The U.S. Environmental Protection Agency’s recent announcement that it will reject dozens of requests by the oil industry for small-refinery exemptions (SREs) to the Renewable Fuel Standard is good news for ethanol and biodiesel. Biofuel industry leaders are closely monitoring the follow-through by EPA Administrator Andrew Wheeler.
Wheeler said EPA will deny 54 of 68 pending requests for SREs or “gap” waivers. The denial stems from petitions by the oil industry dating from 2011 to 2018. The remaining 14 of the waiver requests are awaiting evaluation by the Department of Energy before being sent to EPA for final action. Also, Wheeler made no mention of the 31 waivers being considered for 2019 and 2020.
The RFS is a federal law requiring an increasing amount of ethanol and biodiesel to be blended into the U.S. fuel supply each year. Since 2016, EPA in the Trump administration has approved 85 SREs that reduced ethanol and biodiesel use by 4 billion gallons. Refiners request EPA to grant the waivers so they don’t have to blend as much renewable fuel into gasoline and diesel fuel.
Using waivers to skirt RFS
The RFS became law in 2005 and includes a provision allowing oil refineries to apply for an exemption from the blending requirements during years of financial hardship. Not surprisingly, the oil industry has sought to exploit the SRE provision every chance it gets. The 10th Circuit Court of Appeals issued a decision earlier this year that should have put the case to rest. It ruled EPA exceeded its authority by approving most waivers it has issued over the years, and only refineries that had secured exemptions continuously since 2010 are eligible.
Recently, the oil industry tried to secure retroactive waivers as an end-around the court’s decision. If EPA granted those waivers, it would open the door to further abuse of waivers and take away a big market share for corn and soybeans, removing hundreds of millions of gallons of clean-burning biofuels from the nation’s fuel supply.
Don’t mess with RFS
“It’s important to keep an eye on this because EPA has a history of not going all the way on some of these issues,” says Dave Walton, an eastern Iowa farmer serving on the Iowa Biodiesel Board. “And as long as there are outstanding waiver requests, there’s always a potential for shenanigans.”
Denying the gap-year waivers means restoring demand for soybeans for biodiesel and corn for ethanol. Iowa ranks No. 1 among states in producing these two biofuels. Iowa produced 345 million gallons of biodiesel in 2019. Recent studies show biodiesel increases the value of soybeans by about $1 per bushel. “For me, this means an extra $62 or $63 per acre,” Walton says, “and it means hundreds of millions of dollars for Iowa farmers. It is a big deal.”
Commenting on Wheeler’s announcement, Monte Shaw of the Iowa Renewable Fuels Association adds, “The retroactive waivers were a blatant attempt by some oil refiners to skirt the RFS. Rejecting the waiver petitions is the right thing to do and a big step forward toward fully restoring integrity to the RFS.”