Number of waivers granted adds uncertainty to renewable fuel volumes

  

JEFFERSON CITY, Mo. — The amount of hardship waivers granted to refineries in the past year has added an element of uncertainty to the proposed renewable fuel volumes for 2019, according to the policy director at the Missouri Corn Growers Association.

On June 26, 2018, the U.S. Environmental Protection Agency issued the proposed volume requirements under the Renewable Fuel Standard program for cellulosic biofuel, advanced biofuel, conventional biofuel, and total renewable fuel for 2019. EPA also proposed biomass-based diesel volume standards for 2020.

The EPA is proposing to increase the total amount of ethanol and biodiesel that must be used next year to 19.88 billion gallons, a three-percent increase over this year’s levels.

Conventional renewable fuel volumes, primarily met by corn ethanol, would be maintained at the implied 15-billion gallon target set by Congress for 2019.

The advanced biofuel standard for 2019 would be increased by almost 600 million gallons over the 2018 standard. And the biomass-based diesel standard for 2020 would be increased by 330 million gallons as compared to the standard for 2019.

“Issuing the proposed rule on time meets Congress’s statutory deadlines … and provides regulatory certainty to all impacted stakeholders,” said EPA Administrator Scott Pruitt.

The announcement of the standards was originally scheduled to take place on a farm outside Kansas City, Missouri, on June 22. The event in Missouri was canceled and the announcement pushed back when an agreement between the producers and refineries was not on solid footing.

“The targets announced [Tuesday] could promote modest growth in U.S. biofuel production, but not if they are subject to another endless string of EPA waivers. Rural workers and farmers cannot afford another year of demand destruction,” said former-Sen. Jim Talent and Rick Santorum, co-chairs of Americans for Energy Security and Innovation, in a joint statement.

Under Scott Pruitt’s leadership, the EPA has more than tripled the number of waivers handed out to refineries. The agency that sets the renewable fuel volumes also has the authority to provide economic hardship waivers to small refineries releasing them of that obligation.

The RFS program, created in 2005, requires fuel companies to use increasing volumes of renewable fuel each year.

The figure that Missouri corn producers really focus on is the conventional renewable fuel volumes.

“In past years, if we heard the announcement that it was at 15 billion gallons we would be very positive and excited. This year is a little different given the small refineries waivers,” said Shane Kinne, Director of Policy and Grower Engagement for the Missouri Corn Growers Association. “That 15 billion gallons doesn’t mean much if the EPA administrator is just going to go later in the year and waive those gallons with a wave of his wand.”

The EPA has granted 40 waivers since 2016, including 25 in 2017 alone, totaling roughly 1.6 billion gallons of biofuels being excused from production. The amount of corn needed to produce 1.6 billion gallons of biofuels is more than the amount of corn produced in Missouri, according to Kinne.

The law is written that if an RFS is causing an economic hardship to a refinery, the EPA administrator can waive the requirements. Kinne notices that some of the companies receiving the waivers made very good profits.

One of the refineries that was granted an economic hardship waiver was Andeavor, who posted a $1.5 billion profit in the same year. The New York Times reported that oil giants Exxon and Chevron have requested waivers for 2018.

“We are at a time when we have over 200 billion excess bushels of corn in the U.S….our trade policies are obviously a big issue right now…we should be able to depend on domestic demand — and we can’t right now,” said Kinne. “It’s impacting price, it’s impacting future demands, and corn farmers are pretty upset with this EPA.

“It’s hard to depend on a number that can be waived at any time during the year.”

Part of the uncertainty in the proposed volumes is that the EPA did not outline potential waivers that might be coming and how they plan to relocate those gallons, something they are supposed to do, according to Kinne.

He also called on Pruitt to grant a Reid Vapor Pressure waiver allowing 15 percent ethanol fuel to be sold year round. The current “regulatory barrier” prohibits that ethanol blend from being sold in summer months.

Granting the waiver would increase the amount of ethanol being sold, according to Kinne.

Alisha Shurr is a reporter for the Missouri Times and Missouri Times Magazine. She joined the Missouri Times in January 2018 after working as a copy editor for her hometown newspaper in Southern Oregon. Alisha is a graduate of Kansas State University. Contact Alisha at alisha@themissouritimes.com.