading in the right direction as the year came to a close.” That was followed by a Jan. 24 U.S. Court of Appeals for the 10th Circuit “bombshell 99-page decision finding that EPA (Environmental Protection Agency) vastly exceeded its statutory authority in granting three specific small refinery exemptions,” Cooper said.

Matthew Morrison, attorney in the lawsuit filed by RFA, the National Corn Growers Association, the American Coalition for Ethanol and the National Farmers Union challenging EPA’s issuance of three 2016 small refinery exemptions, said the EPA won’t be able to revive the exemptions in question and should make the 10th Circuit decision apply nationwide “to calm the waters” surrounding ethanol.

If EPA does not make the decision national policy, RFA and its allies can go back to the courts, Cooper told reporters.

In his speech, Cooper also cited a series of positive developments in December including the conclusion of phase one trade negotiations with China, congressional approval of the U.S.-Mexico-Canada trade agreement, congressional passage of a spending bill that extended key biofuels tax provisions, which President Donald Trump signed. He also noted EPA’s publication of 2020 RFS blending obligations.

“While EPA’s rule didn’t adopt the SRE reallocation method we preferred, it marked an improvement over the original proposal – and it gives us an outside chance of finally achieving the full 15 billion gallon requirement established by law in 2020,” Cooper said.

At the conference today, Bob McNally of Rapidan Energy Group said that, while electric vehicles are a challenge in the future, “The idea that policymakers are going to drive ethanol and oil out of the transportation market is wildly premature and unrealistic. I see we are going to see much stronger oil demand in the next 10 years and therefore more demand for ethanol.”

But demand from China “is the big question,” and it’s unclear if the OPEC countries and Russia can manage oil supply, McNally said.

The attendees also listened to panels on decarbonizing liquid transportation fuels, the potential for an international clean fuel standard and ethanol’s competitiveness in the octane market.

Michael Dwyer, an analyst, said that international clean fuel standards have the potential to drive innovation in lowering the carbon intensity of ethanol and be rewarded for it in the marketplace, but that the lack of a global agreement on measuring carbon intensity of biofuels is leading to the “balkanization” of clean fuel policies and standards and protection of local industries.

Finally, at the end of the day, Kenny Hauk of Hauk Designs LLC, which builds off-road vehicles; Brian Sowers of Crappiemasters, a fishing tournament and TV show; and Derek Tidd, a race car driver, explained how their activities can help promote ethanol “beyond the road.” All three are backed by the ethanol industry.

Former RFA President and CEO Bob Dinneen, who is now RFA’s senior strategist, also interviewed pundit Bill Kristol about the elections.