Refiners: Cutting ethanol mandate won’t hurt corn farmers

Source: By Marc Heller, E&E News reporter • Posted: Monday, July 22, 2019

Eliminating federal biofuel mandates wouldn’t be the disaster for corn farmers that ethanol advocates predict, a study commissioned by petroleum refiners said.

The study by Energy Ventures Analysis found that doing away with the renewable fuel standard would reduce the percentage of biofuel in gasoline by less than 1 percentage point by 2025, from 10.8% to 10.3%. Because ethanol is cheaper to produce than gasoline, refineries would use it even without a mandate, according to the study.

That suggests Congress could end the program without hurting biofuel markets or corn farmers, the study said.

The study was paid for by a group of merchant refiners that opposes ethanol mandates, the Fueling American Jobs Coalition.

Merchant refiners say they take the brunt of the RFS program’s shortcomings because they typically don’t blend biofuels themselves and are forced instead to buy renewable fuel credits to show compliance with the program.

“Results presented in this report demonstrate that the RFS mandate is no longer relevant as an energy policy. Better ways to advance these policy goals may exist, but the outdated RFS is not one of them,” the study said.

Relying on data from the U.S. Energy Information Administration and other sources, the study’s authors said maintaining the RFS would increase the cost of fuel to consumers by $8 billion by 2025. The study recommended scaling back aspects of the program to shift away from corn ethanol, arguing that even without the mandate, farmers will find biofuel markets for that crop, the main source of ethanol.

One option, EVA said, is to eliminate the conventional biofuel mandate and maintain requirements for biomass-based diesel — but at “moderate levels.”

In addition, the authors said, the RFS doesn’t appear necessary to establish U.S. energy independence. The federal government projects that the United States will become a net exporter of petroleum and other liquid fuels by 2025, with or without the RFS, according to the study.

The report comes as EPA revisits aspects of the RFS, including a reset of mandated biofuel levels triggered by past RFS waivers approved by the agency. Those waivers lowered some of the required volumes in past years, a condition that calls for a reset according to the RFS law.

Biofuel industry groups continue to press the agency to maintain or boost biofuel volumes, and they’ve criticized EPA for granting exemptions to small refineries that say the requirements cause economic hardship. Those exemptions have effectively reduced overall biofuel volumes below EPA mandates.

The Renewable Fuels Association has called on EPA to reallocate, to other refineries, the volume of biofuel waived through small refinery exemptions and to do that through a reset rule.

EPA hasn’t committed to doing so.

“As a result of these waivers or exemptions from required volumes, many ethanol plants have recently idled, shut down, or announced layoffs,” RFA President and CEO Geoff Cooper wrote to EPA in January. “These compliance exemptions have also hurt demand and price for American farmers.”