POET has reduced ethanol production at half of its biorefineries, with the largest drops taking place in Iowa and Ohio. As a result, numerous jobs will be consolidated across POET’s 28 biorefineries and corn processing will drop by an additional 100 million bushels across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri.
In addition, POET will idle production at its bioprocessing facility in Cloverdale, Ind. The process to idle the plant will take several weeks, after which the plant will cease processing of over 30 million bushels of corn annually.
While there are certainly numerous market factors at play, POET blames the undermining of the Renewable Fuel Standard by the U.S. Environmental Protection Agency.
“The Renewable Fuel Standard was designed to increase the use of clean, renewable biofuels and generate grain demand for farmers. Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard. Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process,” said Jeff Broin, POET chairman and CEO.
The RFS authorizes waivers for small refinery exemptions to refiners that (1) process less than 75,000 barrels of petroleum a day and (2) demonstrate “disproportionate economic hardship.” Over the past two years, the EPA has issued waivers to refineries owned by ExxonMobil, Chevron, and other large oil companies — none of which are small and none of which have economic hardship.
Domestic demand for ethanol has declined and driven Renewable Identification Number (RIN) values to near zero, which weakens the incentive for retailers to offer higher blends. With the waivers issued — including the recent announcement of 31 new waivers — the EPA has cut biofuels demand by 4 billion gallons and reduced demand for corn by 1.4 billion bushels.
“POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies. The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity,” said Jeff Lautt, POET president and COO.
POET, the world’s largest biofuels producer, has a network of 28 production facilities across seven states. At full run rates, POET purchases 5% of U.S. corn and produces 2 billion gallons of ethanol, 10 billion pounds of distillers dried grains, and 600 million pounds of corn oil annually. POET, through its joint venture with DSM, also operates a commercial-scale cellulosic ethanol plant in Emmetsburg, Iowa.