Biofuel Groups Win 15 Billion Gallon Floor in RFS Deal

10:35AM Oct 04, 2019
Blender Pump
President Donald Trump has announced a biodiesel deal.
( South Dakota Corn )

Biofuel groups celebrated a victory in winning most of their demands in a drawn-out fight over refinery exemptions to the Renewable Fuels Standard (RFS). The White House, EPA and USDA announced a resolution to the dispute on Friday that will maintain the 15 billion gallon blending requirement of the RFS.

Biofuel groups have been pressuring the administration over the past three years as hardship exemptions were granted to refiners allowing them to bypass the mandatory blending of ethanol and other biofuels.  That effectively reduced the biofuel mandate well below the legislated 15 billion gallons.

“That's exactly what this proposal does,” USDA Secretary Sonny Perdue told AgriTak Radio host Chip Flory. “It ensures a certainty of 15 billion gallons being 15 billion gallons, and EPA has agreed at the present direction to reflect any potential small refinery waivers that are issued there, to account for those in the overall total to ensure that the minimum of 15 billion gallons is obtained.”

According to Perdue, the final agreement does not include full reallocation of previous years’ Small Refinery Exemptions (SREs), but it does base future years’ blending requirement reallocations on a rolling three-year average of the exemptions.


Listen to the full AgriTalk interview with USDA Secretary Sonny Perdue below:

 


Senator Charles Grassley (R-IA), one of the most vocal critics of the SREs, praised the agreement.

“The president listened to all points of view and delivered. Small refineries can still apply for waivers while biofuels are able to blend the legally-required amount.
 
“This plan will fix EPA’s exemption process and help farmers and biofuels producers going forward,” Grassley said in a statement. “The solution outlined by President Trump, Administrator Wheeler and Secretary Perdue is exactly how the RFS is meant to function according to the law as written by Congress. The RFS has a built-in mechanism to make up for waived volumes in advance and EPA will be implementing the law as intended.”

The plan unveiled by President Donald Trump also calls for increased investment in 15% blends of ethanol or E15.

“We're working on ideas, listening to the industry about what it will take to grow the E 15 demand,” Perdue said. “Infrastructure is part of that. How do we incentivize that? Whether it's incentives or infrastructure, what's the best way that we can quickly make E15 the fuel of choice out here?”

The announcement was welcomed by biofuels groups.

"By accurately accounting for lost gallons from this point forward based on a 3-year average of all exempted gallons, beginning with the 2020 biofuel targets, and breaking down regulatory and infrastructure barriers to higher biofuel blends, we will be able to realize the true potential of the opportunities President Trump opened by approving year-round sales of E15,” Growth Energy CEO Emily Skor said in a press statement. “Our industry and farm suppliers are eager to put this plan in place and deliver more lower-cost, lower-carbon biofuels to American consumers. We look forward to finalizing this rule to help America's farmers.”

 "On behalf of NBB's members and soybean growers, we are grateful that President Trump is taking a huge step to restore integrity to the Renewable Fuel Standard,” added National Biodiesel Board CEO Donnell Rehagen. “Biodiesel producers continue to be severely harmed by EPA's misuse of small refinery exemptions. Nine producers from across the country – including in Pennsylvania, Michigan, Texas, Georgia and Iowa – have closed their doors or reduced operations and laid off more than 200 employees. Today's announcement is a first step in reversing the loss of production and restoring those jobs. The biodiesel industry deeply appreciates the consistently strong advocacy of Agriculture Secretary Perdue and Iowa’s political leaders.”

The RFS deal does not include a cap on prices of Renewable Identification Numbers (RINs), which are used to certify compliance with the RFS. The RIN cap had been pushed by oil industry interests. Perdue said EPA will continue to pursue transparency in RIN pricing to reduce volatility.

EPA expects to file a new rule implementing the announced changes in November, according to Perdue. There will be a public comment period for the proposed rule.