The National Corn Growers Association recently began airing a TV ad calling on the Environmental Protection Agency to stop giving Renewable Fuel Standard waivers to big oil companies. These waivers negatively impact farmers by undercutting the RFS and reducing corn demand.
The ad features Iowa farmer Kevin Ross, who on June 11 shared the podium with President Donald Trump following a tour of the Southwest Iowa Renewable Energy (SIRE) ethanol plant at Council Bluffs. A past president of the Iowa Corn Growers, Ross becomes president of NCGA in October.
Trump came to Iowa, toured SIRE and held a rally to help farmers and other ethanol supporters celebrate EPA’s long-awaited removal of the summertime restriction on E15 sales. EPA issued the final rule allowing E15 to be sold year-round on May 31. Trump told the cheering crowd, “We lifted the restrictions on E15 just in time to fuel America’s summer vacations. By unlocking the power of American agriculture and energy, we are fueling our roaring economy.”
Unjustified waivers must be addressed
Ross, a six-generation family farmer in southwest Iowa, told Trump that farmers appreciate the approval of year-round E15 sales, but the job isn’t finished. He said, “Mr. President, you delivered on E15, but we have more work to do. EPA’s oil refinery waivers threaten to undo your good work. I ask that you listen again because the pain the ethanol and biodiesel industries have endured is holding back a farm economy that has further capacity to produce more clean air and clean liquid fuels for this country.”
EPA Administrator Andrew Wheeler and U.S. Ag Secretary Sonny Perdue were there and heard those words. Following the trip to Iowa, Trump asked EPA and USDA to find a solution to the waiver controversy. Trump announced June 21 that EPA will review the process of granting waivers. Stay tuned.
The ethanol industry says the small-refinery waivers have destroyed demand for 2.6 billion gallons of ethanol, equal to 1 billion bushels of corn, since Trump took office. Year-round access to E15 could increase demand for corn by 100 million to 200 million bushels in the short term. The point is that farmers aren’t helped much by approving E15 year-round but continuing to approve the small-refinery exemptions.
RFS exemptions destroy ethanol demand
Monte Shaw, head of the Iowa Renewable Fuels Association, says the Trump administration is considering 39 waivers currently pending for the 2018 compliance year. The 2017 RFS waivers that were granted reduced the 15 billion-gallon annual ethanol volume required by the RFS to 13.18 billion gallons for that year, rolling it back to pre-2013 blending requirements.
As a result, ethanol consumption in the U.S. declined for the first time in 20 years. USDA’s most recent projection is for a 155 million-bushel decline in corn going to ethanol production in 2018-19 marketing year.
The waivers are supposed to be granted only to small, financially distressed oil refineries, but some have been awarded to giants such as Exxon Mobil and Chevron. Shaw says it’s difficult for any refinery to declare a hardship, given low prices for ethanol and renewable identification numbers (RINS), the industry’s biofuels trading program. He says the final rule allowing year-round E15 appears ready to withstand legal challenges from the oil industry. Big Oil has vowed for years to sue EPA over the E15 rule.
In addition to its call on EPA to not grant any more waivers, NCGA is supporting legislation in the U.S. House (HR 3006) and Senate (S 1840) seeking to stop waiver abuse and address the harm these waivers are causing the RFS and corn demand.
Biodiesel also damaged by waivers
The National Biodiesel Board is also calling attention to the economic damage EPA’s small-refinery exemptions are causing the biodiesel industry. NBB sent a letter to Wheeler taking issue with his recent comment that the approval of year-round E15 sales will make up for the damage from the refinery exemptions. The E15 waiver will not provide market growth for biodiesel, while small-refinery exemptions have a detrimental effect on demand for this renewable fuel.
Kurt Kovarik, NBB vice president, says, “If EPA continues to undercut the biodiesel market by handing out RFS exemptions to every refiner that asks, America’s soybean farmers and small biodiesel producers will be hit even harder. Our soybean growers need new markets and additional value for their crop. Biodiesel is an important market that adds value to every bushel.” He says demand destruction for biodiesel could reach 2.45 billion gallons over the next few years causing a $7.7 billion economic loss.