RFA: Ethanol industry needs COVID-19 relief

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Thursday, December 17, 2020

The Renewable Fuels Association on Dec. 16 said the COVID-19 pandemic will likely continue to negatively impact the U.S. ethanol industry well into 2021. The group, however, expressed optimism in working with the upcoming Biden administration.

Representatives of the RFA discussed the impact of the pandemic, the need for COVID-19 relief, and several policy initiatives during a media call held Dec. 16.

Geoff Cooper, president and CEO of the RFA, said market conditions for ethanol have gone from bad to worse in recent weeks as higher COVID-19 cases have resulted in new restrictions and reduced demand for transportation fuels.

Scott Richman, chief economist at the RFA, said ethanol production was down approximately 2 billion gallons from March to November. As a result, the ethanol industry lost approximately $3.8 billion in revenues, he said, noting the impact of that loss will not be mitigated through future sales.

Although COVID-19 vaccines are now being distributed, Richman said fuel demand will likely remain depressed for several months. At the earliest, he said volumes could normalize by late spring 2021. Reduced demand associated with the pandemic, however, could persist for longer. “The impact of this pandemic is not over,” Richman said.

Cooper said the RFA has has been advocating for the federal government to provide dedicated COVID-10 relief to the biofuels industry since last spring. While the CARES Act did provide funds for ag relief, none of the funds were specifically allocated to the renewable fuels industry.

Congress is currently negotiating a new relief package and is expected to reach a deal this month. Although that legislation is unlikely to provide dedicated relief for ethanol, it will likely provide a fresh round of ag relief. The upcoming Biden administration might make it possible for ethanol producers and other downstream ag processors to benefit from those ag relief funds.

Coper explained that the USDA does have the discretion and authority to provide ethanol producers and other downstream ag producers with relief through Commodity Credit Corp. funds. Current Agriculture Secretary Sonny Perdue has been reluctant to do so, Cooper said. The RFA believes, however, that President-elect Joe Biden’s pick for ag secretary is likely to take a more inclusive approach to COVID-10 relief. Biden has announced his intent to nominate Tom Vilsack to lead the USDA. Vislack is a former two-term Iowa governor and served as ag secretary during all eight years of the Obama administration.

Cooper also discussed RFA’s advocacy work related to the Renewable Fuel Standard, small refinery exemptions (SREs) and related court challenges. Regarding the overdue RFS rule to set 2021 renewable volume obligations (RVOs), Cooper said the RFA believes the upcoming Biden administration should manage that rulemaking.

“It’s been a wild year, to say the least,” Cooper said. “I’m sure I speak for the entire ethanol industry when I say we will not be sad to say goodbye to 2020 and ring in the new year.”