Renewable Fuel's Big Week on The Hill

More than 70% of ethanol produced in the U.S. is transported by rail across the lower 48 states, along with Canada and Mexico.

U.S. Surface Transportation Board (STB) kicked off a busy week of public hearings on Monday, with Biden administration officials, like Pete Buttigieg, looking at steps to hitch the disrupted railway system back together.

Railroads in the U.S. typically transport more than 370,000 carloads of ethanol per year, according to the Renewable Fuels Association (RFA). Currently, the STB shows average railcar dwell time for ethanol this week is at 61.4 hours, nearly doubling the same weeks average in 2021 at 37.1 hours.

Linking Ethanol to Gas Pumps

With EPA suspending the E15 summer ban and the Biden administration dedicating $100 million to ethanol availability at pumps across the nation, refiners will likely see a spike in demand that might be stretched if there aren’t enough railcars moving ethanol.

Geoff Cooper, president and CEO of the RFA, spoke to the renewable sector’s reliance on “efficient and timely” rail service by submitting written testimony to be addressed during the hearing.

“The rail traffic congestion issue and subsequent decision to meter traffic is leading to major disruptions for our members and is impacting their ability to maintain production and deliver vitally important fuel ethanol to the market,” he says.

Labor shortages and inefficient use of railways have frequently mumbled through microphones at the STB hearing, according to Jared Mullendore, RFA director of government affairs. He says much of the proposed action in the hearings have centered around privately owned rail cars.

“We’re focused on getting these privately owned cars moving at a pace we used to see because this slow trend is impacting our producers and our membership,” he says. “We’re still getting the product where it needs to be, but the inefficiency is causing our producers to slowdown or even shutdown completely.”

According to Cooper, more than 70% of ethanol produced in the U.S. is transported by rail across the lower 48 states, along with Canada and Mexico. As United States Trade Representative Katherine Tai visits Canada this week to discuss USMCA, we will likely hear more on rail situation across borders.

EPA Looks to Crank-Up the Volume

EPA Administrator Michael Regan shared a similar ethanol conversation with AgriTalk Host Chip Flory earlier this week.

Regan’s agency previously proposed to deny all pending Small Refinery Exemption (SRE) requests under the Renewable Fuel Standard (RFS). While he believes the denial will come through, Regan says his agency is weighing all options.

“We need to be on course to grow biofuels in this country,” says Regan. “When we look at these exemptions, it’s our opinion—along with the courts—that these exemptions have not been done appropriately in the past, and we look forward to making the right calls as we move forward.”

In early April, EPA decided the fate of the 2018 SREs under the RFS by moving to deny 36 of the pending waivers. The agency then offered relief to 31 waivers previously granted by allowing the facilities to meet their 2018 obligations without purchasing credits to show compliance with the law due to “extenuating circumstances.”

Future SRE relief opportunities were put to rest when Regan shared his agency’s outlook with Flory.

“The alternative path for compliance that was awarded to the first batch of SREs was done because these mistakes were made so far in the past,” says Regan. “The market has moved forward; the conditions on the ground have shifted. Moving forward, those compliance alternatives are not a guarantee.”

Renewable Volume Obligations (RVOs) obligations for coming years will be finalized by the EPA on June 3rd. Regan says the RVOs his team has planned will revamp the RFS program, offering biofuels a “sound footing” to play the role Congress intends for it to play.

“2020 was a cleanup year. 2022 will be one of the most aggressive RVO years that we have seen,” he says. “From 2023 and beyond, we want to build on that by showing how biofuels will be a part of the solution for climate change, and in lowering the price at the pump.”

Renewable Fuel Takes Flight

Jim Wiesemeyer, ProFarmer policy analyst, says renewables should be gearing up for a big break in the sustainable aviation fuel sector.

"Letters are starting to come out, urging the sustainable aviation fuel credit," Wiesemeyer shared 19-minutes into the podcast. "Lobbyists are gearing up for an eventual vote and I really see it coming in the form of a down payment in a green new deal."

Jordan Fife, BioUrja Group trading president, told Flory the pipeline that is renewable diesel can handle sustainable aviation fuel credits.

Flory agrees with Fife and Wiesemeyer, saying Senator Chuck Grassley (R-IA) is "gaining good momentum" in the sustainable aviation fuel sector.