Visiting the Iowa State Fair in mid-August, the acting head of the U.S. Environmental Protection Agency pledged to offer more “certainty” on the Renewable Fuel Standard and other issues important to agriculture.
Andrew Wheeler, recently named acting administrator following the resignation of Scott Pruitt, provided few details on how EPA will do this, however. Wheeler, accompanied by Iowa Gov. Kim Reynolds, held a closed-door roundtable discussion with representatives of ag groups and renewable fuel leaders. A press conference followed the meeting.
Wheeler said the RFS is an important program not only for farmers and biofuel producers, but for the entire nation. He said President Donald Trump favors expanding the RFS.
“The Trump administration wants to move forward implementing the RFS within the spirit and letter of the law,” Wheeler said. “We want to provide more certainty for the renewable volume obligations. So far, this administration has been on time in setting the RVOs each year and that provides more certainty for producers and consumers. We will continue to do that.”
Waivers destroying demand
Biofuel supporters told Wheeler the EPA’s recent RFS small-refinery exemptions make RVOs meaningless if the gallons aren’t reallocated. The National Biodiesel Board says exemptions in 2016 and 2017 reduced biodiesel demand by 300 million gallons. That’s about equal to Iowa’s biodiesel production last year. Ethanol industry officials say the small-refinery waivers cut ethanol demand by more than 1.5 billion gallons. Wheeler wouldn’t say EPA would grant fewer waivers in the future but promised more transparency in the decision-making process.
Several Iowa Soybean Association leaders took part in the EPA listening session. Grant Kimberley, ISA market development director and Iowa Biodiesel Board director, believes Wheeler intends to be more transparent than Pruitt when it comes to small-refinery waivers even though specifics were lacking.
“Wheeler appears to be more sincere about working with farmers and the biofuels industry,” Kimberley said. “We delivered the message to the administrator that science and data show the biomass-based diesel RVOs should be raised in the RFS. I feel good about Mr. Wheeler taking time to come here and listen.”
RFS volumes need to be increased
NBB says a 2.8 billion-gallon RVO requirement for biodiesel is consistent with EPA’s own assessment of what is achievable. Chad Stone, with Renewable Energy Group (REG), based in Ames, serves on NBB. He told Wheeler the industry can meet the 2.8 billion-gallon request. REG is the nation’s largest biodiesel producer.
Stone made sure Wheeler understood that biodiesel is made from excess soybean oil, corn oil, animal fat and used cooking oil. Stone pointed out that biodiesel helps farmers at a time when help is needed most. Grain and livestock prices have fallen recently due to tariffs.
Wheeler needs to keep this in mind as EPA looks at granting small-refinery exemptions, Stone said. “We need to make sure EPA understands that biodiesel is a big value that’s added to agriculture. A study commissioned by NBB shows demand for soybean oil by biodiesel increases soybean prices by nearly 63 cents per bushel and lowers soybean meal costs by $21 per metric ton.”
Iowa Corn Growers President Mark Recker attended the meeting. Wheeler was willing to listen to farmers’ concerns, “but we received little assurance that anything would change as related to the demand-destroying small refinery exemptions for the RFS, or his willingness to grant year-round sales of E15,” said Recker.
In the past year, EPA granted waivers to small refineries amounting to a loss of 2.25 billion ethanol-equivalent gallons. Making matters worse, in the proposed RFS volume rule, EPA made no attempt to reallocate those lost gallons and stated they won’t make up for any exemptions granted for 2019 obligations after the volumes are set.
Iowa biofuels supporters at the meeting pushed Wheeler to grant a Reid Vapor Pressure (RVP) waiver to allow for year-round sale of E15, a blend of 85% gasoline and 15% ethanol. The administration prefers this be approved legislatively to avoid court challenges, Wheeler said. He declined to provide a timeline for when a decision will be made on a proposal to allow year-round use of E15.
Renewable fuel advocates told Wheeler that because of the antiquated RVP regulation from 1990, the federal government restricts the sale of higher-octane ethanol blends, including E15, between June 1 and Sept. 15, simply because those fuels were not around when the regulation was written.
RVOs are volume obligations EPA must announce before the end of November each year. RVOs are set annually by EPA to dictate the amount of renewable fuel that is blended into the nation’s motor fuel supply. The RFS is a federal law that requires domestic, renewable, cleaner-burning fuels to be blended.
While this is important, farmers are more concerned about the small refinery waivers issued by EPA that destroy demand for ethanol, Recker said.
Oil companies sidestep obligations
Farmers deserve greater honesty and transparency from the EPA as the agency’s actions have created a back door that allows oil companies to sidestep their biofuel blending obligations, costing farmers and ethanol $5 billion in lost markets. Wheeler acknowledged he knew the small-refinery exemptions are an issue in Iowa. “We’re trying to provide more certainty for that situation,” he said. No further plans or details were provided.
Regarding the RVP and making E15 available year-round, Wheeler said EPA is looking into it. Reynolds expressed her support for year-round E15 sales saying, “You need to get this done sooner rather than later. This would have an immediate positive impact on markets, raise the price of corn, and infuse some certainty and optimism into the ag economy.”
Monte Shaw, executive director of the Iowa Renewable Fuels Association, attended the meeting. “I was a little disappointed that Andrew Wheeler has pulled back from Scott Pruitt’s position that EPA has authority to grant year-round E15. Administrator Wheeler wants to be certain it holds up in court. I get that, but at some point we need to move forward with our best legal argument.”