Wheeler complicating Trump ethanol plan with refinery waivers

Source: By John Siciliano and Josh Siegel, Washington Examiner • Posted: Monday, March 18, 2019

Environmental Protection Agency Administrator Andrew Wheeler is raising the ire of the ethanol industry and other renewable fuel producers, by allowing oil refiners not to blend the corn-based fuel, while at the same time implementing the president’s plan to increase the amount of ethanol sold annually.

Wheeler approved a new round of five oil industry exemption waivers on Thursday, allowing the refineries to forego blending ethanol into the gasoline supply as they are required to do under Renewable Fuel Standard mandate. 

The timing of the waivers was odd, given that it came just days after Wheeler began the first step in implementing the president’s plan to up the amount of ethanol being sold year-round. 

The president’s plan is to remove a key regulatory barrier to selling 15-percent ethanol fuels during the summer months, creating a year-round market for the higher blend of corn-based fuels. The plan is part of keeping the president’s promise to farmers in Iowa. 

Wheeler’s mixed messages: Ethanol producers, although pleased by Trump’s plan, are confused by the mixed messages the Trump administration is sending. 

On one hand, they are helping the industry to raise the amount of ethanol allowed in the market, but on the other hand they are allowing the oil industry off the hook to blend it. 

“If on the one hand you are allowing this additional market access by removing an arbitrary barrier, and on the other hand you’re destroying demand through inappropriate granting of a mass number of small refinery exemptions that arguably will interfere with the growth of the higher blends,” said Neil Koehler, CEO of Pacific Ethanol, and chairman of the Renewable Fuels Association, the ethanol industry’s primary lobbying group. “It’s important that both get addressed.” 

RFA has been leading the charge in opposing the EPA’s use of the blending waivers, or exemptions, and is currently involved in a legal battle over former EPA administrator Scott Pruitt’s approval of over two dozen of the oil refinery waivers before Wheeler took over the agency. 

Koehler said on a call with reporters this week that Pruitt’s actions caused significant “demand destruction” for the industry, and the industry is now seeing ethanol plants closing as a result. 

A double whammy: Ethanol production is lower as a result of EPA’s refinery waiver, which is seeing renewable fuel plants close. But that’s just adding to the pain experienced by the U.S.-China trade dispute, said Koehler. 

Plants are being shut down, and production is lower, because of the small refinery exemption and trade dispute with China that took out another chunk of ethanol demand. 

The industry has the ability to produce nearly 17.5 billion gallons, so the opportunity is there to blend 15 percent ethanol blends, if the policy is kept stable, the RFA chairman explained. 

GRASSLEY ANGERED BY ‘BIG OIL’ WAIVERS, SAYS TRUMP’S PLAN HANGS IN THE BALANCE: Senator Chuck Grassley, R-Iowa, the top ethanol supporter in the Senate, called Thursday’s refinery waivers “ridiculous,” saying Trump’s commitments “to Iowa/Midwest hang in balance.”

The five new waivers represent nearly one billion bushels of corn demand lost from policies put in place by “fired Pruitt,” Grassley tweeted. It is now “important” for Wheeler to put in place a “new process” for future years, the senator added.

Following the Pruitt path: “EPA Administrator Andrew Wheeler is unfortunately following in the footsteps of Scott Pruitt,” said Kurt Kovarik, vice president of federal affairs for the National

Biodiesel Board, representing the advanced biofuel industry that also requires refiners to blend its fuels under EPA’s Renewable Fuel Standard. 

“It appears to be business-as-usual at EPA, with no effort to ensure that renewable volume obligations are made whole following the exemptions,” said Kovarik. “America’s farmers, biofuel producers, and the environment are today’s collateral damage.”

The renewable fuel industry wants EPA to make up for the losses caused by the waivers in setting the annual RFS targets, which based on the waivers would have to be much higher than normal. The agency has not taken that path in response to Pruitt’s actions, and the issued is expected to be worked out in cou

 

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