White House, EPA Won’t Change Course on Biofuels

After months on months of back-and-forth, frustration, deals negotiated for, backed out of, proposals made, and a month-long review period, sources from the White House are now starting to comment on the administration’s stance, going forward, on biofuels.

Drumroll…

The EPA and Trump administration will continue their course and proceed with the deal originally announced in October, which will mandate 15 billion gallons of biofuels be blended into the nations supply. That, however, is not the actual amount of gallons lost to Trump’s extensive waivers to oil companies.

“The Administration is moving forward to finalize the 2020 RVO (Renewable Volume Obligations) in line with the agreement that the President made this fall,” White House spokesman Judd Deere told Reuters.

This deal looks to also keep with their plan to use a three-year rolling average to replace fuel blocked by Small Refiner Exemptions back into the supply, which disappointed farmers and commodity groups back in October when it was announced.

“Administrator Wheeler has echoed the President’s commitment to 15 billion, and we hope this announcement begins a new era where EPA stops playing games with rural economies and skirting the law in support of oil allies. Today was a missed opportunity to finally restore clarity to the ethanol and grain markets, but more opportunities lie ahead in 2020,” said Kyle Gilley, Senior Vice President of External Affairs and Communications at POET. “With these 2020 RVO levels now finalized, our near-term focus shifts to implementation of the remainder of the President’s critical biofuels package: ensuring 15 billion gallons means 15 billion blended, deploying an infrastructure package, changing the pump label, and reforming the fuel survey.”

Lots of Timelines

Today’s news comes at a weird time, when many different agricultural issues seem to be coming to a head. The U.S. – China trade war appears to be getting closer to over, with this weeks ‘stage-one’ deal, and indications from Congress show that the USMCA should be ready for a vote relatively soon.

Still, the EPA’s announcement is another disappointment for the farming community that has lobbied for so much time this year to have the Renewable Fuel Standard upheld as written.

The deal, the details of which are live on the EPA website now, will likely use recommendations from the Department of Energy to decide how much biofuels to put back into the nation’s fuel supply.

However, this will again disappoint, as it did before, as there is a disparity between the amount of fuel actually exempted and what was recommended by the DOE. This leaves a gap in the actual fuel exempted and what will be placed back in market to make up for exemptions.

Long-Awaited Decision

With details beginning to come out about the EPA’s plan going forward, industry leaders have started reacting to the news.

“After EPA’s overwrought abuse of the SRE program in recent years, agency officials had a chance to finally make things right with this final rule—but they blew it,” said RFA President and CEO Geoff Cooper. “EPA’s rule fails to deliver on President Trump’s commitment to restore integrity to the RFS, and it fails to provide the market certainty desperately needed by ethanol producers, farmers, and consumers looking for lower-cost, cleaner fuel options. While the final rule is an improvement over the original proposal, it still does not guarantee that the law’s 15-billion-gallon conventional biofuel blending requirement will be fully enforced by EPA in 2020.”

Sonny Perdue, head of the USDA, said though, that, “once you understand the EPA proposal… you’ll be fine.” Industry leaders do not seem to feel the same.

“The Administration has chosen to move forward with a final rule that corn farmers believe falls short of adequately addressing the demand destruction caused by EPA’s abuse of RFS refinery waivers,” said Kevin Ross, President President of the National Corn Growers’ Association. “While using the DOE recommendations to account for waivers is an improvement over the status quo, it is now on corn farmers to hold the Administration to their commitment of a minimum of 15 billion gallon volume, as the law requires. We will use future rulemakings and other opportunities to hold the EPA accountable.”

Instead of using these DOE recommendations, industry leaders have made it clear that the actual volumes of exempted fuels should be used, to make up for the damage done.

“President Trump pledged to deliver certainty and stability for America’s farmers and biofuel producers by restoring integrity to the RFS,” said Growth Energy CEO Emily Skor. “While we’re encouraged that EPA is finally taking steps to follow the law and account for biofuel demand lost to secretive oil refinery exemptions, this rule leaves important work unfinished. Integrity is restored to the RFS only if the agency accurately accounts for exemptions it will grant.”

Today’s announcement could be a break from what has happened over the last six months, but, from all indications, it looks like it will be a continuation of the frustration and economic hardship the farming community has felt for months.

By Josh Cook
Posted 12/19/19