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EPA’s proposed RFS small refinery measures under fire

On Oct. 15, U.S. Environmental Protection Agency Administrator, Andrew Wheeler, signed the supplemental proposal to the 2020 Renewable Volume Obligation (RVO) rulemaking for the Renewable Fuels Standard.

The notice does not change the proposed volumes for 2020 and 2021. Instead, it proposes and seeks comment on adjustments to the way that annual renewable fuel percentages are calculated. Annual renewable fuel percentage standards are used to calculate the number of gallons each obligated party is required to blend into their fuel or to otherwise obtain renewable identification numbers (RINs) to demonstrate compliance.

Specifically, the EPA is seeking comment on projecting the volume of gasoline and diesel that will be exempt in 2020 due to small refinery exemptions based on a three-year average of the relief recommended by the Department of Energy (DOE), including where DOE had recommended partial exemptions. The agency intends to grant partial exemptions in appropriate circumstances when adjudicating 2020 exemption petitions. The agency proposes to use this value to adjust the way renewable fuel percentages are calculated.

The EPA said the proposed adjustments are designed to help ensure that the industry blends the final volumes of renewable fuel into the nation’s fuel supply and that, in practice, the required volumes are not effectively reduced by future hardship exemptions for small refineries. According to the EPA, the supplemental notice seeks to balance the goal of the RFS of maximizing the use of renewables while following the law and sound process to provide relief to small refineries that demonstrate the need.

Ethanol proponents, however, are not pleased.

“The White House’s Oct. 4 announcement acknowledged Small Refinery Exemptions (SREs) would continue in the future but promised EPA would ensure that 15 billion gallons of ethanol be blended in 2020. Further, in an Oct. 3 phone call, Trump Administration officials told us the approach they would take to ensure at least 15 billion gallons for 2020 would be to prospectively account for the three-year rolling average of actual SRE volume from 2016-2018. In other words, EPA would apply the three-year rolling average of SREs for the 2016-2018 compliance years, approximately 1.34 billion gallons, and prospectively reallocate the volume to the 2020 RVO,” said Brian Jennings, with the American Coalition for Ethanol. “Instead, EPA is proposing to ‘consider the exempt volumes of gasoline (and diesel) in previous years had EPA followed the Department of Energy (DoE) recommendations without deviation’ in determining the 2020 RVO. If this is confusing, I would suggest that’s EPA’s goal. The Agency hopes farmers and biofuel producers will overlook the fact EPA is not planning to ensure 15 billion gallons for the 2020 RVO. Instead of using the approach suggested in the Oct. 3 phone call, EPA is planning to begin issuing ‘partial’ SREs for 2020, something DoE has recommended in the past only to be rejected by EPA. Next, EPA is going to ignore the fact it granted 85 full SREs for the 2016-2018 compliance years, representing 4 billion gallons it never intends to reallocate, and instead assume it had followed DoE’s advice to issue partial SREs during that time frame. Then, it is going to calculate the average of those imaginary partial SREs and apply that volume, approximately 770 million gallons, to the 2020 RVO.”

These measures will effectively continue to reduce the biofuel use intended by the RFS, Jennings said.

“The ongoing insanity over EPA’s mismanagement of the RFS would be bizarrely humorous if not for the sobering fact that it, along with the trade war and weather-related disasters, has taken a terrible economic toll on the livelihoods of corn growers and biofuel producers across rural America,” he said. “We urge farmers, biofuel producers, elected leaders and other industry stakeholders to participate in the comment period following this proposal to get EPA to finally follow the rule of law with the RFS.”

Comments on the proposed rule must be received on or before Nov. 29, 2019 and a public hearing will be held on October 30, 2019 in Ypsilanti, Mich. The Ohio Corn and Wheat Growers intend to comment on the proposal.

“President Trump has promised, repeatedly, to support homegrown biofuels. Ohio is home to seven ethanol plants and make no mistake, they are hurting because of EPA’s actions. These plants are the customers for nearly 40% of the corn grown in the Buckeye State. Strong biofuel policies support rural jobs, bolster our communities, and give consumers more choices at the pump,” said Tadd Nicholson, Ohio Corn & Wheat Growers Association executive director. “The EPA proposal is not what was promised by the Trump Administration and it fails to answer President Trump’s directive for a stronger conventional biofuel requirement of more than 15 billion gallons per year. President Trump needs to personally intervene again to get the RFS back on track and ensure his EPA follows the law and honors his commitment to our nation’s corn farmers and ethanol industry.”

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